fiscal follies

Max Sawicky sawicky at epinet.org
Sun Sep 26 13:24:42 PDT 1999



>
> Max, some enlightenment please. Why are the spending caps being
> breached? Where's all this reckless spending happening? What's the
> status of the non-SS "surplus"? And is the administration just
> standing by smiling, making political hay out of embracing strict
> austerity, while the goobers of the GOP spend money on god knows what?

1. The caps are being breached because they are unreasonably tight, because there are too many Repugs who like to appropriate discretionary funds that are targeted to their district and/or to campaign contributors. Plus there are a few that think that some of the money is well-spent. The absence of the deficit bogeyman and the presence of huge surpluses energizes all these motives.

2. I wouldn't say there's any more reckless spending than usual, though the existence of the caps creates 11th-hour situations where deals are made quickly and covertly, facilitating the passage of spending that is more dubious than average. This has led to some of the leading budget hawks calling for the caps to be raised and adjusted annually for inflation (such as Robert Reischauer). They are afraid that there is more spending with caps than without them.

3. The non-SS surplus for FY2000 has all been spent, but it wasn't too large to begin with. Latter-year non-SS surpluses remain large and in prospect. The big flap is over a minor dip into the SS trust fund surplus for FY2000, since it is a heresy against the bipartisan, religious adherence to using the SS surplus to pay down debt, described paradoxically as being "put into a lockbox." (In other words, if the surplus is used for non-SS spending that's a "raid." But if it's used for non-SS debt repayment, that's a "lockbox." As I said before, this is so stupid it's hard for rational people to understand.)

4. The spending splurge of which we speak is, after discounting for inflation, quite modest. Tomorrow I'll dig up a few numbers. I don't ordinarily pay too much attention to the 'next year' trench warfare, since that does fall within my definition of parliamentary cretinism.

5. The Administration is not overly concerned with the aggregate spending issue right now. They've won the war. There will be a massive unified budget surplus. This is just mopping up over specific programs.

6. The goobers' budget process is imploding, creating the possibility for abolition of the caps, an important change for the better. Caps are a way of saying public spending is something that only has to be held back; it has no positive value. An inflation-adjusted "cap" says spending must advance in some way or another with the passage of time, opening the way for more substantive standards for spending growth.

mbs



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