Massive GOP spending cuts begin to take effect

[The Vorlon]

How can this be possible? - I read yesterday in the NY Times that GOP cuts were killing poor people, causing the earth's orbit  to destabilize, and leading to a premature supernova of the sun...

The Austerity Myth: Federal Spending Up 5% This Year

By JOHN MERLINE, INVESTOR'S BUSINESS DAILY
Posted 10/17/2011 08:05 AM ET

When Republicans took control of the House in January, they pledged to make deep cuts in federal spending, and in April they succeeded in passing a bill advertised as cutting $38 billion from fiscal 2011's budget. Then in August, they pushed for a deal to cut an additional $2.4 trillion over the next decade.

Some analysts have blamed these spending cuts for this year's economic slowdown.

But data released by the Treasury Department on Friday show that, so far, there haven't been any spending cuts at all.

Higher Spending, Deficits

In fact, in the first nine months of this year, federal spending was $120 billion higher than in the same period in 2010, the data show. That's an increase of almost 5%. And deficits during this time were $23.5 billion higher.

http://www.investors.com/NewsAndAnalysis/Article/588254/201110170805/The-Austerity-Myth-Federal-Spending-Up-5-This-Year.aspx

[Tetro Kornbluth]

How is this a surprise? Your shock-horror pseudoness is irritating and does not pretend to be amusing.

[Roemerista]

How does increased spending = no pressure on the poor?

[Link]

By JOHN MERLINE, INVESTOR'S BUSINESS DAILY

I read investor's business daily... and then I stopped reading.

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[Wonkish1]

By JOHN MERLINE, INVESTOR'S BUSINESS DAILY

I read investor's business daily... and then I stopped reading.

You must be logged in to read this quote.

This article has been floating all over the internet the last few days. I read it before October 17th(yesterday) on the top of the linked article. So they didn't originate the article.

Like it matters the article is in fact correct.

[greenforest32]

The cuts aren't massive (they're over 10yrs) and IIRC they don't even take effect until 2012/2013. Also are these figures even adjusted for inflation?

[The Vorlon]

In my opinion, one of the worst things congress ever did from a fiscal sanity point of view was adopt the 10 year budget window.

The way they do it is silly... a "cut" is measured from the existing baseline trend, so if you you are currently spending 4 trillion a year, and are planning to spend 8 trillion 10 years from now, but suddenly decide to spend "only" 7 trillion, on Planet Washington, that qualifies as a 1 trillion "cut"

Oddly enough, all of these fake cuts magically happen just after the next election as well...

[Wonkish1]

The cuts aren't massive (they're over 10yrs) and IIRC they don't even take effect until 2012/2013. Also are these figures even adjusted for inflation?

The problem is that a lot of the "cuts" aren't real cuts. They are reductions in baseline growth numbers. Like abc program is slated to automatically grow 8% a year. So each budget that comes out the starting number is 8% higher(for example) than the previous years number. Then a "cut" or an increase occurs from that number.

A good portion of what congress did was to lower future baseline growth rates. In the example above they just preset the future baseline numbers in certain programs at lets say 3% instead of 8% or 6% instead of 15%. They then booked those numbers as "cuts" in future spending projections. Now the combination of those and some real cuts in the future might have actually produced something close to a government spending freeze in 2013, but realistically no actual net cut in government expenditure is slated for any year going forward relative to this years numbers(unless of course the GOP wins the White House and they do produce real cuts in 2013 which is more than likely, and would be the first time ever minus two very, very tiny cuts in total government expenditure inflation adjusted in 1987 and in some year in the 60s I forget which one).

Claiming cuts is just always a BS lie that the Dems spit out of their mouth and the media regurgitates, and their unwitting supporters just assume its true.

[greenforest32]

The cuts aren't massive (they're over 10yrs) and IIRC they don't even take effect until 2012/2013. Also are these figures even adjusted for inflation?

The problem is that a lot of the "cuts" aren't real cuts. They are reductions in baseline growth numbers. Like abc program is slated to automatically grow 8% a year. So each budget that comes out the starting number is 8% higher(for example) than the previous years number. Then a "cut" or an increase occurs from that number.

