Apparently more charts are needed concerning the question: sequestration, is it a good thing? Washington has resorted to issuing usual scary stories to get its way on spending more happy money far into the future. In the absence of a functional Congress that can actually agree on a budget instead of passing a continuing resolution and
deux ex machina spending cuts,
US Person said
yes. Why? One reason is the law exempts a significant portion of mandatory spending on Social Security and Medicaid from sequestration (automatic cancellation of budgetary resources). Medicare cuts are limited to 2% per year. The Act's mandatory caps on discretionary federal spending keep appropriations for 2012 and 2013,
except for war spending, below that provided for in 2011. The caps
limit growth of, not actually cut, federal appropriations to 2% a year from 2014 to 2021. [dotted line, chart] Discretionary spending, that spending controlled by Congress in annual appropriations, accounted for nearly 40% of federal spending in 2010. The amount was $1.3 trillion of which over half ($689 billion) was spent on defense programs. Granted, the capped growth in federal funding will be less than the Congressional Budget Office's projection for the economy's growth rate, so total federal discretionary funding will fall relative to GDP and by 2021 reach levels not seen in a long time. Liberals are screaming bloody murder and gay bashing as horror stories of their social programs being brutalized and pillaged by pointy-headed tax avoiders are trotted out for the press to repeat into their screens and microphones. But the Budget Control Act does not specify how the discretionary budget authority is be allocated among various federal programs, it only caps total spending. So don't fall for the scary sounds emanating from behind the beltway, its just the lobbyists farting!
Fact is according to CBO statutory caps on discretionary spending were imposed in 1990, extended twice, and did not expire until 2002. The limits helped control discretionary spending. According to CBO
all of the required reductions in appropriations could be met by cutting appropriations for defense programs--not directly related to war fighting in Iraq and Afghanistan--from 3.7 of GDP in 2011 to 2.4% GDP in 2021! Budget authorities could even be allowed to grow for non-defense programs at the rate of inflation under this scenario. Even with the Budget Control Act mandates limiting growth in spending, the amount of outstanding pubic debt will continue to grow. By 2023, assuming current laws remain in place, debt will equal 77% of GDP on an upward path (the chart understates the problem since it does not include federal debt held by the Fed or other government entitites). No, we cannot cut our way to prosperity but we may be able to avoid becoming another Greece:
[charts source: Congressional Budget Office]
