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August 19, 2009
Column #1,460
There's No Free Lunch
By Mike McManus

The health care debate is sidestepping an elephant in the living room.

       Everyone wants a free lunch.

The free lunch that Presidents Reagan and Bush offered was tax cuts.  The free lunch that Presidents Clinton and Obama offered is guaranteed health care at lower cost.

Both Republicans and Democrats are delusional.  The Federal Government will spend $3 trillion this year but will run a $1.8 trillion deficit.  Experts say it was needed to avoid a Depression.

However, who proposes to reduce that deficit?  No politician.

So, both parties are willing to accept massive deficits - forcing our children and grandchildren to pay for OUR profligacy.

A fundamental moral issue is at stake: Should this generation saddle our children and grandchildren with massive debt on which they had no voice?

My wife and I and their grandparents sacrificed to send our three sons to college and grad school.  We drove junker cars for decades to pay their tuition. It is natural for one generation to provide for the next.

However, this is not what we have been doing in public policy for 30 years.  We applaud politicians who cut our taxes or increase our health care benefits.  However, we have not been thinking clearly. It is unnatural in the extreme to purposely burden our children and grandchildren with debt so that we might enjoy a free lunch today.

Consider some history. At the end of Carter's term in 1980, the total U.S. debt - accumulated over 200 years - was only $909 billion.   The interest on the debt that year was $52 billion, and the federal deficit, $74 billion.

Ronald Reagan was elected on a free lunch platform of simultaneously cutting taxes and raising military spending. This strategy was praised as "supply side economics" to spark prosperity by Rep. Jack Kemp and Robert Novak, a columnist who died this week.

However, Reagan's Budget Director David Stockman warned that the result would be "$200 billion deficits as far as the eye could see."  He was right. The annual deficit hit $212 billion by 1985 and continued for years.

The result?  By 1990, after Reagan's eight years and two years of the first George Bush, America's debt had more than tripled to $3.2 trillion. The Federal Government's annual interest on that debt nearly quadrupled to $184 billion.

Did Ronald Reagan care?  He was out of office and remembered fondly by those who liked extra tax cut money in their pockets.  But you and I and our children had to bear the higher cost of government and the inflation that excessive borrowing spurred.

When the first President Bush bravely dared to raise taxes to cut the deficit, he was turned out of office.  People liked their free lunch.

Clinton raised taxes on upper income people, yet the sky did not fall. In fact, the economy prospered across the 1990s.  However, when Clinton tried to pass an expensive Health Care bill, he lost not only the bill, but control of Congress in 1994.

       Ross Perot surfaced as an Independent presidential candidate in 1992. His platform was simple: cut the Federal Budget Deficit.  That was such a popular idea, it won him nearly 20 million votes, 19% of the total.  He took away votes from the presumed conservative, Bush, enabling Clinton's victory.

       Clinton got the Perot message.  He cut the growth of Defense and in 1996, just before his re-election, signed a Welfare Reform Law that moved 60% of welfare recipients into gainful employment.  Those steps increased tax revenues and decreased costs at the same time.

       Result: for the first time in the modern era, there was a Federal Surplus of $236 billion in 2000. However, oddly, the total Federal debt rose from $5.5 trillion in 1998 to $5.6 trillion in 2000.

       Why? Clinton quietly borrowed from Social Security surpluses, not from outside sources, to give the appearance of a bigger surplus than was real.

       George Bush II made another round of tax cuts and launched the unnecessary Iraq War.  His administration borrowed so much money, it nearly re-doubled the national debt to $9.6 trillion by 2008.

       Obama is now trying to sell a $1 trillion Health Care plan.  Another free lunch.

       I vote no.  Some technical reforms would cost no federal dollars - prohibiting denial of insurance and making it portable.

       I also propose to allow Bush's tax cuts to lapse.  For a family earning $40,000 - $50,000, the tax increase would be $939 a year, or $18 week, not enough for a daily free lunch! A family earning $75,000 - $100,000 would pay $48 more per week, according to the Concord Coalition.

       .That would cut the federal deficit over ten years by an astounding $2.6 trillion.

       It would stabilize our currency and be a great gift to our children and grandchildren.
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