StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between

FY2012 Budget Debate Began Yesterday

07 Feb 2011
Posted by Stan Collender

In case you missed this yesterday because you were slow-cooking chili while waiting for the Super Bowl to begin, the communications battles on the fiscal 2012 budget began yesterday with this op-ed in the New York Times by OMB Director Jack Lew that provides the first few details about the reductions that will be proposed next Monday.

Most of the op-ed is a repeat of the themes the president used when talking about the budget in his State of the Union Address.  But unless I missed them somewhere else, these three soon-to-be-proposed cuts were mentioned for the first time:

  1. Community Service Block Grants: Cut by $350 million with the remaining amount changed from a formula to a competitive grant
  2. Great Lakes Restoration Initiative: Cut by $125 million
  3. Community Development Block Grants: Cut by $300 million

Several things stand out about the op-ed.

First, the proposals are going to put a lot of Republican governors and mayors on the spot.  I suspect the administration wants to force these GOP officials to be seen lobbying against the spending cut proposals.  Look for them to be invited to some high profile meetings at the White House with heavy media coverage.

Second, the op-ed provides some details on cuts but provides nothing more than generalities on the increases we've been told are coming in certain areas.  In fact, that's only mentioned in the first sentence of the next-to-last paragraph and in a throwaway line in the last graph.

Third, the focus on the cuts in the piece very likely is the messaging strategy the White House plans to use for the budget debate as a whole.


1) Our problem today is jobs

1) Our problem today is jobs and a weak economy. Let's put first things first and try to fix that. Short-term deficit cuts are counterproductive.

2) Focusing on less than $1 billion in spending out of a budget of $3.5 trillion isn't even rounding error.

How about cutting military spending? We're spending as much as the rest of the world combined. We could get by with a bit less. We could probably even survive if we cut the number of wars we're currently fighting.

Healthcare costs are a major component of spending (govt and private). Fix that and we're fine. Don't fix it and the rest is irrelevant.

If the deficit is important, we have to raise taxes. Even Reagan recognized that. How did so many lose sight of simple arithmetic and clear evidence?

Why are both the "right" and

Why are both the "right" and "left" bought in to the absurd magical notion that in the depths of massive unemployment with a severe lack of private-side demand, the government should "tighten its belt" and that cutting the federal budget is going to lead to jobs? There is not a single credible economist that I am aware of that predicts that budget cuts will increase job growth.

It is disturbing beyond belief that as a nation we have simply given up on attempting to discern the nature of objective reality and to make policy decisions on that basis. We are like a cargo cult praying that the magical "belt-tightening" god is going to shower us with economic growth and jobs.

Where does the money go?

I'd like to see where the Community Service and Development Block Grants are going. Be my guess more than a fair share gets distributed to suburbs where the need isn't great but they can afford lawyers and lobbyists to write up the grant requests properly and the amounts are small enough not to draw much attention.

My congresswoman Judy Biggert (IL-13) sent out her campaign manager/district director a month or so ago to take credit for more than $1.1 million in federal grant money targeted for a new commuter train station in Tinley Park for instance.

What Cuts?

Are you kidding? The "cuts" mentioned here amount to $775 million dollars. In other words, less than 2 hours of annual federal spending. The first thing that should have struck you, Mr. Collender, is that until the administration starts to seriously discuss cutting entitlement spending, they aren't serious at all.

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