There's No Budget Deal, And The Government May Still Shut Down

[^_^ 5,021]

The big news today is that the $38.5 billion in budget cuts announced with such fanfare on Friday night mostly aren’t real. A good deal of it involves money from previous years and previous budgets that hasn’t actually been spent. As the AP puts it, the budget deal is

financed with a lot of one-time savings and cuts that officially ‘score’ as savings to pay for spending elsewhere, but that often have little to no actual impact on the deficit…cuts to earmarks, unspent census money, leftover federal construction funding, and $2.5 billion from the most recent renewal of highway programs that can’t be spent because of restrictions set by other legislation. Another $3.5 billion comes from unused spending authority from a program providing health care to children of lower-income families.

The total amount actually cut appears to be somewhere between $8 and $14.7 billion.

The politics here are very complicated now. On the one hand, polls suggest the public is overwhelmingly in favor of there having been a deal, around 60 percent or so. On the other, politically engaged people on both the Right and the Left are profoundly upset by what they take to be unprincipled caving on the part of the leaders of the two parties.

That profound concern is likely to spur a populist revolt this week, over the next 72 hours, before the vote is taken. Already there are indications that a great many House members are going to vote against the deal. What we don’t know, or can’t know, is whether grass-roots velocity has sped up to such a degree over the past several years that we could be looking at a major meltdown of support when the votes are cast, as Republican members honestly balk at the clear deceit of the negotiators in making non-existent cuts in federal spending—and as they fear the wrath of the voters (particularly tea partiers). Meanwhile, Leftist Democrats who feel betrayed by Barack Obama and Senate Majority Leader Harry Reid might also decide to teach them a lesson by withholding support.

And then, all of a sudden, there will be a shutdown. And no plan to end it.

http://www.commentarymagazine.com/2011/04/12/government-shutdown-its-not-over-yet/

[mawilson 2,133]

The total amount actually cut appears to be somewhere between $8 and $14.7 billion.

Probably closer to 8 bucks than 14.7 billion

[Usui Takumi 1,562]

I don't mean to sound all republican here, but that's such a joke. We are totally screwed.

[^_^ 5,021]

I don't mean to sound all republican here, but that's such a joke. We are totally screwed.

What's a joke? The $ amount?

[Usui Takumi 1,562]

What's a joke? The $ amount?

Yeah the dollar amount. Realistically we should be aiming to cut at least 10% of the budget deficit immediately with a plan to get it balanced within a decade and the creation of surplus after that.

[^_^ 5,021]

Yeah the dollar amount. Realistically we should be aiming to cut at least 10% of the budget deficit immediately with a plan to get it balanced within a decade and the creation of surplus after that.

So your concern is the deficit, not the debt?

[JohnSmith2007 353]

This country has no hope. There are no adults in Washington. What we need is a two term limit on any office in washington with a lifetime limit of 20 years in elected office. Just flush the toilet on the whole DC cesspool.

[Obama 2012 1,714]

There's No Budget Deal, And The Government May Still Shut Down

Good.

[Usui Takumi 1,562]

So your concern is the deficit, not the debt?

Yes, I understand that nations can operate with heavy debt loads even higher than their GDP, so I don't have some irrational fear that we are in debt and we are going to crumble. We've been in debt for nearly our entire existence. But I don't want to wake up in 20 years with a 200% ratio and instability. Sustainability is important.

Edited April 12, 2011 by Sousuke

[^_^ 5,021]

Yes, I understand that nations can operate with heavy debt loads even higher than their GDP, so I don't have some irrational fear that we are in debt and we are going to crumble. We've been in debt for nearly our entire existence. But I don't want to wake up in 20 years with a 200% ratio and instability. Sustainability is important.

Isn't the actual GDP/debt ratio more important than the surplus/deficit of a single fiscal year?

[Usui Takumi 1,562]

Isn't the actual GDP/debt ratio more important than the surplus/deficit of a single fiscal year?

Yes, I assume that in current estimates GDP growth is included right? In order to determine estimate tax revenue? We won't grow fast enough to keep up with the current deficit?

Sorry lots of questions. (I'm thinking if debt piles on at say 10% of total debt per year adjusted for higher tax revenue as a result of growth and your total economic growth is say 3% you have a serious problem.)

[Vi-Jay 218]

Shut it down. Freeze the entitlements. Default on the debt. Scrap it and start over from the beginning.

Damn! I need to buy a gun!

Edited April 12, 2011 by Vi-Jay

[Usui Takumi 1,562]

Isn't the actual GDP/debt ratio more important than the surplus/deficit of a single fiscal year?

I went back and had a look, we are a year or two away from passing the all time high at WW2.

Edited April 14, 2011 by Sousuke

[mawilson 2,133]

Isn't the actual GDP/debt ratio more important than the surplus/deficit of a single fiscal year?

It depends on who owns the debt. Japan has been able to sustain

government debt levels over 200 percent of GDP because 85 percent

of their debt is internally owned (mostly by their pensioners.)

Interest payments on the debt go back into the economy.

It's not the case in the US - when we reach 200 percent (in about

10-15 years), we're f*cked.