Budget Mice
by
The
Freeman on Friday, November 5, 2010 at 12:01am
So, we’ve made it through another election. Obama euphoria is gone, and
control of the House of Representatives has gone to the opposition wing
of the uniparty. The deficit-spenders and high taxers have been partly
displaced by the cutters.
Or that’s what we’re supposed to believe. What can we expect?
To listen to the generalities of those who will take over one half the
legislative branch in January, you might expect attempts at massive
spending cuts massive enough that the deficit will shrink dramatically
despite the big tax cuts they also say they have in mind.
We should be so fortunate. But there’s reason for skepticism. When
pressed for details, the opposition’s message is underwhelming. In
interviews election night several members of the opposition did little
more than pledge an across-the-board cut in discretionary
spending.
Let’s unpack this. To oversimplify somewhat, government spending comes in
two flavors: discretionary and mandatory. Discretionary spending
is the kind for which Congress each year appropriates a specific amount
of money. For example, Congress has decided to the dollar how much will
be spent on the national parks in FY 2011.
Mandatory spending is the kind for which the total amount depends
on how many people are eligible for the programs that fall in this
category. Congress does not set a dollar amount for how much will be paid
out in Social Security or Medicare or food stamps. The appropriation
process is on autopilot. This kind of spending applies to so-called
entitlement programs. To change the amount spent, Congress would have to
change the rules of eligibility. Mandatory spending also include interest
payments on the national debt.
The opposition’s promised spending cuts will not come from
mandatory spending. This is not to say that some members of Congress
would not like to change the rules so entitlement programs cost less.
Some indeed have proposals to “reform” coercive Social Security and
Medicare, which are headed toward bankruptcy and have trillions of
dollars in unfunded liabilities. But those changes would not cut the
budget in the short run. Any savings would be some time off in the
future. For now, the self-proclaimed budget hawks have little stomach for
touching Social Security and Medicare. Some of them even campaigned on
saving Medicare from the ruling party’s ax. Retirees vote in high numbers
enough said.
Discretionary Spending
With mandatory spending off-limits to the
cutters, that leaves only discretionary spending left to be sliced. By my
calculations, total discretionary spending is 37 percent of the FY 2011
budget of $3.834 trillion, or $1.415 trillion. This is a good time to
point out that the projected FY 2011 budget deficit is $1.267 trillion.
(Don’t be surprised if in the end it’s more.) So to balance the budget
without touching mandatory spending, Congress would have to eliminate 90
percent of discretionary spending.
Well, go to it, budget-hawk party. Slash that discretionary spending and
balance the budget.
No, they won’t do that. Why not? Because the budget “hawks” have declared
much discretionary spending untouchable also. Specifically, the military
and homeland-security budgets are off-limits.
That casts a new light on our subject and, in my view, tarnishes the bona
fides of the budget, well, mice. Out of a total $1.415 trillion in
discretionary spending, fully $895 billion is labeled “discretionary
security” for the Pentagon and Department of Homeland Security.
(Robert
Higgs calculates actual total military/security-related spending at
over $1 trillion. But let’s take the government’s numbers.) That’s 63
percent of total discretionary spending and nearly a quarter of the
entire budget.
That makes discretionary nonsecurity spending – at $520 billion
only a little more than one-third of total discretionary spending
and only one-seventh of the entire budget.
That’s not a very big portion.
If the deficit is projected to be $1.267 trillion and if the opposition
manages to cut all discretionary nonsecurity spending – which of
course it does not promise to do the deficit would still be a whopping
$747 billion.
Some Revolution
I don’t know about you, but I wouldn’t call that
a revolution. Getting started on the task of dramatically shrinking
government’s spending that is, control of resources will require much
bigger thinking than that. Entitlements and “security” (which is far more
likely to create insecurity) must be on the table. (See my
“Can America Afford an Empire?” and
“Deficit Hawks or War Hawks?”)
If not they are not on the table, then the opposition is just performing
a vacuous pantomime aimed at only one thing: procuring political
power.
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