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U.S. Budget Cuts – Always Letting the Future Solve Our Problems

Decade after decade, U.S. budget cuts have attempted to balance the budget in years far ahead. It’s become the American way. Congress always puts the austerity part of the program out where someone other than us can feel the pain for us or where some other congress can take the heat. We’re noble that way.

U.S. budget cuts with no authority behind them

Even that future austerity doesn’t wind up cutting the budget when the time comes because congress has NO authority over those years. Each new congress will write its own budget for those years, no matter what this congress says, thank you very much. U.S. budget cuts have all occurred in the future so many times that that is why we have this huge debt. Such cuts have no effect, as they are always rewritten when the years of real pruning arrive.

[Watch in 2012 as that happens with the budget cuts known as the “fiscal cliff.” If congress cannot come up with an agreement to avoid the fiscal cliff, they’ll just vote the cliff out of existence without a solution.]

Just as we seek to spend tomorrows money today so that future generations can pay for our generous welfare to the poor, so we also seek selfishly to put all austerity for our spending on those same future generations. They get the bill for our fun today along a plan for reducing all the fun when their time arrives.

While many of us will be alive then and part of that generation, we also know we can rewrite it when the time comes if the pinch feels too great. It’s like planning a diet versus doing one; it accomplishes almost nothing, and we can always change the plan when the time comes.

The only cuts in the U.S. budget that mean anything are ones that happen in the next year or two while essentially the same people are in Congress, as they are unlikely to change their vote when the second year comes around.

The IMF is far more honest about our debt than our own government is. Fortunately, the assessments of others, like the IMF, will press us to start making corrections soon, but I am afraid they will not press us to do enough fast enough. Fortunately, the IMF was not beguiled into believing the present proposals are credible solutions, but congress feels it can ignore the IMF. Who cares what those Eurodemics say anyway?

From what we have seen in the last “battle” over U.S. budget cutting trifles, there is NO resolve in Congress (Democrat or Republican) or in the White House to make the kinds of course corrections that can actually turn this ship around at this late juncture. So, we will hit the ice berg for certain, as no one has the courage to make the cuts NOW or the tax increases that are necessary to effect serious change. And that’s not just because we’re in a perilous economic time where reducing spending could make the economy worse. Congress has always been reluctant to live within our means … even in the rockin’ and rollin’ times.

U.S. budget cuts that put 90% of the pain ten years down the road are trite talk.

 

Here are the real U.S. budget cuts congress is spending so much time arguing about:

 

According to a Congressional Budget Office comparison, the bill would produce only $350 million in tangible savings this year, partly because cuts in domestic programs were offset by an increase of about $5 billion for Pentagon programs. When projected emergency contingency spending overseas is figured in by the budget office, estimated outlays for this year actually increase by more than $3 billion. (New York Times)

 

After all the talk of cutting what is only a stop-gap budget by something like $billion the CBO states the only cuts this year are $350M. Most of the rest of the cuts were IN THE FUTURE, even in this stop-gap budget cut, or they were offset by typical Republican spending increases on military (which, of course, are necessary to fund Obama’s war in Libya … something he can get Republicans to agree to spend on).

 

Future savings would be greater as the cuts took hold — a point Republican aides emphasized by noting that the plan is estimated to cut spending by $312 billion over the next decade. “Big stuff,” said Representative Tom Price, a Georgia Republican and leading conservative who said he intended to support the measure.

 

Big stuff??? $30 Billion dollars in budget cuts averaged over the following ten years, but all backloaded to happen a few years from now is considered BIG STUFF??? 99% of the cuts — small as they are — happen in years that will ALL be renegotiated in the years ahead anyway! The U.s. budget deficit fifty times that much  each year! They think its big stuff worth weeks or wrangling to cut one-fifieth of the annual deficit and spread that over ten years but not start for a few years out???!!!

Do you see how hopelessly lost we are when such paltry trimmings are heralded as “big stuff” by as spokesman for the side of Congress that has traditionally been conservative on budget matters? It is not NOT big stuff by standards in any year. In real terms, as the military spending is real RIGHT NOW with our overseas involvement in three wars, they just voted to INCREASE the budget now and voted to let future years curb those costs for us. I’m sure they’ll thank us for it.

They just spent weeks arguing and bringing the government to brink of closure over the U.S. budget cuts for nothing, then the most conservative members of Congress herald it as a major breakthrough. Talk about an entire nation that is completely out of touch with its own problems. It is a nation led by the desire of the populace in each constituency to continue to HAVE NOW at the expense of future generations. What a completely dysfunctional congress and a nation in decline due to denial!

Big stuff!!!???

