Why “Back to the Future” Budgeting Doesn’t Work

[Donnachaidh]

http://www.ncpssm.org/entitledtoknow/?p=1584&utm_source=twitterfeed&utm_medium=facebook

The Center for Budget and Policy Priorities calls the McCaskill-Corker spending bill a “look Ma no hands” approach to budgeting. We also see it as a dangerous trip “Back to the Future”. That’s because , rather than making specific budget choices based on 2011 realities, their bill sends us back to the spending levels of the ‘80s, only to then impose across-the board cuts when our “Back to the Future” DeLorean breaks down. The Associated Press describes their budget plan this way:

“The legislation doesn’t actually propose cuts but instead sets spending caps and enforces them with the threat of automatic, across-the-board reductions. The target of 20.6 percent of gross domestic product is the average of federal spending over 1970-2008. A recent Congressional Budget Office report projects spending under current policies reaching 24 percent of GDP in 2021, which would require more than $800 billion in budget cuts in that year alone. That is significantly deeper than the recent proposal by President Barack Obama’s deficit commission, which recommended raising Social Security and Medicare retirement ages, and cutting military pensions, farm subsidies and a variety of other popular programs.

‘At a time when many families have been forced to tighten their pocketbooks, Congress must also learn to do the same,” McCaskill said. “This bill isn’t just about cutting back this year or next year; it’s about instilling permanent discipline to keep spending at a responsible level.’

There are so many problems with this Congressional budget axe approach and the families’ analogy. Consider this; let’s say you need to cut your household spending by 15% to “tighten your pocketbook”. Does that mean you can just tell your bank, “I’ll be sending you 15% less this year for my mortgage?” Of course not, because you have a financial obligation to pay back the money you borrowed from the bank just as the federal government has an obligation to pay Social Security beneficiaries what was borrowed from the Trust Fund. When families have to clamp down on spending, they make certain to keep paying their debts while looking for other ways to trim expenses. That’s real fiscal discipline. American families don’t have the luxury of backing out of their financial obligations.

More at the link --

[bluestateguy]

1. Sounds a lot like the Gramm Rudman Act

which of course fell apart once the supposed automatic spending cuts were supposed to take place.