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CBO Finds Reid Plan Half A Trillion Short Of $2.7 Trillion Promised; Actual Cuts Are $375 Billion Over Ten Years

Submitted by Tyler Durden on 07/27/2011 09:26 -0400

Yesterday, we roasted Boehner over his proposed deficit-cutting plan after it was discovered that it cut about $250 billion less than had been promised. Now it is time to do the same to Harry Reid, after the CBO has just released its analysis of his so-called "plan", which has double the credibility, and dollar, hole: per the CBO the plan will only generate $2.2 trillion in savings, half a trillion short of the promised $2.7 trillion. But wait, it gets far, far more idiotic. Per the CBO "The caps on appropriations of new budget authority excluding war-related funding start at $1,045 billion in 2012 and reach $1,228 billion in 2021" - that's right: savings from not fighting future wars - a cool trillion. But why stop there - savings from not declaring war on Mars: $1 quadrillion; savings from not paradropping suitcases full of $1 billion dollar bills for every US citizen: $333 quadrillion, and so forth. But wait: there's more: "The legislation also would impose caps of $127 billion for 2012 and $450 billion over the 2013-2021 period on budget authority for operations in Afghanistan and Iraq and for similar activities." But wait, there' even more: "Savings in discretionary spending would amount to nearly $1.8 trillion, mandatory spending would be reduced by $41 billion, and the savings in interest on the public debt because of the lower deficits would come to $375 billion." Gotta love the circularity: less interest payments are part of the actual deficit cuts! So, here's the math: of the $2.2 trillion in "savings" strip away non-savings from non-authorized "wars" and you get... $750 billion... and take out the $375 billion in, no really, interest savings, and you get... $375 billion. OVER TEN YEARS! Is there a wonder why with idiotic leaders like this the true US rating is CCC at best?

Here is how the Reid plan looks in paper:

Source: CBO

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Wed, 07/27/2011 - 09:28 | 1497386 jkruffin

So, exactly what kind of fuzzy math are they using to say cutting $375 billion over 10 years are cuts? When they are spending over $1 Trillion a year? Real math shows the hole gets bigger and bigger. Are these politicians that stupid or what?

Wed, 07/27/2011 - 09:34 | 1497408 101 years and c...

"Are these politicians that stupid or what?"

No. But they know that 90% of the population is that stupid. 9% are wealthy and dont care and 1% cant do anything about it.

Wed, 07/27/2011 - 10:52 | 1497784 TrafficNotHere

<<=== politicans are stupid

<<=== politicans are smarter then us

Vote!

Wed, 07/27/2011 - 09:35 | 1497418 SheepDog-One

When you factor in Bernank raiding $200 billion from govt pensions to keep the behemoth aloft just since QE2 end, we see what a total insignificant joke $375 billion over 10 years really is. These people should be dragged out and hanged.

Wed, 07/27/2011 - 09:38 | 1497433 fuu

Timmah took the pensions.

Wed, 07/27/2011 - 09:36 | 1497422 Derpin USA

The budget deficit and the overall debt burden are two related but separate things.

The issue has never been whether or not the debt would grow, just by how much.

Wed, 07/27/2011 - 09:42 | 1497454 Sophist Economicus

This is not 'fuzzy math', it's that 'new math' being taught to our young citizens (and non-citizens alike) in our illustrious public schools. This new kind of thinking has been backward tested in union halls across america and has been found to produce the desired result -- a growing population of citizens that cannot find its ass with two hands

Wed, 07/27/2011 - 09:31 | 1497390 Cognitive Dissonance

Whoops. Now that's embarrassing when you are exposed by the CBO.

Look mom, Harry Reid has no peas.

BTW look at the word em.barr.ass.ing

Wed, 07/27/2011 - 09:34 | 1497410 fuu

"Look mom, Harry Reid has no peas."

Wed, 07/27/2011 - 09:56 | 1497517 DaveyJones

or marbles

Wed, 07/27/2011 - 10:46 | 1497748 InconvenientCou...

I looked it up.

