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We’ve Already Cut Spending By Almost All of the Bowles-Simpson Targets

Jared Bernstein of the Center on Budget and Policy Priorities has an important piece that reinforces something I’ve been saying for a long time. Contrary to the opinion of Michael Grunwald that there has been no austerity in Obama’s first term, Bernstein lays out the numbers that actually shows the austerity, in both the short- and long-term, that actually encompasses most of what deficit scolds seek in their grand bargain.

And this is actually a bad idea, as Bernstein illustrates.

These developments are poorly understood by those—most vocally, SB advocates—who continuously inveigh that we’re not “serious” about cutting spending. In fact, that’s the only thing we’ve been “serious” about so far, such that we’ve actually achieved 70% of the discretionary spending cuts called for in the SB budget plan. This does not count war savings, nor does it include savings on interest payments, which would add another $250 billion to the savings.

Bernstein references this paper by Richard Kogan of CBPP, which lays out the deficit reduction deals already put in place by Congress and the President, both from the 2012 budget deal and the Budget Control Act (i.e. the debt limit deal). This generated $1.5 trillion in discretionary spending cuts between 2013-2022, as part of a spending cap that President Obama is unlikely to violate as long as he’s President. And Kogan writes that, while 2/5 of these cuts come from defense, “These reductions will shrink non-defense discretionary spending to its lowest level on record as a share of GDP, with data going back to 1962.” The chart at the top reflects that.

As Bernstein explains, we have hit 38% of the $4 trillion deficit reduction target, then, in spending cuts. And this translates to 70% of their cuts in discretionary spending. There have also been $716 billion in cuts, as everyone in a swing state knows, to Medicare, as part of the Affordable Care Act.

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We’ve Already Cut Spending By Almost All of the Bowles-Simpson Targets

Jared Bernstein of the Center on Budget and Policy Priorities has an important piece that reinforces something I’ve been saying for a long time. Contrary to the opinion of Michael Grunwald that there has been no austerity in Obama’s first term, Bernstein lays out the numbers that actually shows the austerity, in both the short- and long-term, that actually encompasses most of what deficit scolds seek in their grand bargain. And this is actually a bad idea, as Bernstein illustrates.

These developments are poorly understood by those—most vocally, SB advocates—who continuously inveigh that we’re not “serious” about cutting spending. In fact, that’s the only thing we’ve been “serious” about so far, such that we’ve actually achieved 70% of the discretionary spending cuts called for in the SB budget plan. This does not count war savings, nor does it include savings on interest payments, which would add another $250 billion to the savings.

Bernstein references this paper by Richard Kogan of CBPP, which lays out the deficit reduction deals already put in place by Congress and the President, both from the 2012 budget deal and the Budget Control Act (i.e. the debt limit deal). This generated $1.5 trillion in discretionary spending cuts between 2013-2022, as part of a spending cap that President Obama is unlikely to violate as long as he’s President. And Kogan writes that, while 2/5 of these cuts come from defense, “These reductions will shrink non-defense discretionary spending to its lowest level on record as a share of GDP, with data going back to 1962.” The chart at the top reflects that.

As Bernstein explains, we have hit 38% of the $4 trillion deficit reduction target, then, in spending cuts. And this translates to 70% of their cuts in discretionary spending. There have also been $716 billion in cuts, as everyone in a swing state knows, to Medicare, as part of the Affordable Care Act.

That’s a massive amount, and if you add the $1 trillion in expected savings from ending the wars, and the savings on interest on the debt (which Bowles-Simpson includes), you’re inching very close to that $4 trillion number ALREADY. And yet these same scolds, the Pete Petersons of the world, still act like there’s been no deficit reduction, so they can take a whack at programs they don’t like, i.e. Social Security, Medicare and Medicaid.

Bernstein furthermore explains that this insistent deficit reduction, the result of a successful House Republican gambit to focus on public spending, is a bad, bad idea.

Finally, I’ve said it before and I’ll say it again. What is so damn great about cutting the heck out of non-defense discretionary spending? Clearly, we want to evaluate their effectiveness, but in an age of increased inequality and diminished opportunity and mobility among the least advantaged, many of the programs in this category should be expanded (help with college assistance, Head Start, job programs and job training). Simply cutting for the sake of optics without regard to social need and economic context is not the way forward.

That’s exactly right. And the trolling from these fiscal scolds, which has buy-in across the political spectrum, created this false need to cut, with dire potential effects on the economy.

(Incidentally, Bowles-Simpson masked its tax increases through differing baselines and shrunken budget windows; when Republicans see the true implications, they’ll run screaming.)

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David Dayen

David Dayen