Today's Inquiry into English Usage and Basic Mathematics ...

This one’s from the New York Times

And as the Pentagon confronts the prospect of cutting its budget by about 10 percent over the next decade …

… but you can probably find it in just about any newspaper article discussing the upcoming “budget cuts.”

So, just how deep are these horrendous, army-killing cuts?

Well, if “sequestration” goes as forecast, the federal government’s non-war military spending will only increase by 10% instead of by 18% between 2013 and 2021.

No, that is not a typo. The “cuts” are not cuts in actual spending, they’re cuts in the previously projected growth rate of that spending.

Most federal government spending proceeds on rails due to something called “baseline budgeting.” The “baseline” is the previous year’s spending. Under “baseline budgeting,” that previous year’s “baseline,” plus an increase based on a formula, happens automatically unless Congress decides to tinker with it.

This “sequestration” thing — triggered by Congress’s inability to agree on “deficit reduction” targets last year — imposes across-the-board reductions in that rate of automatic growth of spending, not in spending as such.

Neat trick, huh? Your congressman can brag to you that he’s cutting spending at this morning’s town hall, then — this afternoon, over cognac and cigars — brag to your local defense contractor or other corporate welfarist that he’s increasing that same spending.

Hint: He’s lying to one of you. And it’s not the guy pouring the cognac and lighting the cigars.

This Means a Lot

Via Yahoo:

The House on Friday passed a Republican budget blueprint proposing to fundamentally overhaul Medicare and combat out-of-control budget deficits with sharp spending cuts on social safety net programs like food stamps and Medicaid.

The nonbinding plan lays out a fiscal vision cutting $6.2 trillion over the coming decade from the budget submitted by President Barack Obama. It passed 235-193 with every Democrat voting “no.” [Emphasis added.]

This story brings up another reason I dislike democracy. The system encourages political leaders to posture instead of actually solve problems. I do not blame politicians for working within the confines of the system. Rather, I blame the voters who have absolutely no grasp of reality. There will be plenty of people who will make a big fuss over this legislation. Conservatives will use this point out how liberals aren’t serious about addressing government spending; liberals will point out how this measure doesn’t actually address government spending either (because it’s non-binding), and the problem will remain unsolved. Then this cycle will be repeated endlessly for every issue henceforth: politicians will propose meaningless half-measures to solve serious problems, and such measures will fail.
This bill specifically, though, has nothing to love. It’s non-binding, extremely partisan, and doesn’t do enough to actually solve the problem. This is a farce of a solution.
First, what value is a non-binding solution in the face of such a significant problem? To test the waters? Americans know that the current situation is no longer tenable. Businessmen and economists know the situation is untenable. Even Bernanke, in the back of his brain, knows that we are no longer able to continue the excessive borrowing even though he will never say this publicly. Besides which, everyone already knows that Democrats are only good for the most feckless of proposals anyway. The Republicans should have simply offered a binding proposal and let it play. Go big or go home.
Second, there is no hope for permanent reform if the Democrats aren’t on board, at least at this time (which is of the essence, by the way). The fault for partisanship, in this case, lies not with the Republicans but rather with the Democrats. If the Republicans are unserious about reigning in spending, then the Democrats must think this a new opportunity to practice their stand-up routine. At least the Republicans are making an effort, albeit a futile one. All the Democrats have to offer is refusal and non-solutions. Actually, they don’t even offer the latter. All they can really do is hope that they can wish hard enough to change reality. Good luck with that.
(Note: I do have one minor criticism of the Republican’s political maneuvering in this matter. They should have suggested a considerably more drastic reduction in government spending in order to make $6 trillion look like a reasonable compromise. But that’s just a minor complaint, for it does not seem likely that Democrats would have accepted it or even negotiated in good faith. Still, the Republicans could have at least made the effort.)
Finally, $600 billion dollar budget reduction per year isn’t even forty percent of the projected deficit for 2011. The reality is simply that we can no longer continue to run any deficits. Period.
The projected deficit for 2011 is $1,645 billion, and the projected savings are $600 billion. That means we’re still running a TRILLION DOLLAR DEFICIT. This sort of thing is not sustainable. And, frankly, it’s completely unacceptable. Reality will eventually kick us in the face if we do not stop this immediately. And when it does, we will deserve it.
The time has come to get serious. The time has come to end the half-measures. I sincerely hope both parties are up to it.

New Evidence on the Effects of Fiscal Policy

From Alberto Alesina and Silvia Ardagna (link):

“We examine the evidence on episodes of large stances in fiscal policy, both in cases of fiscal stimuli and in that of fiscal adjustments in OECD countries from 1970 to 2007. Fiscal stimuli based upon tax cuts are more likely to increase growth than those based upon spending increases. As for fiscal adjustments, those based upon spending cuts and no tax increases are more likely to reduce deficits and debt over GDP ratios than those based upon tax increases. In addition, adjustments on the spending side rather than on the tax side are less likely to create recessions. We confirm these results with simple regression analysis”