A sea of numbers that all seem to tell different stories about the same thing

You may have heard about the 38 billion dollar deal that the CBO says was only 380 million? What’s the fuss?

Budgets and numbers seem appropriate on April 15. The deal and the CBO thing is somewhat like cash versus accrual that you choose when making business reports to the IRS. Bruce McQuain has a good rundown on why The $32.5 billion in cuts are real cuts.

All of these things are important. Removing the budget authority essentially defunds a program, or, as mentioned, stops it in its tracks and removes the money from being available to the program being defunded. It also removes it from the grasping, greedy fingers of bureaucrats ready and eager to take whatever money they can get their hands on and spend it.

This is also related to some of the ‘end of year’ spending where departments make sure to use up their budgets allocated for the year so as to not cause people to think its budget can be reduced next year.

What has happened is that some project and activities that had money set aside, but not yet spent, were canceled. The 380 million is about money that was being spent. The 38 billion is about money that was promised and set aside but not yet on the line.

The importance of the budget deal is that it resets the debate. Prior to this point, the term “cuts” has often been used to refer to a reduction in growth. Now it is being used to actually refer to reductions in the actual amounts being spent. The rate of growth in government spending has exceeded that of the economy and that resulted in financial stress. If that rate of growth can be held to below the rate of growth of the economy, that stress will be relieved over time. If the rate of growth of government can be stopped or even made to go towards a smaller government, then the climb out of current debt and obligations will be more assured to occur at a faster clip.

Comments are closed.