A Deck Chair Off the Titanic

by Russ Roberts on February 2, 2006

in Media, Politics

The headline from the lead story in the Washington Post:

Budget Cuts Pass By a Slim Margin
Poor, Elderly and Students to Feel Pinch

Sounds pretty harsh—budget cuts on the backs of the least able members of society.  The story opens:

The House yesterday narrowly approved a contentious budget-cutting
package that would save nearly $40 billion over five years by imposing
substantial changes on programs including Medicaid, welfare, child
support and student lending.

So maybe it’s not so harsh.  Forty billion over five years.  Not exactly a big slice or much of a pinch.  And it turns out they aren’t really cuts at all.  When you go to the continuation of the story to page A7, the headline reads:

House Votes to Stem Increases in Spending

So they aren’t cuts at all.   They’re reductions in future spending increases.  Tiny reductions.  Eight billion a year.  If you read all the way through the article, toward the end comes the real measure of what’s at stake here:

The impact of the bill on the deficit is likely to be
negligible, slicing less than one-half of 1 percent from the estimated
$14.3 trillion in federal spending over the next five years.

You could ask why this story makes the front page.  It’s not exactly a man-bites-dog story.  More of a man yells atdog story.  But if it makes the front page, the Post might try and describe it correctly as it does on the home page of Post’s web site (even though the linked story has the same misleading headline.

How do you feel the pinch from getting a smaller increase than you might have gotten?

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dymphna February 2, 2006 at 4:07 pm

This is more like "the man tiptoes by the dog" story. It certainly isn't a serious cut in anything, just a small dribble from the entitlement faucet.

Mjrmjr February 2, 2006 at 4:22 pm

I agree that it's really more a non-story than front page news. However, from the POV of a GMU student who has received Pell Grants and Stafford Loans in the past I can read this as "bad news". The tuition at GMU and particularly the cost of books has and likely will continue to increase at a higher rate than inlfation. Supposing that funds for grants/student loans was originally going to increase at the same rate as the cost of tuition/books but now might only increase at the rate of inflation(I don't know if this is actually the case, but let's say it is for arguments sake)I would say that students are going to "feel the pinch". At the margin it may not be much of a pinch, but I'd argue that any pinch or increase from currently high levels is bad. On the other hand, will it make my degree more valuable if young folks look at the price tag of a college degree and say "no thanks"?

Kevin February 5, 2006 at 11:01 pm

Here's a tautology for ya Mjrmjr: the price of education keeps going up so much *because* there continues to be money available to pay for it. Everyone complains but between debt, grants, and whatever, there's no shortage of paying students.

If young people actually did stay away in droves because school (finally) costs too much — if they had a college and no one showed up — then most assuredly prices would start to drop.

Keith February 6, 2006 at 9:38 am

"If young people actually did stay away in droves because school (finally) costs too much — if they had a college and no one showed up — then most assuredly prices would start to drop."

What country are you living in, Kevin? I think you're confusing economics with politics.

mstahl16 February 7, 2006 at 2:53 am

Can anyone explain why student loans are costing the government anything at all? If they really are loans (which of course they should be) the government should be making money on them!

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