Tuesday, February 02, 2010

It’s No Longer Bush’s Debt, Mr. President

On December 11, 2009, on this blog, I wrote an open letter to President Obama and to my three representatives in the Congress urging them to show some fiscal restraint and to start dealing with our gargantuan national debt. It has been less than two months since I wrote that letter. Yet our national debt has increased by nearly $197 billion, more than three billion dollars per day. And, as the late Senator Everett Dirksen would have said, “That’s real money!”

How, you may ask, can this be happening? Why is the United States borrowing so much money? Well, the simple answer is that each year we are spending far more than we are receiving in revenue. But, that answer doesn’t tell you, my loyal reader, why this is happening. The more complicated answer has two parts.

First, there is mandatory spending. Over the years the Congress has enacted so-called direct spending or “entitlement” programs. Each of these programs contains permanent appropriations. Therefore, the amount that is spent on these programs each year is not controlled by the Congress in the annual budget cycle. Rather, the amount spent in these programs depends on the per-person benefit amount of the program and the number of people who are entitled to benefits. The only way that the Congress can reduce spending in these programs is to amend the basic program legislation to reduce the amount of benefits paid per person or to raise eligibility requirements so that fewer people receive benefits. Politically, this is very difficult.

Second, there is discretionary spending. These are programs which require annual appropriations in order to operate. These programs are normally funded by the thirteen appropriations acts that the Congress enacts each year. Spending on these programs is more easily controlled. All the Congress has to do is to reduce the amount it appropriates for these programs each year. Of course, this is also politically difficult to do because voters expect their representatives or senators to bring more federal dollars to their district or state. No member of the Congress is elected or reelected on a campaign promise to reduce federal spending in his/her district or state.

Although our national debt nearly doubled during the administration of George W. Bush, members of the Bush Administration were unconcerned. They argued that we could take care of our debt through growth of the economy. So, every year of his term, the President sent a deficit budget to the Congress and the Congress appropriated funds at a deficit rate.

The near collapse of the nation’s credit system in 2008 resulted in two major jumps in the national debt of the United States. The first was caused by the bank bailout of fall 2008. The second was caused by the economic stimulus package of last spring.

Both during his campaign and since he has taken office, President Obama has stated that, unlike Mr. Bush, he is deeply concerned by the magnitude of our national debt. In his recent State of the Union speech to the Congress, Mr. Obama said, “We can no longer afford to leave the hard choices for the next budget, the next administration or the next generation.” In the same speech Mr. Obama announced a spending freeze for part of the discretionary spending side of the annual budget, but not to begin until next year. This week Mr. Obama revealed his fiscal year 2011 budget. It projects a one-year budget deficit of more than $1.5 trillion.

In his speech the president said that he was creating a bipartisan commission to study the debt problem and recommend solutions to our generation-long spending spree. Now, this maven spent the bulk of his adult years in and around Washington, D.C. and I know that usually president’s propose bipartisan commissions so that they can delay having to deal with a problem. I certainly hope that this is not Mr. Obama’s motive.

In my opinion there is no need for a bipartisan commission. Mr. Obama knows how to balance our budget. We need to drastically cut our spending and increase our revenue (i.e. taxes). There is no other solution. A partial freeze on discretionary spending is only a drop in the bucket. Nor will Mr. Obama’s campaign promise to go through the budget page by page and eliminate programs that don’t work have any significant effect. Like President Reagan’s promise to balance the budget by eliminating fraud, waste and abuse, eliminating only those programs that don’t work is like treating cancer with Band-Aids. Our national debt disease is so serious that drastic treatment is needed.

Mr. Obama must tell the American people the truth. The truth is that our monumental national debt is a serious threat to our economy and our national security. The truth is that we can no longer afford many of the federal programs that we have grown accustomed to, unless we are willing to significantly increase taxes to pay for them. We need to start cutting even those programs that work. If Mr. Obama is seriously concerned about deficit spending by the Federal Government, he must stop proposing new programs unless they are paid for in the budget (either by tax increases or elimination of other programs). He needs to reconsider his fiscal year 2011 budget and significantly cut the projected $1.5 trillion one-year deficit. Mr. Obama says that we must not leave the hard choices for “the next budget.” However, his fiscal year 2011 budget does exactly that. (See today’s Washington Post lead editorial that reaches the same conclusion. 1

I voted for Mr. Obama because I believed that he would make a better leader then would Senator McCain. To me a leader needs to be totally honest with the people (within the bounds of national security) and to make the hard choices necessary to maintain the United States that we all love. A leader does not set up a commission to make those choices.

During his first year in office President Obama has often deflected criticism by reminding everybody that he inherited a significant debt and annual deficit from President Bush. That was a good excuse for year one. Now Mr. Obama is proposing a one-year deficit significantly higher than any proposed by Mr. Bush. By doing so, he is transforming Bush’s debt into Obama’s debt.

Mr. Obama recently said that he would rather have one good term in office than two mediocre terms. The implication of that statement is that he intends to make the right decisions even if they are politically unpopular. Now is the time for him to start.

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