No Runny Eggs

ABC News reports that the Senate Democrats, specifically a staffer for Senate Appropriations Labor, Health and Human Services, and Education subcommittee chair Tom Harkin (D-IA), arranged for a 1/24 rally of lobbyists and interest groups to call for even more federal tax dollars to be spent on things the federal government has no business spending mone…er, labor, health and human services, and education (wait a minute; I was on the right track). The staffer even misapproprated a Reaganomics quote by saying a rising tide raises all boats. Point of order – that’s a rising tide in the private sector; one focused on raising the public sector tide necessarily swamps the private sector and ultimately sinks all boats.

A side note; thanks in no small part to No Child Left Behind, that particular item on the budget trails only defense in discretionary federal spending.

Yesterday, House Budget Committee chair Paul Ryan (R-WI) set the overall FY2011 House discretionary budget authority level at $1,054.7 billion (or if you prefer, $1.05 trillion), with “non-security” at a claimed “FY2008-for-the-rest-of-the-year” $419.8 billion. Meanwhile, House Appropriations Committee chair Hal Rogers (R-KY) set the levels of the 12 individual components of said authority. I do have good news, bad news, and ugly news, which I’ll summarize after the revealing chart (side note; it was a beast to actually find the FY2008 budget authority amounts). Portions of the chart should look familiar – the FY2010, the Obama proposed numbers, and the House FY2011 numbers were included in Rep. Rogers’ release. I cobbled together the FY2008 numbers from the final House Reports on the 2008 Defense appropriations bill and the 2008 omnibus bill, then crunched together a final column which I’ll explain in a bit.

Click for the full-sized graphic

The good news is, outside of the parts of government that are under the purview of the Defense subcommittee, those are actual cuts from what was spent last year. Specifically on the “non-security” end, that’s a $42.6 billion cut from FY2010 levels, and a $58.0 billion reduction from what Obama wanted to spend this year.

That’s where the good news ends. Despite it being, in some cases, quite significant in percentage terms, the overall cut is but a drop in the $1,480 billion ocean of deficit projected for FY2011 if nothing at all changes.

On a policy level, that isn’t exactly a full-on return to FY2008 levels for FY2011 to which the House Republican Conference sure seemed to pledge, and which a significant portion of the Republican Study Committee wants for the entire fiscal year. Depending on whether one measures from the FY2010 numbers as the RSC did or the Obama proposal as the HRC did, that would have been an $82.9 billion cut (an undersell by the RSC, which estimated an $80 billion cut) or a $98.3 billion reduction (an oversell by the HRC, which estimated a $100 billion reduction). It still wouldn’t move the deficit off of a new record, but it would be a second drop.

Now, for the ugly news. I also included a column showing what discretionary spending would be if one were to assume the first 5 months at pro-rated FY2010 levels (which the government is supposedly limited to under the various continuing resoultions) and the last 7 at pro-rated FY2008 levels. It looks like they missed the mark by $5.7 billion.

Revisions/extensions (2:01 am 2/4/2011) – With that said, it is important to note this is just for FY2011, and that comprises, depending on whether one counts from the day the Republicans retook the House or the last day of the current continuing resolution, 9 months or 7 months respectively. Neither President Obama nor Rep. Ryan have put together a FY2012 budget yet. I haven’t taken a look at what knocking spending down to FY2006 levels starting in FY2012 will do on a 12-month basis (it’s quite late), though I strongly suspect that it would bring a 12-month actual cut to over $100 billion.

