Tag Archives: spending

Budget Discipline, Part II

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In the last three years, the Progressive Do-Nothing Senate has passed zero budgets.  Even President Obama completed his stand-up routines in that time frame, offering two massive budget jokes.

Here are some things that grown, adult human beings who are serious about their purposes have accomplished in the space of three years or less.

  • Broad Group erected the 30-story Ark Hotel in Dongting Lake, Hunan, PRC in just 15 days late last year.  (As an aside, the Daily Mail reports that no worker was injured on this project.)
  • Gone with the Wind was filmed in just over 9 months.
  • Building the Empire State Building, then the world’s tallest, took a year and a quarter.
  • The Pentagon, still the world’s largest building in terms of floor space, took a year and a third.
  • The time from D-Day to Germany’s surrender at the end of WWII was 11 months.
  • Indeed, the time from Operation Torch, the British-American invasion of northern Africa in WWII, to Germany’s surrender and the liberation of western Europe was 30 months.

Hmm….

Budget Discipline

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In the House, a budget is passed that contains spending levels below the $1.047 trillion cap agreed in last summer’s Budget Control Act.  The Republicans are heavily scored by Progressives for violating the BCA’s agreement to cap spending by actually spending less than that cap.

In the Senate, a bill to increase spending on the Post Office is proposed.  If passed, this spending bill will increase the Federal deficit by $34 billion because it does not offer spending reductions elsewhere—thereby exceeding the $1.047 trillion cap.

Senator Jeff Sessions (R, AL), the Ranking Republican on the Senate Budget Committee (you remember that bunch—the Progressive dominated committee that’s been so well disciplined that it has produced zero budgets in the last three years, including a half-hearted effort of just a week ago that Senate Majority Leader Harry Reid (D, UT) ordered scotched before it was born), has announced that he’ll raise a number of points of order to block this bill of ill discipline.  (As an aside, it’ll take separate 60-vote majorities, under Senate rules, to kill each of the points of order.)  Sessions made a statement on the floor of the Senate Monday explaining his action; it can be found here.  Following is an excerpt.

Under Senate rules, no committee can bring a bill to the floor that spends even one penny more than is already going to be spent under current law, or increases the deficit more than it will increase under current law.

In other words, the spending and debt under the postal bill violates the debt limit agreement reached just last summer.

…

This is particularly odd since the President and the Senate Majority Leader have accused the House members, the Republican House, of breaking the budget agreement by trying to save a little more money than the Budget Control Act said that they should save.  This argument is not sound, of course, but that bill established basic spending caps, basic limits—the maximum amount that could be spent on discretionary accounts.  Not one word in that law prevents us, or any member of Congress, from doing the duty to try to save more money.  Not one word in that law requires Congress to max out and spend up to that cap, to that limit.  So this is not a matter of interpretation; caps are the maximum, not the minimum, you can spend.

Can we really afford any more Progressive budget discipline?

Entitlement Waste

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In the pouring taxpayer money down a rathole category, we have this and this.

In one of President Obama’s Chicago Way executive edicts, he pushed through a “demonstration program” of $8 billion to pay performance “bonuses” under the Medicare Advantage insurance program.  The bonuses were claimed to be incentives to improve performance; however, in fact they were targeted at average performers: out of a 5-star scale, Medicare Advantage plans that got 3.5 stars got bonuses.  In such a canonical “esteem is more important than performance” reward system, a reasonable person might ask after the incentive to do better when simply meeting standard is remarkable.  Moreover, the enormity of this program meant that the bonuses, in their aggregate, actually undid nearly two-thirds of the cuts in overall Medicare Advantage costs that Obama’s Patient Protection and Affordable Care Act supposedly provided.

The Government Accountability Office has recommended that this waste be done away with, and the bonus program be canceled.  This isn’t a lone recommendation.  The Medicare Payment Advisory Commission, an independent Congressional agency, also has a dim view of this administration “bonus” program.  MedPAC’s view is that the bonuses are just “a mechanism to increase payments,” and Commission Chairman, Glenn Hackbarth, wrote that the bonus plan

lessens the incentive to achieve the highest level of performance

It gets better.  A report released Monday by the Social Security Trust Fund’s trustees contained this bit of good news:

The Social Security retirement fund is projected to run out of money in 2035 while the Social Security disability fund is projected to run out in 2016.

Combined, the two funds will last all the way to 2033.  If they run dry, payroll taxes would only cover about 75 percent of current benefits.

These failure dates are closer in than claimed last year.  The program’s finances are worse, say the trustees, due to a couple of factors:

Workers are expected to work fewer hours than previously projected, even after the economy recovers.

