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The Ugly Reality On The Budget, Deficits And Debt Ceiling


market-ticker.org / By Karl Denninger / January 5, 2013, 23:50

As you folks all know I’ve been pounding the table for years about the fact that if we’re serious about addressing what’s wrong with our budget we must break the medical monopolies.

Indeed, there’s an entire sub-category of Tickers dedicated to Health Reform, which I started writing on when the entire Obama mess began and the discussion took off in earnest.

But lately I’ve been asked to look once again at exactly what sort of realistic budget cuts we could make, especially now that the “fiscal cliff” game has been “punted.”

Let’s remember something here folks — last calendar year’s deficit was $1,210 billion. That’s from 12/30/2011 to 12/31/2012, the last “working day” of each year, measured by the outstanding debt.

So here’s the problem in a nutshell.  Anyone can find $20 or $30 billion to cut in the budget.  That’s so trivial that it’s not funny.  $100 million here and $100 million there and you get there.  It’s not hard at all.

But it’s inconsequential, because if you cut $30 billion that’s only about 2.5% of the deficit.

Indeed, even $120 billion, or 10% of the deficit, is not enough to matter.  That would “count” as $1.2 trillion to the wonks in DC, but that’s a lie, for two reasons — there’s a new budget each year and you cannot bind the next Congress no matter what you pass, so only that which you do right now counts.

$120 billion is not enough to matter fiscally.  But this much is assured — if you try to cut $120 billion in real spending 5,000 lobbyists are going to descend on your office and make your life a living hell, no matter which party you are in.

And that, my friends, is for a symbolic change in spending that will do exactly nothing to solve the problem.

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