Cutting Deficits Harder Than Just Talking About It

The coming year-end spending spree after so much debate over budget deficits shows just how hard it is to stem the government's flow of red ink.

Lawmakers are poised to spend $120 billion or so to renew a Social Security tax cut that averaged just under $1,000 per household this year. They're ready to commit up to $50 billion more to continue unemployment benefits to people out of work for more than half a year.

And doctors have no reason to doubt they won't be rescued, again, from steep cuts in their Medicare payments. Combine that with the tax cuts and jobless benefits, and Congress could add almost $200 billion to the federal ledger this month.

That's why it's excruciatingly difficult to cut the deficit, even when the House is dominated by tea party forces.

The year-end spree follows the failure of three high-profile efforts at big deficit deals: talks led by Vice President Joe Biden; efforts by President Barack Obama and House Speaker John Boehner, R-Ohio, to strike a "grand bargain"; and the ignominious cratering of a special deficit super committee before Thanksgiving.

Each disintegrated in great measure over the question of taxes. But their failures also illustrate the tremendous difficulty in getting anyone to actually cut spending.

The singular success in attacking the deficit this year came after a protracted battle this summer over whether to let the government continue borrowing. That fight finally produced a promise of more than $2 trillion in cuts over the coming decade.

Even with those savings, new government borrowing would be on track to total four or five times that amount over the same period.

The debt-deficit deal contained virtually no specific cuts to any program. Instead, it would reap $900 billion over 10 years by capping the annual day-to-day operating budgets of Cabinet agencies below inflation.

The deal also set up the bipartisan super committee and told it to produce a plan that would cut $1.2 trillion more from future deficits. If the panel failed, as it did, the alternative was automatic spending cuts of a like amount to domestic and military programs.

The budget caps are indeed tough, but they're also easy to support because most of the pain comes in the future. Likewise, the across-the-board cuts, which start in January 2013, won't cause any immediate hardship.

With projected federal spending expected to total about $4 trillion each of the next two years, the August budget pact would cut spending by $25 billion in 2012 and by $115 billion in 2013, according to the Congressional Budget Office.

"They've sketched out the outlines but they haven't painted the picture, and that's the hard part," said Robert Reischauer, president of the Urban Institute and director of the Congressional Budget Office during the deficit battles of the early 1990s. "They have yet to make the tough decisions."

No sooner had the budget deal been adopted than defense hawks such as Sen. John McCain, R-Ariz., pledged to block nearly half a trillion dollars in automatic spending cuts for the Pentagon and its military contractors.

"I will not be the Armed Services (Committee) chairman who presides over crippling our military," said Rep. Howard "Buck" McKeon, R-Calif.

Congressional champions of defense interests aren't the only lawmakers scampering to protect their favorite programs. The super committee's experience exposed the great difficulty of coaxing lawmakers to embrace real spending cuts in other programs.

The chairmen and senior minority members of the Senate and House agriculture committees tried to add a five-year farm bill onto a deficit panel package that never came together. They promised "reforms" that would end much-criticized direct subsidy payments to Southern rice and cotton growers whether they farm or not.

But instead of banking the nearly $50 billion in savings, farm-state lawmakers maneuvered to channel much of the money to a new subsidy for locking in four-decade-high revenues for corn and soybean growers in the Midwest.

The new subsidy would act as a free revenue insurance and could pay out if a farm lost as little as 13 percent of its revenue in a year. They easily could end up costing the government as much or more than the current subsidies to cotton and rice growers

The revenue insurance idea, said Bruce Babcock, an agricultural economist at Iowa State University, is a "cynical attempt to turn deficit reduction into a guarantee of prosperity for large-scale agricultural interests."

Republicans insist that extending the Social Security tax cut and jobless benefits for the long-term unemployed must be paid for through cuts to other programs or finding other nontax sources of money for them.

But using any such arrangements means they're no longer available for cutting deficits.

