The New Republic

"John Boehner managed to ass a bill". Funny stuff.

- kluhman

July 27, 2011 at 9:45am

You beat me to it, Kluh

- Tristan

July 27, 2011 at 9:53am

Plus 3. That made me smile this morning.

- wildboy

July 27, 2011 at 9:54am

- Obama had one goal: Raise the damn debt limit. Republicans are divided by multiple pledges: Don't raise the debt limit, defeat Obama, don't increase taxes, repeal this and that, and the list goes on. Each faction views winning and losing through a different lens so when Obama appeased one sliver he pissed off the majority. Boehner has the impossible task of pleasing a majority & Obama was more than happy to urge him into that maze because whether The Speaker emerges or not, Obama wins: They will raise the damn debt limit.

- michaelg

July 27, 2011 at 10:03am

I think that, much like they're still waging a war against parasitism that started with welfare queens, there is still a common wisdom among the morons that the government is a wasteful spendthrift and they want the waste gone. I guess it's fairly similar to the notion that they pay no attention to the details; the sentiment itself is decent enough, nobody likes wasteful spending, they just don't know what they're talking about.

- GSpinks

July 27, 2011 at 10:14am

This is a great bit of analysis, simple and clear. Similar to what I have been writing over and over again to our own seattleng who endlessly repeats the fallacy that non-security discretionary spending is the root of our deficit problem. If you are of a mind to do an update, the change I suggest would be to separate the funded entitlements, social security and medicare, as a separate revenue and expense stream so that their contribution do the current deficit is clearly distinguished from the rest. Then it becomes clear that our deficit problems are really due primarily to tax cuts in the face of security spending increases, plus a contribution from the cost of medicaid (which is not a financing issue but a real economic issue that the ACA only partially addresses) and other income support. Given that the income shares of the wealthiest have increased hugely in the last 30 years, both pre-tax and after-tax, it would also be worthwhile showing just what their after-tax share would be if they "gave back" enough of their income increase to fund the income support the need for which grows because the income share of the wealthiest has increased. They would still have shares well above those when Reagan was in office. THEN you really do see that tax cuts combined with security spending increases are the heart of the problem, the wars and domestic security that Bush not only refused to pay for but combined with ruinous tax increases. Social security and medicaid (whose deficits would be funded in the near term from the trust funds) are not the current problem. They are a future problem. The Tea party nuts want to leave the current problem unaddressed while using them as an excuse to slash entitlements that are not the source of the current deficit.

- roidubouloi

July 27, 2011 at 10:20am

Your table is both simple and illuminating. Yes, I agree that few Republicans pay attention to the details. They imagine that there are hundreds of billions to be gotten by cutting "waste, fraud, and abuse". Sadly, I see the end game to be cuts in discretionary spending to truly Spartan levels, to be followed in the next 6-12 months by the public realization that they miss many of the functions of government that have been savaged. Maybe this is what it'll take for the endless demands for nonspecific spending cuts to be silenced.

- desperjm

July 27, 2011 at 10:45am

I'd like to think of congress with committees sitting around studying our problems and addressing them. Instead, I imagine a Monte Python Routine with Republicans sitting around in a hearing room with scissors snipping and with jerky bird head movements looking back and forth at each other and at their hands snipping. They can't wait to cut something. They just need to cut something.

- Nusholtz

July 27, 2011 at 10:50am

Reminds me of "Amadeus" when the Archduke (I think) listens to Mozart's new composition. Being a puffed up, insecure, ignoramus needing to impress the court, he makes a ridiculous critical pronouncement at the end of the performance: "Too many notes". To which Mozart replies, "Which ones would you have me remove?" Or something like that.

