Is The Budget Deal On The Verge Of Collapsing?

Tyler Durden's picture

Something rather troubling for the "kick the bankrupt (and only modestly radioactive, still way below the unrevised legal threshold though) can down the street crowd"- Commentary Magazine reports that the "Budget Deal", won after so much theatrics, soap opera, and Razzie nominations, may in fact collapse shortly. "The big news today is that the $38.5 billion in
budget cuts announced with such fanfare on Friday night mostly aren’t
real. A good deal of it involves money from previous years and previous
budgets that hasn’t actually been spent." Commentary refers to an AP article in which it is made clear that the proposed legislation is one 'financed with a lot of one-time savings and cuts that officially "score" as savings to pay for spending elsewhere, but that often have little to no actual impact on the deficit...cuts to earmarks, unspent census money, leftover federal construction
funding, and $2.5 billion from the most recent renewal of highway
programs that can't be spent because of restrictions set by other
legislation. Another $3.5 billion comes from unused spending authority
from a program providing health care to children of lower-income
families." And once the more vocal fringers realize they have been cheated once again by both parties, it is possible that the whole thing could just as easily fall apart, and just in time for the US debt ceiling to be breached within 1-2 weeks tops.

The bottom line is that even the woefully inadequate number of cuts previously cited, as great success for the GOP, is big fat lie:

The total amount actually cut appears to be somewhere between $8 and $14 billion.

The politics here are very complicated now. On the one hand, polls suggest the public is overwhelmingly in favor of there having been a deal, around 60 percent or so. On the other, politically engaged people on both the Right and the Left are profoundly upset by what they take to be unprincipled caving on the part of the leaders of the two parties.

That profound concern is likely to spur a populist revolt this week, over the next 72 hours, before the vote is taken. Already there are indications that a great many House members are going to vote against the deal. What we don’t know, or can’t know, is whether grass-roots velocity has sped up to such a degree over the past several years that we could be looking at a major meltdown of support when the votes are cast, as Republican members honestly balk at the clear deceit of the negotiators in making non-existent cuts in federal spending—and as they fear the wrath of the voters (particularly tea partiers). Meanwhile, Leftist Democrats who feel betrayed by Barack Obama and Senate Majority Leader Harry Reid might also decide to teach them a lesson by withholding support.

And then, all of a sudden, there will be a shutdown. And no plan to end it. And make no mistake—the public will blame the GOP.

Those who wish to replicate the math can do so using the GOP Summary of the Continuing Resolution.

Republican Budget Deal Summary

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RobotTrader's picture

Obviously, the debt ceiling doesn't matter today.

TLT and TIPS both experiencing voracious demand.

TIP is now paying 6.4%, probably pretty attractive while risk assets are imploding again.

IBelieveInMagic's picture

OT, Tyler or any reader, any perspective on the feverish BRICS meeting in China tomorrow in advance of G7 meeting this month? Does it look like positioning for some serious negotiations on new financial order? Any thoughts?

Imminent Crucible's picture

RT is looking at the yield on Barclay's TIP bond fund, not the actual TIPS yields. The current top rate for TIPS is the 3 7/8% April 2029 30yr, issued in April 1999.

The TIPS rate is set when the bond is auctioned and stays the same to maturity. The inflation-indexing is accomplished by adjusting the principal due (but you don't get that back until maturity). So, rest assured that your 30-year investment with the USG will be returned (eventually) in inflation-adjusted FRN's, with the rate determined by the same guys who model owner's-equivalent rents and the edibility of iPads.

Piranhanoia's picture

30 years. Two radioactive products, a bond and the half life of cesium 137.  Both quite poisonous.

Misstrial's picture

Not sure why you were junked, however what you post is true.


RockyRacoon's picture

Looks like an influx of RoboTrolls junking anything that makes sense.  What this joint needs is a Thumbs-Up button.

Cdad's picture


You mean the TLT is doing a light volume melt up....just like everything else in this Ponzi market.

baby_BLYTHE's picture

You don't quit You cannot just print up all this play money, put it into the economy and expect zero consequences. We are all going to pay dearly just so an egg-head academic can go around giving speeches on how he saved the entire world from certain implosion World wide Benocide is just getting started. We are about to enter an inflationary Depression that will look and feel worse than any economic collapse in history. If you don't have gold. Get some now along with a firearm to protect ur family.

