Fiscal "Cancer"

Not that we really needed a commission to tell us this, but Obama apparently did.

The co-chairmen of President Obama’s debt and deficit commission offered an ominous assessment of the nation’s fiscal future here Sunday, calling current budgetary trends a cancer "that will destroy the country from within" unless checked by tough action in Washington.

The two leaders — former Republican senator Alan Simpson of Wyoming and Erskine Bowles, White House chief of staff under President Bill Clinton — sought to build support for the work of the commission, whose recommendations due later this year are likely to spark a fierce debate in Congress.

They’re talking mostly about a future economic crisis, not even the current one.

Bowles said that unlike the current economic crisis, which was largely unforeseen before it hit in fall 2008, the coming fiscal calamity is staring the country in the face. "This one is as clear as a bell," he said. "This debt is like a cancer."

So where’s all the money going?

The commission leaders said that, at present, federal revenue is fully consumed by three programs: Social Security, Medicare and Medicaid. "The rest of the federal government, including fighting two wars, homeland security, education, art, culture, you name it, veterans — the whole rest of the discretionary budget is being financed by China and other countries," Simpson said.

Entitlement spending has become the federal government’s primary purpose these days, despite there not being anything in the Constitution specifying this role.  And because people feel, indeed, entitled to it, cutting always has been and always will be, extremely difficult if not politically impossible.

And remember, this is before ObamaCare. 

What’s their recommendation?

"We can’t grow our way out of this," Bowles said. "We could have decades of double-digit growth and not grow our way out of this enormous debt problem. We can’t tax our way out. . . . The reality is we’ve got to do exactly what you all do every day as governors. We’ve got to cut spending or increase revenues or do some combination of that."

Bowles pointed to steps taken recently by the new coalition government in Britain, which also faces an acute budgetary problem, as a guide to what the commission might use in its recommendations. That would mean about three-quarters of the deficit reduction would be accomplished through spending cuts, and the remainder with additional revenue.

I remember what got George Bush (the first one) essentially fired from the Presidency.  He promised, "Read my lips; no new taxes."  He then proceeded to go along with Congressional Democrats who bargained with him to raise taxes with promises of spending cuts to come later.  The taxes went up, but the spending cuts never happened.  The public blamed Bush, but they were only half right.

Democrats now control Congress (for now).  Do you really think they’ll go for such spending cuts?  Their history over the decades suggests they’ll have nothing to do with them, and they’ll run us into the ground with debt.

If Republicans win big enough in November to change the balance of power, they had better start living up to their talk of fiscal conservatism.  But if they do, will the entitled public go along with it?

Filed under: Doug • Economics & Taxes • Government

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