High energy prices suppressed wages, a trend the trustees see as continuing.

Thus we see another effect of Obama’s destructive energy policy, as well of his failed economic policies generally.

But just try to rescue these entitlement programs from their failure.  On the one hand, we have the Ryan Plan, which the Progressives in Congress and the Executive Office timidly snipe at from the sidelines, and on the other hand, we have the Progressives’ plan.  Umm, what was their plan, again?  Oh—the do-nothing Senate and the do-nothing President don’t actually have one.  They just want to keep throwing money down this rathole, too.

You Didn’t Hear It Here First

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Although I have written something similar before.

Freedom of speech is on no use to a man who has nothing to say, and freedom of worship is of no use to a man who has lost his God.

And

We cannot read the history of our rise and development as a nation without reckoning with the place the Bible has occupied in shaping the advances of our Republic.

And

The lessons of history, confirmed by the evidence immediately before me, show conclusively that continued dependence upon relief induces a spiritual disintegration fundamentally destructive to the national fiber. To dole our relief in this way is to administer a narcotic, a subtle destroyer of the human spirit. It is inimical to the dictates of a sound policy. It is in violation of the traditions of America.

And on Social Security, as it was drafted originally (and ultimately as passed and evolved; although the remark was made of the draft):

This is the same old dole under another name.  It is almost dishonest to build up an accumulated deficit for the Congress of the United States to meet in 1980.  We can’t do that.  We can’t sell the United States short in 1980 any more than in 1935.

Who said this stuff?  A man not known for his modern conservatism: Franklin Roosevelt.

The catalog of Roosevelt’s economic and regulatory failures is long, but there also is much that the present administration could have listened to and thereby avoided the damage done by its own economic and regulatory failures—as could FDR, had he listened to himself.

 

h/t to Power Line

Government Tax Increases and Government Spending Cuts

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Stipulate, arguendo, that government spending is stimulative.  In order to pay for the stimulative spending, government must collect taxes or borrow.  Taxes taken away from the citizens, though, is money the citizens no longer can spend.  Raising taxes to pay for increased stimulative spending is even more money that those citizens now cannot spend.  This reduced private spending offsets the public spending funded by that taxation.

Increased taxes to support increased public spending reduces private spending even more than the amount of the tax increase, though.  The increment above the simple reduction in private spending comes from individuals and businesses now being especially careful to husband their monies: they increase their savings so as to improve their ability to handle unforeseen problems, such as a medical emergency, a roof repair, a capital plant problem, another increase in their tax bill beyond the one just suffered.  Thus, private spending is reduced further by increased saving, and a tax increase results in a net reduction in the sum of private and public spending.

This offset doesn’t change when government borrowing, rather than tax increases, is used to fund stimulative (government) spending.  Americans aren’t stupid.  We all recognize that today’s government borrowing is just tomorrow’s increased taxes and/or rising inflation, and so the above husbanding still occurs.

This is a relatively symmetric relationship.  A reduction in tax rates achieves two positive things (although after a minimum threshold, the second positive becomes a wasteful negative).  The first positive thing is that more money is left in the hands of private individuals and private businesses.  This additional money is either spent, which is directly stimulative, or it is saved against one of those unforeseen events, or for a planned large expenditure, future retirement, or future investment.

Thus, saving is stimulative tomorrow, and more than that, the saved money actually serves two stimulative roles.  One role is that this is the money private individuals and our businesses are going to spend tomorrow for one of the reasons just described.  The other role is through private or commercial lending/borrowing.  Those savings are assets that banks and other financial institutions can lend to our neighboring private individuals and to our businesses, so our neighbors and businesses have increased money for their current spending.

The second positive thing is that with these reduced tax rates, economic growth is encouraged, and that increased economic activity generates more revenue for the government beyond the direct reduction from those reduced rates.  However, since government has no need of money beyond funding the few things our government was created to effect, any amount beyond that level is wasteful and so provides room for reducing tax rates even further.

Finally, in the real world, where (Keynesian) stimulus spending has been shown to be wrong empirically (vis., FDR’s “stimulus” spending during the Great Depression, which prolonged the Depression; and Obama’s “stimulus” spending in the present deep recession, which is prolonging the recession), reduced government spending also is net stimulative.  Government spending crowds out private spending through at least two mechanisms.  Government demand artificially elevates prices compared to the level at which those prices would exist in the face of solely private demand, and private spending is reduced by lack of need to purchase: the government will buy and transfer the goods to the private individuals.  Reduced government spending reduces that crowding out, and private individuals and businesses return to the market place.