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.
Continue Reading on www.forbes.com
February 27, 2013
Gary North [send him mail] is the author of Mises on Money. Visit http://www.garynorth.com. He is also the author of a free 31-volume series, An Economic Commentary on the Bible.
Copyright © 2013 Gary North
