February 3, 2010
How To Cut the Deficit
By Mike McManus
President Obama released his disturbing budget proposal that would add a
stunning $1.3 TRILLION to the national debt next year on top of this
year's $1.6 Trillion.
These figures stagger the mind. As recently as President Ford's first
year in office, the total federal debt was only $500 billion.
Obama says the federal deficit "when I walked in the door" was $1.3
trillion, and he only increased it to $1.4 trillion in 2009 and $1.6
trillion in 2010.
Not true. The deficit in Bush's last full year was $585 billion. When
America's economy fell apart, he passed TARP in his final months.
However, TARP was really short term loans to stabilize the banking
system - not government spending. Banks have already paid back $500
billion. Another $200 billion went to AIG and federal mortgage banks
that probably won't be repaid.
So Obama really inherited a $785 billion deficit, which he has nearly
DOUBLED. And the repaid $500 billion has not reduced the deficit.
Instead the President uses it as a cookie jar to propose some tax cuts
He offered a fig leaf of concern: "Our fiscal situation remains
unacceptable." Yet he is still pushing for a Health Care package
costing nearly a trillion over a decade, that doesn't even begin for
four years. And he's got a dandy $100 billion "jobs" bill that will
leave unemployment at around 10 percent all year.
He proposes a freeze on spending of smaller "discretionary programs"
which will only save $35 billion a year, less than 1 percent of the $3.8
trillion budget. What's not being touched are such big items as Defense.
Social Security, Medicare, Medicaid. Why?
They are considered untouchable.
Republicans love to cut taxes, but support Defense spending, on
which Obama proposes a 2 percent hike to $702 billion. Democrats, who
created Medicare and Social Security, love and protect them - and have
earned political capital by beating up on Republicans for decades for
once opposing these popular programs.
These are the biggest of 180 "tax expenditures," which are really
spending programs run through the tax system. The mortgage interest tax
deduction is a big one and employer-sponsored health insurance is
another. Their annual cost? More than $1.1 trillion a year.
These programs are on autopilot, and will grow forever if
Congress does nothing. Republicans call any cuts in tax expenditures a
However, with trillion dollar deficits as far as the eye can see,
we are imposing HUGE burden on our children. Obama says "It would be a
terrible mistake to borrow against our children's future to pay our way
today…" But he adds, "It would be equally wrong to neglect their future
by failing to invest in areas that will determine our economic success."
Nonsense. We will still have a 10 percent jobless rate with that
Len Burman, a former top Treasury official, notes that if Obama
had applied his "freeze" to tax expenditures for three years starting in
2012, the deficit would be reduced by $3.5 trillion over a decade.
In fact, a step in that direction was taken when Sens. Kent Conrad
(D-ND) and Judd Gregg (R-NH) proposed creating a bipartisan commission
that would craft fiscal reforms that Congress would have to vote up or
down, with no amendments.
For months, Obama took no stand on the issue.
By contrast, Republican Senate Minority Leader Mitch McConnell said in
May, "We must address the issue of entitlement spending now before it is
too late. As I have said many times before, the best way to address the
crisis is the Conrad-Gregg proposal, which would provide an expedited
pathway for fixing these profound long-term challenges. This plan would
force us to get debt and spending under control. It deserves support
from both sides of the aisle."
A good guy, right? NO.
One week before the vote, the President finally supported Conrad-Gregg,
but when the issue came up on the floor of the Senate recently,
McConnell cynically voted against it. A half dozen other Republicans who
had bravely supported the commission, also ran for the hills, including
Sen. John McCain. Had they voted for a bill they argued for, it would
not have failed.
My sons and seven grandchildren - deserve a government which does not
pile on annual $1.5 trillion dollar debt hikes, on which they will pay
an escalating interest rate for scores of years.
As a Washington reporter for nearly five decades, I've never had such
bipartisan disgust with our "leaders."
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