The Infuriating Truth About the Federal Budget & Spending Cuts

on August 19, 2011 at 9:27 AM

washington dc capitol hill A few weeks ago, Congress raised the debt ceiling on the condition that we cut some of the outrageous spending going on in Washington right now. After lots of back-and-forth and mudslinging and name calling, both houses of Congress and the President were able to agree to raise our credit limit by $2.1 trillion to $2.4 trillion, on the promise that they’ll cut spending by at least $2.1 trillion over the next 10 years.

It sounds semi-reasonable; at least it does until you find out that those “cuts” are actually increases. Say what?

The United States uses something called a baseline budgeting. This means that automatic annual increases in spending are built right into the budget. Every year, every department in the government automatically gets a 3 to 10 percent raise. For inflation and stuff.

So the $2.1 trillion that’s going to be cut over the next 10 years is actually not a cut in spending at all. It’s a slight decrease in the rate of spending. It’s like buying a $100 sweater because it’s on sale for $75, but you really only have $50 in your purse, and then bragging to everyone that you saved $25. No, you didn’t save $25; you spent $25 you didn’t have.

Citizens Against Government Waste put it like this:

Baseline budgeting tilts the budget process in favor of increased spending and taxes. For example, if an agency's budget is projected to grow by $100 million, but only grows by $75 million, according to baseline budgeting, that agency sustained a $25 million cut. That is analogous to a person who expects to gain 100 pounds only gaining 75 pounds, and taking credit for losing 25 pounds. The federal government is the only place this absurd logic is employed.

When President Obama decries budget cuts to education, or when Senate Majority Leader Harry Reid claims that Republican budget proposals are draconian, or when House Minority Leader Nancy Pelosi says that the GOP is trying to balance the budget on the backs of the poor ... they’re full of baloney.

No one is even arguing about any actual budget cuts. We’re just saying that maybe federal regulatory agencies don’t need their collective budgets increased by 16 percent over the same three years that unemployment has doubled.

Image via Alotor/Flickr

Filed Under: barack obama, economy, in the news, media, politics, taxes, white house

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Comments (9)

EBee12

on Aug 19, 2011 at 10:51 AM

Do you know what the government spends their money on? The American Way of Life. Yes, money goes to poor people who need food or health care, but if you suddenly became poor with no way out and no one to help you, as an American, would you want to receive this assistance? Like food and health care, unemployment is a waste of money until you need it. Do you know what happens when there aren't social systems like these? Visit a 3rd world country and you can see for yourself. There is poverty in the world most Americans would have to see to believe, and believe me, they don't want to see it in America.

And, how about our military? Aren't you proud to say we have the best military in the world? Because the majority of money that we pay in the taxes and the government has in the budget goes to the military. This is an undeniable fact.

The American Way of Life costs A LOT of money. Yes, it costs a lot of money to allow us to bicker back and forth about what we should and shouldn't be spending all the money on, but the fact of the matter is we, as a country, are fortunate enough to be rich enough to be having these debates while sipping our lates, walking down flat sidewalks (or perhaps driving our fancy cars down our well maintained streets) and texting on our smartphones.

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hallieballie

on Aug 19, 2011 at 11:02 AM

EBee12, you realize that we're in debt... to China. So how are we as a country rich? Because we keep using other people's money? Yeah that makes sense.

on Aug 19, 2011 at 11:30 AM

hallieballie, that's how the world works. Everyone borrows money to live the lifestyle they want, I do, for my mortgage. Some people do it on their credit cards. Even people with no debt tend to invest, and what's investing but allowing someone else to borrow your money to cover their debt because you have faith that your money will be returned. Every country is in debt to another country, China happens to have a lot of faith in our country and our people because they keep buying more treasuries and bonds. If China lost faith in us, we'd be in trouble, but so would I if my bank thought I wasn't going to continue paying my mortgage and so would companies if the people who invest in them weren't seeing the returns they want to see.

Facebook comment from Heather Floyd

on Aug 19, 2011 at 11:39 AM

hallieballie I couldn't have said it better...and as for the military comment.....that money never reachs the soldiers...we are the most underpaid service out there...sorry but that's just a fact.

SweetJakesMom

on Aug 19, 2011 at 2:17 PM

"Because the majority of money that we pay in the taxes and the government has in the budget goes to the military. This is an undeniable fact."

I wish that defense was the largest part of our budget, but unfortunately it's only 16%, while social programs are 45%. I'm not sure where you're getting your undeniable facts, but you can start here...

http://www.usgovernmentspending.com/us_budget_pie_chart

Furthermore, third world countries are poor by definition, they are not as developed as we are and are typically dictatorships.

To the original blogger, you've made a valiant effort at educating us, but I'm afraid it will fall mostly on deaf (or ignorant) ears. THAT is our biggest problem.

scooteroosMama

on Aug 19, 2011 at 3:16 PM

Clearly someone needs to refer back to one of the authors previous blogs about spending. The government spends money ($500,000 in fact) on things like studying schrimp on treadmills. And 1.5million on a robot that can fold laundry? All of us on this supposed evil welfare hating side don't think welfare is where all the cuts should be made there are plenty of ways to reduce spending without cutting important programs.

on Aug 19, 2011 at 4:00 PM

1. I was wrong about the military, I was thinking of tax dollars, I apologize.

2. There is A LOT of waste in Washington and that has led us to this crisis. It's on both sides of the aisle, it needs to be fixed but with the way our current political system works it's unlikely the waste will be fixed anytime soon.

3. Soliders are underpaid and that is sad, they are out there every day, away from their families, risking their lives. An amazing and honorable group of people.

4. As a 3rd world country, take a look at Colombia. It's not a dictatorship. It is a developing nation. What makes us a developed nation is our riches and how we use them, and at this time, we use them to live the American Way of Life.

5. If we want to make a serious impact in our debt, more than just cutting waste (which is part, but not enough to solve our debt problem) we need to take a serious look at ourselves and evaluate what we need to live our lifestyle and what we can do away with.

hoticedcoffee

on Aug 19, 2011 at 5:10 PM

In 20 years, you won't need to leave America to visit a third world country. We are so in debt right now, we could tax every single working American at 100% - and not just half, like we do now - EVERY SINGLE DOLLAR THAT IS EARNED BY EVERY SINGLE WAGE EARNER IN THIS COUNTRY - and we would still have a deficit. That is not an "American way" that I support, and frankly, it's nauseating to hear someone defend incredibly poor judgement, not only on their own behalf, but on behalf of government. As long as there are people who think 'hey, it's just the way it is', people who will support the type of president we have now and think he's making things better, we will never be a great country again. The "American Way" has become a joke.

I hope your article is read with open eyes, Jenny. I really do.

on Aug 20, 2011 at 10:58 AM

I completely agree, our system is extremely messed up. We are deep in it and we need to make MAJOR changes to our country to fix these problems. But it's going to be hard and people, especially people who are happy with their way of life, are not going to like it.