Political Hay

Ryan’s Opening Pitch

His proposal is not the final word on budget cuts, just a first step.

By 2.7.11

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Operating under new Republican rules that give him unilateral authority to set the maximum discretionary spending levels for the federal government for the rest of this fiscal year (though not how the money will be spent), House Budget Committee Chairman Paul Ryan (R-WI) last Thursday proposed total discretionary federal spending for this fiscal year of $1.055 trillion. (Those rules were made possible by the Democrats' failure to pass a budget in the last Congress.)

As a senior staffer for the congressman put it, Ryan's spending limit allocation "is like an allowance that will guide the appropriations process for the current fiscal year. The federal government has been misbehaving as of late, so Paul cut their allowance."

While President Obama's budget proposal is for about $74 billion more in spending, Ryan's numbers represent only about $33 billion less than 2010 spending numbers, leading the most fiscally hawkish Republicans to call for deeper cuts.

Ryan's proposal does not represent the final word on spending; it represents a ceiling on spending for the rest of this fiscal year -- a ceiling that can be lowered but not raised. It is likely that fiscal conservatives such as Indiana's Mike Pence -- widely considered to have presidential ambitions -- and other members of the Republican Study Committee will offer amendments to make those deeper cuts. And it's hard to see any reason they shouldn't, given the recent Congressional Budget Office prediction of a deficit of $1.5 trillion for the next fiscal year out of a total budget of about $3.7 trillion. To be clear, Ryan himself seems committed to swinging the axe again. As he said to an audience at Marquette Law School last week, the cuts announced Thursday are "just the start." (Watching that video made me say out loud, "Ryan should run for president one day, but for now we're damn lucky to have him where he is.")

In other words, the first swing of the axe is cutting less than 1% of the budget. In fact, it's cutting only about one-quarter of the one-year increase from FY2010 to FY2011 and less than 5% of the three-year increase from FY2008 to FY2011.

Democrats are predictably screaming like stuck pigs (which they almost literally are), calling the cuts "draconian" and "unworkable." I can already see the campaign ads against Democrats in 2012: "After what you've had to do in the past few years with your personal budget, do you really want to elect someone who can't find a way to cut 1% from the bloated federal government?"

Congressman Ryan's office generously responded to my inquiry on the topic Thursday evening, including making the point when it comes to analyzing the first axe swing that they "have seen considerable (and understandable) confusion on how to measure cutting $100 billion over 12 months. The non-security savings that we'd achieve by bringing spending to pre-binge levels for the remainder of the fiscal year ($58 billion) is being made over 7 months. ($100 / 12) X 7 = $58. Again -- these are significant cuts, but just the beginning."

It's an argument Ryan is making both to his conservative colleagues, explaining to them that these cuts are bigger than they may at first appear, as well as to the left and its media tools who are already trying to make Republicans look bad with headlines like "House GOP Savings Plan Short of $100B Pledge" or "GOP scales back budget cut goals."

In the meantime, since the Department of Defense's budget will actually increase year-over-year, though less than proposed by the president's budget, and since these cuts don't touch entitlements, it's basically domestic agencies that will take the well-deserved brunt of the first cuts. As laid out in a document from the House Appropriations Committee, the Departments of Transportation, Agriculture, Commerce, Energy, and Financial Services will face large budget reductions, including the FDA and IRS. (If that doesn't bring a smile to your face, then you must either be a depressed person or a Democrat.) Perhaps a later axe-wielder will have the courage to actually try to end one of those Departments, even if in a sunsetting fashion, just to prove it can be done.

In the meantime, conservatives would do well to give Paul Ryan the benefit of the doubt when it comes to budget cuts and not to assume that the first swing of the axe was intended to make the deepest cut.

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About the Author
Ross Kaminsky is a self-employed trader and investor and is a senior fellow of the Heartland Institute. He is the host of The Ross Kaminsky Show on Denver's NewsRadio 850 KOA on Saturday mornings from 6 AM to 9 AM. You can reach Ross by e-mail at rossputin(at)rossputin(dot)com.