These are the times that try budget analysts’ souls—especially budget analysts who’d like to see Washington dramatically cut spending. The debate over lifting the debt ceiling has produced a number of proposals from Capitol Hill—none of them have been worth celebrating. We can now add House Speaker John Boehner’s latest proposal to the pile.
If it is true that a failure to increase the debt limit on August 2nd has the potential to bring about economic Armageddon, shouldn’t we be asking ourselves if it’s a good idea to allow the political class in Washington to continue collectively play God with our lives? After all, these people are fallible human beings.
My colleague Dan Mitchell discussed the good, the bad, and the ugly in the deficit reduction plan released by the bipartisan group of senators known as the “Gang of Six.” As Dan noted, the plan is more of an outline and a complete assessment isn’t possible until more details emerge. However, the fact that President Obama immediately embraced the plan ought to tell proponents of limited government all they need to know.
Washington is the only town where the circus never leaves. Elephants, donkeys, clowns and a ringmaster residing at 1600 Pennsylvania Avenue — our nation's capital has it all. And what a show they're putting on for the American people over raising the debt ceiling for the umpteenth time in recent years.
Cato Institute scholars Chris Edwards and Dan Mitchell evaluate the plan offered by Republicans for lowering federal spending using a so-called “Cut, Cap and Balance” proposal that would make small cuts to federal spending in the short run, cap federal spending, and balance the federal budget using a tax-limited balanced budget amendment to the Constitution:
When government officials come up with what they claim to be a wonderful new idea, I often think of an old Saturday Night Live skit from 1990 poking fun at commercials for blue jeans. The skit’s scene is a group of middle-aged buddies getting ready to play basketball in their new “Bad Idea Jeans.” Each guy optimistically announces a plan to do something that is actually a “bad idea.” For example, a character says “I don’t know the guy but I’ve got two kidneys and he needs one, so I figured…” and “BAD IDEA” flashes across the screen. (The skit can be watched here.)
A new video produced by Cato’s Caleb Brown and Austin Bragg does a typically stellar job of visualizing the alleged $2 trillion in spending cuts currently being negotiated on Capitol Hill as part of a deal to raise the debt ceiling.
For much of the nation’s history, policymakers recognized that the federal government’s powers were “few and defined,” as James Madison noted. Issues like education and community development were largely left to the states. Unfortunately, the separation of responsibilities between the federal government and states has been eroded to the point that federal funds now account for approximately a third of total state spending. A consequence is that federal aid to the states has fostered bigger government at all levels.
Almost 600 pages into the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act is a provision directing the Government Accountability Office to assess the feasibility of the federal government certifying organizations that provide financial literacy. The GAO released its report this week and concluded that “While a federal process for certifying financial literacy providers appears to be feasible, doing so would pose challenges.”
Congressional Republicans have said that spending cuts must be at least as large as an increase in the debt ceiling. Negotiations over lifting the debt ceiling are ongoing, but the “magic number,” so-to-speak, would be around $2 trillion in spending cuts.