December 18, 2014

A Balanced Approach

Posted on July 26, 2011 by in Articles, Opinion

I am not a speech watcher, and I am certainly not a speech writer. But Monday night, I took notes on two speeches. And this is what I was able to take away from speeches by President Obama and Speaker of the House John Boehner.

President Obama addressed the nation to talk about the crisis in Washington D.C. that has been coming to head. It took him less than one minute (60 seconds) to blame his predecessor, George W. Bush. The President claimed that he inherited a bad economy, and he did. But that is where the truth-telling stopped. The President said “the recession meant that less money was coming in, so we had to spend more money”. Only in a Marxist fairytale does that make sense.

He continued to rehash the same lines that he’s been using for months. President Obama used the phrase “balanced approach” no less than seven times in his 15 minute speech. I stopped counting after the seventh one. He promised once again that families earning less than $250,000 per year will not see any increase in taxes. Obama compared himself to Ronald Reagan a few times, and even had the audacity to quote him. He yet again bemoaned millionaires, billionaires, corporate jet owners, and big businesses for not being taxed enough; for not paying their “fair share”. The president reiterated that the Republican Party is the ‘Party of ‘No’’. He criticized a short term plan released this morning by Boehner as “kicking the can”. President Obama again turned to fear tactics and class warfare by threatening Social Security and Medicaid checks. He said the Republicans refuse to compromise, refuse to increase revenue, demand deep spending cuts and are “holding the economy captive”.

The entire speech was spent trying to eviscerate the Republicans for being partisan, ideological, and stubborn. But the President was able to sprinkle in a few other tidbits that many people might not pick up on or focus on. Mr. Obama mentioned that most Americans were just starting to ‘tune in’ to the stalemate, and that outside of Washington, most people “have no idea what the debt ceiling means.” Was I the only one offended by that? This is the age of the Internet, Mr. President. If someone hears a term or word that they are not familiar with, all they have to do is “Google it”. In fact, in all my discussions and rants over the past month on this topic, the only person who needed an explanation of the debt ceiling was my nine-year-old son! Mr. President, Americans are not stupid. President Obama, after explaining the debt ceiling in layman’s terms, also said that an increase in the debt ceiling does not mean an increase in spending, it will just be to pay our bills. Really? When I call my credit card company to ask for an increase, it’s so that I can spend more (borrowed) money.

On top of the lies and the insults to the American people, President Obama was even brave and brazen enough to contradict himself within his own speech. After demagoguing the Republicans for fifteen solid minutes, he told us that we “need to put politics aside and make progress”. He scolded Speaker Boehner for kicking the can down the road with his short term (6 month) plan, and then praised the plan from Senate Majority Leader Harry Reid’s long term (16 month) plan. Harry Reid is just better at kicking that can, I guess. The president repeated over and over again that we need a balanced approach, but failed to mention that Reid’s plan has no tax increases. With so much double-talk, I wonder if the President may suffer from multiple personality disorder.

Here is a link to President Obama’s debt ceiling address.

Shortly after the president signed off, House Speaker John Boehner offered a brief rebuttal. I specifically chose the word rebuttal, not response, because I think he did a good job of refuting the major points that Obama tried to make. John Boehner introduced himself as the “Speaker of the Whole House”, and as a former small business owner in Ohio. You see? instantly bi-partisan and appeal to the average person. The speaker noted the sharp contrast between running a business and making tough choices versus the “spend all the problems away” mentality he encountered in Washington, D.C. He accused the president of wanting another “routine increase in the deficit”, and for wanting a ‘clean’ debt ceiling increase, both of which were denied by Congress.

Here is a link to Speaker of the House John Boehner’s speech.

Speaker Boehner, unlike the President who refused to offer any details, got into some specifics. He said that President Obama created “this atmosphere of crisis” in part with his rhetoric, as well as the Patient Protection and affordable Care Act (ObamaCare) and all of the stimulus spending. He stated in no uncertain terms that there will be no increase in the debt ceiling without real spending cuts and meaningful reforms. He reminded everyone that the House passed a plan called Cut, Cap and Balance, but that the President threatened to veto it before it was passed.

Mr. Boehner stated that he put forth a “sincere effort” in negotiations with President Obama, but that just when he thought that they had found something to agree on, Obama demanded more, and said the President would not “take yes for an answer”. The Speaker summed it all up in plain English by saying that “If we’re spending more than we’re taking in, we need to spend less.”