A good portion of what congress did was to lower future baseline growth rates. In the example above they just preset the future baseline numbers in certain programs at lets say 3% instead of 8% or 6% instead of 15%. They then booked those numbers as "cuts" in future spending projections. Now the combination of those and some real cuts in the future might have actually produced something close to a government spending freeze in 2013, but realistically no actual net cut in government expenditure is slated for any year going forward relative to this years numbers(unless of course the GOP wins the White House and they do produce real cuts in 2013 which is more than likely, and would be the first time ever minus two very, very tiny cuts in total government expenditure inflation adjusted in 1987 and in some year in the 60s I forget which one).

Its just always a BS lie that the Dems spit out of their mouth and the media regurgitates, and their unwitting supporters just assume its true.

One of the reasons this has rarely happened is because of the huge population growth in the country. We had ~180 million people in the country in 1960, ~226 million in 1980, ~281 million in 2000, and ~309 million in 2010. The future projections don't seem to be any different:

http://en.wikipedia.org/wiki/Demographics_of_the_United_States#Projections

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The only way to get an inflation-adjusted, decrease in spending with a fast growing population is to have large cuts in government spending as a % of GDP.

Fiscal conservatives have never been able to do this directly so they go through the back door and reduce government tax revenue as a % of GDP and drive up the debt in hopes of creating a fiscal crisis where cuts are now necessitated (spending/revenue caps, balanced budget amendment, super-majority requirements to pass the budget/raise taxes, debt "ceilings", etc).

That's obviously where we're headed, but you think it's going to end there? You think the majority of the population is suddenly going to love the idea of having government spending and revenue at 20% or less of GDP?

Nope, not after they see what it actually means. They'll repeal a balanced budget amendment after a few cycles of living with its consequences. Fiscal conservatives may have a few moments in history where they spike in terms of policy adoption, but they're never going to have a lasting command.

[Wonkish1]

One of the reasons this has rarely happened is because of the huge population growth in the country. We had ~180 million people in the country in 1960, ~226 million in 1980, ~281 million in 2000, and ~309 million in 2010. The future projections don't seem to be any different:

http://en.wikipedia.org/wiki/Demographics_of_the_United_States#Projections

You must be logged in to read this quote.

The only way to get an inflation-adjusted, decrease in spending with a fast growing population is to have large cuts in government spending as a % of GDP.

Fiscal conservatives have never been able to do this directly so they go through the back door and reduce government tax revenue as a % of GDP and drive up the debt in hopes of creating a fiscal crisis where cuts are now necessitated (spending/revenue caps, balanced budget amendment, super-majority requirements to pass the budget/raise taxes, debt "ceilings", etc).

That's obviously where we're headed, but you think it's going to end there? You think the majority of the population is suddenly going to love the idea of having government spending and revenue at 20% or less of GDP?

Nope, not after they see what it actually means. They'll repeal a balanced budget amendment after a few cycles of living with its consequences. Fiscal conservatives may have a few moments in history where they spike in terms of policy adoption, but they're never going to have a lasting command.

Both of those are just absolutely factually incorrect. Government spending has way outpaced GDP growth(which grows at a faster pace than both inflation and population) and taxes as a percentage GDP have barely moved.





And since tax revenue is better shown in inflation adjusted dollars not as % of GDP, I'll include the graph below.




But again you can't really count on a liberal that actually believes there have been spending "cuts" in the past to know the facts on spending and taxation.

[greenforest32]

One of the reasons this has rarely happened is because of the huge population growth in the country. We had ~180 million people in the country in 1960, ~226 million in 1980, ~281 million in 2000, and ~309 million in 2010. The future projections don't seem to be any different:

http://en.wikipedia.org/wiki/Demographics_of_the_United_States#Projections

You must be logged in to read this quote.

The only way to get an inflation-adjusted, decrease in spending with a fast growing population is to have large cuts in government spending as a % of GDP.

Fiscal conservatives have never been able to do this directly so they go through the back door and reduce government tax revenue as a % of GDP and drive up the debt in hopes of creating a fiscal crisis where cuts are now necessitated (spending/revenue caps, balanced budget amendment, super-majority requirements to pass the budget/raise taxes, debt "ceilings", etc).

That's obviously where we're headed, but you think it's going to end there? You think the majority of the population is suddenly going to love the idea of having government spending and revenue at 20% or less of GDP?

Nope, not after they see what it actually means. They'll repeal a balanced budget amendment after a few cycles of living with its consequences. Fiscal conservatives may have a few moments in history where they spike in terms of policy adoption, but they're never going to have a lasting command.

Both of those are just absolutely factually incorrect. Government spending has way outpaced GDP growth(which grows at a faster pace than both inflation and population) and taxes as a percentage GDP have barely moved.

