Rep. Ron Paul (R-TX) has about the best take on the debt ceiling deal that has crossed my computer screen, most people losing sight of the fact that the agreed to “cuts” are not really cuts at all, at least not in the way that most people use the word in their own finances.
When a Cut is Not a Cut
One might think that the recent drama over the debt ceiling involves one side wanting to increase or maintain spending with the other side wanting to drastically cut spending, but that is far from the truth. In spite of the rhetoric being thrown around, the real debate is over how much government spending will increase.
No plan under serious consideration cuts spending in the way you and I think about it. Instead, the “cuts” being discussed are illusory, and are not cuts from current amounts being spent, but cuts in projected spending increases.
In reality, bringing our fiscal house into order is not that complicated or excruciatingly painful at all. If we simply kept spending at current levels, by their definition of “cuts” that would save nearly $400 billion in the next few years, versus the $25 billion the Budget Control Act claims to “cut”. It would only take us 5 years to “cut” $1 trillion, in Washington math, just by holding the line on spending. That is hardly austere or catastrophic.
What’s most disconcerting about all of this is that we are told we live in a world where inflation is quite low, employers all across the land using this as justification for freezing wages, benefits, and the like while, in Washington, the notion of enacting a simple “freeze” is anathema, an other-worldly concept that, somehow, isn’t even on the radar.