GOP To Propose $4 Trillion In Spending Cuts Over A Decade, While A Meager $30 Billion Threatens A Government Shutdown

Tyler Durden's picture

While the government wrangles over a whopping $30 billion in spending cuts for the 2011 budget (with fiscal 2011 already half way over), which threaten to shut down the government yet which we all know will be successfully addressed in the 11th hour, with a compromise of sorts confirming once again that both parties are incapable of dealing with the relentless climb in US government debt (and oh so eager to turn their back on campaign promises when faced with reality), which unfortunately is the only fuel driving the US economy, the GOP's Paul Ryan is expected to announce a whopper of a 2012 budget, one which trims a record $4 trillion in spending over the next 10 years. What this means is that the GOP is about do away with Obama's health care "revolution" and things are about to go back to the way they were. Not only that, but any hopes the Fed may have had that congressionally-mandated fiscal stimuli will take over the central bank's monetary boosts, can be put to rest, meaning that very soon the Chairman et al will be back to the drawing board debating just how much more cash needs to be injected in the economy next time around (as a rough guideline, we expect it will be about 75% of the next debt ceiling increase). And while we expect the current government shutdown crisis will be resolved within a few weeks on the back of promises of massive cuts over the next decade, which will never happen, the only thing to watch for is how big the debt ceiling increase will be when announced some time over the next 3-4 weeks. Everything else is smoke and mirrors.

From AP:

The head of the House Budget Committee, Rep. Paul Ryan, says President Barack Obama is "punting on the budget and not doing a thing to prevent a debt crisis."

Ryan tells "Fox News Sunday" that GOP budget-writers are looking at cutting $4 trillion-plus in spending over the next decade. That's more than even what the president's deficit commission recommended.

Ryan is talking about spending caps and long-term belt-tightening for the Medicare and Medicaid health programs. He wants older people who are wealthy to pay more out of pocket for their health care.

The GOP plan for the budget year that begins Oct. 1 is coming out Tuesday.

And while the government haggles over numbers both too big and too small to matter, here is William Buckler's appropriate summation of where we stand, courtesy of the latest edition of his Privateer newsletter:

The latest proof that the financial authorities will literally do “whatever is necessary” to keep the markets from keeling over has led to a HUGE rebound on global stock markets in the second half of March. The proof that the US government will give no more than the most cursory lip service to any talk of lowering their deficit spending makes this rebound more dangerous the higher it goes.

President Obama is putting pressure on both the Republican and Democratic leaders of Congress to “make a deal” on a proposal to “cut” $US 30 Billion from the deficit in order to finalise a 2011 budget.

That $US 30 Billion includes the $10 Billion which has already been cut to keep the government “in funds” - until April 8. To put this in perspective, the Fed’s QE2 program is monetising just under $US 30 Billion of Treasury debt paper - EVERY WEEK.

No QE3? (and yes, there will be a modest delay between QE2 and QE3 - after all 2011 is following the 2010 script. To the penny.)



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TaxSlave's picture

The $30 Bil is not a cut, it's 'less increase'.

The next thing to watch out for is a collapse of the bond bubble.  Then the end game is on, the only tool left in the box will be the Zimbabwe strategy. 

Twindrives's picture

Shut that corrupt bitch down in D.C.   The world will be a better place for it.

Nord's picture

Details on the nice avatar will be appreciated.

Central Bankster's picture

with over One trillion of treasuries to rollover just this year, another 5 trillion over the next 5, PLUS 1.6 trillion + dollar deficits per year, the "Zimbabwe Strategy" is already in motion.  There simply are not enough foreign + domestic bond buyers.  Just a few weeks ago ZH reported the bond auction failures in Russia and Poland.  And I think that was a measley couple hundred billion?



Mr Anderson's picture

The bond auction failures havn't been talked about enough. The MSM ignored it, the tea party groups ignored it.


And if there is no QE 2.1 2.5 or 3.0

Who the devil will buy it?


Mr Anderson's picture

The bond auction failures havn't been talked about enough. The MSM ignored it, the tea party groups ignored it.


And if there is no QE 2.1 2.5 or 3.0

Who the devil will buy it?


Sudden Debt's picture

You missed the most important:

He wants older people who are wealthy to pay more out of pocket for their health care.


Pure communisme. If you got money, you have to spend it. If you don't got money, you'll get it for free.

Where's the incentive to work?

I might be European but I grew up with the American dream where you could become rich by working hard and using your brains.

