With it apparent that the United States Congress Joint Select Committee on Deficit Reduction (the “Supercommittee”) has failed to reach an agreement, we need to step back a moment and realize just what a tiny task the committee was given.
The committee’s goal was to achieve $1.2 trillion in deficit reduction over the next ten years. That’s $120 billion per year, on average.
For context, in fiscal year 2011, which ended on September 30th, 2011, federal government expenditures were $3.6 trillion, and deficit was $1.3 trillion.
This means that the committee’s annual goal of $120 billion is 3.3 percent of last year’s spending, and 9.2 percent of the last year’s deficit.
This is why the supercommittee’s goal must be described as very small and modest. Yet it could not be achieved. Congress could not agree to reduce spending by 3.3 percent, when the real goal we need to meet is 36 percent, if we ever wanted a balanced budget. This failure has large implications on our future. If we can’t achieve such a modest goal, how will we solve the real problems?
Since the committee failed, an automatic sequestration, or cutting, process will go into effect. But that won’t happen until 2013 — if it happens at all.
Spending cuts, or not?
Besides the failure of the supercommittee to meet such a small goal, we must realize that spending, even if the sequestration takes place, will continue to rise. The cuts that sequestration would impose are cuts not from previous year spending, but cuts from budgeted spending, and that spending is always rising. Veronique de Rugy explains in her article Federal Spending Without & With Sequester Cuts: “When the public hears ‘cut,’ it thinks that spending has been significantly reduced below current levels, not that spending has increased. Thus, calling a reduced growth rate of projected spending a ‘cut’ leads to confusion, a growing deficit, and an ever-larger burden for future generations.”
Her article contains a chart, presented below, of future federal spending with and without sequestration. There’s not much difference.