Your response doesn't even make sense. I said that in order to get an inflation-adjusted decrease in government spending, you have to cut government spending as a % of GDP (keeping it flat as a % of GDP would not decrease it) and you start talking about spending increasing faster than GDP growth as if that refutes my point?

And lol @ disputing a decrease in revenue as a % of GDP in the recent history (2001-2011): http://www.cbo.gov/ftpdocs/108xx/doc10871/Chapter4.shtml

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Figure 4.1:

[Wonkish1]

Your response doesn't even make sense. I said that in order to get an inflation-adjusted decrease in government spending, you have to cut government spending as a % of GDP (keeping it flat as a % of GDP would not decrease it) and you start talking about spending increasing faster than GDP growth as if that refutes my point?

And lol @ disputing a decrease in revenue as a % of GDP in the recent history (2001-2011): http://www.cbo.gov/ftpdocs/108xx/doc10871/Chapter4.shtml

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Figure 4.1:

In the past inflation has averaged about 3% a year. GDP growth has averaged 4-5%. So the growth in spending has outpaced inflation and population growth. Your point is just factually wrong. Look at the graph above. Do you want me to grab another one with inflation, and show you the averages?


And then you post the exact same graph I posted and except shorter to point out that tax revenue is lower as a percentage of GDP. Well of course it is, the economy is in the toilet. Compare the increases and decreases in tax revenue to booms and busts in the economy and you'll see they line up pretty good. A tax increase or tax cut has a lot less to do with revenue than the economy. I mean this stuff is pretty basic.

[Wonkish1]

I said that in order to get an inflation-adjusted decrease in government spending, you have to cut government spending as a % of GDP (keeping it flat as a % of GDP would not decrease it)

Historically that just isn't true. The only way that would be true is if inflation grew at a faster rate than GDP did. Since it hasn't your just wrong.

Today since inflation is higher than GDP growth than yes you would have to cut government spending as % of GDP given this years government spending numbers. That is what happens when you have insane growth in public debt.


You don't have a leg to stand on in this argument.

[greenforest32]

Your response doesn't even make sense. I said that in order to get an inflation-adjusted decrease in government spending, you have to cut government spending as a % of GDP (keeping it flat as a % of GDP would not decrease it) and you start talking about spending increasing faster than GDP growth as if that refutes my point?

And lol @ disputing a decrease in revenue as a % of GDP in the recent history (2001-2011): http://www.cbo.gov/ftpdocs/108xx/doc10871/Chapter4.shtml

You must be logged in to read this quote.

Figure 4.1:

In the past inflation has averaged about 3% a year. GDP growth has averaged 4-5%. So the growth in spending has outpaced inflation and population growth. Your point is just factually wrong. Look at the graph above. Do you want me to grab another one with inflation, and show you the averages?


And then you post the exact same graph I posted and except shorter to point out that tax revenue is lower as a percentage of GDP. Well of course it is, the economy is in the toilet. Compare the increases and decreases in tax revenue to booms and busts in the economy and you'll see they line up pretty good. A tax increase or tax cut has a lot less to do with revenue than the economy. I mean this stuff is pretty basic.

I said that in order to get an inflation-adjusted decrease in government spending, you have to cut government spending as a % of GDP (keeping it flat as a % of GDP would not decrease it)

Historically that just isn't true. The only way that would be true is if inflation grew at a faster rate than GDP did. Since it hasn't your just wrong.

Today since inflation is higher than GDP growth than yes you would have to cut government spending as % of GDP given this years government spending numbers. That is what happens when you have insane growth in public debt.


You don't have a leg to stand on in this argument.

Wonk you're still making no sense. You're saying that there is another way to decrease government spending (adjusting for inflation of course) without decreasing it as % of GDP?

[Wonkish1]

Wonk you're still making no sense. You're saying that there is another way to decrease government spending (adjusting for inflation of course) without decreasing it as % of GDP?

No I'm making perfect sense.

I'll make it real simple for you. Go to the first blue graph that covers spending as a percentage of GDP. Look at the late 90s, and you'll see spending as a percentage of GDP fall.

Then look at the bottom graph that covers spending and taxation in inflation adjusted dollars(not % gdp), and look at the late 90s again. Explain to me how spending could fall as a percentage of GDP and yet spending in inflation adjusted dollars could increase.

So I'll help you out. The economy grew faster than inflation adjusted spending did. That is the only answer you can come to.

