There are times that even I am at a loss for words, and this is one of them. Perhaps I should have known better; but then again, I am not a government budget expert, and don’t have the time to analyze what the entire world failed to report correctly.
In this case, I’m referring to the “budget deal” announced last week by Paul Ryan and Patti Murray; i.e., the so-called “conservatives” that agreed to a whopping $20 billion or so of annual spending cuts over the next decade. The fact that such cuts are back-end weighted, including a number of new airline ticket taxes that are instead being deemed “fees,” is immaterial. Moreover, $20 billion of deficit reduction in the context of a $17.2 trillion national debt is – frankly – an embarrassment; particularly given the additional burden of $5+ trillion of “off-balance sheet” debt and $200+ trillion of “unfunded liabilities.”
If I weren’t so burdened with keeping up with the unending, expanding list of “horrible headlines”; perhaps I would have asked how a nation with just a $1.012 trillion “budget” – i.e., the figure submitted by Ryan and Murray for 2014 spending – made little sense in the context of trillion dollar deficits for each of the past four years. However, given that every media outlet parroted the $1.012 trillion figure as gospel, the reality of the matter got lost in the broadening, mind-altering miasma that is the government’s ever-expanding “Ministry of Truth.”
And thus, when Kerry Lutz said he thought actual, annual spending was closer to $3.5 trillion than $1.0 trillion, I did a little research. Amazingly, not a single media outlet reported this “minor detail”; but finally, I found this article, which explained the truth. And mind you, there is a difference between actual spending and a budget; the latter of which, we have not had for nearly five years.
As it turns out, Obama’s “requested” spending plan for fiscal 2014 spending is a whopping $3.77 trillion, assuming a $744 billion deficit. The difference between $3.77 trillion and $1.012 trillion, as it turns out, is that while the former represents total spending, the latter includes only discretionary spending. And thus, the ballyhooed “budget deal” only covers one quarter of the total budget. Moreover, if indeed it aims to cut $20 billion from the annual deficit (over the next decade, back-end weighted), it is really just saying Obama’s proposed (and likely, heavily understated) 2014 deficit of $744 billion will now be just $724 billion. Heck, all one needs to see is the Congressional Budget Office’s own debt projections to realize how immaterial such cuts are; and keep in mind, the below graph only considers “debt held by the public”; and thus, excludes the more than a one-third held by the Fed itself.
Consequently, what I wrote in last week’s “The Budget Deal is a Total Farce” has just been magnified four times over. The level of propaganda is reaching epic proportions, as the end game rapidly approaches; and what makes it that much more scary is that no one is writing of it other than one low-profile internet writer and – of course – the Miles Franklin Blog. Literally, U.S. spending has become a tsunami of liquidity funded by the Fed’s QE program; and over time, will only grow exponentially larger – that is, until the dollar, once and fall, loses the remainder of its purchasing power to the inevitable HYPERINFLATION.