I also did things where everybody used to say it was to risky, I worked to hard, I was a capitalist...

And now that I've got money, I mostly hear envy and reasons why I should give away more of my money.

This kind of shit really pisses me off!

Without a incentive to work hard, it's also impossible for new starters to get to that goal. If your at the bottom, you'll never be able to crawl out of it thanks to this system. And if you have money, you have to fight to keep it.

Everybody loses with these kind of systems.

Only losers with nothing who "hope" to get out of their missery support this crap but don't realise it's because of a system like that that they are in this kind of mess where they can't get out.




Be consistent!

And by that I mean:

You want stuff, you want to become rich = Capitalisme

You want everything for free and work less = Socialisme



Pepe's picture

is "capitalisme" french?

I would say: You want to keep everything in the hands of a few and make everyone work their ass off?: Capitalism

You want to make everyone work as slaves and feed them a few slogans to make them feel better?: Socialism

You want to be what you were created to be: a Human being? Then figure out something new and Radical

malek's picture

Your rant makes no sense, unless you're whining over the "loss" of free healthcare as a senior.
You are paying 1.45% (or 2.9% if self-employed) of your income on Medicare, which is clearly money down the drain for a Generation X-er or younger, but otherwise what exactly lowers your incentive to work? And save, so you can pay for your own costs in retirement?

ZackAttack's picture

Nice trick, to move all that private bank debt onto public balance sheets, then, once that's complete, demand austerity.

OK, here you go:

- End all 3 wars tomorrow. There's $500b over the next decade.

- Cut the F-35 program. There's nearly $400b.

- Cut off the GSEs and putback every non-qualifying piece of mortgage paper onto the selling bank. There's $500b over the next 5 years.

- Shut down the DHS. $40b annually, going to $60b, for a total of two arrests. There's another $500b.

There, that was easy. It took 5 minutes to find half the spending cuts they need, and the only people it pisses off are bankers and defense contractors.

Ace Ventura's picture

But...but...Zaaaack....if you do all that wanton 'irresponsible cutting', think of all the jobs you'll be destroying? Why do you hate America? Why must the chilrenz suffer because of your ideas? Dont you care? /sarc

Dude, if that sort of stuff was pushed at high enough levels, I have no doubt the JFK Treatment would be administered accordingly. Still, you're absolutely right of course.


Michael's picture

Why would anyone Not hate what America has become?

Piranhanoia's picture

I wonder if the people that have these kinds of jobs would trade for?  Zach only cut the jobs regarding busy work and killing.  The reduction to the online porn alone would clear up a lot of bandwidth

ExploitTheMarket's picture

+4 Trillion... only 71 Trillion more to go...

It’s Official: Ron Paul Can Beat Obama in 2012

goldfish1's picture

End corporate welfare:

General Electric paid no tax at all in America last year and even managed to get a $3.2billion ‘rebate’ from the government.

The utilities giant allocated just 7.4 per cent of its $5.1billion U.S. profits in tax - around a third of what others companies its size are paying.

But through a complex series of measures GE, which is America's largest company, will not even have to hand that over.

Read more:
WonderDawg's picture

"End all 3 wars tomorrow. There's $500b over the next decade."

You have a source for that number? I would have thought it would be higher.


"Cut off the GSEs and putback every non-qualifying piece of mortgage paper onto the selling bank. There's $500b over the next 5 years."

Again, source? I'm just using back of the envelope numbers, but I would think it's closer to 3 trillion than 500b, and where do you get 5 years?

Perhaps spending more than 5 minutes would give you the chance to come up with some real numbers, and they're much bigger than the numbers you casually bounced out there.



Long-John-Silver's picture

This amounts to rearranging deck chairs on the Titanic. This economic ship of state is flooding with debt faster than the tax payers and pump it out.  It's slipping by the bow and nothing will or can be done. All we can do is be ready for the day that we become Zimbabwe II.

SparkyvonBellagio's picture


Brickerbracker Firecracker Sis Boom Bah

Zimbabwe, ZimbabUSA Rah Rah Rah!

Will the criminal Bankers blow those annoying Vuvuzelas!


John Law Lives's picture

This is pre-election year posturing.  The GOP is trying to paint Obama as a big spending liberal.  In fact, there is no way either party has the guts to make deep and significant cuts in Social Security, Medicare, Medicaid and Defense.  No way.

The US will never produce another balanced budget, and the great R-E-S-E-T button will get pressed.