Per CBO

Boner: CBO estimates that the legislation would reduce budget deficits by about $850 billion between 2012 and 2021

Reid: CBO estimates that the legislation would reduce budget deficits by about $2.2 trillion between 2012 and 2021

http://www.cbo.gov/doc.cfm?index=12338

But this is zerohedge, so just invert those and carry on with screaming at the mirror.

Wed, 07/27/2011 - 09:32 | 1497400 johnnymustardseed

It is all bullshit... none of this matters. How about a VAT on Chinese crap sold here for deficit reduction only. If the Chinese don't like tell them to stick the worthless Treasuries up their ass and eat dirt not our imported wheat and corn.

Wed, 07/27/2011 - 11:12 | 1497916 spartan117

That would be real smart. Let's increase taxes on goods sold here in the US so consumers pay more for things.

Wed, 07/27/2011 - 09:33 | 1497404 pazmaker

Reid and Boehner ---same horse different color. Let's just default already and get it over with!

Wed, 07/27/2011 - 09:33 | 1497405 SheepDog-One

Cartoonation.

Wed, 07/27/2011 - 11:05 | 1497874 NumberNone

Ass-clowns running the show that spend their lives in a bubble. It's not real money, there is no real impact to their pampered lives, the only risk is they get voted out and spend the rest of their lives as millionaire lobbiests. Freaking sit up in DC, never make a hard decision, negotiate wiith their buddies, and slap themselves on the back as Master Negotiators and Masters of the Universe.

Only now when the eyeballs are on them and the public takes a moment to look over the shoulder of their elected representative to watch them work do we really see what a bunch incompetent jackholes they are.

Wed, 07/27/2011 - 09:33 | 1497407 midtowng

I still want to see the wars end. Can we include that in the deal anyway?

Wed, 07/27/2011 - 10:42 | 1497725 CrashisOptimistic

Iraq has remained on the Bush withdrawl schedule since Obama was elected. That is, until recently, when the schedule was slowed, and odds are pretty high that a new security agreement will retain 15-20,000 troops there indefinitely. That's right, Bush was ending the war faster than Obama has. Is this bizarre or what?

Afghanistan troop levels ramped up since Bush left office, as have casualties. That also is scheduled for reduction and that reduction is in the most plausible CBO baseline.

This is about money. It's not about wars. Wars can appear at any moment for any reason (one is getting ready near the Senkaku Islands right now, and it will go nuclear).

Wed, 07/27/2011 - 11:28 | 1497978 karzai_luver

Just as with the USSR--- when the troops begin pulling back in force you will KNOW the collapse/implosion is at hand.

Bin laden of the deep says "winning now , bithcezz"?

Wed, 07/27/2011 - 09:34 | 1497409 Derpin USA

Good article, but I take issue with downplaying the savings from interest payments. That's a legitimate savings. If you're going to base current projected deficits and total debt by including interest payments (which you should), reducing those payments should be taken into account as well.

Wed, 07/27/2011 - 09:37 | 1497428 Buckaroo Banzai

Umm...yeah. You do realize that what you are saying makes no sense unless you assume that Congress has full legislative control over the interest rate they pay on the debt, right??

Wed, 07/27/2011 - 09:45 | 1497467 Derpin USA

It's based on the best guesses of the CBO, just like anything that they put out.

Obviously if rates go up enough, the savings would be cancelled out, but that actually makes a pretty good argument against defaulting and creating an institutional selloff of Treasuries, doesn't it?

Wed, 07/27/2011 - 09:58 | 1497526 Buckaroo Banzai

Stop being ridiculous. Do you know what a budget is? Budgets aren't ESTIMATES, they are BUDGETS. The meaningful parts of the budget are the parts that you have 100% control of. The meaningless parts are the parts where you don't have control.

Wed, 07/27/2011 - 10:05 | 1497555 Derpin USA

The CBO is estimating the effect upon the total national debt. What part of that is so hard to understand? If a budget deficit grows, so does the interest payment. If it declines, so does the interest payment. Therefore, reducing the budget reduces the increase to the debt both by reducing spending and reducing interest payments.

