Argh
Saturday, December 1, 2012 at 3:00AM 
Boehner wins! At least that seems to be the consensus of this article.
House Republicans, already worried about possible primary challenges in 2014, are pleading to keep that number below $1 trillion, even if it is by a hair. Still, they know it’s likely to come in a shade higher. The safe bet is just over $1 trillion for the final number. A bit less, and that’s a notable win for Boehner.
Why do I say argh?
The first reason is that this is not a tax increase. It is a 3 trillion dollar tax cut. The Bush tax cuts are due to expire next year. This means 4 trillion in revenue over 10 years. (They spread everything they do over ten years to make the changes sound larger than they are.) But now the tax cuts will be extended, unless you are wealthy. These tax increases are already baked into the CBO (Congressional Budget Office) deficit estimates, so the deficit will go up over the next 10 years by 3 trillion.
Argh.
I won't even mention the fact that the CBO has ever unrealistic assumptions about economic growth.
Argh.
What about spending cuts? Apparently they come later. Here is a quote from the article:
“A lot of the big entitlement savings comes in the 10-20 year budget window, not the next 10 years,” a Democratic aide said. “Everybody will need to get on board understanding that. Paul Ryan and the Obama budget are the same on health cuts for the next 10 years.”
This is what is usually called a lie. But the article seems to hold this as a truth of some sort. Yes, Ryan and Obama are proposing similar cuts in Medicare, but Obama double counts these cuts as he allocates these savings to pay for ObamaCare.
Argh.
New spending cuts you ask? Nope.
Spending cuts will be crucial to this. The floor for new spending cuts is simple: replacing the $1.2 trillion in automatic cuts set to kick in if the two parties can‘t cut a deal before year’s end. Republicans will insist these are real and imminent to swallow the rest.
In other words the spending cuts in this proposal are less than the cuts already made. No new spending cuts.
Argh.
They will also count the winding down of the war as a "cut." This has already been counted once in the CBO estimate, so let's count it again.
Argh.
There is some talk about minor Medicare cuts, so I continue in being guardedly pessimistic. Since most people will not examine the details of whatever budget deal is made, there will be a spurt of false optimism when we pretend everything is fine. 2013 may not be as bad as I thought, but that means 2016 will be worse.
Argh.
Frédéric Bastiat, an early economic writer, had this observation about economists: “The bad economist pursues a small present good, which will be followed by a great evil to come, while the true economist pursues a great good to come, at the risk of a small present evil.”
This obvious truth is the exact opposite of modern economic thought, like Keynes, who said, "In the long run we are all dead."
Argh.
Here is Karl Denninger's version of these hard truths.
Economics 
Reader Comments (2)
All the budget negotiation talks are another form of financial fraud. Deceit. Mendacity. Lies. Cuts in spending that are actually increases in spending. There is no "long-term" solution, as Denninger points out. Now or never.
Yes, this last post seemed to fit into my theme of fraud. Tomorrow's post fits as well.