Wednesday, June 1, 2011

A Few Questions for Speaker Boehner

The Speaker is promoting a statement signed by 150 economists. He says the statement calls for spending cuts that exceed any debt limit hikes. But, if spending cuts exceed debt hikes, why would an increase in the debt limit be required at all?

What is not being called spending?  What year are the supposed spending cuts likely to kick in? Is the Speaker only discussing a slowdown in the growth of government spending?

And therein lies the smoke and mirrors.

2 comments:

  1. But, if spending cuts exceed debt hikes, why would an increase in the debt limit be required at all?

    Not that I think the proposal is aggressive enough--I don't think they should raise the debt limit--but they're not making the math error you seem to believe.

    I think it's like this:

    Right now there is a $1.6 trillion deficit. So suppose they cut spending by $1 trillion. They would still need to raise the debt limit by $600 billion. Hence, in that outcome, spending would have been cut by more than the debt ceiling was raised.

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  2. @Bob Murphy

    I get your point. But, I think Boehner's wording is misleading. He does not mention a cut in deficit spending. He starts off by referencing spending cuts which exceed "debt hikes". If you take that as an absolute, without an unspoken clause, it doesn't add up. And that is how I have consistently see him reference his position. He leaves out the clause "relative to the deficit".

    That's why I added:

    "Is the Speaker only discussing a slowdown in the growth of government spending?

    And therein lies the smoke and mirrors."

    I get what he is trying to do, but by his wording he is giving, I think intentionally, the impression the cuts are somehow bigger than what they really are.

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