Friday, July 29, 2011

Debt Ceiling Phonus Balonus

I don't know how the final numbers will shake out, but as of right now, the competing House and Senate versions both claim they'll increase the debt ceiling by $2 trillion or so, in exchange for $2 trillion or so in spending cuts over the next ten years - all give or take a trillion or two. The biggest sticking point seems to be whether it will be a short-term increase (six months or so) or long-term (just past the next election).

Either way, we're going to be facing another debt ceiling debate by December 2012. So the ceiling increase is good for only about 18 months, tops.

But the proposed spending cuts are spread out over ten years. Presumably, we'll be having this same argument next year or early 2013.

Some questions:
  1. What spending do they think they're going to cut in 2013 in exchange for the 2013 debt ceiling increase?
  2. Why do they think that spending can't be cut today, but they'll be able to cut it in 2013?
  3. The proposed cuts that are being spread out over the next ten years - will they be cuts compared to what was spent this year? Or will the cuts that they're looking to schedule in, say 2018, be cuts compared to whatever ridiculous amount was spent in 2017? In other words, if, say, the EPA's budget this year is $40 billion, and it's scheduled to get cut $10 billion in 2018, will its budget be reduced to $30 billion in 2018? Or will it be reduced $10 billion from the $65 billion it had meanwhile increased over the previous five years? In other words, what is the baseline for that $10 billion cut?
  4. And aren't all these proposals for cuts ten years from now a pointless, phony exercise, since nothing that Congress does today is binding on any future Congress?
I think you know the answers to these semi-rhetorical questions as well as I do, but just in case, here they are:
  1. Shut up. We'll cross that bridge when we get to it.
  2. We can't afford to make those cuts even today. If we make those cuts, who's going to 
    1. stop black-market sales of incandescent light bulbs;
    2. support NPR;
    3. pay the salaries of Outreach Coordinators, Diversity Liaisons, and Sustainability Facilitators;
    4. pay for high speed government rail service between Chicago and Iowa City;
    5. make sure there are government warning labels on all lawn mowers warning people not to stick their limbs into them;
    6. buy machine guns for Mexican drug lords;
    7. grope potential five-year-old terrorists at boarding gates.
  3. The 2018 EPA budget will be $93 billion, which is a cut of $11 billion from 2017's $65 billion because otherwise they would have gotten a budget of $97 billion. If that doesn't make sense, it's because you're smarter than your congressman, who, being an imbecile, understands it perfectly.
  4. Yes.
 The only real spending cuts are the cuts that take effect immediately. Everything else amounts to BOHICA.

Anyway, the debt ceiling increase is meaningless. You could increase it to infinity + a jillion skillion dollars + a unicorn. The bond ratings outfits are going to downgrade our debt regardless, because they don't give a rap what our debt ceiling is. They care about what we're doing to fix the clusterfark we're in, not what we're going to allow ourselves to borrow.

And we ain't doing squat about that. Invest in China.

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