You think the CBO includes that factor for shits and giggles?

Wed, 07/27/2011 - 10:31 | 1497684 Buckaroo Banzai

ARE YOU HIGH? They are claiming the interest savings as BUDGET CUTS! NOT "estimates"! Go back to the top and read the piece.

Wed, 07/27/2011 - 11:31 | 1497989 karzai_luver

They are off by such amounts as to be little more than monkey shit readings.

Wed, 07/27/2011 - 09:36 | 1497411 TuesdayBen

CongressWeasels and the 'Prompter have gotta be hatin' the internet and getting instantly called out on their self-serving, mealy-mouthed BS, with no intermediate MediaSpinner between the CongressWeasel and the Sheeple, ala Brian Williams and his ilk, providing a stamp of FauxCredibility

Wed, 07/27/2011 - 09:35 | 1497412 jkruffin

As a man said the other day:

If you voted for Obama in 2008 to prove you weren't a racist, then in 2012 vote for anyone else to prove you are not an IDIOT!

Wed, 07/27/2011 - 09:40 | 1497443 lizzy36

Yeah, because voting for Michelle Bachmann is really going to disprove that idiot theory.

Wed, 07/27/2011 - 09:35 | 1497413 Buckaroo Banzai

At first, I thought Reid just had monumental contempt for the american people. Then I started to wonder, does he actually think like this? That maybe he might actually believe the shit that he talks?

Then I realized that it is a form of psychosis, and it all made sense.

Wed, 07/27/2011 - 09:35 | 1497414 DavidC

Omigod...

Wed, 07/27/2011 - 09:35 | 1497416 Growyourownfood

But why stop there - savings from not declaring war on Mars: $1 quadrillion

Now that was funny

Wed, 07/27/2011 - 09:42 | 1497456 PeeTee

Very.

Can I see the cost breakdown of that $1 quadrillion.

To my knowledge, declaring war doesn't cost much. Just the price of a phone call or a postage stamp...

FED: I hereby declare war on UR-ANUS.

Wed, 07/27/2011 - 11:08 | 1497891 Doyle Hargraves

TD channeling Billy Mays!

http://www.youtube.com/watch?v=VtYdDK1uTDI

Wed, 07/27/2011 - 09:36 | 1497419 wandstrasse

wait, wait, I have insider info, they will pull out the black hole event horizon printing press, called TTIID (this time it is different) which solves ALL problems, it is in the final stage of testing and will be unveiled in 4,3,2...

Wed, 07/27/2011 - 09:36 | 1497421 Archimedes

Come on folks! It is a Harry Reid plan! That alone should scare the hell out of you. This is a guy who is felating anyone he can to keep his large REIT holding aloft and the guy who is in charge of Nevada. A place where 67% of homes have negative equity! What did you expect from this Dips**T!

Wed, 07/27/2011 - 09:40 | 1497441 SheepDog-One

'Your leaders shall be the very worst among you'.

Wed, 07/27/2011 - 09:39 | 1497434 fishface

they can't even get their maths right

hilarious...or in that position dangerous

obs. Schools need more funding

Wed, 07/27/2011 - 09:40 | 1497440 dwdollar

They're desperately flinging poo in hopes that something will be swallowed by the public.

Wed, 07/27/2011 - 09:40 | 1497447 Everybodys All ...

and you wonder why republicans just say no?

Wed, 07/27/2011 - 11:34 | 1498005 karzai_luver

no, but I DO WONDER why you listen.

Oh well , enjoy your time in prison. Funny they don't need bars anymore.

Wed, 07/27/2011 - 09:44 | 1497449 grunk

"savings from not paradropping suitcases full of $1 billion dollar bills for every US citizen: $333 quadrillion"

You mean to say that government was going to provide me with a suitcase of one billion dollar bills?

That makes it an entitlement. I REFUSE TO GIVE UP ANY ENTITLEMENTS. I'm calling my congressman!!!