Now today that isn't possible because GDP growth is lower than inflation. But for the last 60 years the US government could have increased spending by inflation and spending would have decreased steadily as % of GDP. But that isn't what happened. Instead government spending increased by more than double the inflation rate, and thereby also more than GDP growth.


Spend 3 minutes reading over what I just posted and looking up at the graphs. If you still haven't figured it out ask me specifically what part your not getting.

[greenforest32]

Wonk you're still making no sense. You're saying that there is another way to decrease government spending (adjusting for inflation of course) without decreasing it as % of GDP?

No I'm making perfect sense.

I'll make it real simple for you. Go to the first blue graph that covers spending as a percentage of GDP. Look at the late 90s, and you'll see spending as a percentage of GDP fall.

Then look at the bottom graph that covers spending and taxation in inflation adjusted dollars(not % gdp), and look at the late 90s again. Explain to me how spending could fall as a percentage of GDP and yet spending in inflation adjusted dollars could increase.

So I'll help you out. The economy grew faster than inflation adjusted spending did. That is the only answer you can come to.

Now today that isn't possible because GDP growth is lower than inflation. But for the last 60 years the US government could have increased spending by inflation and spending would have decreased steadily as % of GDP. But that isn't what happened. Instead government spending increased by more than double the inflation rate, and thereby also more than GDP growth.


Spend 3 minutes reading over what I just posted and looking up at the graphs. If you still haven't figured it out ask me specifically what part your not getting.

I understand what you're saying, but I'm saying your response makes no sense to mine.

All you're saying is that the economy grew by a larger margin than the % GDP decrease in government spending so the inflated-adjusted absolute amount of government spending increased and what I've been saying from the beginning is that the only way to get an inflation-adjusted DECREASE in government spending is to cut government spending as a % of GDP by a margin larger than the GDP growth, while you keep saying I'm wrong on this.

[Wonkish1]

I understand what you're saying, but I'm saying your response makes no sense to mine.

All you're saying is that the economy grew by a larger margin than the % GDP decrease in government spending so the inflated-adjusted absolute amount of government spending increased and what I've been saying from the beginning is that the only way to get an inflation-adjusted DECREASE in government spending is to cut government spending as a % of GDP by a margin larger than the GDP growth, while you keep saying I'm wrong on this.

But that is flat wrong. So let me walk you back farther.

What is inflation adjusted mean??? And what does government spending as a percentage of GDP mean???

Is there a difference between those 2 percentages???

Which is bigger???

So can you have government spending increase by the inflation rate, but yet have it fall as a percentage of GDP???


And lets put it a different way. If in 1960 the US government continued to increase government spending by the rate of inflation would government spending be higher, lower, or the same as a % of GDP in comparison today???

[opebo]

Well, obviously, if these purported cuts are in fact not real and instead spending is increasing, then we all have reason to rejoice. 

[Wonkish1]

All you're saying is that the economy grew by a larger margin than the % GDP decrease in government spending so the inflated-adjusted absolute amount of government spending increased

Sorry, but it also appears that you have problems with understanding the difference between % and dollars. That part should read.

"All you're saying is that the economy grew by a larger margin than the amount of inflation adjusted spending government spending so government spending as a % GDP decreased."

That is the correct sentence. Not the one you said.

[greenforest32]

I understand what you're saying, but I'm saying your response makes no sense to mine.

All you're saying is that the economy grew by a larger margin than the % GDP decrease in government spending so the inflated-adjusted absolute amount of government spending increased and what I've been saying from the beginning is that the only way to get an inflation-adjusted DECREASE in government spending is to cut government spending as a % of GDP by a margin larger than the GDP growth, while you keep saying I'm wrong on this.

But that is flat wrong. So let me walk you back farther.

What is inflation adjusted mean???

Inflation adjusted means you account for inflation in a calculation. So for example, if spending increased by 100% between 1980 and 1985 and the cumulative inflation between 1980 and 1985 was 40%, then you would reconcile the 100% spending increase with the 40% inflation increase to get the inflation-adjusted figure(s).

And what does government spending as a percentage of GDP mean???

Government spending as % of the total size of the country's GDP.

Is there a difference between those 2 percentages???

Yes they measure different things.

So can you have government spending increase by the inflation rate, but yet have it fall as a percentage of GDP???[/b] Which is bigger???

What the hell are you talking about? We were talking about GDP growth and spending as a % of GDP and the marginal differences, not inflation.

