Tuesday, April 12, 2011

"Underwhelming Cut"

It was interesting to see that the potential federal government shut down was averted at the "11th hour" with a compromise deficit reduction of 39 billion agreed to by the president, Senate majority leader, and the Speaker of the House of Representatives. While 39 billion is nothing to sneeze at, when compared to an over 1.5 trillion dollar budget deficit shortfall for this year and a potential 1.7 trillion dollar deficit for 2012 and a current 14.3 trillion total current deficit; 39 billion in cuts is somewhat  of an underwhelming cut and maybe amounts to about "a half of one drop in the deficit bucket".

Only in Washington can a reduction from a proposed budget amount be called a budget cut even if the budget item ends up being a higher amount than was present the year before. For example say the year before a budget item was 50; then the next year this same budget item is budgeted for 70. Budget reduction forces come into play and after intense deliberations a compromise is reached for 60 for this item with a 10 unit savings even though this 60 amount is higher than the previous year's amount of 50.

I saw a clip on television where Senator Obama in 2006 voted against extending the debt ceiling when the total federal governmental debt was "only" 8 trillion dollars at that time. Senator Obama said that increasing the debt ceiling was a sign of a failure of leadership and America deserves better. It will be interesting to see President Obama's upcoming speech to see if he proposes any specific cuts and or whether he proposes any tax increases after just recently agreeing to extend the "Bush era" tax rates that were due to expire. If President Obama does propose some cuts will Senator Charles Schumer (D-NY) label the president "extreme" like he is trying to label the Republicans and "tea party" member?