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Common Cents: Two Cent Solution

Posted: February 12, 2013 at 4:00 pm   /   by

Common Cents: Two Cent Solution

Two cents out of every dollar. Based on federal spending last year, that’s approximately how much Washington would have to cut to offset the sequester.  But instead of getting out the red pens and finding a couple of pennies per dollar in waste and inefficiency, (surprise, surprise) Washington is once again coming hat-in-hand to the American people for more money.  As they do, here’s something to consider:  If you’ve run up four straight trillion dollar deficits, are on pace for a nearly $20 trillion national debt in the next four years, and still can’t cut two cents on the dollar, you might have a spending problem.

The $85 Billion Across-The-Board Cuts In The Sequester Amount To About 2 Cents On The Dollar.  (CBO, “The Budget and Economic Outlook: Fiscal Years 2013 to 2023,” 2/5/13)


Washington Refuses To Admit It Has A Spending Problem:

Rep. Nancy Pelosi: “[I]t is almost a false argument to say we have a spending problem, we have a budget deficit problem.” (FOX’s “Fox News Sunday,” 2/10/13)

President Obama: “We don’t have a spending problem.” (Stephen Moore, “The Education of John Boehner,” The Wall Street Journal, 1/6/13)

White House Press Secretary Jay Carney: “Deficit reduction is not a worthy goal unto itself.” (Daniel Halper, Carney: “Deficit Reduction Is Not A Worthy Goal,” The Weekly Standard, 1/10/13)


President Obama: “Over the last few years, we’ve made good progress towards reducing our deficit in a balanced way. There’s no reason we can’t keep chipping away at this problem.” (President Obama, “Weekly Address: A Balanced Approach To Growing The Economy In 2013, White House, 2/10/13)

But The Deal To Avert The Fiscal Cliff Was Anything But Balanced:

The Atlantic: “There Are No Spending Cuts In This Deal.” (Derek Thompson, “Fiscal Cliff Deal FAQ: What Just Happened And What It Means For You,” The Atlantic, 1/2/13)

The New York Times: “And It Includes Almost No Spending Cuts.” (David Leonhardt, “For Obama, A Victory That Also Holds Risks,” The New York Times, 1/2/13)

The Associated Press: “[The Fiscal Cliff Deal] Puts Off The Toughest Decisions About Spending Cuts…” (Charles Babington, “Analysis: Cliff Deal Is Another Pain-Free Punt,” The Associated Press, 1/3/13)


Bloomberg: “Obama to Propose Spending to Boost Jobs in State of Union.” “The president will offer proposals for spending on infrastructure, clean energy and education, according to a senior official briefed on the speech.” (Lisa Lerer and Heidi Przybyla, “Obama to Propose Spending to Boost Jobs in State of Union,” Bloomberg, 2/10/13)

President Obama Says Tax Revenue Will Go Towards Spending.  “In a foreshadowing of more budget battles to come, Obama said he would insist that taxes be raised by closing loopholes that benefit the wealthy, as a way to raise money for spending projects.” (Steve Holland, Obama open to “big deal” on budget, but wants revenues, Reuters, 2/7/13)

Even Though Spending Has Soared In Recent Years:

“… [T]otal discretionary domestic spending is up closer to 30% from 2008-2013. The sequester would claw that back by all of about 5%.” (“The Unscary Sequester,” The Wall Street Journal, 2/7/13)

From 2008 to 2010, Federal Domestic Discretionary Spending Soared By 84 Percent. “In Mr. Obama’s first two years, while private businesses and households were spending less and deleveraging, federal domestic discretionary spending soared by 84% with some agencies doubling and tripling their budgets.” (“The Unscary Sequester,” The Wall Street Journal, 2/7/13)

“[F]rom 2008-2013 federal discretionary spending has climbed to $1.062 trillion from $933 billion—an increase of 13.9%. Domestic programs grew by 16.6%, much faster than the 11.6% for national security.” (“The Unscary Sequester,” The Wall Street Journal, 2/7/13)

And The CBO Predicts It Will Only Get Worse:

The CBO Reports By 2017, Our National Debt Will Be Nearly $20 Trillion. “The government’s debt is $16.4 trillion and is slated to reach almost $20 trillion by 2017, according to financial analysis by the non-partisan Congressional Budget Office.” (Neil Munro, “Credit-Rating Agency Threatens Downgrade If Obama Spending Isn’t Curbed,” The Daily Caller, 1/15/2013)

By 2023, The Debt The Public Holds Will Equal 77 Percent of GDP. “By 2023, if current laws remain in place, debt will equal 77 percent of GDP and be on an upward path, CBO projects.” (“The Budget And Economic Outlook: Fiscal Years 2013-2023,” Congressional Budget Office, 2/4/13)

Entitlement Spending Will Double. “Spending on Social Security and healthcare will double to $3.2 trillion a year over the next decade, threatening a sharp rise in national debt unless Congress acts to avoid the danger, congressional researchers warned on Tuesday.” (David Morgan, “Social Security, health spending to hit $3.2 trillion a year,” Reuters 2/5/3013)

Interest Payments Alone On Debt Set To Overtake Defense Spending. “Accumulated interest payments from 2014 through 2018 are $1.76 trillion under CBO’s new baseline. Interest payments for the second five years are more than double that or about $3.64 trillion. … The end result is that annual interest costs are predicted to have overtaken defense spending by 2020 even allowing for an extra $100 billion annually for overseas contingencies.” (David Rodgers, “CBO: Interest on debt snowballing,” POLITICO 2/513)

CBO: A Large Debt Poses An Increased Risk. “Moreover, such a large debt poses an increased risk of precipitating a fiscal crisis, during which investors would lose so much confidence in the government’s ability to manage its budget that the government would be unable to borrow at affordable rates.” (“The Budget And Economic Outlook: Fiscal Years 2013-2023,” Congressional Budget Office, 2/4/13) is an educational project of Public Notice, an independent, nonpartisan, non-profit, 501(c)(4) organization dedicated to providing facts and insight on the effects public policy has on Americans’ financial well-being.

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Common Cents: Two Cent Solution