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July 29, 2011

Pathetic, Tiny Cuts vs. the Reality of Federal Budgets. [ArthurK]

Some background info the budget process relevant to the pathetic little near term cuts Boehner is talking about.

Foster lays it out.

... the main reason the cuts are back-loaded isn’t political per se, it’s mathematical. Current law assumes that spending on program x will increase at rate y every year for the next ten years. If you freeze spending on program x or even retard its growth, the real dollar value of the cut is thus greater in the out years. It’s as simple as that.

If a program is spending a billion dollars then it's assumed that it will grow x% (Truman North recently said 7% is assumed) a year. So if you cut that program $10 million you also save $10,700,000 the next year and $11,449,000 the year after that. Cutting $10 million NOW results in $32 million less spending over 3 years.

I remember this from the Reagan defense buildup. They talked about the expense of new weapon programs over the years. It was like a ship moving through the ocean. You had a bow wave and a stern wave. The bow wave represented research, development, fixing bugs and buying the new stuff. Like the wave from a boat, it got bigger each year. The stern wave (often overlooked) was operating and repairing the equipment. It didn't kick in until after the new stuff was bought but then it too got bigger each year - pretty quickly.

Cutting spending is like that in reverse.

Hey. I'm not happy about the level of Federal spending. But if you think we're going to cut 40% out of the budget in ONE YEAR... Getting rid of the annual deficit over the next 6-10 years (with the right guys in office) is more plausible - then we can start nibbling or slashing away at the outstanding debt.

And there's no point in arguing with me on this. I've exhausted all my expertise and will sit passively by and let your points roll over me unrefuted! (Red Eye comes on in 18 minutes)

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posted by Open Blogger at 02:41 AM

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