Tag Archives: government debt

Budgets, Taxes, Deficits and Debt; or, Mulvaney Versus the Math

English: South Carolina State Senator Mick Mul...
South Carolina State Senator (now director of the US Office of Management and Budget) Mick Mulvaney speaking in front of a crowd in Newberry, SC, in August of 2010 during his run for the U.S. House of Representatives. (Photo credit: Wikipedia)

“What you see in this budget is exactly what the president ran on,” US Office of Management and Budget director Mick Mulvaney told George Stephanopoulos on ABC’s “Good Morning America” in late February.

The president’s overall budget proposal is still under wraps and hasn’t been sent to Congress yet, but Mulvaney was making the media rounds to flack for its first big component: A $54 billion increase in military spending.

Mulvaney’s claim is true as far as it goes. Donald Trump ran for president on a promise to “rebuild” the most expensive war machine in the world, a “defense” establishment that hasn’t missed a meal since World War Two and that, if cut by 90%, would still be the first or second largest in the world (depending on what China spends from year to year).

Mulvaney didn’t look very happy about it. I don’t blame him. As Stephanopoulos pointed out, Trump made a few other promises, too — and those promises represent an insoluble math problem for the numbers guy.

On one hand, in addition to the increased defense spending, Trump wants a $1 trillion infrastructure program and he’s pledged not to touch Social Security or Medicare spending.

On the other hand, he’s promised to cut taxes.

Even if his hands weren’t so famously small, they’d have trouble holding on to both sets of promises while juggling two more in the air: He’s promised to reduce the federal government’s annual spending deficit and pay down its gigantic debt.

Yes, the “Laffer Curve” predicts the possibility of increased government revenues from general economic growth after tax cuts,  but those numbers still just don’t add up. It’s not possible to spend more, and tax less, and pay down crippling debt, and bring a runaway budget into balance.

Unless Trump and Republicans in Congress are willing to buckle down and get serious about spending cuts (if you’re not serious about cutting military spending, you’re not serious about cutting spending) Mulvaney’s real job for the next four years won’t be balancing budgets, it  will be making excuses.

Fortunately for Trump, he has considerable relevant business experience that he can bring to bear on the problem.

Unfortunately for the rest of us, that experience is in the casino industry where, no fewer than four times, he spent enterprises into insolvency then left his partners holding the bankruptcy bag.

I predict that his presidency will bring that number to five.

Thomas L. Knapp (Twitter: @thomaslknapp) is director and senior news analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism (thegarrisoncenter.org). He lives and works in north central Florida.

PUBLICATION  HISTORY

  • “Mulvaney versus the math,” by Thomas L. Knapp, Newberry, South Carolina Observer, 03/08/17
  • “Budgets, taxes, deficits and debt; or, Mulvaney versus the math,” by Thomas L. Knapp, Southern Utah News [print edition, p. 4], 03/09/17

Reagan Redux? The Federal Budget Battle Shapes Up

English: A graph of the US GDP compared with F...
A graph of the US GDP compared with Federal budget outlay. (Photo credit: Wikipedia)

It’s Donald Trump’s first work week as president of the United States and already, The Hill reports, he “may be headed into a big fight with Republican lawmakers with his plans for dramatic cuts to federal spending.”

Dramatic cuts? Not really: “Team Trump is relying on proposals outlined last year by the Heritage Foundation in its ‘Blueprint for Balance: a federal budget for 2017.’

The Heritage plan is weak tea. It doesn’t even claim to cut overall government spending, but rather to merely “control the growth” of that spending. And its claim to balance the budget by 2023 is pure sleight of hand. The “primary balance” it mentions excludes interest on existing government debt, which is fast approaching the  half a trillion dollars per year mark.

The  developing Trump plan is the usual tinkering around the edges, searching for “waste, fraud and abuse” in “discretionary spending.” Baby steps like that will never bring the budget into balance, but they’re still too much for Congress.

“Discretionary spending” is politicianese for “spending Congress uses to buy votes back home.”

US Senator Lisa Murkowski (R-AK) and US Representative Don Young (R-AK) blew their stacks when they learned that something called the “essential air program” — a federal subsidy for the rural airports so important to their state — might be on the chopping block.

