Debt Ceiling: The Trap of Budget Cuts in the 'Out Years'

Jon N. Hall
President Obama is making noises about getting a multi-year deal in the upcoming debt ceiling negotiations.  House Republicans should resist this -- it is a trap. The only things a Congress can control are those that happen during its own time in office.  No Congress can bind another Congress.   Back-loaded budget cuts that are supposed to happen years from now aren't worth the paper they're written on.

Larry Kudlow addressed this issue Wednesday on The Kudlow Report in a sweet little sermon called "The Budgetary Game is a Taxpayer Scam." CNBC.com puts up videos of most of Larry's segments, but I couldn't find a video for the segment in question. Which is a pity, as Larry's delivery is terrific. But here's the transcript, and here's the last lines:

Let's be honest here. This budgetary game remains one big taxpayer scam. Look, I used to work in the federal budget office. I know the game.

Here's yet another scam: big budget deals say they "cut" (there's that word again) a couple of trillion dollars over ten years. But most of it is targeted for the last couple of years, as in years eight, nine, and 10. So basically it'll never happen. It's four or five congresses from now. Laws change. Deals are broken.

At the end of the day, the only thing that really matters is next year's budget. Will it be cut? Ever in my lifetime? Because if it were cut, it would bring that line in that chart above down. Now that would be ;;; called a decline. All of that other stuff? Increases. [Emphasis added.]

When business cut expenses, the spending line declines. But when government cuts spending, the spending line always rises. Think of it.

Thank you, Larry.

Jon N. Hall is a programmer/analyst from Kansas City.

President Obama is making noises about getting a multi-year deal in the upcoming debt ceiling negotiations.  House Republicans should resist this -- it is a trap. The only things a Congress can control are those that happen during its own time in office.  No Congress can bind another Congress.   Back-loaded budget cuts that are supposed to happen years from now aren't worth the paper they're written on.

Larry Kudlow addressed this issue Wednesday on The Kudlow Report in a sweet little sermon called "The Budgetary Game is a Taxpayer Scam." CNBC.com puts up videos of most of Larry's segments, but I couldn't find a video for the segment in question. Which is a pity, as Larry's delivery is terrific. But here's the transcript, and here's the last lines:

Let's be honest here. This budgetary game remains one big taxpayer scam. Look, I used to work in the federal budget office. I know the game.

Here's yet another scam: big budget deals say they "cut" (there's that word again) a couple of trillion dollars over ten years. But most of it is targeted for the last couple of years, as in years eight, nine, and 10. So basically it'll never happen. It's four or five congresses from now. Laws change. Deals are broken.

At the end of the day, the only thing that really matters is next year's budget. Will it be cut? Ever in my lifetime? Because if it were cut, it would bring that line in that chart above down. Now that would be ;;; called a decline. All of that other stuff? Increases. [Emphasis added.]

When business cut expenses, the spending line declines. But when government cuts spending, the spending line always rises. Think of it.

Thank you, Larry.

Jon N. Hall is a programmer/analyst from Kansas City.