Budget Impasse Silly When Put in Perspective

As the threat of a government shutdown looms in less than thirty-four hours from now, it is important to put the whole impasse in perspective. When confronted by the sheer weight of the country’s budget and budget deficit, a difference of $28 billion is a drop in the bucket.

Putting the Numbers in Perspective

So far, both sides have tentatively agreed to a cut of $33 billion. However, the Republican plan calls for a reduction of $61 billion. Given the state of the economy and the $28 billion gap between the two sides, the Republicans seem like they are overreaching.

However, if one puts these numbers in the context of the overall FY2011 budget and deficit, both sides are fighting over scraps. The President’s 2011 budget is $3.8 trillion with a projected deficit of $1.6 trillion. The Republican’s more aggressive proposal of $61 billion represents a paltry 1.6% cut, while the Democratic proposal is less than 1.0%! Furthermore, the Republican proposal would only reduce the 2011 deficit by 3.7%, while the Democratic proposal would reduce it by 2.0%.

Yet, both sides are willing to shut the government down over a difference that represents just 0.7% of the 2011 budget!

The greater problem is raising more debt to fund the government’s spending binge. One way out of this problem is by printing money. However, the market is already voting with its feet. PIMCO, the world’s largest bond fund, recently sold all its U.S. Treasury holdings on expectations that the Fed will have to make a second round of debt purchases (which is the Fed’s equivalent of printing money).

The bottom line is that the U.S. government is fighting over scraps, while it continues to build up an avanlanche of debt.

What Do Americans Think?

It is still unclear whom most Americans would blame for a government shutdown. An April 5th Gallup poll suggests that 58% of Americans want their elected leaders to compromise on the budget to avert a government shutdown. A recent poll by Pew suggests that 39% of Americans would blame Republicans for a shutdown, while 36% would blame the Obama administration. However, a recent NBC News/Wall Street Journal Survey suggests that 37% of Americans would blame Republicans, but 42% would blame the President, Democrats in Congress, or both.

I find it hard to believe that both sides cannot find an additional 0.7% of the budget to cut. The concept seems ridiculous to me.

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About Sean Patrick Hazlett

Conservative clean energy crusader, national security hawk, financial analyst, engineer, and former military officer.
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44 Responses to Budget Impasse Silly When Put in Perspective

  1. Scott Erb says:

    I read that one barrier to an agreement is that the GOP wants riders that threaten funding to groups like planned parenthood. If so, I don’t blame the Democrats for refusing to go along. That is a legitimate issue, but for another time. For now the focus should be on the budget and reaching an agreement. I get the impression they’re close, but the social conservatives are standing in the way. If it turns out that abortion is the issue that prevents a compromise, I think that will hurt the Republicans and play into the “tea party extremist” narrative that the Democrats will use.

    • I agree.

      If the right uses this impasse to push socially conservative issues, the Democrats will have a field day. Right now, the Republicans have an advantage based on the economic data. If the left can shift the debate from that to tea party whackiness, the Republicans are in trouble.

  2. Alan Scott says:

    Gentlemen,

    Please, please do not let facts get into your way or discussion . I believe the current one week bill that funds the military the rest of the year and the other stuff for one week only has two riders,,,, Which Democrats have voted Affirmative in the past on .

    Do not fall for Democratic Party fibs about those Whacky,whacky Tea Partyers . The propaganda war is on . And the shot is getting deep .

    • Scott Erb says:

      The one week bill is not the issue. The overall compromise is threatened by those issues. The Democrats essentially are saying they’re not going to give any political cover by buying an extra week. Look, they’re close. There’s no reason for abortion issues to get in the way of an agreement ending the impasse. The two sides can reach an agreement for next year and then start an intense discussion about the real long term budgetary issues.

      The Republicans have the House. The Democrats have the Senate and the Presidency. Neither side can get their way because we have split government. Both sides can give and compromise and then have a public debate about the long term budget.

  3. Moe says:

    I heard R Rep. Mike Pence say he’s prepared to twist arms and stop the budget if he doesn’t get the vote he wants cutting funds to Planned Parenthood. Obama’s failure is that he isn’t out there using his bully pulpit and demanding the non fiscal riders be removed.

