SMOKINCHOICES (and other musings)

May 7, 2011

Obama needs to drive Budget Debate

Filed under: Uncategorized — Jan Turner @ 3:01 am

Obama needs to be driver behind budget debate


If you’ve wondered why it’s so hard to subdue budget deficits, you should consult a new study from the Congressional Budget Office called “Reducing the Deficit:  Spending and Revenue Options” (free at ).   You’ll learn from its 240 pages that the deficits definitely can be curbed. The CBO presents 105 policies (it doesn’t endorse them) that would shrink deficits by trillions of dollars over the next decade. You’ll also learn — surprise   ! — that most choices are political poison.

Suppose we increased the federal gasoline tax by 25 cents a gallon, from 18.4 cents to 43.4 cents. That would raise $291 billion from 2012 to 2021, estimates the CBO.   Or we could advance the ages for early and full Social Security benefits; one suggestion is to raise them (now 62 and 66) by two months a year until reaching predetermined targets (say, 64 and 70). The CBO reckons the decade’s savings at about $264 billion. How about slowly moving Medicare’s eligibility age from 65 to 67? The savings: $125 billion. (So what are those elders supposed to do?  It would be convenient if we would just all die. . . .but don’t count on it.  The point is our nation has much to correct before we can expect an employment market for senior citizens as able bodied,  qualified younger people cannot find work.  Based on current reality the benefit age should be left as is.  Means testing is reasonable  and some formula certainly could be devised which would be fair and sensible.)  

Are we finished? Nowhere near.  At most, these crowd-pleasers would make noticeable dents.  Recall that the deficits total almost $10 trillion over the next decade under President Barack Obama’s original 2012 budget.  That’s the point:  Even discounting the effects of the deep recession, prospective deficits are so large that they can’t be cured by tinkering.  We should be asking basic questions:

  • How big a government do we want? For four decades, federal spending has averaged 21 percent of gross domestic product. An aging population and high health costs mean that average spending, as a share of GDP, will rise by a third or more in the next 10 to 15 years if today’s programs simply continue. 
  • Who deserves government subsidies, and how much? About 55 percent of spending goes to individuals, including the elderly, veterans, farmers, students, the disabled and the poor. (These should stand if we are a nation with any sense of decency and fair-play.  There seems to be a really big class of huge corporations however,  who get unbelievable subsidies and kickbacks from government – see April 18, 2011  post  called      10 Wealthiest Corps pay no taxes. and these should be corrected )
  • How much, if at all, should social spending be allowed to squeeze national defense?
  • If taxes rise, how much and on whom? Which taxes would least hurt economic growth?   (How about 1/2 Million$?, with rates going back to those in place during the successful Clinton years.

We aren’t having this debate, and President Barack Obama is mainly to blame. His recent budget speech at George Washington University was a telling model of evasion, contradiction and deception. He warned that by 2025 present tax levels would suffice only to pay for “Medicare and Medicaid, Social Security and the interest we owe on our debt. . . . Every other national priority — education, transportation, even our national security — will have to be paid for with borrowed money.”

Fine. But Obama has no plan to balance the budget — ever.  He asserted “every kind of spending [is] on the table.” But every kind of spending is not on the table. He virtually ruled out cutting Social Security, the government’s biggest program (2011 spending: $727 billion). For example, Social Security is excluded from a proposed “trigger” that would automatically reduce spending and raise taxes if certain deficit targets weren’t met. He also put Medicare (2011 spending: $572 billion) largely off-limits.   (Medicare – I’ve spoken on this so often. It is so doable! Negotiate the Pharmaceuticals  down to the level Vets get and all other countries in the world.  No-brainer.  Curtail the ever-increasing cost of newer technology when prior methods are often as good or better – for LESS.  Curtail all the nice-to-have, but unnecessary, uber expensive procedures – like geriatric replacement of body parts that wear out.  And disallow heroic procedures in the last year or so of life when  all medical experience reveals that it would not be fruitful. It is said these are the days of greatest expenditure.  )

The president keeps promoting an “adult conversation” about the budget, but that can’t happen if the First Adult doesn’t play his part.    One way — maybe the only way — to break today’s deadlock is to alter public opinion so that some government benefits are seen as unnecessary or illegitimate and some taxes are seen as fair burden-sharing.      Given better health, longer life expectancy and wealthier elderly, why shouldn’t Social Security and Medicare eligibility ages be raised and means-testing broadened? The president doesn’t broach this debate. Farmers receive about $15 billion a year in crop subsidies to help offset the insecurities of weather and fluctuating prices. Considering that volatile markets impose similar insecurities on many Americans, why do farmers deserve special protection? The president doesn’t engage that debate. Might not a higher gasoline tax reduce budget deficits and oil imports? Obama is silent there, too.

All this may be politically shrewd. Voters disdain hard choices. Liberal pundits loved Obama’s speech. But another audience is less impressed — global money managers. The Financial Times’ respected columnist Gillian Tett recently asked whether the administration’s “reassuring patter on debt” could be believed. Not entirely, she concluded. Shortly thereafter,  Standard & Poor’s warned that it might downgrade U.S. government debt.  Obama is flirting with trouble, even if he doesn’t realize it.

Robert J. Samuelson writes for Newsweek and the Washington Post Writers Group.

(It is long past time that President Obama take the helm and start steering the ship.  We all remember the 2008 candidate Obama who won our hearts and minds.  We would be there in a flash for him if he would just stand up for the people and do the right thing.  It is excruciating to see the affability and charm return when it is only for re-election purposes.  Words alone will no longer cut it.  We need LEADERSHIP coming from a fire in the belly.  Nothing else will do.  We all hope he finds the will to do it.     This post has nothing to do with Osama bin Laden.  Our president showed the brilliance and cool head that we all know he has and is – never a question about innate ability.   One simply asks, why the hell won’t he stand up and do it?  Take charge!   Everywhere we look, we see hanging fire. . .so much to do.    

Of course, the biggest savings of all would be realized if we just checked out of all the war games.  There IS NO WINNING to be realized – nor are we wanted there.  We have no right to be over there.  We have been being used for a fool.   To withdraw our troops and begin nation building at home would solve just about every problem we have.  Not easy of course – – but so needed.  Lets stop all this suicide mission and start building our American way of life again.      Jan)

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