Government shutdown averted – deficit growth not as much

Senate Majority Leader Harry Reid and House Speaker Boehner saved the day with a last minute agreement that will allow the Government to continue to run. Half way into the 2011 budget, the deal was struck cutting $38 billion. Compromise has led to heros in politics.

Now if we wake up from the daydream the reality is a bit sobering.

Of course Democrats and President Obama will make the case that the deal is a victory for them. House Republicans have blinked in the last minute and compromised on the promise they made to voters during the 2010 mid-term elections. A mere $38 billion, sure to be quoted as $78 billion, is the price of votes – needed to shore up dismal 2012 election projections.

Consider that the initial $40 billion in savings came directly from Republicans efforts, with Continuing Resolutions to fund the government, cutting billions week after week. Democrats opposed every cut, and swallowed the cuts with grimaces. Only when the public outcry to the paltry and realistically non-existent spending cut proposals went against Democrats did they offer anything.

The President for his part did nothing. He postured a bit, made a few speeches and gathered the Congressional leaders for a meeting or 3. But he equally abandonded the situation, travelling to begin his re-election campaign and prop up his Black vote support.

On the Republican side things are hardly any better. Republicans will also claim the full $78 billion in spending cuts. Their claim is more credible, but still off the mark from their promise. Even if the promise were kept, the sum not being spent still equates to less than 1% of the national budget ($3.4 trillion) and the national deficit ($1.6 trillion for 2011 alone, $14 trillion as of 2010).

If either side, or the President, were at all serious about Government spending there are real choices that could have been made without any real argument.

  • The Stimulus – roughly $300 billion remains available to be spent out of the $814 billion (and counting as the overages are still growing) dedicated to the program. To date, not one objective of the Stimulus has been completed. It is understood to be a complete failure by any critical analysis, though saving political face will not allow the Obama Administration to admit this publicly. Stopping the funding for the Stimulus, and paying off the deficit with the remaining funds would make more of an impact than every cut agreed to times 3.
  • TARP – As most have forgotten (like with the Stimulus) the money repaid by banks and financial institutions was to be used to pay off the deficit. To date over 65% of all the banks that received funds have paid them back, most with about 11% interest as as well. That’s about $420 billion, again a far more significant and immediate way to affect the deficit.
  • 10% cuts across the entire budget – There is no way that anyone can explain how the Government is incapable of removing just 10% of the waste it generates each year. Without having to end even 1 program, institution, or Agency the Government could save at least $346 billion (based on the 2011 budget).

    In total, the above spending cuts would eliminate $1.06 trillion. That’s just cutting a failure, following the law as written, and assuming the Goverment can do a pinch of the cost cutting that the public has done for more than 4 years.

    Given these examples, and more can easily be made without debate, does a mere $78 billion in spending cuts even compare? Does the impact on the deficit, or even just the interest on the deficit alter with the agreement made between Democrats in the Senate and Republicans in the House, as well as President Obama are currently trumpeting?

    The Government will not shut down. With that the deficit will not decrease, and America is no closer to solvency nor avert the potential of bankruptcy. As much as the news will be used to garner votes and decry opponents as vile politicians out only to support their special interests, has anything been done to be worth of a vote or praise?

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  • About the Author

    Michael Vass
    Born in 1968, a political commentator for over a decade. Has traveled the U.S. and lived in Moscow and Tsblisi, A former stockbroker and 2014 Congressional candidate. Passionate about politics with emphasis on 1st and 2nd Amendments.

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