How To Talk About Spending ‘Cuts’

How did we get to the point where an increase in federal outlays is being advertised — by the GOP, no less — as a “spending cut”? That’s the question at the heart of the budget battle brewing on Capitol Hill. The House budget chief, Congressman Jodey Arrington, crows that “cutting spending can help” lower the deficit and interest payments on federal debt. Yet the House GOP budget features a 1 percent increase in discretionary federal spending. That dims the aura of fiscal righteousness for the Republicans, since discretionary spending — some 27 percent of the budget — is where the solons have the most leeway to trim spending. By contrast there’s no negotiating the interest due on the debt. That annual expense, nearly $1 trillion, now exceeds America’s defense spending. The rest of the budget is constrained by entitlement spending on programs like Medicare, Medicaid, and Social Security. That’s where the outcry over “spending cuts” comes to bear. The Times is sounding the alarm over “steep Medicaid cuts” that are reportedly “central to Republicans’ budget plans.” The budget passed by the GOP House, the Times reports, would “cut spending by $880 billion over the next decade.” What is the alchemy, though, that turns what the Times concedes is “an 11 percent reduction in the program’s planned spending” into a budget cut?The House budget resolution sheds some light on this mystery. In the current fiscal year, the budget calls for spending $677 billion on Medicaid and related health matters. By 2033, that spending is projected to reach $711 billion, and by 2034 that figure rises to $741 billion. What the Times, and others — including, now some in the GOP — are protesting is that the Medicaid spending won’t rise at a faster clip than the House Republicans are planning.Along the way, some cost savings could be achieved by, say, requiring Medicaid recipients to get a job — or at least look for one — in an echo of how 1990s-era welfare reform helped trim costs and incentivize countless recipients of federal largesse to enter, or return to, the workforce. There’s also talk of scaling back the lavish subsidies, imposed via Obamacare, that are meant to entice people to sign up for government-funded health insurance.“We are on a mission to cut waste, fraud and abuse of taxpayer dollars,” Congressman Harold Rogers explains, to “protect the future of programs like Medicaid.” Yet talk of “spending cuts” has liberals and their allies in the press smelling blood in the water. Vox is warning of GOP aspirations of “slashing Medicaid.” The poorest Americans will “bear the brunt” of any “cuts,” the Times laments. Even President Trump seems to be walking back talk of any cutting.This cognitive dissonance is hardly new. The attempt to frame a slowdown in the growth of federal spending as a “cut” goes back decades. It’s one reason why efforts to control the runaway costs of entitlement programs have foundered. For decades, Congress used to debate on how much to increase Social Security payouts based on economic conditions and budgetary constraints. This helped keep entitlement expenses in check — to a degree. Yet in the 1970s, amid the stagflation triggered by President Nixon’s abandonment of the gold standard, Congress gave up trying to hold the line on benefit increases. The legislators set up a kind of budgetary doomsday machine by mandating “future automatic benefit increases” in any year when inflation hit 3 percent or higher. In 1986 the solons removed the 3 percent trigger. So it is that the debasement of the fiat dollar fuels the runaway growth in spending.Medicare and Medicaid costs, too, rise in inexorable lockstep every year driven by inflation, eligibility, and benefit formulas buried in the fine print of voluminous budget resolutions. Once enacted into law, these ever-higher costs are deemed sacrosanct and, as GOP reformers learned in 1995 — and today’s Republicans could yet overcome — any hint of slowing down this rate of growth is met with outrage over the shocking notion of “spending cuts.”

How To Talk About Spending ‘Cuts’

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