ArmchairRevolutionary's picture

"there is no way either party has the guts to make deep and significant cuts in Social Security, Medicare, Medicaid and Defense"

It is not about guts. Both parties are part of the kleptocracy. It is about who gets to do the stealing.

Number 156's picture

Ok, riddle me this Batman, where are they going to find this kind of money unless they are willing to cut entitlements?  Or, are they going to default on interest payments? Military spending?  Heck, even if they ended all these sacred cows, you still wont get there.

The fat lady is making her way to the poduim....

cossack55's picture

I always did enjoy Kate Smith's rendition of "God Bless America".

disabledvet's picture

qstion isn't "qe 3?" but "can they get away with it?"  b4 "islamic tinderbox" (predictable) and "God annihilates Japan" (not predictable at all) i said "reckoning" and "time to die."  specifically "raise cash" 6 weeks ago--anticipation of "war fact" with hapless response. WRONG! new data means new views:  qe 3 can be done--much depends however with "Libya."  that's WMD's on Europe's doorstep in hands of total looney in K-daff and an amazing "eh, whatever" response.  that's tmptation for him.  even that seems deal-able tho due to "wrath of Japanese God."  in short "fed can monetize this war" for forseeable future (generational-20 years) which in it's own right can create continued albeit anemic recovery.  should prez give "The Hamm" the go i see such leadership creating a potentially "re-electable recovery."  shall see.  btw--sorry for bad typing--thumb crushed by evil fed ex trailer.

Hulk's picture

The children are definitely in charge, reminds me of the star trek episode "and the children shall lead" Roddenberry was way ahead of his time...

nmewn's picture

Bonk bonk on the head...bonk bonk...LOL.

"Entitlement" spending is the problem that needs addressed.

Anyone can dispute the source of the link...but the numbers are very real...but it's not all bad I guess;

"Washington will spend $2.6 million training Chinese prostitutes to drink more responsibly on the job."

Can't see how this equates to more "bang for the buck" though ;-) 

A Nanny Moose's picture

Nice link. I always thought it odd that our postal monopoly deemed it necessary to fund Lance Armstrong's early TdF victories to the tune of ~$40 million, with questionable revenue results...for the agency that is.

nmewn's picture

Hadn't heard about that one, not surprised.

Of course they throw money around as if it wasn't theirs to throw around...oh's not ;-)

digalert's picture

Just bitchin, all of CONgress giving public lip service while doing bankster Lewinsky's behind the scene. Meanwhile Barama will officially announce that he wants to be prez (again) in 2012 and 2016 and...

cxl9's picture

Silliness. Federal government spending will never be reduced because there is no mechanism by which it can be reduced, and the numbers are simply too vast. At most, the rate of spending acceleration will occasionally flatten before resuming its inevitable upward trajectory. Until the final, spectacular collapse of course. Then we wind up and start all over again. But that is 20 or 30 years away at least.

Ace Ventura's picture

Not gonna make it to 20 years before we start crossing interstellar numbers on the debt load. Trillions will seem like hundreds. Start thinking quintillions and you'll be closer than you probably think. Unless of course the 'RESET' button gets pressed....which I believe will be the case....long before then.


John Law Lives's picture

<<<  Unless of course the 'RESET' button gets pressed....which I believe will be the case....long before then.  >>>


cxl9's picture

In the saner world of yesterday, I would agree with you. But these are very different times we're living in.

* Coordinated, centrally-planned global economy.

* Bond market price fixing.

* Vastly more powerful and expansive central governments.

* Widespread practice of ignoring laws and Contitutional limits.

* Expanding and more sophisticated methods of population control.

Yes, I do believe we're headed for a crash of epic scale, but it is a long way off. They will kick this can further down the road than anyone would have imagined possible. We have decades to go, not months.


ForWhomTheTollBuilds's picture

Totally agree.  The Elites have established a system allowing them to move any unpayable debt onto the backs of any taxpayers, anywhere on earth.  Mathematically it can go on until all earning power is consumed by the taxes required to service the debts. 

Meanwhile the ability to run the printing press allows the elites to conficate all the (paper) savings of all of the citizens of the world. 

Humans are not known for thinking or taking action until the alternatives become too painful, and even then the choice of "think or die" is a crapshoot.  As angry as we ZH'ers are, we are decidedly in the minority.

