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Saturday, March 5, 2011

Tell Them About the Twinkie

I love Washington DC math.  I'm already a math geek as it is, but when you throw in a certain amount of creativity, math can really be a lot of fun.  I just wish there was a tangible use for Washington math in the real world.  Balancing my household budget would be a piece of cake.  If only...

This week, HHS Secretary Kathleen Sebelius testified before a House subcommittee.  She was questioned on an obvious budgetary fudge of double counting money saved from cuts to Medicare Advantage.  During questioning Rep. John Shimkus (R) asked her,
What’s the $500 billion in cuts for? Preserving Medicare or funding the health-care law?
Sebelius’ reply? “Both.”
By the sheer force of her will power, Secretary Sebelius is able to take $500 billion in cuts and double that into $1 trillion.  Her talents are being wasted in HHS.  Surely the ability to double money on a whim could be used more productively in other areas.

In other offices of the capitol, the House and Senate are trying to agree on a budget for this year to avoid a government shutdown.  The House Republicans seek to cut $100 billion from non-defense discretionary spending.  The Senate Democrats are willing to cut $6 billion and consider that an adequate compromise since it meets the House halfway to their goal.

I know you might be thinking that 6 is not halfway to 100, but you're not using Washington math.  Because the Democrats wanted to increase spending by $40 billion, they claim that by giving up that increase, they've already "cut" $40 billion.  With the $6 billion in actual cuts plus $4 billion passed last week, that brings Democrats to their halfway point of $50 billion.

Don't worry if it seems this math doesn't make sense.  Remember when the President said the stimulus would save or create 3 million jobs.  Then he said it worked when unemployment dramatically increased.  That's Washington math.  Three million jobs saved or created - heck, it could have been 30 million.  If at least that many people still had a job, he could say he was successful. 

In the same way, no matter how much money Republicans want to cut from the budget, the Democrats can simply raise the amount of their desired spending increases.  Then when they don't increase spending they have effectively "cut" spending.  [This is why I always look at the numbers when I hear that the mean Republicans are cutting funds for some poor group.  Often they were actually increasing funds, just not as much as requested.

It may help to think of this in terms of a household budget.  If I choose to cut back on eating out with the family, I can save $50/week.  Then using Washington math, I have an extra $50/ week available to pay down my credit card debt and $50/week available for new spending (which I suppose could be used to take my family out to eat).  Got it?

Or I could think about spending more money.  Then if I don't really spend more, I've cut my spending.  If you can "think" big enough, you can actually cut your spending while increasing it (This is the type of math that "saves" you money when your spouse buys something on sale). 

Our current budget deficit in Washington is about $1.3 trillion dollars this year alone.  It's no wonder that in only one term (4 years), President Obama will have ran up the deficit more than during the entire Bush/Clinton Presidencies (16 years) combined.  Today, one group has decided that it's time to set aside the normal Washington math, but the other side is still denying reality.  Read what I wrote about the President's very unrealistic budget proposal to understand what I mean.

Tell them about the Twinkie
The real problem in Washington goes far deeper than what Congress is debating today.  In the movie Ghostbusters, Egon Spengler explains,

Well, let's say this twinkie represents the normal amount of psychokinetic energy in the New York area. According to this morning's sample, it would be a twinkie 35 feet long weighing approximately 600 pounds.
That's a big Twinkie.
Our problems are not yet to such an exaggerated level, but they're not much better.

Currently the budget battles in Washington cover only non-defense discretionary spending.  For the 2010 fiscal year that came to $431 billion.  The entire budget is just over $3.5 trillion.  Which means that Congress is haggling over cuts to only 12% of the budget.  Currently, entitlements, insurance and debt payments account for $2.2 trillion or 64% of the budget.  There's your Twinkie.

If non-defense discretionary spending were a normal Twinkie, then the entitlements, insurance and debt payments would be a Twinkie over 1 1/2 feet long, 6 inches high and weighing over 13 pounds.  That's a big Twinkie. 
  
But it only gets worse.  Unless something is done, this Twinkie's growth is on auto-pilot.  It will continue to grow and take up more of our budget, leaving less and less for the important national matters that may come up in the future.

My wife and I, like other families, can haggle with each other over $50 in spending without ever giving thought to the house payment.  But if that house payment is 50% or more of our budget, $50 isn't our problem. 

For our nation to get its budget in order, Social Security and Medicare will need to be included in the discussion.  Otherwise, we're not being serious about solving our budget problems.  In Washington, Republicans and Democrats can argue about whether to cut $100 billion or $6 billion, but they can't stop there lest they ignore the huge Twinkie in the room.

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