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Monday, July 25, 2011

Oh, Nancy and Harry, why stop there?

Harry Reid is reportedly putting together his own debt limit increase plan that would contain $2.5 trillion in spending cuts without any offsetting tax increases and that won't touch entitlements. My, that sounds wonderful! Why haven't we seen such a plan before? Why have we even had a standoff?

Well, that is because, as Nancy Pelosi has indicated, the savings would come from ending the wars in Iraq and Afghanistan.
We could go even further with non-health mandatories, could take us almost to two trillion. We could use the offshore -- the Overseas Contingency [the wars in Iraq and Afghanistan] -- could take us to two-and-a-half trillion dollars. Which is the dollar-for-dollar for the lifting the debt ceiling. I don't think we have to have dollar-for-dollar, but for those who think they do, there's a path to get there.
As Philip Klein points out, this is just nonsense. They're taking spending that was already scheduled to end and counting that as spending cuts.
In other words, if you count the savings from ending the wars in Afghanistan and Iraq -- which are expected to end over the next 10 years anyway -- add some additional discretionary spending cuts and assume lower interest payments, it could reach the number that Reid is proposing.

However, such a proposal wouldn't represent $2.5 trillion in real cuts, nor would it even start to address the trajectory of our long term debt, which the rating agencies said puts us at a risk for a downgrade, even if the debt ceiling is raised.
It's just picking a phony baseline of spending that is not scheduled to be spent and then patting yourself on the back for not spending what was already not going to be spent.

If that is what we're going to do, why should we stop with cutting phony spending. Why not add in phony tax cuts. The Republicans could posit that taxes are going to go up 50% and then say that they're going to cut all those tax increases and there you go! We have massive tax cuts. Isn't that what they keep doing with the AMT? It's supposed to go up, but they keep having to cut it. We can play this game all day long.

Of course, it's massively dishonest. It might fool people who are only paying cursory attention to the whole debate. But it wouldn't fool the people we're supposed to be worrying about - our creditors. It won't change anything about the trajectory of unsustainable debt that we're on.

But if you can fool the inattentive voter, isn't that all that the Democrats with their demagoguery about taxing the rich and not sending out the Social Security checks care about?

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