  4. ted hazlett says:

    Sean- Just saw Reid and Kyl on senate floor. Reid trotted out all the garbage about people dead in the streets line because they can’t get planned parenthood services. Kyl countered that 90% of planned parenthood’s business is abortions. He says PP gets 300 million in subsidies and that there are numerous other facilities that take care of women’s cholesteral, cancer screening, etc. Then the dems trot out the dem women whose leader is Nancy Pelosi. Boehner then speaks to the press about the holdup being the money. The government is bloated, is spending at a record pace, and no one seems to get the message. The dems had a year to get the budget done and they held all three branches. The latest talking pts. for dems is extremism on the right, being led by the tea party. Shame on the Dem party and shame on the most incompetent president that we have ever had to bear!!

    • V. R. Kaine says:

      Pelosi: “The GOP is waging war on women.” Oh, shut it! Dems always resort to this bleedheart (and factually inaccurate) sensationalism to rile their base because they know the majority of them won’t bother to read anything beyond the headlines.

      To Sean’s point, Megyn Kelly (hubba hubba!) is currently discussing exactly your point today from yesterday. You beat the presses!

      • Vern,

        Thanks for letting me know! I just did the math.

        The counter to my view is that the Republican plan is going to destroy 700,000 jobs (Moody Analytics, the same company that gave subprime mortgages fantastic credit ratings said so, so it must be true).

        My counter is that the Dems can always offer to cut something else to get to that number.

        The counter: The Republicans can always come down to the Dem number or move to the middle.

        My counter: Step back and look at the fact that we are fighting over scraps. To pay for all this, we will have to raise more debt. However, we will have to raise it at a high interest rate. Raising interests now will lurch the economy back into recession and destroy more than 700,000 jobs.

    • “Kyl countered that 90% of planned parenthood’s business is abortions. He says PP gets 300 million in subsidies and that there are numerous other facilities that take care of women’s cholesteral, cancer screening, etc.”

      If these stats are true (I rarely trust stats from any politician – I’ve heard its about a third of their funding), it sounds like a reasonable thing to cut to me. If the Democratic Party has a problem cutting this particular program, they should offer something else to cut — and then both sides should cut it.

      Planned Parenthood is nothing but a eugenics program for poor and/or black people. For instance, according to Planned Parenthood’s research arm, the Guttmacher Institute, “In the United States, the abortion rate for black women is almost five times that for white women.”

      It’s probably not the organization’s current intent, but it is the result.

      In fact, the founder, Margaret Sanger, was an outspoken eugenicist.

      Seriously, I cannot make this stuff up. The Democratic Party is unwittingly liquidating its future voting base.

      Unbelievable.

      • Moe says:

        A discussion on Planned Partenthood isn’t relevant right now – should be for another day. But the GOP has been after them for decades and seem to seize any opportunity to cut funds to them because they don’t like PP. PP provides abortion services and the GOP will go after anyone who provides such services.

        Are the GOP really ready to take a budgetary stand on this? Is anyone aware of a rider on the Dem side that is unrelated to the budget negotiations?

      • “A discussion on Planned Partenthood isn’t relevant right now – should be for another day.”

        That’s fair as long as the Democrats find another $300 million to cut from somewhere else, I am fine with that.

      • Moe says:

        $68 billion is already agreed to. The deal isn’t about another $300 million.

      • “$68 billion is already agreed to. The deal isn’t about another $300 million.”

        Really? Must be a recent development. I thought the Republicans were holding out for $61 billion?

        If this is true, the Republicans should take the deal if its $7 billion more than what they were asking for.

      • Moe says:

        The $68 is what I thought they agreed to last night. The $61 was what they first wanted (a week? ten days ago?) but they upped it and the agreed amount per last night was supposedly $68. But who really knows, mly head is spining.

      • “The $68 is what I thought they agreed to last night. The $61 was what they first wanted (a week? ten days ago?)”

        Who knows? I think half the time, the reporters don’t know the number either.

