President Obama said in his State of the Union speech Weve already agreed to more than $2 trillion in cuts and savings.
That was reassuring.
The new budget he released this week promises $4 trillion in deficit reduction -- about half in tax increases and half in spending cuts. But like most politicians Obama misleads.
Cato Institute economist Dan Mitchell cut through the fog to get at the truth of the $2 trillion cut.
We have a budget of what almost $4 trillion? So if were doing $2 trillion of cuts Mitchell said were cutting government in half. That sounds wonderful.
But what the president was talking about is not even a cut. The politicians just agreed that over the next 10 years instead of increasing spending by $9.48 trillion theyd increase it by just $7.3 trillion. Calling that a cut is nonsense.
Mitchell gave an analogy: What if I came to you and said Ive been on a diet for the last month and Ive gained 10 pounds. Isnt that great? You would say: Wait what are you talking about? Thats insane. And I said: I was going to gain 15 pounds. Ive only gained 10 pounds therefore my diet is successful.
Democrats use this deceit when they want more social spending. Republicans use it for military spending.
And the press buys it. The Washington Post has been writing about draconian cuts.
The politicians know this game Mitchell said. The special interests know this game. Everyone gets a bigger budget every year. ... And we wind up sooner or later being Greece.
We are definitely on the road to bankruptcy.
We have maybe 10 15 years advanced notice. And whats frustrating is that were not taking advantage of that even as we see these other countries collapsing into social chaos and disarray.
Mitchell points out that the politicians dont even have to make actual cuts to save the future. If they just slowed the growth of government to about 2 percent per year the U.S. economy could grow out of this mess. But the politicians wont do even that.
Being from the Cato Institute I actually do want to cut spending. But if all were trying to do is balance the budget over 10 years which is sort of the minimal thing that politicians keep saying we should do if we simply limit the growth of spending to 2 percent a year which is about the projected rate of inflation well have a balanced budget in 2022. ... But instead the politicians say Oh well have draconian and savage budget cuts. ... They dont want to put government on a diet even if that diet allows spending to grow 2 percent a year.
They also continually mislead us about what their schemes will cost.
President Bush said the war in Iraq would cost $50 billion to $60 billion. It cost $800 billion. When Medicare Part A was created the government said it would cost $9 billion in 1990. It cost $67 billion. They said the hiring of TSA airport security screeners would cost $100 million. Then they spent $700 million. Yet the media report the estimates as if they are realistic. Again and again politicians get away with underestimating the cost of their programs.
Often the cost goes up because people change their behavior to get free stuff. A program meant to help the needy costs a certain amount. The next year it costs more because now more of the needy know about the program and more social workers know how to tap it. The next year the non-needy feel like suckers if they dont get the handout and they figure out a way to game the system.
Then Mitchell point out what do politicians do the next year? They expand the program to buy more votes. And the year after that they add a new benefit. Thats whats happened with Medicare. Its not just that they got the fundamental estimates wrong. They did. But every new generation of politicians figures out some new expansion some new benefit.
And so were on the road to Greece.
Bottom line: Dont trust the politicians numbers.
John Stossel is host of Stossel on the Fox Business Network. Hes the author of Give Me a Break and of Myth Lies and Downright Stupidity. To find out more about John Stossel visit his site at johnstossel.com.
President Obama said in his State of the Union speech Weve already agreed to more than $2 trillion in cuts and savings.
That was reassuring.
The new budget he released this week promises $4 trillion in deficit reduction -- about half in tax increases and half in spending cuts. But like most politicians Obama misleads.
Cato Institute economist Dan Mitchell cut through the fog to get at the truth of the $2 trillion cut.
We have a budget of what almost $4 trillion? So if were doing $2 trillion of cuts Mitchell said were cutting government in half. That sounds wonderful.
But what the president was talking about is not even a cut. The politicians just agreed that over the next 10 years instead of increasing spending by $9.48 trillion theyd increase it by just $7.3 trillion. Calling that a cut is nonsense.
Mitchell gave an analogy: What if I came to you and said Ive been on a diet for the last month and Ive gained 10 pounds. Isnt that great? You would say: Wait what are you talking about? Thats insane. And I said: I was going to gain 15 pounds. Ive only gained 10 pounds therefore my diet is successful.
Democrats use this deceit when they want more social spending. Republicans use it for military spending.
And the press buys it. The Washington Post has been writing about draconian cuts.
The politicians know this game Mitchell said. The special interests know this game. Everyone gets a bigger budget every year. ... And we wind up sooner or later being Greece.
We are definitely on the road to bankruptcy.
We have maybe 10 15 years advanced notice. And whats frustrating is that were not taking advantage of that even as we see these other countries collapsing into social chaos and disarray.
Mitchell points out that the politicians dont even have to make actual cuts to save the future. If they just slowed the growth of government to about 2 percent per year the U.S. economy could grow out of this mess. But the politicians wont do even that.
Being from the Cato Institute I actually do want to cut spending. But if all were trying to do is balance the budget over 10 years which is sort of the minimal thing that politicians keep saying we should do if we simply limit the growth of spending to 2 percent a year which is about the projected rate of inflation well have a balanced budget in 2022. ... But instead the politicians say Oh well have draconian and savage budget cuts. ... They dont want to put government on a diet even if that diet allows spending to grow 2 percent a year.
They also continually mislead us about what their schemes will cost.
President Bush said the war in Iraq would cost $50 billion to $60 billion. It cost $800 billion. When Medicare Part A was created the government said it would cost $9 billion in 1990. It cost $67 billion. They said the hiring of TSA airport security screeners would cost $100 million. Then they spent $700 million. Yet the media report the estimates as if they are realistic. Again and again politicians get away with underestimating the cost of their programs.
Often the cost goes up because people change their behavior to get free stuff. A program meant to help the needy costs a certain amount. The next year it costs more because now more of the needy know about the program and more social workers know how to tap it. The next year the non-needy feel like suckers if they dont get the handout and they figure out a way to game the system.
Then Mitchell point out what do politicians do the next year? They expand the program to buy more votes. And the year after that they add a new benefit. Thats whats happened with Medicare. Its not just that they got the fundamental estimates wrong. They did. But every new generation of politicians figures out some new expansion some new benefit.
And so were on the road to Greece.
Bottom line: Dont trust the politicians numbers.
John Stossel is host of Stossel on the Fox Business Network. Hes the author of Give Me a Break and of Myth Lies and Downright Stupidity. To find out more about John Stossel visit his site at johnstossel.com.