- katsnovak

July 27, 2011 at 11:23am

roid - Thanks for your suggestions for further consideration; I'm learning a lot from your doctoral studies. I think that the alarming answer to Chait's question about whether there's a bottom is simple: no. The Republicans have been fanatical for thirty years in their pursuit of tax cuts for the rich and spending cuts for the poor, and have never cared about the details. Sadly, while the details are becoming impossible to ignore, this is happening at the exact same time as the libertarian crazies finally have taken over the party. While conservatives haven't crusaded against transportation funding and food inspectors before, they're starting to now. Paul Ryan's budget made that clear, and it isn't just Ron Paul (or even his son) saying that all government spending is evil anymore. It's the Tea Party's raison d'etre, and if they're not fought, the end of the road really is where our Republic is headed.

- janus

July 27, 2011 at 12:07pm

You are learning the wrong things, j.

- liberalref

July 27, 2011 at 12:38pm

Roid (and any others who can answer): How do we resolve this table, which suggest non-security discretionary spending has remained level even before inflation, with Seattle's data indicating that there's been a modest (24%) increase since 2000, even after adjusting for inflation. Which are the correct numbers, and how do we know? In either case, non-security discretionary is not the main problem, but it makes a difference whether that spending block has been growing modestly in comparison with inflation plus population growth, or shrinking, and the conflicting figures I see are, well, contradictory. C

- Curran1

July 27, 2011 at 1:28pm

Great article, Jonathan and great comment, roid. Both make this complicated issue clearer. The table helps a lot. But a few questions: 1. J, what is the source(s) for the info in the table? 2. Are mandatory programs just social security and medicare, or does this category also include medicaid? And other programs? 3. I get the gist of the good points about social security and medicare, but would welcome more explanation if anyone is so inclined. As I sort of understand it, ss (and medicare?) has a separate trust fund(s) that in fact face exhaustion a few decades down the line, but should be considered separately from the the current budget debate. So is the point that that yes, we're spending more on ss and medicare than we're taking in, but the spending is coming from actual pots of money that we have at our disposal? If so, then the problem is that we're gradually depleting those pots, but we're not incurring additional debt right now to fund those programs? Or am I totally confused? And is the point different for ss than it is for medicare? Sorry about my request for a primer on US Budget 101, but I think these matters go over lots of people's heads (or at least mine!)

- Thunderroad

July 27, 2011 at 3:16pm

Typical liberal ignorance. Without some basic understanding of accounting, one can not appreciate the magnitude of the problem we have ---- nor design a solution. The real 2010 federal budget deficit was $5.3 trillion, not the $1.3 trillion previously reported by the Congressional Budget Office, according to the 2010 Financial Report of the United States Government as released by the U.S. Department of Treasury Feb. 26, 2010. NOTE TO LIBERALS -- Can't raise enough taxes to cover $5.3 Trillion deficit. The difference between the $1.3 trillion “official” 2010 federal budget deficit numbers and the $5.3 trillion budget deficit based on data reported in the 2010 Financial Report of the United States Government is that the official budget deficit is calculated on a cash basis, where all tax receipts, including Social Security tax receipts, are used to pay government liabilities as they occur. The calculations in the 2010 Financial Report are calculated on a GAAP basis (Generally Accepted Accounting Principles) that includes year-for-year changes in the net present value of unfunded liabilities in social insurance programs such as Social Security and Medicare. Under cash accounting, the government makes no provision for future Social Security and Medicare benefits in the year in which those benefits accrue. “The broad GAAP-based federal deficits, including the Social Security and Medicare unfunded liabilities, have been in the $4 trillion to $5 trillion range in 2008 and 2009, and 2010′s deficit again likely was near $5 trillion, remaining both uncontrollable and unsustainable,” “The federal government cannot cover such an annual shortfall by raising taxes, as there are not enough untaxed wages and salaries or corporate profits to do so

- mr_rationale

July 27, 2011 at 3:19pm

Oh, I see--so we need to change the tax code to cover all the fluctuations in long term estimates of entitlement liabilities THIS FISCAL YEAR. -That- makes sense! Keep in mind, Rat, that you are the only one here bringing up the idea of raising taxes by five trillion dollars for each fiscal year.