  5. V. R. Kaine says:

    I’ve heard that about PP as well, and we know how cozy Sanger is with Hillary Clinton (who happens to be “in awe” of her). There was also that exposing that people can target their donations to specifically go towards aborting minority children. (http://www.lifesitenews.com/news/archive/ldn/2008/feb/08022802)

    Funding them is as ridiculous as funding ACORN.

    • Vern,

      Wow, there was some really disturbing stuff on that link…

      Now I’m really on board. Cut it!

    • Moe says:

      A: And we don’t, you know we just think, the less black kids out there the better.
      PP: (Laughs) Understandable, understandable.
      A: Right. I want to protect my son, so he can get into college.
      PP: All right. Excuse my hesitation, this is the first time I’ve had a donor call and make this kind of request, so I’m excited, and want to make sure I don’t
      leave anything out.

      So PP was EXCITED?? Sorry, can’t buy it. It’s a Christian website reporting on a story in a pro-life Christian college magazine and there were no links and it’s very slimly sourced.

      • Moe,

        Who knows if the anecdote is true, but you cannot argue with the PP’s own statistics. PP does abort a disproportiate number of African American and poor children and uses tax payer funding to do so. Tax payers should not be funding this organization at all.

      • Moe says:

        Sean – sounds like a semantic situation here. I assume you’re asaying PP reaches out and provides services disproportionately to the poor and to blacks? A lot of social agencies do that – pro life groups do the exact same thing. Both reach out to the most vulnerable among us because they’re usually the ones who need the help.

        In any case, if PP is doing abortions with federal money, that’s a crime. Don’t see any indictments out there.

      • “In any case, if PP is doing abortions with federal money, that’s a crime. Don’t see any indictments out there.”

        Fair point.

        I don’t think the government should be funding organizations that abort children (whether or not those funds are used directly for abortions).

        Frankly, I also don’t think it should be funding religious organizations either. If you can find examples of that (which I’m sure you probably can), the government should be aggressively cutting tax payer dollars there as well.

      • V. R. Kaine says:

        How about we take a look at the cost of regulation? Any places to cut there? Surely some of the regulations and protections are necessary, but is all the red tape that goes along with it necessary as well?

        http://www.heritage.org/Research/Reports/2010/10/Red-Tape-Rising-Obamas-Torrent-of-New-Regulation

    • V. R. Kaine says:

      Not trying to beat a dead horse here, just wanted to post some “balance” to what I posted earlier on Planned Parenthood. This link: Larry O’Donnell shares his thoughts and an email re: the organization. (http://www.msnbc.msn.com/id/21134540/vp/42503559#42503559)

      This was the second time I’ve watched Countdown post-Olbermann. Looks like the same exaggeration still goes on there as before, but the positives should be stated.

      • Both sides continue to distort the truth. I just reviewed Planned Parenthood’s annual report. It looks like John Kyl’s statement came from the annual report on page 6, which states:

        “Ninety percent of the health care provided by Planned Parenthood health centers is designed to prevent unintended pregnancies through contraception, reduce the spread of sexually transmitted infections through testing and treatment, [and] prevent cervical and other cancers through lifesaving screenings.”

        It looks like his people took a factual number and distorted what it represented.

        MSNBC does something similar.

        On the same page you can find the Abortion Services statistic of 3%. Of course, 3% represents the proportion of services that included abortions, not the total dollars spent (which is the issue in question).

        So I dug a bit further. It turns out that on page 28, medical services represent 66% of Planned Parenthood’s expenses (which equals $683.7 million). Of the total services provided by Planned Parenthood, about 64% represent medical services of some sort including abortion services (3%), other women’s health services (10% – this is debatable whether it should be included, but I PP does not provide enough info for me to rule it out), cancer screening and prevention (17%), and sexually transmitted diseases / infectious (STD/STI) Testing and Treatment (34%). It seems to me that of these procedures, abortion services and cancer screening and prevention would dominate the majority of these 66% of expenses because they are more expensive to perform(require paying doctors to perform operations, etc.).

        Therefore, while MSNBC is right that John Kyl’s statements were inaccurate, it misrepresented the data as well. MSNBC used the percentage of total procedures to answer a question about what percentage of funds PP used for abortions. I guarantee the number is higher than 3%, but lower than 66%.