Cleanclog's picture

We issue $6 Billion a day in debt but Congress can't figure out $38 Billion in REAL cuts?  Sham. Gonna get super ugly  on next round and next year's budget.  

Can't help but laugh every time I hear one shill or another talk about how this or that will be okay by 1225 budgetarily.  Really?

slaughterer's picture

Make way for "Budget Deal 2".  Coming to a vomitorium near YOU!

nmewn's picture

Hey!...they'll only spend 1.4 trillion >>>more<<< than they actually have in revenue this year...LOL.

I remember when everyone freaked over a trillion dollar budget...instead of a trillion dollar budget deficit.

The lunatics are running the asylum.

Clamdigger's picture

That all-new avatar is totally throwing my game off.

Robot Traders Mom's picture

Thanks Robo. I'm surprised the football team let you out of the locker.

Zero Govt's picture

Oh Good, Clown Show The Sequel in 2 weeks... they'll be putting NBC out of the entertainment and comedy business if this continues with Ronald Obumma McDonald as cheif red nose and size 19 shoe wearer leading the circus ...simply can't wait for his budget speech tomorrow, should be non-stop comedy start to finish   

SheepDog-One's picture

LOL Robo youre such a poor troll.

Ying-Yang's picture

Robo... I bet when you eat salty popcorn at the Saturday matinee, your crabs get thirsty and they get up to go get a drink of water, you hop up and change seats.

max2205's picture

SHOCKED!!!! You can't make this shit up...Tea Party is going to be all over this like Barnney Frank at a chuckie chesse

mynhair's picture

More like Chucky Schmucky over a TV camera...

CPL's picture

Three Card Monte for the win!!

hedgeless_horseman's picture

And then, all of a sudden, there will be a shutdown. And no plan to end it. And make no mistake—the public will blame the GOP.

Nobody blames anyone for a blessing. 

We give thanks and praise!

  1. Shut the Federal Government down.
  2. Shrink it to at least 1/5th its current size.
  3. Reap the thanks and praise.

NOTW777's picture

usually they blame Bush first then Palin

Rick Masters's picture

Do you believe in trimming the defense budget by say a $100 billion? or is that off limits?

mynhair's picture

Only after DOE, DOA, NIH, DHS, DOS, HHS, and ED are eliminated.

HeadintheGame's picture

WTH's wrong with including DOD equally weighted with all those other bloated bureauracies ?  Just because killing people is the most efficient thing we do in government, shouldn't give it a free pass.

hedgeless_horseman's picture

Do you believe in trimming the defense budget by say a $100 billion?

I am all for it, but it would take a miracle.  Bring 'em all home. 

Backspin's picture

Cut defense by 100B?  Shoot, there's as much bloat and inefficient beauracracy there as in any branch of government.  I believe that any reasonable person should be able to trim at least 300B without much trouble.

Think that's crazy?  Then cough up 300B, please.  It's just not there, people.  Not there.  I'm thinking about this thing called Reality, that most politicians ignore.


RockyRacoon's picture

I've been disenchanted with the military budgets since 1971.  My Air Force job was electronic tech and we used a "bench stock" for small parts for repairs.  Each little bin had the price on it as well, as a measure proposed to let us know how much of the taxpayer money we were using in our work.   Simple shit like common resistors and capacitors (not mil-spec) were priced at $8 to $15 each.  When we were out we'd run over to Radio Shack and buy them out of pocket for a ten cents to a quarter.   I was never fooled again.

nmewn's picture


"Do you believe in trimming the defense budget by say a $100 billion? or is that off limits?"

You could take all of it (680 billion in 2010) and not even get half way to the deficit...let alone the debt outstanding.

That's how big the numbers are.

They have a spending problem not a revenue problem.

bob_dabolina's picture

I'd rather live in total anarchy than watch this never ending bullshit.

Our government is so useless 

FunkyMonkeyBoy's picture

"Our government is so useless"

- Not true, they are brilliant. They couldn't have executed this plan any better really. They have managed, for their masters, to steal vast amounts of wealth from the majority of citizens and place it in the hands of the few. Not too mention the fascism they have managed to impose in such a sort amount of time...

... most people don't even realise what the government has done to them, let alone do anything to oppose it.

A big standing ovation for a masterful government puppets, their owners must be very pleased with the progress made so far in enslaving the populous with as little resistance as possible.