The fact that we are here debating to raise the debt limit shows a failure in leadership. Yes, that is what Senator Obama said five years ago, and that is the only area where I agree with him. After that, he loses me. But Speaker Boehner is no messiah either. If the president wants a balanced approach, why hasn’t he proposed one? He emphasized cuts to domestic programs (which ones? your guess is as good as mine) and to defense spending. But why not balance that with cuts to international spending? Speaker Boehner wants no new taxes, but why does Ethanol get a subsidy instead of coal? President Obama refuses to look at any plan in “phases”, but Republicans need to compromise.

Everyone keeps talking about default. If you default on your car, it is because you didn’t make the payments, and the lending bank repossesses your car. And the same with your mortgage. If you don’t write that monthly check, you’ll get evicted sooner or later. If America ‘defaults’ on its debt, does China get to take over? I don’t think so. The truth is, America will not default. The monthly payment, America’s ‘mortgage’, if you will, amounts to about 10% of it’s income, or tax revenue. And my next-door neighbors will get their Social Security check next month, because that column accounts for only roughly 35% of monthly tax revenue. Default will not happen, but a shutdown might. Personally, that might not be so bad.

The fact of the matter is that politicians make lousy accountants, and serious reform in needed across the board. I’m no economist (heck, I barely have an A.A. degree), but here’s my plan. Fight for Cut, Cap and Balance. Call the Democrats’ bluff. Erick Erickson at redstate.com would say, “Hold the freaking line!” They will cave. Harry Reid practically has already, and Obama won’t let a default or a shutdown spoil his legacy. Let the Senate offer amendments if they want to, but stick to your principles. After you pass that, and it will pass, pass a truly balanced budget for FY2012. Go line by line and find everywhere possible to pinch pennies, not just political or social issues like Planned Parenthood and NPR. With a budget out of the way, go after the tax code. Start closing loopholes, eliminating deductions and banishing subsidies. And if you’re feeling extra frisky, reduce marginal rates. Once you prove that can reform the tax code, tackle the unsustainable ‘entitlements’. Create an ‘opt-in’ or ‘opt-out’ for Social Security. Give the states more power and control over Medicare and Medicaid. And that’s just for starters, before the 2012 elections. Yes, it is a lot of work, but it can be done. It must be done. Or a default will be the least of your concerns.

The Real Path to Prosperity

Posted on April 19, 2011 by in Opinion

To many Americans, specifically those aligned with Tea Party values,  the 2010 national elections were a referendum of sorts on Washington, D.C.  Americans are tired of out-of-control spending, tax increases, government overreach, and ‘business as usual’ politics.  Newly elected Republicans, primarily in the House of Representatives, believe that this is why they were elected: to reign in the out-of-control culture in the Capitol.

There has been a lot of media coverage of the current fiscal budget, 2011.  Why was there not a budget in place? What took so long to compromise on $38.5 billion?  But as the newly emboldened House Speaker John Boehner spent most of his time bickering back and forth with the president and with Senate Democrats, Rep. Paul Ryan has been working tirelessly to pen a budget proposal for fiscal year 2012.  Ryan has dubbed his proposal the Path to Prosperity.

Ryan’s budget, which claims saving of more than $6 trillion over 10 years, is broken down into four major issues. The first area of government that the Path addresses is ‘efficient, effective and responsible government’, which is followed by reforms to Medicaid, and by reforms to Medicare and Social Security, and finally reforms to the tax code.

Since I’m no economist, I’ll spare you my interpretation of most of the numbers involved.  Essentially, though, the Path avoids raising taxes in any way, as far as I can see.  Rather, Rep. Ryan realizes the over-indulgent culture that is the Federal Government, and makes spending cuts in virtually every single federally funded program.  He took the advice of Defense Secretary Robert Gates and cut $178 billion from the Defense Department’s budget, reinvested $100 billion of it, and applied the remainder to deficit reduction.  His Path calls for complete repeal and defunding of the healthcare reform bill passed last year, effectively leaving us no worse off than we were in that arena.  The Path calls for the remainder of domestic spending to return to 2008 levels, and a 10 per cent reduction in the federal workforce, and retooling their generous pension programs.  By following Ryan’s Path, he says, we will reach ‘primary balance’ in 2015; that is to say, the only red ink in the budget would be interest on the federal debt.  According to the CBO, however, it would be 2040 before this plan would actually start to pay off the principle of the federal debt.  Finally, Ryan makes a soft attempt at reforming the Tax Code for simplicity sake, and caps the nominal tax rates at 25 per cent.  Not bad, Mr. Ryan.

