The U.S. Congress Can’t Cut Its Way to Avoiding a Debt Armageddon
Comonwealthfund.org) Congress is considering a joint resolution to set federal budget targets for the next 10 years.
Yeah well, tell me more.
Although the actual policies will need to be specified in subsequent legislation, the U.S. House of Representatives budget resolution calls for cutting at least $880 billion over the next decade for programs under the jurisdiction of the House Energy and Commerce Committee, and at least $230 billion for programs under the House Agriculture Committee. The principal entitlement programs under these committees are Medicaid and the Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp Program), which indicates that these two programs are the principal targets for budget cutbacks.
The combined cuts represent a more than $1.1 trillion loss of services that millions of low-income Americans rely upon. The Senate budget resolution is less specific; it mentions cuts of at least $1 billion, although it would permit deeper cuts.
So, let's see now, that plan is to save $1 trillion, when the average deficit in an administration (no matter Dem or Republican) is $5 trillion.
What a great idea, let's hope it gets bi-partisan support. A decade is ten years, so that's two and a half presidencies. We will have saved $1 trillion, while digging a deeper $12.5 trillion hole. Is that the entire 'art' of this deal, or are there unintended consequences here or there?
Turns out there are a few.
· If Medicaid funding is cut by $880 billion over 10 years, the amount that all states receive from the federal government would be 11.8 percent less than what they would get without any cuts. If cuts are evenly spread across the decade, $72.4 billion in funding would disappear nationwide in 2026 alone, and losses would rise over the remainder of the decade.
· State gross domestic products (GDPs) would be $113 billion lower, which exceeds the federal budget savings.
· About 1.03 million jobs would be lost nationwide in health care, food-related industries, and other sectors.
· State and local governments would lose $8.8 billion in state and local tax revenues. Not extending the enhanced health insurance premium tax credits (that are scheduled to expire after December 2025) would lead to an additional 286,000 jobs lost in 2026, for a combined total of more than 1.3 million jobs lost in a single year.
So far, we’ve stripped a million jobs in the first year and lost $1 trillion in health and welfare services that millions of low-income Americans rely upon. The (currently) Republican held House and Senate claim that as progress. And, perhaps they’re right, but theories based on austerity have never in the history of politics rescued a party or a government.
Austerity is based on further bending the backs of the poor, and the poor are already staggering under the load.
Which is why it’s always the go-to solution of the rich, whether it be Angela Merkel against Greece, PM James Callaghan in 1970s Britain, or the 1997 Asian Financial Crisis. Each of which led to widespread economic hardship, rising unemployment, and social unrest, while failing the nations it was meant to save.
A starving man has never saved the rich from bankruptcy.
We know where the solution lies, but it takes courage and statesmanship, both of which are in short supply.
It’s a moneyed crowd running government today, and maybe it always was. But the Fords, Carnegies and Rockefellers had a social conscience, along with all their piles of dough. You can wake up in the middle of the night these days, trying to pick the brain of a Zuckerberg, Musk or Bezos, and not be a degree more intelligent when the sun breaks over the horizon.
Money was always a byproduct of wealth, until more recent times, when it became the main entre, served right after the soup course, usually on a mega-yacht.
It’s a sin against your nation to only know how to take and construct, while never remembering how to give and deconstruct.
So it is in a government, where you never tax the hand that feeds you.