Bravo i say, slaughter the sheep.

SheepDog-One's picture

The govt is brilliant compared to the stupid neandersheeple public.

RockyRacoon's picture

I'll agree that Fascism may be the result, but I'd argue that it was not the original intent.  It is a normal offshoot of the type of greed being demonstrated, tolerated, and encouraged in certain government and financial quarters.

andybev01's picture



[an-er-kee] –noun
a state of society without government or law. 2.
political and social disorder due to the absence of governmental control: The death of the king was followed by a year of anarchy. 3.
a theory that regards the absence of all direct or coercive government as a political ideal and that proposes the cooperative and voluntary association of individuals and groups as the principal mode of organized society. 4.
confusion; chaos; disorder: Intellectual and moral anarchy followed his loss of faith.  I'm not seeing a difference here...
Zero Govt's picture

the dictionary definition of anarchy, like the definition of capitalism, is academic bullshit

so-called 'anarchy' is usually applied to extremely brief (a few days) times when Joe Public lop the heads off the delusional parasitical elite. This is of course not anarchy, but clearing the parasites and a return to social (natural) order

Anarchy is not the result of no Govt or Law, it is in fact a state of Govt and Law (tyranny). Both are Totalitarian controls over a free people (try not paying your tax to feel terror)

We have been well and truly brain-washed to accept a persistent state of elite parsitical control. We have truly forgotten what actual freedom is and how much of our wealth and liberty is robbed every day of every month by the Govt

We are living in a State of anarchy where the parasites are running riot across societies (not nations, they do not exist either but are pure political fabrications to border and then tax and control us)

We were born free... from that point on we are systematically tagged, bullied, coralled and robbed (and lied to) by the State, by parasites

Cdad's picture

Well, then there will be a shutdown...because the Dems actually want one.  However, there must be a mistake in the article because it says, "make no mistake, the public will blame the GOP."  Ummmm...the writer must have meant that the public will "give the credit to the GOP."

Am I missing something here?  

But anyway, like radiation, I'm sure it's all super uber bullish...


SheepDog-One's picture

Politicical jockeying bullshit. Yea made me mad too seeing that in this article, we should all be WAY above the 2 heads of the 1 political party bickering and squabbling to place blame for what they all do on 1 or the other. All total bullshit for suckers.

RockyRacoon's picture

Sure it is, you are right.  But the blame will go to the Party that wants to "starve the orphans", regardless of which Party it actually is.  The lumpen proletariat will blame anyone with any idea that involves change.   And that blame will be directly proportional to the boldness of the change involved.  The article would be correct in this case.

Milton Waddams's picture

Congress is where you go when you come to the realization that the business you started / inherited / graduated into is better off in the hands of more capable operators.  

Misean's picture

"Another $3.5 billion comes from unused spending authority from a program providing health care to children of lower-income families."

How is that even possible?!?! Don't they care about the chiiiilllllddrrrreeeen?!?!?

LFMayor's picture

we already have a surplus of lower income families... shouldn't there be even more unspent monies in this program?

pazmaker's picture

Let's hope it does collapse!

6 String's picture

...And to think, with such favorable conditions that the market almost went down 1% today (well, I know there is 5 minutes left but the despots can't allow for a 1% or more decline now can they? while POMO is still on).


topcallingtroll's picture

Then shut it down and default.

This will prevent politicians and the parasites from adding further debt for our children to pay.

If we default on just one treasury that would be enough to stop big government in its tracks.

oogs66's picture

They really can't help themselves, can they?  They just lie, lie, lie, spin, congratulate themselves and expect us all to be happy with them?  I hope it is starting to catch up to them, and not just at places like ZH which have always been questioning their lies, but even more mainstream sites.  They have to be called out on this!  Barry, all grinning, and self congratulatory, and they couldn't come up with $38 billion or real cuts?  

EscapeKey's picture

Very rarely do I agree with user comments on BusinessInsider, but today there was one which hit the mark:

An analogy for the recent budget compromise in D.C.: "We have a family that is spending $38,200 per year. The family’s income is $21,700 per year. The family adds $16,500 in credit card debt every year in order to pay its bills. After a long and difficult debate among family members, keeping in mind that it was not going to be possible to borrow $16,500 every year forever, the parents and children agreed that a $380/year premium cable subscription could be terminated. So now the family will have to borrow only $16,120 per year."

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