A list presented Friday to Republicans at a private caucus contained "cuts" that are among the easiest to enact. They include around $15 billion from new auctions of broadcast spectrum to wireless companies, and $35 billion by increasing the fee that mortgage companies Fannie Mae and Freddie Mac charge lenders to guarantee repayment of new loans. The fee increase would add $15 a month to the monthly cost of an average new mortgage, the White House estimates.

Conspicuously absent are politically nettlesome proposals such as raising airline security fees from the current rate of $2.50 per trip leg, which was part of a recent proposal by super committee Republicans.

These spending cuts are measured over 10 years to pay for deficit spending that occurs over the next year or so, which has generated much grumbling among conservatives.

"It's a gimmick," said Rep. Jeff Flake, R-Ariz. He complained that the pay-for proposals are spread over a decade while the tax savings to workers and aid for the unemployed are for a single year. He predicted the same dance would occur again year from now when both parties will feel the political pressure to renew them again.

The White House, after saying all fall that Obama's jobs agenda must be paid for with tax increases on high-income earners, appears willing to simply pad the nation's $15 trillion national debt instead of finding offsetting cuts.

"It's not even any more about how you pay for it," said White House press secretary Jay Carney. "It's whether or not one party actually supports giving tax cuts to middle-class Americans."


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Comments are posted from viewers like you and do not always reflect the views of this station.
  • by 40some on Dec 4, 2011 at 07:42 PM
    To anonymous, who could forget Bush's failures, it was all Obama had to go on for his first two years, he couldn't accomplish anything worth bragging about.
  • by 40some on Dec 4, 2011 at 05:07 PM
    BS! In the real world you stop spending when the credit card is maxxed out and the card companies will no longer give you an increase.
  • by True Dat ! on Dec 4, 2011 at 02:46 PM
    Writing Headlines Is Harder Than Drooling Out One Side Of Your Mouth.
  • by Ben Location: Kinston on Dec 4, 2011 at 10:11 AM
    We have a pesident who pledged to balance the federal budget in his first three years of office. Instead, he has run up a deficit of over one trillion dollars in every year he's been in office. When democrats had control of both houses of congress they deliberately failed to pass a budget so Obama would have no restraints on spending. When Obama proposed a budget for this fiscal year it was so outrageous that even his own party refused to endorse it. He pays lip service to fiscal reforms while using every excuse in the world to spend more and more and borrow more and more from the Chinese. His only hope of being re-elected is to create class warfare between those who have more and those who have less. This from a candidate who was supposed to be the great uniter of this country. Just how long will it be before ALL Americans are sick of this demagogue?
    • reply
      by Pleasant Surprise on Dec 4, 2011 at 04:30 PM in reply to Ben
      You post is such a pleasant surprise for this site. It does my heart good to know that there are some in Eastern NC that still have the intelligence to see and understand what this administration has done to our country. Thank you Ben, hopefully others will read and understand your post without coming back with ignorance and name calling as is so often done on both sides of the political isle.
      • reply
        by 40some on Dec 4, 2011 at 05:10 PM in reply to Pleasant Surprise
        Nope. "The others" will come and see this post and try to defend the man and his actions. In their eyes he can do no wrong.
        • reply
          by Anonymous on Dec 4, 2011 at 06:19 PM in reply to 40some
          Thats odd, in your eyes, you saw no harm GW BUSH did.
        • reply
          by 40some on Dec 4, 2011 at 07:39 PM in reply to 40some
          Wrong again anonymous. Why do you assume you know so much about me? I don't need to go through the laundry list. I've seen three things Obama has gotten right. It looks as if he got Orleans back on track, Osama and libya. Kinda slim list.
    • reply
      by Bud on Dec 7, 2011 at 04:40 AM in reply to Ben
      How soon we forget. You conservatives have such short memories. You talk about how for two years we had a Democratic majority in both houses but you seem to forget that Republicans fillibustered every significant piece of legislation that came along. It's a miracle that anything got done at all. Keep in mind that the Republicans stated that their NUMBER ONE PRIORITY was to ensure that Barack Obama would be a one term President. This at the expense of the American people and the economy. So if you want to assign blame you need to acknowledge that your own party is AT LEAST as much to blame as anyone.
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