Wed, 07/27/2011 - 09:41 | 1497452 adonisdemilo

What a bunch of assholes.

All smoke and mirrors.

They might as well get David Copperfield or Yuri Geller in to just make the damn deficits disappear.

Wed, 07/27/2011 - 09:42 | 1497453 dick cheneys ghost

Take a look at the coburn plan that nobody is talking about........$9 trillion in cuts and is still not enough........

http://coburn.senate.gov/public/?p=deficit-reduction

Wed, 07/27/2011 - 10:31 | 1497683 nedwardkelly

Thanks for the link. I hadn't seen this one talked about anywhere... Here's the overview link:

http://coburn.senate.gov/public//index.cfm?a=Files.Serve&File_id=5d66088...

There's some BS in there, but it actually looks to list actual, legitimate CUTS as opposed to hocus pocus 'savings' that involve not doing something that we maybe weren't going to do anyway.

Wed, 07/27/2011 - 09:44 | 1497462 pre

Question: Are you smarter than a fifth grader (in economic studies)?

Answer: No, no you are not.

Wed, 07/27/2011 - 09:46 | 1497470 Debtless

"But why stop there - savings from not declaring war on Mars: $1 quadrillion"

Sure you liberals will continue to just let the Martians continue to endanger our freedoms - as they hate OUR WAY OF LIFE. We must come together as a great nation and spare no cost to prevent this Martian jihad.

Wed, 07/27/2011 - 10:43 | 1497736 CrashisOptimistic

Martians are hard to negotiate with. You have to use force.

Wed, 07/27/2011 - 09:47 | 1497475 taint

For 2012, can't they take 2011 expenditures and just subtract 450 billion, push it down on a pro rata basis to every program and tell them to make it work? then do the same for 2013 - 2015? This whole couch the reducting in a 10 year plan is simply bullshit.

the number of lying stupid bastards in Washington is unimaginable.

Wed, 07/27/2011 - 10:48 | 1497746 CrashisOptimistic

The reason this is not done is the GDP/Unemployment shock that would occur. Remember, Government Spending is a direct component of the GDP equation.

Obama's re-election advisors would unanimously recommend veto. A spike in unemployment going into the election is not acceptable.

FYI, note that this is the VERY SAME explanation for why the Democrats discarded a demand for tax increase. Tax increases are never phased in. They are immediate. If you phase them in, taxpayers maneuver to reduce their future liability and one never gets the revenue expected.

But regardless of that, tax increases can't get a majority of even Democrat votes. If it could, it would have been instituted when they had overwhelming majorities.

So it's spending cuts. The Democrats don't want any tax increases. They drain money from a teetering economy.

Wed, 07/27/2011 - 09:49 | 1497484 sbenard

These politicos are just a bunch of idiots playing games with our future!

Wed, 07/27/2011 - 09:55 | 1497503 janchup

While the Congress Fools whimper and cry over the trivia of 50 billion here, 100 billion there people seems to have forgotten that what screwed the pooch for all time was the gift of 6 trillion dollars of taxpayer money to the banks. Oh sure, they paid it back....by borrowing the payback money from the Treasury.

Wed, 07/27/2011 - 09:56 | 1497512 Burgess Shale

I see heads on pikes.

Wed, 07/27/2011 - 10:14 | 1497594 pacha75

The US is now controlled by right-wing extremists. As per policy, other countries should impose trade sanctions, freeze bank accounts, etc until it turns into a democracy again.

Wed, 07/27/2011 - 10:51 | 1497783 pods

And here I thought that we ZHers were the enlightenend ones.

The US has been controlled by banksters and a ruling oligarchy for more than a century.

Please drop the left right drivel, my bullshit detector goes off whenever I hear phrases like:

"right-wing extremists".

"democracy"

Isn't there some kind of sporting event that you could be watching?

pods

Wed, 07/27/2011 - 11:12 | 1497913 the not so migh...

Donkey alert.. DIVE>>>DIVE!!!!!

Wed, 07/27/2011 - 10:16 | 1497605 israhole

Crank up the presses!

