Monday, February 24, 2014

To Obama, We're Living in Times of Austerity

No, really.  It's being reported that Obama is submitting a 2015 budget which he's calling an "end to austerity". 
With the 2015 budget request, Obama will call for an end to the era of austerity that has dogged much of his presidency and to his efforts to find common ground with Republicans. Instead, the president will focus on pumping new cash into job training, early-childhood education and other programs aimed at bolstering the middle class, providing Democrats with a policy blueprint heading into the midterm elections.
Austerity?  Austerity??  As the meme goes, "You keep using that word; I don't think it means what you think it means".  Nick Gillespie at the picks it up:
The Democratic logic behind increasing spending runs something like this: Because we no longer regularly post $1 trillion deficits, we've got no reason not to spend more and more every year. Don't you know that deficit spending helps expand the GDP (which registers virtually all government spending as adding to GDP)? If the government will spend enough, we'll lick this recession/slow-growth phase, just wait and see once slack demand gets taut again. Then we'll slow down spending...and everything will be fine. Just like we did, er, don't look at the chart about spending...
Personally, I can't figure out what austerity they're talking about.  While it's true deficits have been declining, mostly due to tax increases, we're still running some of the biggest deficits in history.  I hope they don't think that a spending cut as small as the dreaded sequester, which amounted to 1 or 2% of spending, was austerity.

How big is the new spending going to be?  Ed Morrisey from Hot Air chimes in:
Outlays for FY2014 authorized in the recent budget deal are still a bit ambiguous in the reams of data from both Congress and the White House, but CBO estimates it at $3.54 trillion. At that level, we are spending 9.3% more in FY2014 than in FY2008, the last budget signed by George W. Bush (Democrats stalled the FY2009 budget with continuing resolutions until Obama signed an omnibus bill in March 2009 to complete that budget).  If the new budget ends “austerity” by returning to Obama’s original top-line outlay demand of last year’s budget request, that will mean an additional increase of federal spending of 6.7% in just one year. If it’s just $56 billion more than the actual FY2014 outlays, then the notion that this ends “austerity” is doubly laughable.
If you hear Evil Party talking points, you'll hear them brag about the CBO showing deficits going down and they're the party of fiscal sanity.  But the CBO shows deficits going up again by 2016, the line labelled "Total Deficit" in this spreadsheet, and then rising forever. And that was before this coming "end of austerity" was leaked to the press.
Nick Gillespie has a good quote to close with:
Fear of persistent deficits and increasing national debt isn't an accounting fetish. It's rooted in the universally accepted notion that once debt gets too big, it can swallow whole economies and often does. Everyone knows that current entitlement spending - especially on Medicare - is unsustainable and a mortal threat to the federal budget (you can toss in Social Security and Obamacare, too, neither of which is paying its own way). With notable individual exceptions, nobody in either party is seriously engaging this problem, which is frustrating as hell.

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