Our guest blogger is Michael Linden, director of tax and budget policy at the Center for American Progress Action Fund.
At a press conference this morning, House Speaker John Boehner said that he could accept a fiscal cliff deal that had equal amounts of new spending cuts and new revenues. Last night, media reports suggested that President Obama has offered him a deal which does just that.
According to those reports, the President’s latest offer consists of $1.2 trillion in new revenue, paired with $400 billion in health care savings, $200 billion in further discretionary cuts, $200 billion from other mandatory programs, $130 billion from switching to the Chained CPI, and about $300 billion in reduced interest payments on the debt. All those spending cuts add up to over $1.2 trillion, more than the President’s revenue request.
So why then, did Boehner, at the very same press conference, complain that the President’s offer was “unbalanced” because it contained only $800 billion in spending cuts? Because Boehner wants to pretend that reduced spending on interest payments isn’t really a spending cut. But that’s utterly at odds with reality, basic math, and common sense.
When the government incurs debt, say because it enacted huge tax cuts which reduced federal revenues below spending levels, it is obligated to pay interest on that debt. Every year, billions of federal dollars flow out of the treasury and into the pockets of those who previously lent the government money. Those dollars count as spending just as much as dollars that the government uses to pay employees, or to provide grants to schools, or to build highways. That’s why the Congressional Budget Office, the official non-partisan budget scorekeeper, includes interest payments in its totals for overall spending.
But don’t take my word for it. Just ask noted budget expert John Boehner! Last week, Boehner used a colorful chart to illustrate his point that “spending is the problem.” This chart showed total spending growing to nearly 40 percent of GDP by 2040. Scary! And guess what? Nearly 30 percent of all that spending was interest payments on the debt. Here’s a modified version of Boehner’s chart:
And Boehner’s not alone. Republican lawmakers often complain about how large federal spending is, and they always include interest payments as part of that “problem.” Here’s Senator John Kyl (R-AZ) last year: “Spending in this fiscal year is projected to be a record $3.8 trillion.” $225 billion of that spending was net interest payments. And here’s Paul Ryan (R-WI) complaining about spending in the President’s budget, “Spends too much: $47 trillion of government spending over the next decade.” Guess what? $5.7 trillion of that is interest. There are many more.
Boehner may not like President Obama’s latest deficit reduction proposal. But it is breathtakingly dishonest for him to complain about “out of control” spending one week, and then, in the very next week pretend that proposals to reduce that very same spending don’t count at all.