Tag federal budget

Denial is not a river in Egypt, but it does water the root of America’s economic trouble

Pat Ryan 2 Comments

Please read this column.  Loren Steffy, the excellent business columnist at Houston’s Leading Information Source, makes a point that he and others have been making for a long time, but he does it today in such a clear and simple and straightforward manner that this truth must now be self-evident after any honest appraisal of the economic facts as they are recognized here in the reality-based community.

We know that increasing spending faster than revenue is unsustainable.  We know that fixing our problems will require both cutting spending significantly and increasing revenue.

We just don’t want to do it.

We haven’t even wanted to think about it for generations.  We elected representatives who promised programs that benefitted us; incumbents campaigned on a record of “bringing home the bacon” and we rewarded them with re-election; we treated the federal treasury as an ATM machine with no limits on withdrawals; and any candidates who spoke honestly of a need to raise revenue to meet government obligations were thrashed.  When the rising tide of the tech revolution lifted all boats and left the government with an actual surplus, we thought we were crapping platinum.  Our aversion to reality was so strong that rather than raise taxes to pay for two simultaneous wars we chose to trust that all would be well since we were on the side of the angels.

All those expenditures through all those years, without enough real money in the bank to pay the bill, added up: more than $14.5 trillion and counting.  As Steffy says, it doesn’t matter now whether President Obama lacks leadership or Congress lacks backbone or Standard & Poor’s bears some of the blame for the subprime mortgage crisis and subsequent recession that led to the bailouts which contributed to the debt:

If we’re honest with ourselves, we know that S&P’s analysis rings painfully true.  We can blame whomever we want, but it’s a couple of decades past time to do something about it.

The leaders of the House and Senate are announcing their selections for the deficit reduction committee called for in the debt ceiling deal; that’s where the work has to start, now.  Let’s please pull our heads out of ___ _____ (you fill in the blanks) and find a solution to our problem.

T-minus three weeks and counting…

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There’s just the faintest whiff of default in the air in Washington, D.C., so the frequency of budget meetings is on the rise.  Late last week President Obama and Speaker Boehner sounded confident they could make a deal  that would reduceBoehner government spending by $4 trillion over ten years, but Boehner has backed off from what The New York Times characterizes as “a transformative proposal, with the potential to improve the ugly deficit picture by shrinking the size of government, overhauling the tax code and instituting consensus changes to shore up Medicare and even Social Security. It was a once-in-a-decade opening.” 

Why?  According to the Times’ analysis Boehner faced the realities of preserving his own power as speaker versus trying to get his own party to accept compromise on taxes; he also may be passing on a rare chance to get Democrats to compromise on major entitlements.

Kathleen Parker is another conservative voice making the case that Congressional Republicans may be pushing their advantage too far, turning their noses up at serious concessions from Democrats while making no progress on solving the immediate issue of the debt limit:

Few honest brokers think that we can prevent a financial catastrophe without both cuts and revenue increases, but there are surely ways to get there from here without necessarily punishing the poor or the wealthy.

(snip)

Meanwhile, not raising the debt ceiling is fraught with peril. Even prolonging raising the ceiling is potentially hazardous before a default happens, as investors take preventive actions that could distort the money markets.

Republicans have made enormous advances toward government reforms that were viewed as unachievable a year ago. Voting no may have become the aphrodisiac of small-government conservatives, but it is not necessarily an act of bravery or wisdom.

Sometimes it’s just stubborn.

If Parker’s suggestion of possible pig-headedness by Republicans is too harsh, Obamaconsider the perspective offered today by David Gergen: with Obama’s indication today that he won’t accept any short-term agreement, all of the players have now painted themselves into their separate corners, and we all will pay the price if they don’t find their ways out:

Republican and Democratic leaders on Capitol Hill, fortunately, agree that it is essential to avoid a default on the debt. They are right. But to get there, each side is going to have to give a little.  It is impossible to imagine either side doing what it would take to reach a $4 trillion deal; the GOP won’t ever agree to tax increases of as much as $800 billion to $1 trillion, nor will Democrats agree to major entitlement cuts. They especially won’t do it in the rush of last-minute negotiations over the next few days.

But in the name of fiscal sanity, they may be willing to agree to a much more modest set of compromises—something that prevents default, allows dust to settle, gives them a chance to build up support back home and keeps negotiating over a longer period of time.

Props to the GOP for getting Democrats to agree to so much of what Republicans want; please don’t get carried away and push for “too much” and not get the debt ceiling resolution that’s needed right away.

Tick…tick…tick…