Monday, February 13, 2012

A budget that ignores a harsh bottom line

Tomorrow's edit today:

Obama’s 2013 plan too quiet on reforms needed to tackle debt.

Given that President Barack Obama’s allies in Congress already have declared a budget won’t be voted on in 2012, the president’s unveiling Monday of his proposed 2013 budget was little more than an opportunity to make a political statement.

When it came to our country’s alarming debt, that statement was hardly a whisper.

The president’s budget, unveiled with a speech at Northern Virginia Community College, offered few surprises. There were tighter caps on discretionary spending, as necessitated by August’s debt-ceiling agreement. There was a proposed $1.5 trillion increase in taxes on the wealthy, which dares Republicans to battle Obama on an issue where he clearly believes he has the political advantage.

The president also proposed some domestic initiatives he’s previously advocated, including $476 billion over six years in road and transportation improvements, plus an $8 billion investment in community college worker training that he telegraphed in a State of the Union speech featuring good work done at Charlotte’s Central Piedmont Community College.

Finally, the budget included the kind of iffy accounting we’ve come to expect with these plans – revenue based on overly rosy economic growth, and cuts based on accounting gimmicks such as nearly $1 trillion in “savings” on war expenditures that the U.S. wasn’t going to spend, anyway.

Add it all up, and Obama’s budget still offers sobering short-term deficits, following up a $1 trillion-plus shortfall in fiscal year 2012 with a 2013 deficit of about $900 billion. Those deficits, while not ideal, are certainly justifiable. The White House says – and many economists agree – that severe and immediate spending cuts are not the best way to guide the fragile U.S. economy toward recovery.

But the long term? While Republicans and Democrats bicker over whether the plan would save $4 trillion, as the White House says, or $300 billion, as Republicans have calculated, this much we know: Obama took a pass, again, on steering us toward the systemic reforms needed to truly tackle a $15 trillion debt that’s becoming more perilous each year.

The biggest driver of that debt is Medicare and other health care costs. Obama’s budget proposes $360 billion in Medicare and Medicaid savings over the next 10 years, mostly by reducing payments to drug companies and other providers. That savings won’t even dent the trillions the U.S. will spend on health care during that same time span.

Obama already has a blueprint to reduce debt – Charlotte’s Erskine Bowles and Wyoming’s Alan Simpson showed how to reduce deficits by $4 trillion over 10 years with real entitlement reform, not timid cuts and accounting sleight of hand.

Bowles and Simpson, who led the president’s deficit task force, made clear that the $4 trillion was just a start down the long path of debt reduction. Perhaps it’s unrealistic to expect President Obama to use an election-year budget proposal to launch us down that difficult road. But it would’ve been nice if he had at least nudged us toward a good first step.

2 comments:

Philip Andolina said...

I can remember when Jimmy Carter signed the authorization to break through the first trillion dollar debt ceiling and the political flack he caught for it then. Decades have slipped by since and very little has ever been paid down. This is not in dispute

Rather than appropriately increase taxes, or responsibly cut spending, or sanely do both - it has been an assumption by both economists and whatever party has been in power that given enough time - the total US economic growth would out pace the national debt. This should not be in dispute.

The baby boomers are now starting to go off into the sunset of their retirements having enjoyed tax cuts AND big government while not paying the bill incurred on their watch. I cannot think of enough despicable terms that this deserves.

J said...

President Obama stated during his innagural address that the financial mess he was walking into was caused by "the greed and irrisponsibility of some, and also by the refusal of the government to make hard choices." He has since chosen to blame everything on those "some" and create as much class- and wealth-envy as humanly possible. Here are some of the "hard choices" that someone is going to have to make:

1) At some point in the very near future, whoever our President is will need to get in front of the camera and state, "unfortunately, we have no choice but to declare that everyone born after the year ___ will not receive any Social Security, Medicare and Medicaid benefits upon retirement, and yet everyone born between (first date quoted) through (whatever year the current 18-year-olds were born) must pay FICA taxes for the rest of their working lives, because the vaunted Social Security Trust Fund has never existed, as every dollar from the fund every year has been used to pay for other government programs. Yes, this is 100% unfair, but it is the price we must pay for runaway government spending the past 4 decades. Everyone born after (first date quoted) should expect to receive no government monies for their retirement and must make their own preparations, such as maintaining a 401(k), IRAs or other such avenues."

2) Some President will also need to announce, "From this day forward, there will be 5-year term limits on Welfare, ADC, Section 8 vouchers, and food stamps. Once your 5 years are up, you are ineligible to receive any of these benefits for 5 years from the date of expiration. The only exception is for people who have been medically declared 100% disabled and completely unable to maintain a regular job."

3) This same President must also state, "I must insist that Congress pass legislation that reduces every tax rate for every type of income - employment, capital gains, inheritence, everything. I understand, as Democrat John F. Kennedy and Republican Ronald Reagan did, that if you reduce income tax rates, this will encourage people to earn more income and thus bring in more tax revenue. Increasing income tax rates, while appealing to the emotions of people who have less than others, creates an environment that encourages people to stop reaching those levels of income and thus decreasing tax revenue."

4) Next, that President must state, "As politicians, we never admit mistakes for fear of not getting re-elected. However, we must admit that the 2010 healthcare act was a grave mistake. We must acknowledge that the vast majority of our constituents opposed this legislation, and we must act as they request and repeal it. We must also roll back many of the combersome regulations instituted between 2009-2011 that have made the cost of doing business so much higher that many businesses slowed hiring because of them."

Then we'll be headed in the right direction.