One exception this time around could be that the elites are, for the most part, a bunch of group-thinkers (this was covered in an earlier ZH post a few months back) who genuinely believe they are genuises.  Jim Sinclair was in Davos trying to talk to the intellectuals and central bankers about a Gold Standard and the thing he noticed was that no one wanted to talk about it because no one really knew what it was. The idea of basing money on an object wasn't something they disagreed with, it was something that just seemed like a bizzare relic of the past that must have been abandoned for a good reason, otherwise we'd still have it.


Our elites appear to be people who have no concept of a monetary system outside of various fiat monies all valued against the fiat US dollar.  If the US dollar starts to shit the bed, our elites may honestly not know how to understand what is happening and what it means.  Their status as elites will convince them that stubbornly clinging to business as usual is the right thing to do, since the people then screaming the loudest will all be poor.

That would be the uncontrolled collapse scenario, and it would be sheer terror for all involved.  On the other hand, at least it would be interesting...

SilverFiend's picture

For some of us it would be sheer delight.  Uncontrollable collapse that is.

r101958's picture

I guess some here think that other countries will want to continue to fund our profligate lifestyle in perpetuity ('a few more decades'), all at the expense of their own people. I respectfully disagree and think their patience will wear thin much more quickly.

WonderDawg's picture

There you go. That's the kicker, and the one really significant variable that tends to get overlooked. When enough people get pissed off enough, there will be change. Catastrophic change, probably, but I don't see this going on for decades. I'm in the camp that thinks we can time it in months or maybe a couple of years, max. The collective social mood (globally) is moving with celerity toward the pessimistic end of the spectrum. That's my conviction, so I'm making my preparations for that scenario. If I'm wrong, well, I won't have to buy rice or beans for a while.


cossack55's picture

"But that is 20 or 30 months away at most". Fixed it for ya. YW.

Matte_Black's picture

We are so fucked. Historians will surely call ours the Age of Delusion. Is there something in the fucking water?

It's as if our political and economic choices (as if there is a difference) boil down to a flip of a coin upon which is imprinted the leering face of stark raving madness.

The best lack all conviction, while the worst
Are full of passionate intensity.


Hulk's picture

Apparently fluoride is the culprit...eq to roman lead.

kaiserhoff's picture

Pseudo estrogen in the Potomac River, for reals.

Hulk's picture

Used to be signs all along the potomac, in DC, stating that the water is polluted and not to be touched...

Matte_Black's picture

Time again to vote

Flip the coin of liberty

what the fuck? both heads.



Mr. Anonymous's picture

" . . . the GOP's Paul Ryan is expected to announce a whopper of a 2012 budget, one which trims a record $4 trillion in spending over the next 10 years. What this means is that the GOP is about do away with Obama's health care "revolution" and things are about to go back to the way they were."


The GOP's gonna start REALLY cutting in 2012, you just wait and see.   For reals, this time.  Just vote us some more power, we'll get it right.  You just watch.  Give me a fucking break, Tyler.  This is just political grandstanding.


I thought you were better than this.

John Law Lives's picture

<<<  This is just political grandstanding. >>>

Agreed.  The GOP controlled the White House and Congress for 6 years with G.W. Bush. We got two wars and significant budget deficits.

There is ZERO chance that either party will make deep and significant cuts in Social Security, Medicare, Medicaid.  This is posturing.

Ace Ventura's picture

My guess is TD isn't pom-pom-ing Paul Ryan or the GOP. Merely reporting what the man is proposing. I don't think there is one reader here on ZH who actually believes Ryan's proposal will ever see actual implementation. Everyone here knows the 2012 campaign cycle is getting cranked up, so with each passing week we'll hear more of what we want to hear from the District of Criminals.

The only way any of this ever changes for the better is when 1776 Episode II goes live. All else is just political theatre. IMHO that is. Hope I'm wrong.


cossack55's picture

Too right. By the time October 2012 gets here the Repubs will claim to want to cut $400 Trillion in 10 years and the Dems will propose unionizing the unemployed.

Mr. Anonymous's picture

Pretty much.  For the GOP, it's more serious, though.  To my ardent Republican friends geeked up on Tea Party tea leading into the election, I said, 'Prepare to be very disappointed'.  It's happening right now, this pathetic little social-program targeted cuts, nothing nearly like the Tea Partiers were expecting.  So, in order to control their right flank, the GOP will promise 'really really big cuts this time, you just gotta vote us some more power.  Then you watch and see.'  Of course, they'll trim out some more minor Lefty stuff, a little window dressing for their base, but leave almost everything significant in place, including the world's most bloated defense budget. 


We do need to take 1776 live.

cossack55's picture

I would prefer the French 1789 route.