Government Spending Cuts? No. Spending Increases.

Tea Party Economist

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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.

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February 27, 2013

Gary North [send him mail] is the author of Mises on Money. Visit He is also the author of a free 31-volume series, An Economic Commentary on the Bible.

Copyright © 2013 Gary North