Deficit commission report 2

Part 1 here.  I’m going to consolidate mandatory and discretionary spending into one post so I can deal with the tax stuff separately.


Discretionary spending is spending authorized or re-authorized every year by congress.  See the summary of the 2011 budget by the National Priorities Project here.

• 1% of the FY2011 discretionary budget was allocated to Food.

• 4% of the FY2011 discretionary budget was allocated to Education.

• Military expenditures are well over 50% of the discretionary budgets in each of fiscal years 2006-2011.

It’s pretty obvious where to cut and kind of telling that they only proposed $100 billion in cuts here despite the fact that it accounts for over a third of the federal budget. Still, they managed to come in with a few stupid proposals like “sell excess federal property” which they estimated to save $1 billion.  I wonder who might buy and re-sell property taken off the government’s balance sheet and how that might “save” anybody anything.


Mandatory spending is spending that occurs in compliance with existing laws to comply with particular programs or functions such as Social Security, Medicare, Medicaid, etc.  They begin by not recommending either single-payer or a public option on health care and jut go after weird stuff like “tort-reform” (i.e. limiting corporate liability in civil litigation).  The results are correspondingly modest and should be pretty embarrassing to anyone pretending to be serious about this.

Next they recommend shifting to a “chained CPI” which makes no sense.  The CPI is a really selective and terrible measure of inflation for a number of reasons that I don’t really have the space for here.  The point is that it’s supposed to be a measure of inflation, so indexing it over time like you do with the GDP, etc. makes absolutely no sense.  There argument for doing this is:

Current measures of inflation overestimate increases in cost of living by failing to account for “substitution bias”

Substitution for living?  I don’t know, the CPI has always been pretty bad and that’s kinda creepy.

P. 38: “Eliminate in-school interest subsidies for student loans”

So shift it off the government’s balance sheets and on to students’ rather than just reducing the the interest on them altogether or maybe providing more in grants, or having schools stop raising tuition so much for no reason.

P. 39: “End payments to states and tribes for abandoned mines.”

I’m pretty sure that violates some treaties, but it’s not like that hasn’t happened before.

“Extend FCC’s authority to auction radio spectrum licenses.”


“Require IRS to deposit fees for its services in Treasury as miscellaneous receipts.”

Making up new costs.

“Index all fixed-dollar user fees to inflation.”

But don’t measure them with the CPI.

Then they bring out the stuff about social security’s supposed solvency problems.  For that, see this and this.

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