Recently by Gary North: Armen Alchian, RIP
We have read about the trillion dollars in automatic spending cuts. It’s headline news.
That’s part of the decade flim-flam. The government always reports one full decade’s cuts. But it never, ever mentions in these reports regarding the Congressional Budget Office’s estimate of total federal spending over the decade: $47 trillion.
You mean that the proposed trillion dollars in cuts are 2% of projected spending? You’ve got it.
This assumes that there will be cuts. There won’t be. There will be automatic add-ins that will offset any cuts. How large are these add-ins? About $110 billion more than the proposed cuts. Forbes reports:
The sequester has been advertised as “cutting” discretionary spending over a ten year period by $995 billion. After inflation adjustments and exempting more than a trillion dollars of defense and non defense discretionary spending from the sequester, the CBO projects (in its Table 1.1) discretionary spending to increase by $110 billion over the decade. There is no actual $995 billion cut after the CBO applies its magic adjustments. Rather there is a $110 billion increase.
The government treats voters as if they were naive rubes. This usually works.
The politicians assume that the financial media will go along. This usually is correct.