Tuesday, August 2, 2011

Debt Ceiling Compromise: The End of the World as We Know It?

The comments coming in the wake of the debt ceiling bill are starting to verge on ridiculous. For the Left it seems that “cutting” government spending will cause a depression, spike unemployment, send the elderly and the poor to an early grave by way of starvation, destroy the middle class, end the welfare state and social safety net and on and on and on. For the Right it seems even the notion of not spending as much as possible on a huge military spread across the world at a cost of 5% or more of GDP will lead to the immediate downfall of America, we will no longer be “secure” don’t you know. At the same time there are those who are bending over backwards to pat themselves on the back for the grand compromise of “slashing” the deficit while saving Social Security and Medicaid. All of this hyperbole, leading to dozens of different conclusions about the outcome, and what is it all about? $22 Billion next year. And this is not a cut, the government is going to spend $22 Billion less next year than it planned to do, and that is a deficit reduction that will either destroy or save the Republic, depending on who is doing the talking. The Federal government spends $400 Million an hour. $22 Billion is less than three days worth of spending. How exactly does this do anything to anybody? We will also have a special blue ribbon super-committee that will try and find another Trillion or so over the next 10 years to cut, while we rack up another 5 to 7 Trillion dollars in debt over and above the $14 Trillion we already have. What in the world will our fearless leaders cut?
If you examine the laughable $22 Billion in “cuts” we will have next year you see that the automatic increases in some areas will just be smaller than what they would have been. No structural changes to what government does or how it does it. Everything will be exactly the same, just spending, in total, less than 1% then they would have. Every year the Government Accountability Office publishes reports on the waste, mismanagement and duplication of government programs. Last year (
here) the GAO found that the Federal government made $125 Billion in improper payments, and that $48 Billion of that was in Medicare. These numbers for the most part exclude the Department of Defense which does not track the possibility of improper payments in over half of everything it does, because they are just so darn good at accounting. So mull on that little nugget for a moment. The government is aware of the fact that they made $124 Billion in improper payments, and this number does not really take into account fraudulent payments for Medicare, just improper ones. $48 Billion in Medicare improper payments is twice as much as they are planning on saving next year. In their ridiculous 10 year window that is over $500 Billion (taking into account an incremental increase if nothing is done) and looking at the year to year increases in “improper” payments across the entire government that seem to continue unabated you are talking about the government flushing away well north of a Trillion dollars over the next decade. No one in this debate ever stood up and said “hey lets end this right now, today”. Billions and billions will continue to be flushed away in this manner. The government will also waste time and effort with duplicated efforts by various government agencies (here), and we aren’t planning on addressing this either. Somehow Libertarians are out of their tree for questioning the scope or the need of many government programs, yet this is what our government administration looks like right now. And even if you were to take efforts to end all these improper payment and duplicated efforts we would still be over budget. Defense, Social Security, Medicare and Medicaid, these are the things that are running us to ruin. If we can’t seriously address these things, the size, scope, management and utility of these programs and spending by the government, then there is no hope of surviving the problem


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