The following was submitted by Nick Nottleman, a reader and concerned American, on the debt ceiling debate and subsequent downgrade in our credit rating by S&P.
Newt Gingrich recently said that his biggest regret while Speaker of the House was not addressing baseline budgeting. This is the mechanism that says Federal Government Spending is automatically increased each year based on a given percentage. For Example, our 2011 Federal Budget is approximately 3.9 TRILLION dollars. Using the baseline of 8 percent, our spending should automatically increase 312 BILLION in 2012.
It is also the mechanism that projects these increases in spending and thus a projected budget for the next 10 years. And the really neat part is that if you decide to spend a little bit less than what these projections indicate, you get to call it a “cut”.
Now here’s the kicker… Anything you add to the annual spending, call it something crazy like “Stimulus”, “Omnibus”, or heck, even “Socialized Medicine”, well, that stuff sneaks right in there and receives it’s nasty little automatic increase.
In an article on Friday, Daniel Gross from Yahoo! Finance questioned whether the Republicans in the House “sabotaged” the US with the passing of the Debt Limit increase bill. A bill that “cut”, or shall I say reduced the amount of increase over 10 years by 2.6 Trillion. Because as they said they would do, the S&P last night reduced the credit rating of the US government from AAA to AA+. This downgrade was presented weeks ago by the S&P stating that if the federal government did not close the deficit gap over the next 10 years by 4 TRILLION dollars or more, they would be downgraded. Meaning, they had to close gap between revenues and expenses over the next 10 years, not actually even balance the budget or start repaying their debt. Simply decrease the amount we were borrowing by a total of 4 Trillion dollars over 10 years.
If the US government simply kept their overly bloated spending at 3.9 Trillion, and NOT RAISED that amount for the next ten years, this would be scored by the CBO and thus the S&P as a 9 TRILLION dollar reduction. DOUBLE what the S&P warned about. Not one DIME less in 2012 than in 2011, and we would have easily kept our AAA credit rating.
The article mentioned above however, points to not allowing TAX increases as the culprit.
Now the sensible among us might argue that the most logical next step is to actually reduce federal spending from 3.9 Trillion to what our actual revenue is. Roughly 2.5 Trillion. Or at least make a REAL effort to close this gap, say along the lines of a 500 Billion dollar spending reduction in 2012. But this seems to be so farfetched and unrealistic that it is equated to proclaiming the last Harry Potter movie was based on a true story. And the candidates for President that actually have a track record and/or the potential to solve these REAL issues being elected, well, that’s just pure nonsense now isn’t it?
Looking through the comments on the Yahoo! Article and realizing that the article itself is released by a major organization, not to mention the last 2 months of debate on the deficit; one has to deduce that our nation is indeed “progressing” right along.