If Paul Ryan’s and Michele Bachmann’s warning-klaxons’ responses weren’t enough to scare you, Tom Blumer took apart in his latest Pajamas Media column the 2010 Financial Report of the United States Government. I could focus on the after-TARP-tricks (explained in the column) cash deficit of $1.41 trillion in 2010 (with 2009’s adjusted downward by a like amount to $1.30 trillion), or the $2.08 trillion (after a $0.13 trillion worsening adjustment in changes of assumptions related to long-term assumptions on federal employee retirement benefits) net operating cost (GAAP) deficit, or the fact that, for each of the 14 years the report was to be produced to GAAP standards, the Government Accountability Office could not sign off on it. However, since I’ve somehow become a SocSecurity “watcher”, I’ll focus on that:

How about Social Security and Medicare? Well, there’s bad news and, as is often the case with this bunch, pretend good news. The bad news, as seen here, is that the government’s actuarial liability for Social Security jumped by $270 billion in fiscal 2010 to almost $8 trillion. The program now runs at a deficit during most months. Without changes, Social Security will hemorrhage cash at an ever-increasing rate in the coming years.

But, but, but I thought the Trustees said SocSecurity’s position was “improved” relative to taxable payroll because PlaceboCare will force employers to offer more wages instead of health insurance. That leads me to the Medicare part…

As to Medicare, the government claims at that same link that its actuarial liability for that program decreased by $15.3 trillion, a stunning turnaround it attributes to the passage of ObamaCare. Here what the GAO had to say about that assertion:

Significant uncertainties […] primarily related to the achievement of projected reductions in Medicare cost growth reflected in the 2010 Statement of Social Insurance, prevented us from expressing an opinion on that statement.

That’s polite accounting-speak for: “Though we can’t prove it, we think it’s a load of rubbish.”

Which raises the question of whether the 75-year actuarial deficit in Social Security should only have gone up by $270 billion. I should note that the GAO actuarial deficit does not include any “trust fund” operations as the money does not exist (yet).

As for the cash deficits, the latest CBO “The Budget and Economic Outlook” (released today) now projects that the combined OASDI funds will not return to anything approaching cash surpluses, though the OASI fund will have a very-minimal (under $10 billion) cash surplus between 2012 (or perhaps 2013; the chart is unclear) and 2015.

I’m still digesting the larger report, but there’s two more things to note right now – if current laws, levels of taxation and levels of spending continue/increase/decrease/end as scheduled, the FY2009-FY2012 deficits will be $5.3 trillion (with $1.5 trillion projected for this fiscal year and $1.1 trillion projected for FY2012), and total debt will eclipse the Gross Domestic Product no later than 2017.

Tomorrow evening, President Obama will address a joint session of Congress and present the annual State of the Union Address.  We here at NRE will be joining the festivities and Drunkblog the event live, or as close to “live” as several Tanqueray martinis will allow me to be.

You can watch the SOTU address and determine for yourself, whether Obama has become the centrist that the MSM claims he has been reincarnated as or whether he remains the hard leftist that brought us Placebocare, stimulus and bail outs for all of his leftist friends.

As a public service, NRE brings you the following preview of the SOTU address:

Do you remember the Godzilla movies? Do you remember how the sound tracks were never in sync with the video?

Exactly two weeks prior to the SOTU address, President Obama went to Arizona to address the memorial for those killed in the assassination attempt on Representative Giffords. In that address, Obama lectured us about civility. He did so even though he himself, and those advisers like Rahm Emanuel, who have been closest to him, have rarely had a second thought about using graphic, violent language to describe a political opponent or policy they don’t agree with.

It was as I watched the Arizona address that the visual of the old Godzilla films hit me. Like them, the words that come from Obama’s mouth rarely match the actions of his administration or himself.

Tuesday night you will hear Obama talk about our need for fiscal responsibility. You’ll hear Obama give a nod to things like smart and efficient oversight that is somehow intended to be different than the ever increasing excesses that all administration agencies have lorded over their subjects. You may also hear Obama talk about corporate tax reform but don’t be fooled. Regardless of what you hear from his lips that may have you saying “Clintonesque,” ignore it. There is no “center” or “movement to the center” with Obama.

The Godzilla movies were fairly formulaic: monster arrives, monster destroys everything in sight, monster is subdued by a resilient people. Our national Godzilla movie has seen the first two acts. Will we see the resilient people subdue Godzilla?

Revisions/extensions (6:54 am 1/25/2011, steveegg) – I’m just adding a little reminder widget from Cover It Live so you guys will know where to head tonight.