Wednesday, June 20, 2012

Second Thoughts

From Gene Hayward, whose posts have the best long titles on the web:

A quick reference visual of Federal Govt spending. Another reminder of the failure of the political class and the public that enables them...

Easy reference visual that shows current Federal government spending in the broad budget categories. Healthcare (includes Medicare, Medicaid), Social Security, and Interest on the National Debt are areas of mandatory spending---must be carried out regardless, whether the govt has the money or not. Some would say that Defense should be in that category as well. The "Safety Net" contains unemployment compensation, food assistance and other income support programs. This is considered (for the most part) a Mandatory part of the budget too.

The Mandatory items mentioned above are the "biggies" in terms of serious budget issues, but are "smalls" in terms of political emphasis. The powers that be are feasting on the "everything else" in the budget in which each item represents a tiny part of the whole.
Source: Christian Science Monitor

So of the six categories shown, as many as five (everything except "Everything else") are mandatory. That leaves 20 cents on the dollar from which to make cuts. That can't be good, if we are trying to cut spending and balance the budget.

I followed Gene's link to the Christian Science Monitor, where Peter Grier writes:

There's a lot of talk about cutting the US deficit but very little actual cutting of deficit. One reason? There's not much easy to cut.

Oh sure, you know generally that Social Security is expensive and the Pentagon isn’t cheap, and so on. But ... despite what you may hear on cable news shout shows, there is no magic fount of wasteful spending the elimination of which will put the US budget in the black. Lazy bureaucrats? Too few. Foreign aid? Too small. Military bands? Please.

Where’s the FBI? Where’s the EPA, the Interior Department, and so on? What about scientific research?

That comes under the miscellaneous category known as “stuff we haven’t mentioned so far because it’s not very big, relatively speaking.” All together it accounts for the last 20 percent of US spending.

That’s why it’s hard to reduce the deficit by cutting nondefense bureaucracy. You can’t balance the budget by squeezing only one-fifth.

It almost sounds like the CSM wants to call defense spending discretionary rather than mandatory. That would double the cut-able part of the budget to two-fifths. I don't have a political or military opinion on cutting defense, just an economic one. I think, if you want to cut the military you should want it out of some sense of what's right and wrong. Not just because we can't afford it.

And that gets me to my post title, short as it is.

According to Gene, we can't cut 80% of the budget. And the 20% we can cut includes the FBI and the EPA and stuff like that, which probably should be bigger, not smaller. This need we have, to cut government spending, is a real problem. You know, people say it all the time: There are no easy answers.

So, to the people who think we need to make those cuts, to you I say this: Second thoughts, anyone? Maybe the economy is trying to tell us something. Maybe we're going about this all wrong. Maybe austerity in government budgets is not the solution it is cracked up to be.

That sounds like I think the government should spend more. That's not what I think.

Me, myself, I like to say we have to stop spending so much time focused on the solution, and spend lots more time on analysis of the problem. We have to figure out what the problem really is, and we have to be careful in our figuring.

There has been none of that, as long as I have been watching.

Here's my analysis. We don't have the debt and deficits because the government is spending too much. We have the debt and deficits because we use credit for money. When you use credit for money, it becomes literally impossible to reduce debt.

Literally impossible to reduce debt. Not because of how much we spend, but because of what we use for money.

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