The Wrongologist

What’s
Wrong Today:

According to the Center on Budget and Policy Priorities (CBPP), the federal government is projected
to spend less money in the next decade on non-defense discretionary programs
than at any point since 1962.

What is non-defense discretionary spending? The Center for American Progress (CAP) defines it this way:

This is an outcome of
the Budget Control Act of 2011 (BCA).
The Budget Control Act
was enacted in August 2011. It sets a
cap on the total amount of funding (budget authority) that may be
provided each year for discretionary programs, as well as separate “sub-caps”
for defense and non-defense discretionary programs.  The resulting levels
of discretionary funding, as projected by the Congressional Budget Office (CBO)
for the ten fiscal years from 2013 through 2022, are $1.5 trillion below the CBO baseline that was in place when the
112th Congress took office.  

That baseline
reflected the final fiscal year 2010 funding levels for discretionary programs
and is adjusted for inflation in subsequent years.

See the CBPP chart
below:

The CBPP goes on to
say that 40% of the $1.5 trillion in savings comes from defense, while the
other 60% comes from reductions in domestic and international programs. The
$1.5 trillion in reductions will produce lower interest payments on the debt. The interest savings amount to about $250
billion, bringing the total deficit reduction achieved to date to more than
$1.7 trillion.

The $1.5
trillion in budget reductions discussed here do not include the additional budget
cuts that will be made if sequestration takes place. Under the BCA caps, non-defense
discretionary funding will be 15% below the 2010 level by 2022.  Defense
funding will also be about 10.5% below that level.

Still think we have a
spending problem? Specifically, what more should we cut? Medicare? Medicaid?
Social Security? Defense?

We actually have three problems to solve: Our revenue problem, our social spending cost inflation
problem, and our defense spending problem. Let’s unpack them:

Our
Revenue Problem:

We need to consider
taxes and revenue along with spending. It is not true that only CEO’s and
hedge-fund managers are paying the lowest
effective tax rates
since the 1950’s, (a period before Medicare and Medicaid); but it’s
true about the rest of us too.
Check out this chart that graphs Federal Government expenditures and Current
Receipts as a percentage of GDP. Grey areas are periods of recession:

We have a revenue
problem to go along with our spending problems, despite what our Republican
friends tell us, a clear-cut and inarguable revenue problem.

As a percentage of
GDP, only South Korea, Turkey, Chile, and Mexico raise less revenue than the
United States. Simply put, we are taxing at a historically low level.

Our
Social Spending Cost Problem:

If you ask Americans what
spending they want to cut, they do not say that we ought to ravage people’s
retirement security. According to CBPP,
91% of entitlement spending goes to the elderly, the disabled, or people who
worked at least 1,000 hours in the last year. Much of the rest goes to people
who worked enough to be receiving unemployment benefits.

As the Wrongologist wrote
last week:

There is no denying
that inflation in medical spending is a major problem that, unchecked, will continue to crowd out spending for all
other purposes. But, these people are not “takers” in the
Mitt Romney/Paul Ryan sense.

So, should we start
slashing the earned benefits people have paid into in Medicare and Social
Security? Should we stockpile surplus cat food for our elderly?

We ought to raise our
taxes before we even think about doing that.

Our
Defense Spending Problem:

The CBPP points out that because of the
wind down of the Bush Wars, projected defense spending is already down by $500
billion. The BCA shaved another $487 billion off projected
Pentagon spending. Adjusted for inflation, we are still spending a tremendous
amount on the military, but it isn’t rising. If the Sequester goes into effect,
that takes another $500 billion away from the Pentagon. But, we will still spend more in 2013 than we
did in 2006, during the height of the Iraq War.  

Despite the fact that
there is room for it to go down further, the Defense Department thinks the cuts
in the sequester go too far.

The
question is: How much should we be spending on Defense? Would Conservatives say
less? Doubtful. In order to bring down military spending as much as it needs to
come down, first, we need to change our national defense strategy: We need the
Secretary of Defense and the Chairman of the Joint Chiefs to be able to go to
Congress and answer “Yes,” when they are asked: “Does this
reduced budget provide you with the resources you need to accomplish the mission
you’ve been given?”

Therefore,
the Politicians must first adjust the military’s mission.  

And
in conclusion:

Overall, it’s misleading to argue that our budget woes are just a result of too much spending.
And, to the degree that it has some truth, Americans don’t agree with the
Republicans’ solutions.

Under Mr. Obama we
have seen:

• The
  lowest effective tax rate on the middle class since the 1950s

• The
  lowest non-defense discretionary spending on record

• A
  big shift away from government jobs on the local, state, and federal level to
  private sector employment 

Ask
Republicans if that is what they expected from a free-spending liberal
socialist.

This
is the Obama administration’s record. The Obamanauts also know that they must
make compromises to get Republican votes on deficit cutting.

That
is why Mr. Obama wants to take a balanced approach to dealing with our deficit.

That’s what the American
people voted for in November and what they continue to support today.