- Curran1

July 27, 2011 at 3:54pm

Curran, With all of these things, there are always issues of classification, in which bucket you put which item. However, I think most of the difference between Chiat and seattle is due to the fact that Chiat adjusts for both population and inflation, which is essential if you are going to make sense out of anything. I have had the argument with seattle about that many times, that when you compare raw numbers over any sort of span of years, you get nonsense. Thunderroad, You've got the gist of it. Mandatory programs included social security, medicare, medicaid, veterans benefits, other income support (such as food stamps) and some other items. They are basically all of the programs in which the parameters to qualify for benefits are set by Congress from time to time, but no annual appropriation is then made as the expenditures are determined by the numbers who meet the established criteria. SS, medicare, and medicaid account for the greatest share. There is a difference, however, in that SS and medicare are funded with dedicated payroll taxes. These taxes may not be used for anything else. When there were annual surpluses, the surpluses were used to buy Treasury debt in the open market. This is also the reason why the publicly held debt is quite a bit lower than the theoretically issued and outstanding debt of $14.3 trillion. These are the assets of the "trust funds" and the trust funds must liquidate assets now because, due to the baby boom starting to retire, the payroll tax receipts are now less than the expenditures. Even if the non-SS and medicare part of the budget were in surplus, the trust funds would still be being liquidated as there has never yet been a provision for using general tax receipts to fund these two programs. Whether SS and medicare are on or off the budget is not something that has a definite theoretically correct answer. It sort of depends on what the question is. In macroeconomic terms, it is all one budget because there is no functional difference between re-selling trust fund Treasuries previously acquired and issuing new ones. Also, from a macroeconomic point of view the relevant classifications are not these accounting notions but total tax revenues, transfer payments (where the taxes come in but then are handed over to someone in the private sector to spend, such as social security) or direct government expenditures. For most macro purposes, the transfer payments are netted out of the tax receipts, in one door, out the other. Then the relevant variables are direct government expenditures and net tax receipts. That difference must be funded with debt since our government does not print money to pay expense beyond the small percentage, on the order of 3%, that it can get away with due to growth. Discussions of the deficit include both the funded entitlement programs and the operating budget all in one, the total Federal surplus or deficit in a given year. However, the operating deficit and the SS and medicare deficit are rather different animals. The former is unambiguously due to the failure to collect sufficient taxes. The latter is in large measure planned in that we ran surpluses before the boomer retirements in order to "fund" the bulge. This, it was never expected that the trust funds would simply grow without limit. Rather, it was a designed smoothing mechanism. For SS, it is working pretty much as intended. For medicare, the unanticipated problem has been the stupendous growth in medical costs. However, this is a serious problem for the economy with or without government medical care. It is not medicare that is the problem, but medical costs that are the problem. ACA takes steps to control those costs, but not nearly what is required. Sooner or later we will move to a European-type single payer program, in some variation, and then the medicare and medicaid "problems" will vanish. There is alas a lot more that one could say on these subjects. In general, there is enormous confusion about the difference between the real economy, production and consumption of goods and services, and the financial economy, the flow of funds. The confusion becomes acute in this context. Rat, That is a bunch of nonsense. All output and all consumption and investment occur in the present. One can postulate that all government spending is a liability in the present, but then, to make sense of it, one would have to capitalize the future earning power of the economy. The result is just more nonsense. What matters is exactly one thing: the current ability to produce what the population consumes plus what we need to invest for replacement of capital and growth. There is absolutely no reason whatsoever to believe that the US cannot support the consumption of the working population, plus children, invalids, and retirees and also generate the investment it needs. The reason we have trouble is that we have a tax system designed by idiots, corruptly mauled by powerful interests to extract favorable preferences (such as capital gains rates), and rendered obsolete by the evolution of the economy. It would be relatively easy to create a simple, progressive income tax system that took all economic income as its taxable base, but supply-side nuts and libertarian nuts (sound like anyone you know?) render this politically impossible at present.

- roidubouloi

July 27, 2011 at 4:51pm

Roid, thanks very much for taking the time to address my questions. It helped a lot. Much appreciated!

- Thunderroad

July 28, 2011 at 1:44am