Much Ado about Nothing in Budget Debate
All the sturm and drang in Washington over the March 1 deadline for a budget deal is an act. Two acts really.
The Republicans are pretending that if we don’t have budget cuts this year, the whole US economy will collapse because of the nation’s enormous indebtedness.
The Democrats are pretending that if no deal is reached, and automatic across-the-board cuts of 8% for the Pentagon and 5% for other programs will not only put the nation’s defense at risk and cause widespread suffering, but that it will derail the nation’s fragile economic “recovery.”
Both claims are, to put it gently, bullshit.
To put it in perspective, remember we’re talking about $86 billion dollars in spending for this current year.
That’s in a federal budget of $3.5 trillion, and a national economy of $16 trillion. A little math is in order. One trillion dollars is $1000 billion dollars. So $86 billion dollars represents just 2.46% of the federal budget. And it represents just 0.5% of GDP.
To put that in context another way, in December Congress, with little discussion or fanfare, allowed federal funding for emergency unemployment benefits to expire. That sucked $30 billion out of the economy this year, taking it all from people who are jobless and desperate. At the same time, it ended the temporary 2% cut in the FICA payroll tax for Social Security. That sucked another $115 billon out of all workers’ pockets. So a total of $145 billion was removed from the economy without any concern at all being expressed about the impact that hit would have on the economy, and we’re talking about an amount that’s nearly twice as much as the cut from so-called sequestration.
We could also talk about the over $400 billion in stimulus spending that the Obama administration and Democrats in Congress pumped into the economy in 2009. It clearly was an amount far too small to kickstart the economy out of the depression it had by then fallen into. Now if $400 billion was too small to accomplish much in 2009, how bad is taking out $85 billion in 2013?
Answer: it’s not such a big deal.