Mississippi Republicans don’t want to lose one of two federal “catfish inspection programs” that hand out artificial government and regulatory compliance jobs to their constituents back home.

A few Republicans will likely peel away from their party to save some discretionary programs usually associated with Democrats: Legal services for the poor, arts funding, and state-subsidized media.

And then of course there’s the single biggest federal budget line: “Defense,” politicianese for “government contracts for expensive planes, ships and weapons systems that keep my campaign contributors happy and let me artificially inflate my district’s employment statistics.”

If you’re not serious about cutting “defense” spending, you’re not serious about cutting spending. The Trump White House and congressional Republicans want to increase, not cut, that budget line.

Some Republicans point out that a balanced budget is impossible without reforming “non-discretionary” spending — Social Security, Medicare and so forth. They’re right. But they’re also making excuses: They won’t cut the spending that it’s easy to cut unless they can also cut the spending that it’s hard to cut, and come hell or high water they’ll find a way to lose the latter fight.

We’ve been here before. Ronald Reagan came into office with plans to balance the budget while cutting taxes and increasing military spending by going after “waste, fraud and abuse,” too. It didn’t work then and it won’t work now.

One difference: Reagan could fob some of the blame off on a Democratic House of Representatives. Trump doesn’t enjoy that luxury. The Republican Party owns the House, and the Senate, and the White House — they own the entire federal government. For at least the next two years, that means they also own 100% of the coming fiscal failure.

Thomas L. Knapp (Twitter: @thomaslknapp) is director and senior news analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism (thegarrisoncenter.org). He lives and works in north central Florida.

PUBLICATION HISTORY

Score One for Fiorina: A Clarion Call to Budgeting Sanity

English: A graph of the US GDP compared with F...
A graph of the US GDP compared with Federal budget outlay. (Photo credit: Wikipedia)

In every presidential election cycle, candidates find themselves called upon to present plans for balancing the federal budget. And, for the most part, their plans call for doing so — in the sweet bye and bye. Never next year, seldom even next decade. The plan is for the current crop of politicians to kick the can down the road some  more, leaving it to future Congresses and administrations to exercise the fiscal restraint that these politicians  won’t.

Not Carly Fiorina. On MSNBC’s Morning Joe (October 7), Fiorina claimed she would submit a balanced budget to Congress in her first term.

Will she? Probably not, if for no other reason than that she wants to increase, not decrease, spending on the single largest sector of the budget, “defense,” so that she can continue the two previous administrations’ program of idiotic military adventurism around the globe.

But, be that as it may, when she explained how she proposed to attack the budget, she put her finger on one of the biggest bad habits of government spenders and promised to fix it. The problem is something called “baseline budgeting.” She proposes to replace it with “zero-based budgeting.” A quick primer:

Under baseline budgeting, the federal government assumes that each department will spend as much as it spent last year, with an automatic upward adjustment reflecting the inflation rate and US population growth. That’s on rails. The only things that have to be justified in the departments’ budget requests are changes upward or downward from that automatic amount — and how often do you think a bureaucrat requests LESS money?

Under zero-based budgeting, it’s assumed that every last dime requested has to be justified from the ground up. Just because the department spent $100 million on chips, dip and  party favors last year, it doesn’t automatically get $102 million for that this year, with the department only having to justify an extra $10 million to buy ponies for all the deputy secretaries (with THAT $10 million forming part of NEXT year’s “baseline”).

The political class, predictably, went ballistic. By the time Fiorina left the set, budget “experts” were loudly reminding us that zero-based budgeting can never work. Why? Well, because the government is just so big and complex that we can’t can’t expect its swarms of bureaucrats to spend time explaining their demands.

The only way to balance the budget, the “experts” say, is to keep automatically forking over more money every year and trust that spending will eventually magically go down on its own. Someday.

Ultimately, balancing a budget is simple: Spend less than you bring in. “Experts” who pretend that zero-based budgeting is out of bounds are the problem, not the solution.

Thomas L. Knapp is director and senior news analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism (thegarrisoncenter.org). He lives and works in north central Florida.

PUBLICATION/CITATION HISTORY