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Tag Archives: Erskine Bowles

Debt reduction–when cutting spending isn’t really cutting spending

Upon further review of the Debt Commission report that got shot down last week, I found something interesting that most of us don’t even realize.

Budgets in Washington tend to factor in an automatic annual increase in spending.  In other words, every year the amount spent on a given program goes up regardless of necessity–and trust me, we all know that an organization will find a way to spend the money in order to avoid a budget cut.  Anyway, when the debt commission spoke of spending “cuts,” there was outrage from both sides (depending on the program to get the cut).  But it turns out there were smoke and mirrors involved.  The commission did not recommend actual cuts.  What they did recommend was a reduction of the annual budget increases.  In other words, they said “instead of programs x, y, and z getting automatic annual increases of 3%, lets just allow them to increase 2%.”

What??

Translation:  they couldn’t find actual spending cuts to be made!  No reductions in spending.  No freezes in spending.  Just a slowdown in growth.  Just wow.

I wish I could operate my home budget the way these folks run Washington!

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At this rate, we’ll NEVER fix the issues

Today is the final vote on recommendations from Obama’s deficit panel.  For those who missed it, President Obama put together a bipartisan panel of 18 appointees, tasked with producing solutions for debt reduction.  The commission did its job, recommending multiple ideas that, if enacted, would help move the country towards fiscal stability.

As expected, the response was chilly at best.  Folks on both sides took the expected approach–“we need cuts, but don’t cut programs that I support!”  Republicans didn’t like the idea of tax increases on gas.  Democrats didn’t like the notion of raising the retirement age or lower tax rates.  Neither side wanted to sign on to doing away with popular tax breaks (even though lowering tax rates would offset it).

So, unless there is some sanity injected into things, we will continue on the rocky road to fiscal disaster.