Wed, 07/27/2011 - 10:23 | 1497641 No Bid

+ 1 Trillion for the "Mars" tag

Wed, 07/27/2011 - 10:36 | 1497707 ImNotARobot

Ok, by law, the current Congress cannot legally bind a future Congress from cutting anything. So that essentially makes the cuts of all of the plans, Democrat and Republican, exactly ZERO. There are NO cuts "over 10 years" because the future Congresses do not have to (and will not) abide by them. A perfect example is the Medicare payment caps to physicians passed in the 90's. Please pass this on, so even the sheeple start to see that we are heading toward an engineered doom.

Wed, 07/27/2011 - 10:43 | 1497733 Magnix

What about $1, 2, 3, 4, or more trillion dollar cut??

Wed, 07/27/2011 - 10:46 | 1497753 pods

They are all just merely posturing long enough to make people think they are doing something, and at the end of this they will kick the can down the road by raising the debt ceiling and will hold up some far off goal that will be forgotten about in a couple of years. Same as it always is. Spend now, cut later. Of course, later never comes.

pods

Wed, 07/27/2011 - 10:48 | 1497765 Diogenes

Lets see, if I dont buy a yacht I can save $1 million. If I dont buy a mansion I can save $5 million. If I dont buy a Rolls I can save $2OO,OOO.

There is $6,2OO,OOO in savings right there. Think I will go to the bank and tell them I just made an extra $6,2OO,OOO this year tax free and see if they will give me a loan.

Wed, 07/27/2011 - 11:14 | 1497882 r101958

Here is the answer: The government currently takes in about 2.1 trillion in revenue. So, simple, take the spending back to where it was in 2003 when we spent 2.1 trillion. You know, I don't recall people being thrown out on the streets back then nor do I recall Grandma being kicked off of medicare. Do you? (figures in millions)

Superfunction and Function 2003

National defense 404,778

Human resources    total 1,417,946
    Education, training, employment, and social services    82,603
    Health       219,576
    Medicare    249,433
    Income security    334,632
    Social security    474,680
    (On-budget)    13,279
    (Off-budget)    461,401
    Veterans benefits and services    57,022

Physical resources    total 115,614
    Energy    -736
    Natural resources and environment    29,703
    Commerce and housing credit    728
    (On-budget)    5,973
    (Off-budget)    -5,245
    Transportation    67,069
    Community and regional development    18,850

Net interest    total 153,073
    (On-budget)    236,618
    (Off-budget)    -83,545

Other functions    total 123,088
    International affairs    21,209
    General science, space and technology    20,873
    Agriculture    22,497
    Administration of justice    35,340
    General government    23,169
    Allowances    ..........0

Undistributed offsetting receipts total    -54,382
    (On-budget)    -44,780
    (Off-budget)    -9,602
Total, Federal outlays    total 2,160,117
    (On-budget)    1,797,108
    (Off-budget)    363,009

Wed, 07/27/2011 - 11:17 | 1497935 kaiten

Rating agencies should also rate politicians. :)

Wed, 07/27/2011 - 11:33 | 1497996 pre

I see how this works...

Listen, since the state has the authority to take human life, including those of its citizens; and, since it intends (I think) to refrain from killing all of it's citizens--shouldn't the government be counting future tax receipts as a savings for not killing the citizen taxpayer?

Wed, 07/27/2011 - 12:02 | 1498117 Peter K

Hey, but but but...........didn't Erin Burnett say that the Reid VaporPlan would not result in a S&P downgrade, but the Boehner would? Something smells rotten in Denmark ;)

Wed, 07/27/2011 - 14:04 | 1498567 malek

The original, AFAIK:

"Why, one wonders, not ‘save’ $5 trillion by proposing to spend that amount to cover the moon with yogurt and then cancelling the proposal?"

George Will, Washington Post, March 12, 2009

http://www.washingtonpost.com/wp-dyn/content/article/2009/03/11/AR200903...

Tue, 08/23/2011 - 22:32 | 1593222 karmete

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