 

Even conservatives are not true budget cutters

Those who are budget conservatives are just as much in favor of spending for their favorite programs as the most liberal thinkers are. The difference tends to lie in what budgets they are willing to cut. They will cut welfare programs, but strengthen the military at the same time, resulting in very little actually cut from the U.S. budget. Think what we could have cut already, had we never entered war with Iraq. (Afghanistan, I think, was probably necessary as it was truly aiding and abetting our worst enemy.)

The present fiasco we just read about proves my point: even budget conservatives are not true budget conservatives. While they cut many programs, they increased military spending so much at the same time, that — if it is factored in as it should be — there was NO cut at all in this year’s budget after all that wrangling, but actually an increase. So unwilling are they to cut their own favorite programs, that they will increase the budget to support their own favorite programs even on the brink of great austerity!

 

High-risk U.S. debt

Interesting that even Pimco considers treasury bonds to be high-risk. (Not interesting that it considers them low-yield, but very interesting that it rates them high-risk since they have always been considered the lowest-risk investments on earth. How times have changed!)

If even major money managers are now seeing the risk of U.S. debt (at long last) and backing away, then the problem is at hand, not at some point in future years. It is THIS year’s problem and we should start to see that play out in a widening arc of people/nations/entities turning away from the dollar and from our bonds.

That will mean that those congressmen who are proposing future U.S. budget cuts to reduce the debt are completely wrong in their predictions, as none of them have had the foresight to realistically project increased costs of financing our debt in each year that they delay! What a MAJOR thing to conveniently (optimistically) overlook. I’m sure they hugely underestimate what our future interest costs will be on the debt, thinking they will remain somewhat near what they are now. Fools and our money are soon departed.

 

Token U.S. budget-cuts are gestures by congress that allow being generous with other people’s money

As far as I’m concerned, the “U.S. budget battle” we just witnessed was 100% posturing and had no significance budget-wise. It was token gestures by both sides, especially Democrats, at a time when very serious changes need to be made NOW not in some future promise of what people in the next decade will have to bear in cuts for our spending today. When politicians cannot find the will to make major cuts at a time like this, then the situation is hopeless.

So, prepare for the impact with the iceberg as no one is willing to turn the ship hard about. It goes without saying that the U.S. government is not willing to make such course corrections because the populace still foolishly believes that the situation is not that dire and that such corrections needn’t be born by them. For those in charge, it would be like turning the Titanic around halfway across the ocean and heading back for England because of the threat of icebergs. The passengers would come unglued.

The majority of the U.S. populace is unwilling to pay the price of their profligacy — unwilling even to cut way back on the charity they extract from the future for people today so that THEY can feel generous in helping the needy today! They help with OTHER people’s money. They have no generosity at all, for they do not pay with their own cash by raising their taxes today to help the needy today.

The U.S. government maintains its delusions of being able to give, too, and continues to give vast sums to other nations to prop up its international influence. There would be nothing wrong with buying such influence in most cases if it were not being bought with other generation’s money and in a time when our debt to the future is greater than we or they can handle.

I believe the U.S. government is now trapped in its own “ponzi scheme” as it is only able to maintain the economy at a slight level of growth (that is now negative if real inflation is factored in) by, first, raking in money from new investors that haven’t been born yet and now by creating money out of thin air. As soon as it stops creating that money, growth will stop.

As soon as banks accelerate the movement of money already created, growth may be supported at a minimal level, but only at the cost of hyperinflation from excess liquidity. I think we’re now hopelessly mired, and congress is just spinning our wheels as long as we have fuel left to spin them. Congress is just making noise for show.

Meanwhile, corporate heads are back to seeing their bloated salaries and bonuses increased again while exhibiting incredible financial stupidity in some of the big decisions they’ve made lately. Yet, the people at the bottom get no increase. Even in the worst of times, no one who can make a difference has learned a thing.

We are witnessing corruption on an unprecedented scale, and the press does not seem to have any investigative reporting skills left or has lost all of its informants because no one is reporting the corruption. They are reporting somewhat on the massive amounts of money that are being handed from the public sector to limited people in the private sector, but there have been no reports on who is getting the money or how much or what they’re actually doing with it (using it to build business or just paying themselves handsomely and creating vast off-shore refuges). Investigative reporting is dead because it costs too much.

Bernanke and Geitner seem to be running with a free hand while the greatest transfer of wealth from public to private sector that the world has ever known happens by their hands. Even Congress seems to be exempting itself from overseeing where the money is going and what it is REALLY accomplishing. They seem to have blind trust in the dastardly duo. The “talent” is, indeed, buying yachts with public money.

–David