Budget Nonsense
By John D. Turner
19 Apr 2011

A long time ago, when I was much younger, more “optimistic”, and had more disposable income, my wife and I got into Amway. Like millions of Americans, the idea of having a business of our own appealed to us. And what could be better than a business we could run out of our own home, with quality products, that we could do part time? We were going to be rich!

Well, it didn’t turn out that way. Seems most of the folks we knew had had their own encounters with Amway, and were not only not interested in joining in order to make us rich, but were not interested in the products either, even at the discounted price I was willing to offer in order to make some sales. Ten years and many other multilevel companies later, we decided that we really were not cut out for the life of a salesperson and moved on to other money-losing propositions, such as insurance, real-estate, and the stock market.

OK, so my investment history hasn’t been stellar. But along the way I did learn some interesting things about sales and how it works; things that do come in handy when the doorbell rings and it’s another salesman trying to sell me a vacuum cleaner, aluminum siding, or some frozen meat off the back of their truck.

One of the things I learned, from a Zig Zigler tape was a technique called “reduction to the ridiculous.” It goes like this. I have a product I want to sell that costs $149. Now $149 is probably more than the individual I am talking to wants to pay. So how am I going to close the sale?

First, I establish that he or she is interested in the product; likely they would buy it, the only stumbling block being the price. So I point out to them that yes, $149 seems like a lot of money. But in reality, it’s only $2.87 a week. Or to put it in better perspective, it’s only about 40 cents a day; why they probably spend more than that on lunch or a soda! So for less than the cost of a soda a day, they can have this wonderful product right now!

It doesn’t always work, but you would be surprised how often it does. If you think about it, you have probably had this sales pitch used on you numerous times.

Politicians have a similar spiel. I call it “inflation to the ludicrous.” It goes like this. Take any dollar amount, say, $10 billion. Then project it over 10 years, and claim that you are going to “save” the taxpayers that amount of money. After a while, transition to only talking about the “total” amount you are going to “save”, in this case, the number is now $100 billion, and let the voter’s think you mean “savings” out of this year’s budget.

What’s great about this ploy is that you can claim pretty much any number you like as “savings” or a “cut”, and never have to actually cut anything. I mean, who’s going to know? The numbers are so huge anyway, and after the budget is actually passed (if it ever is), it’s too late to do anything about it, and in any event, you can always blame the discrepancies on the other party.

If you think about it, you have probably heard politicians make these sorts of claims numerous times as well. The President himself used this exact same tactic in the speech he recently gave on his version of the FY12 budget. In fact, he took it a step further, lengthening the “window” and claiming that he would be saving $4 trillion over a 12-year period.

Wow, he’s good! And this despite the fact that, with any luck at all, he won’t be around after 2012 to have any influence over events. Does anyone remember the projected “$1 trillion budget surplus over 10 years” President Clinton left us with that evaporated pretty darned quickly once President Bush took office?

So what other sorts of games do politicians play with the budget and other legislation?

Politicians are full of weasel words like “cutting waste” and “eliminating abusive and unnecessary spending.” But what exactly do those words mean? We hear them every year. One would think that all the waste, abuse, and unnecessary spending should have been purged from the budget long ago. What is left should by this time be a lean, mean, fighting machine, with every dollar of vital necessity to the continuation of the Republic.

Surely, Democrats gave us that impression over the past few weeks. During the start of the negotiations on cutting the FY11 budget, which had been “deemed” passed by the last Congress, but never actually passed, the Democrats started negotiations by flatly stating that nowhere in the $3.8 trillion budget was there a single dollar that was not absolutely necessary.

After much wrangling, threats to “shut down the government”, complaints by the Democrats that Republicans were “trying to kill women”, and “starve the elderly,” Democrats managed to throw $38.5 billion in cuts out of the budget.

As it turns out though, only about $14 billion of this represents “real” cuts, in dollars, to actual projects the bill funds, and on further examination the amount of actual money saved turned out to be only around $300-400 million. Real money to be sure, but nowhere near the announced savings of $38.4 billion ballyhooed by our elected sacks-full-of-hot-air on national television. Just another example “creative accounting” on the part of congress, and not even “chump change” when it comes to the amounts needed to actually address our budget imbalance.

Of course, Democrats went to the mat, insisting that the funding of the National Endowment for the Arts, National Public Radio, and Planned Parenthood were in the vital national interests and in no way could they be cut from current funding levels, much less eliminated from the budget.

One person’s pork is another’s “vital interests.”

Politicians also have a vocabulary all their own; one which sounds like the same words we commonly use in day to day conversation, but which actually mean something quite different when used by a politician. The intent here is to make you think you are hearing one thing when in fact, they are saying something completely different. This is so that they can have “plausible deniability” when you finally discover the discrepancy. It isn’t their fault, after all, that you misunderstood what they were saying.

A good example of this, when it comes to the budget, is the word “cut.”

Now you or I might think that when a politician uses the word “cut” they mean to reduce. And yes, that is what they mean; sort of. A politician once dazzled us with his brilliance by informing us, on the witness stand that his statement hinged on what exactly the definition of the word “is” is. The same is true with the use of the word “cut.”

