Feb 01, 2011
Two senators are putting another deficit plan on the table today, which includes setting a target for federal spending over 10 years. Plus, the Caucus blog tries to cheer up disheartened budget hawks, and the former chairman of IBM says it may not help to make government smaller unless it also gets better.
A New “Glide Path” on Spending
National Journal reports on two senators holding a press conference today on a bipartisan “ramp-down plan” to limit federal spending to a percentage of the total economy (GDP) over 10 years. Without having seen the plan itself, the real significance here may be the idea of setting a national budget target (albeit a very different one than that which was proposed by the Committee on the Fiscal Future):
“Sens. Bob Corker, R-Tenn., and Claire McCaskill, D-Mo., will introduce legislation today that would put in place a 10-year glide path to cap all spending — discretionary and mandatory — to a declining percentage of the country’s gross domestic product, eventually bringing spending down from the current level, 24.7 percent of GDP, to the historical level of 20.6 percent.”
Talking Points Memo says Senate Majority Leader Harry Reid is taking his hardest line yet in opposition to cuts or privatization of Social Security, including proposals that would raise the retirement age. If that position wins support, the remaining options for Social Security would be tax increases, or doing nothing for now and letting the long-term accounting issues play out. Social Security may start drawing down on its trust fund this year, which means the government will have to shift money into the program from elsewhere in the budget:
“As long as I’m the Majority Leader, I’m going to do everything within my legislative powers to prevent privatizing or eliminating Social Security,” Reid said. “I’ll simply say it’s off the table.”
The Caucus blog at The New York Times takes a look at history and finds A Plan to Cheer Up Deficit Pessimists. Many in Washington’s budget posse have been vocally pessimistic about the chances for change. Acknowledging that, John Harwood writes:
“But unlikely does not mean impossible. Divided government has produced improbable budget compromises before.”
Former IBM chief Lou Gerstner writes in the Wall Street Journal that Don’t Just Cut Government, Reinvent It:
“I’ve learned that across-the-board cuts are almost guaranteed to reduce morale, promote short-sighted choices, and encourage accounting gimmicks that send people looking for loopholes instead of creative solutions.”
The Non-Surprising $1.5 Trillion
Stan Collender, in his Roll Call blog, says the New CBO Deficit Number Is ‘Dog Bites Man’ Story. In journalist’s slang, that means it isn’t a story at all, since, as he points out, everybody in Washington knew the tax compromise reached in December would swell the deficit:
“What was the real story? For one thing, despite campaign rhetoric to the contrary, there was a great deal of bipartisan support in Washington for policies that would increase the budget deficit. The tax cut deal enacted in December, which was adopted by wide margins in both chambers (81-19 in the Senate and 277-148 in the House), was adopted over the objections of some, but it was adopted nonetheless. And many of those who complained the loudest about the deficit during the campaign still voted for the deal a month or so later.
The second part of the story is that Washington’s willingness to consider policies that would increase the deficit hasn’t changed since the election, either. New rules recently approved by the House of Representatives actually make it easier to increase the budget deficit as long as the additional red ink is caused by tax cuts and not spending increases — the same policy included in the tax deal.”
Chart Of The Day
Okay, it’s really a video, but as a visualization of data in terms that are awfully clear, we think this effort from ABC News more than qualifies. The news team there produced this video on what could be bought with $14.3 trillion dollars – if we happened to have the money, instead of owing it, as is the reality, with that number being the U.S. national debt:
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Fiscal Future Daily is produced by Public Agenda for Choosing Our Fiscal Future, in partnership with the National Academy of Public Administration and with support by the John D. and Catherine T. MacArthur Foundation. The editor in chief is Scott Bittle, with contributors Francie Grace, David White, Jen Vento, Hart Hooton and Tom Watson.