Yesterday, I posted a diary on the futility of the GOP's YouCut program, which allows people to vote on which program to cut. I think this image summarizes it nicely:
Quite simply, I found that the cuts that YouCut was proposing, while sounding impressive due to the use of the word "billions" and adding up the savings over 10 year periods, quite simply didn't amount to much. As part of making that graph, I came across a table, a wonderful, wonderful table filled with numbers: the White House OMB's budget information supplemental tables. So many numbers to play around with...
OK, I'm a nerd. I accept that. But, in my nerdish glee, I decided to take a look at something that Republicans said all night long during the election night victory: they wouldn't touch Medicare, Social Security, defense... those things were all off the table. They were going to make across the board cuts to "discretionary spending". So, what would that look like?
First, the methodology. I'm using Table S-4, the table that deals with the proposed budget by category. There's also Table S-3, Baseline Projection of Current Policy by Category, with numbers that are a little bit different (though close enough to give me fits while proofreading this), but I'd prefer starting with the cost-cutting measures that the President has already proposed and see where the Republicans can go from there.
There are a few categories that everything is broken down into, so let me expand the legend.
In blue are the social safety nets: Social Security, Medicare and the federal contribution to Medicaid.
In red is the money that's already been promised. Interest on the national debt is in dark red; pensions for government and military officials, food stamps, unemployment, child tax credits, etc. are listed under "mandatory" in light red. As for the phrasing, it's called "mandatory" in the budget because... well, it's mandatory. It's already been promised and approved outside of the budgetary process.
In green is discretionary spending. Dark green is security discretionary spending (Department of Defense, NSA, etc.). Light green is other discretionary spending (all those agencies that the Tea Party hates).
The black line is the projected revenue that'll be incoming. If you're spending above the line, it's is a deficit; below the line is a surplus.
Obviously, cutting non-defense discretionary spending isn't going to get us out of the red. Additional tax cuts are also not going to help the situation, as that'd push the black line further down (unless you believe trickle-down math).
As for the Republican talking points? We've already established that the gimmicks won't do anything, but we can look at the more detailed proposals (well, proposal, as I could only find one). As Cantor said while being interviewed by the MSNBC crew on election night, what about a cut to all discretionary spending to 2008 levels?
Well, there are a couple of problems. First, that's not much of a cut. 2008 had $1.114 trillion in discretionary spending, 2009 was $1.219 trillion, 2010 is $1.410 trillion. But let's run the numbers. There'll be two aspects: interest (which will go down if the overall deficit is smaller) and the actual value amount of discretionary spending. If we cap all discretionary spending from 2010 all the way through 2020 at $1.114 trillion, and adjust the cost of interest on the debt, then do we have a balanced budget? No. There's savings, but the budget's still a good way from balanced.
(Methodology note: I don't have the exact formula for calculating the interest, so I used the numbers listed in the proposed budget and did a simple polynomial regression off of those values to estimate. It should be pretty accurate plus or minus ten percent, though no guarantees.)
The second problem with these numbers is that they're completely and unreasonably rigid. It's always $1.114 trillion and it doesn't adjust for inflation. As a result, given current 2020 projections, $955 billion would be put to security, leaving $159 billion for everything else. At current levels, that's enough for HHS, Transportation and... that's about it. VA, State Dept, HUD, Education, Energy, Agriculture, Justice, NASA, Commerce, Labor, Treasury, Interior, EPA, Social Security Administration, NSF, Corps of Engineers, etc. would all disappear. Perhaps Rand Paul is OK with the loss of all those things, but normal people see the importance of those administrations. Since this would be implausible and political suicide, the change to discretionary spending would, in practice, be less severe and the savings would be significantly smaller.
Finally, the revenue is likely tied to discretionary spending (and spending in general). One of those acronyms up there is NSF, the National Science Foundation. Grants from the NSF promote research, which leads to breakthroughs, which lead to new or more efficient businesses, which lead to revenue. Cuts to NSF cut off that process, hurting the overall revenue. Add on top of that a decrease in standards of education yielding less qualified workers, collapsing infrastructure making it harder to transport goods, etc. The revenue line will decrease even before additional Republican tax cuts are considered.
So, what's the take-home message? For all the talk from the right about how Washington "doesn't have a revenue problem, they have a spending problem"... Washington has a revenue problem. For the 2009 and 2010 budgets, just the social safety nets that everyone wants to protect and the mandatory spending was greater than the total revenue. Even ignoring "mandatory" spending, the revenue was slightly less than the spending on security, Medicare, Medicaid, Social Security and interest on the debt. Since all of those things are non-negotiable and we haven't even touched mandatory spending, no amount of "fiscal responsibility" will ever fix the situation we've found ourselves in.
There is a revenue problem.
This isn't something that can be completely avoided by either party. Let's be honest: the dark red bar indicating the interest on the debt keeps getting bigger and bigger. As long as spending's above the black line, it's going to be like that. The light blues (Medicaid and Social Security) will keep getting bigger as well. There is really nothing that can be done about those things, as they'll continue growing.
Solving this will be politically and practically difficult. Hopefully we can get there.