It depends on your starting point, apparently.

Normally, if someone told me that they were cutting a certain number of dollars from a program I would assume that the budget for that program was being reduced by that number of dollars. For example, let’s say in FY 11 we spent $100 billion on a government program which we will henceforth call “Umptyfratz”. If I was told that in FY12 the budget for Umptyfratz was being cut by $5 billion, I would naturally assume that the government’s intent was to only spend $95 billion on Umptyfratz.

I would be incorrect in that assumption.

Umptyfratz, like most government programs, is deemed to be utterly necessary for the government to fund. Indeed, not only is it necessary to fund, but it is vitally necessary to increase funding for this totally worthwhile program. Why if Umptyfratz isn’t funded, children will die, old folks will be thrown out into the streets, dogs and cats will live together in sin, and we could be facing the imminent collapse of the Federal Government. So Umptyfratz will not only have to be funded, but funding will have to increase. Both parties agree on this. What they don’t agree on is how much more.

Democrats project a 10% increase in Umptyfratz funding levels. This would result in adding $10 billion to Umptyfratz in the FY12 budget, bringing the total spending to $110 billion of absolutely necessary spending.

Republicans project a 5% increase in Umptyfratz funding levels. It’s a great program, and we really need it but we can’t afford to increase funding by 10% like the Democrats would like. The Republican proposal brings the total FY12 spending for Umptyfratz to $105 billion.

Once again, you or I would look at that and think wow! Spending on Umptyfratz has increased by 5%. But no; Democrats would deem this a cut in the budget for Umptyfratz. How? Because it is $5 billion less than what they deemed necessary (at least, publically), so therefore, it is a cut. Sounds crazy? Sounds normal; the Democrats have been pushing this line for as long as I can remember.

This is how it is that the budget can increase year after year and yet politicians can claim they are cutting things. “Cut” is politicianspeak for “reduction in the rate of growth;” it doesn’t actually mean the program has been cut, it simply means it isn’t growing as fast, or at least as fast as one of the two parties propose that it should increase. And like the “inflation to the ludicrous” example, since you can always project a larger rate of growth than the opposition, you can always claim that the opposition is “cutting” this program or that program. This tactic was used by the Democrats against the Republicans very effectively during the Bush years.

This is also how the Republicans can talk about eventually balancing the budget by holding growth to less than the rate of inflation and yet still spend more each year than the last; spending still increases, but inflation increases faster. Eventually, as long as wages continue to increase, you will “grow into” the budget. Revenues, driven by higher wages, will increase while expenditures, held to less than the inflation rate will stagnate. This works fine – on paper, assuming that nothing ever changes for an extended period of time, and of course, we don’t enter a period of “stagflation” where inflation increases as predicted, but wages do not. This too is an example of “inflation to the ludicrous”, as the payback period is typically 10 years or more, way longer than the current congress or president has any influence over.

There are other ways the government tries to pull the wool over our eyes when it comes to spending, taxing, and the budget. Playing games with the rate of inflation (they control the numbers); playing games with the projected rates of inflation and or rates of growth (which they make up out of whole cloth) to cook the numbers to their advantage; playing games with other economic numbers (which they control), making unwarranted assumptions about the U.S. economy, the world economy, import/export numbers, what-have-you. Most of the time they succeed; what do we know about such things? Why should we care? We elected them to take care of those problems that we don’t understand and are too busy to learn about even if we wanted to. That’s why they get paid the big bucks, isn’t it?

Yes, and look where that has gotten us.

So Mr. President, do me a favor, will you? Stop telling me how much money you are going to “save” over a 10 or 12 year period. It’s pure, 100% USDA inspected recycled bovine feed. We both know that. Even at the start of your term, and assuming you serve two terms, you won’t even be in office 10 years from now. So knock it off. What are you doing with the deficit in FY12 – that’s what I am concerned with now. Don’t paint me some rosy picture about how the economy is going to grow at 12% a year for the next 10 years, interest rates are going to continue to drop and unemployment is suddenly going to go from 8.8% to 1%. I am tired of having smoke blown up my rear end.

Congress, same goes for you. A session of congress only lasts two years. That is your horizon. The current congress has absolutely no way to bind the next or succeeding congresses to anything. So your 10 year projections are not worth the toner you expended to print them. You will have absolutely zip-zero-nada influence over what goes on in Congress over that period. You may not even be there to vote. Each year brings new events, new challenges. None of this is stable over a 10 year period, so quit trying to inflate the numbers by stretching them out over a ridiculous period of time.

Quit playing games. Quit playing politics. Quit playing with the numbers. The time for playing is over. It’s time to put on the big boy pants, put away the crayons, and fix the problems you have created with decades of mismanagement compounded by the last two years of total fiscal debauchery. Business as usual, politics as usual, mealy-mouthed platitudes and the sky is falling rhetoric won’t cut it anymore. The sky is falling – but it has nothing to do with killing women, starving children, and throwing granny out in the street. It has to do with the economic collapse of our nation, and all these things and more will occur if that is allowed to happen.

So get your act together or get out. Elections are coming in 2012. We the people are watching you.