About This Blog

Ludwig von Mises (1881-1973) was the greatest economist of my time. His greatest works can be accessed here at no charge.

Mises believed that property, freedom and peace are and should be the hallmarks of a satisfying and prosperous society. I agree. Mises proved beyond a shadow of a doubt that the prospect for general and individual prosperity is maximized, indeed, is only possible, if the principle of private property reigns supreme. What's yours is yours. What's mine is mine. When the line between yours and mine is smudged, the door to conflict opens. Without freedom (individual liberty of action) the principle of private property is neutered and the free market, which is the child of property and freedom and the mother of prosperity and satisfaction, cannot exist. Peace is the goal of a prosperous and satisfying society of free individuals, not peace which is purchased by submission to the enemies of property and freedom, but peace which results from the unyielding defense of these principles against all who challenge them.

In this blog I measure American society against the metrics of property, freedom and peace.

Saturday, December 14, 2013

The Truth About The Infamous Ryan/Murray "Budget Deal"

You've all heard about the infamous "budget deal" which was hammered out by self-described conservative Republican Congressman Paul Ryan and leftard Democrat Congressman Patty Murray. The House approved the deal a few days ago. The Senate will approve it soon, and the President will sign it. Washington is collectively patting itself on the back for exercising fiscal self-control. The fan bases of the two major political parties are unhappy but they seem resigned to accept the deal. The Tea Party is livid.

First, the facts...

1. The deal does NOT cut net federal spending, not in the next two years nor in the next 10 years. In fact, net federal spending increases by $12 billion:
The deal raises spending $63 billion in 2014 and 2015, split between defense and nondefense programs. That is a lot of money even by Washington standards...So there are more spending hikes in this package ($63 billion) than claimed spending cuts ($51 billion). So this agreement makes government bigger, not smaller, even by its own accounting.
2. The deal's spending "cuts" noted above are not slated to occur until 2022 and 2023. Moreover, they are not cuts in discretionary federal spending but in entitlement programs:
Most of the 2022 and 2023 savings ($28 billion) are supposed to come from putting caps on entitlement spending in those years.
3. The deal raises taxes by $34-billion:
According to the SBC analysis, $34 billion of those savings are actually revenue increases...
4. The new taxes will mostly affect airline passengers:
Airline fees: If you plan to take a trip , buy your tickets now and save a few bucks. The Ryan-Murray agreement would raise the TSA security charge to $5.60 for any one-way trip.  So $11.20 round trip.  Currently, the so-called "9-11 fee" is $2.50 for a nonstop flight and $5 for travel that involves connecting flights.  The deal would charge the same $5.60 regardless of whether the flight plan was nonstop or not.
5. The deal only affects federal discretionary spending, reducing it on paper in the near term by $38 billion. This paltry sum (by Washington standards) amounts to a mere 1% of estimated federal spending in 2013.

So, to sum up, this infamous budget deal raises current discretionary spending, increases current taxes and delays spending cuts to third-rail entitlement programs to 10 years from now in order to make the figures come out right. Moreover, all the fuss is over less than 1% of what Washington spends each year. In short, this bogus budget deal is more of the same old Washington slight of hand.

The only real effect of the budget deal is that it guarantees there will be no political battles over the next two years with regard to raising the debt limit or closing down the federal government. In other words, the national spotlight on the Washington sewer will be dimmed for the next two years!

No wonder the Washington establishment -- Republicans and Democrats alike -- are hailing this "deal."

Lead Democrat negotiator, Patty Murray, said of the deal:
“And I know it would have been far more devastating to working families if the certainty of Congress lurching towards either another government shutdown or continued sequestration was added to the uncertainty surrounding their unemployment insurance.”
Paul Ryan added:
“This agreement will stop Washington’s lurch from crisis to crisis,” Ryan said in a statement after the bill was passed. “It will bring stability to the budget process and show both parties can work together.”
And President Barack Obama was pleased:
The President called the bill’s passage a “positive step forward for the nation and our economy,” but said he would have liked the bill to extend unemployment insurance. Still, he said in a statement, “it marks an important moment of bipartisan cooperation and shows Washington can and should stop governing by crisis and both sides can work together to get things done.”
No wonder the Tea Party is outraged. The Tea Party wants the size of the federal government and its influence on the lives of individual citizens rolled back. The Tea Party wants the national spotlight turned on the Washington sewer brighter and brighter. The Tea Party wants real progress, not business as usual. This budget deal does nothing in that regard.

In fact, it does the opposite while providing the Washington establishment the political cover of bipartisan smoke and mirrors.

House budget data
White House budget data

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