        Clowns on both sides of this argument are killing me…

  6. V. R. Kaine says:

    Agreed. It’s not a matter of pro-life/pro-choice as far as I’m concerned, it’s political cronyism. I’m sure with the strong pro-choice movement out there they can do just fine on donations plus their tax shelters alone. The politicians are just using PP to buy the pro-choice vote anyways.

    • Moe says:

      It’s more personal Vern – the GOP has been after my uterus my whole life – of course it’s not of much use to anyone any more so I don’t quite understand, but . . . .

      It’s not just politics or campaign funds, although that’s always part of it for both sides. My experience over more decades than I can count is that Republicans want legislative control over sex – the woman kind only of course.

      • “My experience over more decades than I can count is that Republicans want legislative control over sex – the woman kind only of course.”

        I could see where you would be coming from if the Republicans were currently trying to ban abortion (I wouldn’t agree, but I would understand your argument from the “it’s my body” perspective).

        However, the Republicans are doing nothing to ban abortions here, they are simply arguing that tax payer dollars shouldn’t go to abort someone else’s child.

        If someone wants an abortion they should pay for it themselves. It’s that simple.

      • V. R. Kaine says:

        Hi Moe,

        I totally understand that it’s more personal, and as I’ve said on other sites, I don’t have a dog in fight over the pro-life/pro-choice debate. I realize as well that the current Planned Parenthood budget debate is as political/ideological as it is financial. Whether the organization should exist or not, to me, is another matter, similar to what you’ve said.

        When it comes to how it should be paid for, however, I have to agree with Sean. I don’t think the bulk of the money for Planned Parenthood has to come from government – the moral or “rights” issue of it aside.

        Either way, I want both sides to own their $hit and stop playing political games for a moment (like saying the parties are literally trying to kill people) and get this resolved. Way too partisan for my liking.

      • Moe says:

        Sean – the taxpayer is NOT funding abortions. At PP or anywhere else. It’s illegal.

        Like I said, its not about fed funded (because that isn’t happening); it’s about the fact that there are abortions being performed there.

      • “Sean – the taxpayer is NOT funding abortions. At PP or anywhere else. It’s illegal.”

        Moe, I think our messages passed in the ether. See my 12:32 post above.

  7. V. R. Kaine says:

    More sensationalist rhetoric from the left:
    ”In ’94 people were elected simply to come here to kill the National Endowment for the Arts. Now they’re here to kill women.” – Louise Slaughter (D-NY)

    Funny coming from someone with that as a last name!

    • Yeah. It’s also an indirect form of ad Hilterium argumentation because its a play on the quote from a Catholic priest during World War II:

      “First they came for the Socialists and no one spoke out, then they…”

      Or something like that. “They” of course were the Nazis.

    • Another proposal, which seems ill-advised to me (even Scott Walker knew better not to mess with police and fireman), is to also cut paychecks to the military. In the last shutdown, Clinton was smart enough to keep their paychecks coming. Obama, not so much.

      Here’s a quote (See http://www.cbsnews.com/8301-503544_162-20052185-503544.html) from Defense Secretary Gates addressing the troops in Iraq that is fairly telling:

      “First of all, let me say you will be paid,” he said. “As a historian it always occurred to me the smart thing for government was always to pay the guys with guns first. But in all seriousness, based on some stuff I read this morning, if the government shuts down starts on the 8th and goes for a week, you’d get a half a check. If it goes from the 15th to the 30th, you wouldn’t get a pay check on the 30th but you would be back paid for all of it.”

      Oh boy…

  8. Scott Erb says:

    The Republicans will hand the Democrats a PR coup if they shut down the government over DC planned parenthood. It’s not about the money — it’s clearly a social conservative agenda. They’ve agreed to nearly $40 billion in cuts, the amount the DC Planned Parenthood receives is virtually nothing. Nobody believes its about the spending, it’s about abortion. There’s no way the Democrats will give in on this because it’s a winner for them politically either way. The Democrats have increased the level of cuts by billions in talks with the Republicans. If a deal is held up by this, the Republicans will be administering themselves a self-inflicted political wound.

    • “If a deal is held up by this, the Republicans will be administering themselves a self-inflicted political wound.”