[greenforest32]

All you're saying is that the economy grew by a larger margin than the % GDP decrease in government spending so the inflated-adjusted absolute amount of government spending increased

Sorry, but it also appears that you have problems with understanding the difference between % and dollars. That part should read.

"All you're saying is that the economy grew by a larger margin than the amount of inflation adjusted spending government spending so government spending as a % GDP decreased."

That is the correct sentence. Not the one you said.

You're mixing up inflation and government spending as a % of GDP. You're the one with the problem understanding things.

[Wonkish1]

What the hell are you talking about? We were talking about GDP growth and spending as a % of GDP and the marginal differences, not inflation.

You said above that spending has increased as a percentage of GDP because inflation and the population has increased.

Alright well what is the average inflation rate of the last 80 years? What is the average growth rate of the last 80 years? Which one is bigger?


And lets put it a different way. If in 1960 the US government continued to increase government spending by the rate of inflation would government spending be higher, lower, or the same as a % of GDP in comparison today???

[greenforest32]

What the hell are you talking about? We were talking about GDP growth and spending as a % of GDP and the marginal differences, not inflation.

You said above that spending has increased as a percentage of GDP because inflation and the population has increased.

No I didn't, I said the reason we rarely see an absolute reduction in government spending (not a % GDP reduction) is because of inflation and population growth.

[Wonkish1]

What the hell are you talking about? We were talking about GDP growth and spending as a % of GDP and the marginal differences, not inflation.

You said above that spending has increased as a percentage of GDP because inflation and the population has increased.

No I didn't, I said the reason we rarely see an absolute reduction in government spending (not a % GDP reduction) is because of inflation and population growth.

Alright fair enough. At the same time you followed this statement...

"The only way to get an inflation-adjusted, decrease in spending with a fast growing population is to have large cuts in government spending as a % of GDP."

By saying that public debt has been exploded because a decrease in tax revenue as a percentage of GDP.

So one can come to the conclusion that you think thought government spending was increasing only because of inflation and population growth. If that wasn't the point you were making than I apologize for misunderstanding.


I followed your post up by pointing out that spending has outpaced inflation by huge margins while taxation as a percent of GDP hasn't changed much over the last 50 years.

So do you still think that its been falling tax rates that is driving debt or do you think its the fact that spending has increased from slightly more than 20% of GDP in 1950 to 45% of GDP today?

[greenforest32]

What the hell are you talking about? We were talking about GDP growth and spending as a % of GDP and the marginal differences, not inflation.

You said above that spending has increased as a percentage of GDP because inflation and the population has increased.

No I didn't, I said the reason we rarely see an absolute reduction in government spending (not a % GDP reduction) is because of inflation and population growth.

Alright fair enough. At the same time you followed this statement...

"The only way to get an inflation-adjusted, decrease in spending with a fast growing population is to have large cuts in government spending as a % of GDP."

By saying that public debt has been exploded because a decrease in tax revenue as a percentage of GDP.

So one can come to the conclusion that you think thought government spending was increasing only because of inflation and population growth. If that wasn't the point you were making than I apologize for misunderstanding.

I followed your post up by pointing out that spending has outpaced inflation by huge margins while taxation as a percent of GDP hasn't changed much over the last 50 years.

So do you still think that its been falling tax rates that is driving debt or do you think its the fact that spending has increased from slightly more than 20% of GDP in 1950 to 45% of GDP today?

I didn't say the debt has increased only because of a decrease in tax revenue (though that is a part of it), I said that because fiscal conservatives can never just cut government spending as a % of GDP by a large margin (say cut it to 25% or 20%), they go after cutting government revenue instead with the hopes of cutting spending later down the road (a point I said I think we are near or already at).

It's obvious that both revenue decreases and spending increases have led to the increase of the national debt and the margins by which spending increased and revenue stayed constant or decreased speak for themselves.

And the "conclusion" that government spending was only increasing because of inflation and population growth is not one I made, only one you inferred. It's obvious the government is doing more now than it did in the past. In terms of proportions, I'm more comfortable with revenue and spending at higher %s than fiscal conservatives obviously but there are areas where I would like to see changes (less blatant give-aways in the tax code, less prison/military spending, more healthcare/education/infrastructure spending, higher taxes on the rich and big businesses with adopting a financial transaction tax, taxing unearned/unearned income the same, and having higher progressive tax brackets, etc).

Edit: typos