The Rediculous in the Reid Plan

Harry Reid: Official Portrait

In the dual of the debt ceiling plans between the House and Senate the CBO yesterday released its first analysis of Reid’s Senate debt ceiling bill.

Finally, the Democrats submit a plan!

It is called the “Budget Control Act of 2011” in both the House and Senate versions.

For a proper comparison of the merits of the two plans it is informative to read both quite similar CBO analysis reports.:
Congressional Budget Office Analysis of Boehner Revised Plan
– CBO Analysis Report, 7/27/2011

Congressional Budget Office Analysis of Reid Plan
– CBO Analysis Report, 7/27/2011

Study both reports and then go to the last table, labeled table 3 in both reports, and do your own cross examination.

But as you will soon learn in this article and from your own analysis, Reid’s exaggerated claims of far greater spending cuts, $2.176 trillion compared to $917 billion, is patently untrue.

You will also learn the sad truth, that neither plan fixes the problem.

Pell Grants

The first thing I noticed is that the Reid Plan retains the same Pell Grant pork from the Boehner Plan. The political meaning of it is fully explained in this article:
The Bombshell in the Boehner Plan” Azleader, 7/27/2011

But in his appeal for the President’s seal of approval Reid outflanks Boehner’s insider political maneuver and sweetens the deal by upping pork funding for Pell Grants from $17 billion to $18 billion.

And the political gamesmanship continues!

Spending Caps

Though Reid blasted the Republican’s “Cap, Cut and Balance Act of 2011” last week as the worst piece of legislation he’s seen in a long time, it must not have been entirely bad.

Reid includes the “Cap” part – spending caps – as part of the “spending cuts” in his alternate plan.

In the two competing CBO reports they are discussed under the topic heading “Discretionary Caps”.

In Boehner’s plan non-war discretionary caps are set at $1.234 trillion over the next 10 years. In Reid’s plan it is set just slightly lower at $1.228 trillion. They are pretty much the same.

In the Boehner plan the discretionary non-war “spending cut” is  $741 billion and in the Reid plan the “spending cut” is slightly less at $717. (Note: you have to subtract out the discretionary war spending to get the $717 Reid total)

Other Minor Differences

In the overall “spending cuts” war these items don’t make much difference, but Reid includes some interesting differences in his plan worth mentioning.

“Program Integrity” has $19 billion more savings than in the Boehner plan. That is because it includes improved collection procedures for fraud and abuse to catch Social Security, health care, unemployment insurance and tax cheaters.

$19 billion is less than a drop in the bucket, but every little bit helps! Why aren’t we doing these things already?

Reid reduces “Agricultural programs”, commonly called farm subsidies, from an 85% level to a 59% level for another $11 billion in savings.

Reid undoubtedly also wanted to include cuts in oil company subsidies but didn’t because that is to toxic to be passed by the House. Its easier to pick on farmers. They don’t have as strong of a lobby.

Reid further proposes to expand the electromagnetic spectrum over which the FCC has authority to auction licenses. Overall, that would raise $25 billion.

In total this $55 billion is barely pocket change compared to the rest but these items all share one interesting thing in common… they all RAISE revenues.

They are not “spending cuts”.

Both Plans Are About The Same

Besides a little tweaking and a couple minor revenue increases in Reid’s plan both are pretty much, fiscally speaking, almost exactly the same.

After accounting for the $55 billion in revenue increases, the comparative spending cuts in both plans are really pretty close.

So where does this huge difference in “spending cuts” between the two debt plans come from??

War Spending!

By far the biggest “spending cut” in Reid’s plan is $1.044 trillion in cuts to end the Iraq/Afghanistan wars. The Boehner plan contains none of that.

Does Boehner exclude this because he is a war monger and wants to continue the wars? No. He excludes it because that money would not be spent in the first place.

Nobody, least of all the President and Congress, are going to do anything but end those wars. Somebody needs to tell Harry Reid that process is nearly complete in Iraq and under way in Afghanistan.

The total cost of both wars over the last decade was $1.1 trillion. That is only slightly more than Reid’s “spending cut” of $1.044 trillion.

We’d have to re-invade Iraq, conduct another “shock and awe” campaign and remain there 10 years more to spend that kinda money!

That just plain ain’t gonna happen. The President knows it, Congressmen know it, Speaker Boehner knows it, and you and I know it.

Harry Reed may be the only person on the planet who doesn’t know it.

Its absurd for Reid to assume two full fledged fictitious wars conducted for the next 10 years and then claim $1.044 trillion in “spending cuts” for not fighting them.

The Bottom Line

Even at this 11th hour our politicians are still playing games.

Reid takes the cake with his war proposal, but Boehner’s Pell Grant gambit is cheap gamesmanship we cannot afford either.

If you throw out the fictitious war spending and the fictitious “debt service” of about $106 billion for it then the Reid plan has around $103 billion more in apples-to-apples “spending cuts” than the Boehner plan after subtracting out the $55 billion in revenue increases.

Reid can still claim his plan has more spending cuts than Boehner’s but not much.

Consider this… according to the CBO’s March 2011 Baseline, government has a total projected budget of $45.77 trillion over the next 10 years.

And in both plans, if you scratch the fictitious war, we are only talking about $1 trillion in “spending cuts”.

That means that this whole debt ceiling argument we’ve been suffering though  is all over a piddly little 2% cutback in government spending over the next 10 years!

That wouldn’t even be noticeable even it it actually happened, which it won’t.

Ironically, in their ignorance, CNN and the mainstream media will pronounce the Reid plan sensible, “balanced” and tout it as the best thing to come along since the invention of the wheel.

Conclusions

What is known, though, is that the CBO forecasts trillion dollar real deficits staring us in the face for far longer than just the next decade.

The federal government has borrowed and spent every penny in every trust fund it manages.

Our government debt is at 100% of GDP and growing; government spending is a frightening 28% of GDP, and deficit spending a very disturbing 10% of GDP.

The federal government already owns 1/3rd of its own debt! Much of its $4-$5 billion a day in deficit spending is being funded by selling treasury securities to itself through the Federal Reserve.

This government is a runaway freight train headed for a brick wall and that wall isn’t very far away.

The only ‘advantage’ of the Reid plan is that we can ignore our debt problem a bit longer than we can with the Boehner plan.

Neither does anything about it.

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About azleader

Learning to see life more clearly... one image at a time!

Posted on Jul 28, 2011, in Debt, Deficit, Economy, Harry Reid, National Debt, Politics. Bookmark the permalink. Leave a comment.

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