Thread: Economics The Fiscal Cliff Approacheth
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Old 12-03-2012, 01:47 PM   #348
DementedLogic DementedLogic is offline
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False Balance in the Fiscal Cliff Deal: Real Tax Hikes, Fake Spending Cuts - Hit & Run : Reason.com

False Balance in the Fiscal Cliff Deal: Real Tax Hikes, Fake Spending Cuts








Neither Democrats nor Republicans are providing
much in the way of details about the fiscal cliff negotiations, at
least not on the record. But Politico
reports
a few details about what kind of deal we might be able
to expect: Taxes will rise by $1.2 trillion or a little less. At
the same time, "there will be at least $1.2 trillion in spending
cuts and 'war savings.'" Presumably the idea will be for the
spending cuts and tax hikes to appear to balance each other out.
But it's only an appearance.


That's because claiming that so-called "war savings" are a
spending cut is Washington's
favorite budget gimmick
.*Doing so would allow legislators
to take credit for savings that are already going to happen.
Counting war savings would mean that almost no real cuts are
necessary: The Congressional Budget Office scored it earlier this
year as "saving" about $850 billion. That's money that was never
going to be spent, but gets counted as a "cut" anyway.*


Finally, Politico reports that some sort of entitlement
cuts may be part of the deal as well. What kind? Who knows?
Republicans won't say what they want. And Democrats won't make an
offer of their own. Nor are they likely to show up any time soon.
The report also suggests that the cuts could end up totaling about
$400 billion, or perhaps more, at least eventually. "Democrats want
most Medicare and other entitlement savings to kick in between 10
and 20 years from now," the story says. Which, given the
congressional history of delay and avoidance on long-planned
Medicare cuts, may as well be never.*


So if Politico's report is right, that's where things
stand: Real tax hikes, fake spending cuts, and a half-hearted
gesture toward Medicare cuts a decade from now. If that's the deal,
it's not much of one.*




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