      Scott, I agreed with you about this a few days ago (probably somewhere on this thread, perhaps). Now, I am not so sure.

      Here is my thinking so far (I believe I posted some version of this on Moe’s site somewhere today):

      If the shutdown is short (i.e., no more than two weeks long), the economic impact will be minimal and it may expose just how non-essential some government services are (as well as just how essential some of these “non-essential” services are). This may enable more thoughtful cost cutting in the future.

      Today, I spoke with a friend at a government agency, who was livid at Republicans for pushing a shutdown. That said, he suggested that if both Parties were serious about shrinking government, he could point them to multiple places where there was massive government waste and inefficiency (and he is a Democrat).

      However, if this thing stretches on for months, it will be an economic disaster.

      I actually think the Republicans could benefit from a brief shutdown. However, they would suffer disproportionately in the event of a longer one.

      I think there is an even shot they gamble and shut the government down.

      The left will present it as a social conservative assault on the government, while the right will portray it as a principled stand on small government.

      It should be interesting to see how all this unfolds…

      • Scott Erb says:

        I think the costs of a brief shut down are pretty high, and if it is due to abortion (supposedly that’s being worked out though) the emotion of that issue will make the budget stuff seem secondary.

        I’m actually hopeful. $38 billion isn’t a lot, but it’s a good start given the situation in which these cuts are being made. There are budget plans out there, the economy seems to be starting to create more jobs and Obama has a huge incentive to show leadership in spending cuts. He’ll need some GOP concessions — the Republicans only hold the House, the Democrats have the Senate and the Presidency so both sides have to compromise.

        My own view is that power needs to shift closer to the people — to states and localities. With the information revolution and new technologies the need for a centralized bureaucratic apparatus is fading. I don’t think either party has really explored the possibility that this could provide a way to cut spending while maintaining the ‘great compromise’ (where the left accepted market capitalism in exchange for social welfare protections). I had a two post entry on my blog on January 12th and 13th about this, starting with this post on the 12th: http://scotterb.wordpress.com/2011/01/12/the-great-compromise/

      • Scott,

        Either way, we’ll find out in less than two hours if the government shuts down. The suspense is killing me.

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  10. Moe says:

    Listened to some of the Sunday gasbags and their expertise on how Washington works; they told me they know what it all means.

    It means the Dems lost. Sayeth one half of them. It means the Repubs lost. Sayeth the other half. (And I haven’t even watched FOX yet.)

    That’s why these ladies and gentlemen of the punditocracy make the big bucks.

    • Moe,

      If you believe that Dems believe in big government, my view is this was a decisive victory for the Dems. I mean, it was not even close. ;-)

      The end result is that the U.S. budget will grower faster than Chinese GDP in 2011. That is an unambiguous and almost comical victory for big government advocates.

      Politically, I don’t know who it will benefit more since the public clearly doesn’t care what the data says since the Republicans clearly fooled them as well.

      • Moe says:

        Since I wrote earlier, I listened to Martin Wolf(?) on Fareed Zacharia’s show. He’s the senior finacial commenter for The Economist, which is what I call credentials.

        He had some very interesting things to say about our situation and if you’ve hte time I think it’s worth a listen.
        Here’s a link to GPS site, I didn’t run down the video with Wolf

        http://globalpublicsquare.blogs.cnn.com/

        Zacharia points out that in looking at Medicare/Medicaid reform, we aren’t facing up to the fact that 85% of costs are spent by 25% of patients. And no ‘shopping for plans’ or competition will change that.

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  12. John G. says:

    Thanks for the perspective. I see this as another form of “Think of the children” blackmail.

    However, let’s suppose we go forward with a government shutdown? I think there are some big positives there. Government will survive, who am I to make it easy for them?

    • John G.,

      It looks like Republicans blinked (and looked at their polling numbers) and decided against a shutdown. I think a week-long shutdown may have done the country some good. However, a shutdown longer than a month would likely have been a disaster (i.e., no tax returns, no passports, no IPOs, etc.).

      It should be interested to hear Obama’s speech tomorrow on his debt reduction plan, but I’m not optimistic.

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