House Republicans vowed to cut $100 billion in nondefense discretionary spending from President Obama’s budget this year. Compared with the $3.5 trillion federal budget, a cut of a hundred billion is rather tiny. But there’s more than just symbolism here. Republicans are using the snowball debt reduction method — a debt counselor-preferred means of reducing debt that has helped many thousands of Americans restore their solvency. This procedure calls for debtors to pay off the smallest debts first and the larger ones over time. The strategy works in part because it provides constant feedback, building confidence that gives people the courage to tackle larger debts as they go along. To make real progress in reducing the federal deficit, however, they’ll also have to cut mandatory programs, as they account for 60 percent of total federal outlays. — David A. Ridenour, National Center for Public Policy Research
In the past half century, six federal budgets have been in balance or surplus, two in the 1960s and four at the end of the past century. What connects those two decades is a pattern of sustained and balanced economic growth. In other words, if you want a strong federal budget, you need a strong economy. Deficits occur when the economy drags: think of the Reagan recession of the early 1980s and today’s Great Recession. That’s because federal revenue falls at the same time that vital safety-net programs such as unemployment compensation and food stamps increase. Repairing our budget really starts by repairing our economy. And that repair begins with increased demand. But consumers are unable to spend if they are burdened by debt and millions are out of work — or worried they soon will be. Companies are unwilling to hire or invest in this uncertain economic environment. There’s only one entity left to prime the pump: the federal government. Once the economy is back on its feet again, spending can be addressed as part of the effort to control deficits. — Michael J. Wilson, Americans for Democratic Action