Conversely, President Obama’s original budget proposal for 2012 actually increases federal spending.  However, the day following the release of the “Path to Prosperity”, President Obama gave a speech in which he outlined his own plan to reduce the deficit by about $4 trillion over the next 12 years.  Obama staunchly defended only two key points on his plan: cuts to defense spending and tax increases.  The president said he stands firm on letting the tax cuts for the ‘wealthy’, those earning in excess of $250,000, expire and not extending them.  Aside from those talking points, sprinkled with some rather partisan rhetoric, President Obama shared very little as far as the details of his deficit reduction plan.

As of April 18, 2011, the United States’ National Debt is $14.284 trillion.  That figure is a mere $10 billion and change shy of the Debt ceiling.  Given the fact that America’s credit cards are effectively maxed-out, both of these plans do far too little, far too late.  Keep in mind that the debt ceiling is the current maximum of total accumulated debt authorized by the same Congress that is now in a scramble debating the terms of increasing that ceiling.  Had that Congress passed a budget last year, they would have known that this limit was approaching, and would have had several more months to work out a plan to address the issue.  The fact that we have yet to see a serious, implementable balanced budget proposed for fiscal year 2012 is disheartening.

When my family budget starts to get tight, we sit down and figure out where we can save money and what we can do without.  We clip coupons, we drive less when possible, we don’t eat out, etc.  We might even look at ways to earn some extra money; work some overtime or do some side jobs.  The same is true of any company or business.  When Joe’s Cogs balance sheets are close to red ink, Joe spends a little less on advertising, he makes sure all the lights are turned off at the end of the day, and maybe he lays off the janitor and sweeps the floor himself.  Depending on the market situation, he might even charge a few extra pennies for his product.  But neither my family or Joe’s Cogs, upon realizing the possibility of a negative balance, decides to simply take out another loan or apply for another credit card.

But that is exactly what the federal government wants to do.  And that is exactly what they’ve done for decades after decades.  In fact, it has been over a decade since America ran an annual budget surplus.  Can you imagine spending ten years digging a hole that your children would be born in?  That is the exact scenario that has played out in Washington, D.C. over the past ten years.  Rather than act like grown ups, the senators, representatives, and presidents that we have elected have become so addicted to power and the desire to be re-elected, that they have done nothing but placate people for the here and now.  This debt is not a new problem, just a bigger one.  America has had a ballooning debt since the late 1970’s, and each year that nothing is done, the problem is compounded.

Sadly, the politicians that we have charged with the responsibility of reducing this crushing debt either don’t understand how to do it, or would rather focus on re-election than do what they know is right.  Since I have yet to hear a logical argument opposed to reducing the debt, I can only assume that the vast majority of Americans understand the gravity of the situation.  Unfortunately, Republicans and Democrats can’t seem to get past the partisan name-calling and finger-pointing and do the adult thing.  Both parties are to blame for America’s financial situation.  The non-partisan Congressional Budget Office estimates a revenue total of about $2.6 trillion in fiscal year 2012.  Maturity, prudence, and common sense would say that spending for the same year should not exceed that amount.  Yes, a true balanced annual budget, what a novel idea.  But neither Ryan’s plan nor Obama’s plan accomplishes that seemingly simple, common sense goal.

A true path to prosperity, a path that we can proudly lead our children and grandchildren down, involves some deep and painful cuts.  There are literally countless programs that receive federal tax money that could easily survive without those funds, saving billions of dollars to the tax payers.  Billions more can be saved by cracking down on waste and fraud in the disbursement of citizen money.  Federal employees, especially politicians, are payed relatively large salaries and luxurious benefit and pension plans that could and should be considerably reduced.  Foreign aid can be completely eliminated, at least until our debt is paid for.  I don’t have a problem helping countries in need as long as we can afford to do it and those countries use the aid responsibly.  The entitlement programs are probably the biggest leaches contributing to the debt, and they need to be reformed or eliminated at the federal level.  Medicare, Medicaid and Social Security are unsustainable in their current forms.  Food stamps, housing assistance and unemployment assistance should all be handled on a state and local level, with no federal funding for those programs at all.  These common sense adjustments, and likely a few others that I missed, will put America back on track.  But they will all be painful.  It is likely that every single citizen will be effected by these changes, and prudence and a sense of responsibility will help to keep the pain to a minimum.  But the pain is necessary.  Our national debt is a cancer that has metastasized and must be removed as quickly as possible, or America will not be on a path to prosperity, but on a path to ruin.