Deficit Solutions Test the Mettle of Leadership

Deficit Solutions Test the Mettle of Leadership

Alex Rader/Getty Images/The Fiscal Times

Forget the Tea Party. What we need is a Whiskey Party. It’s going to take a stiff drink and stiffer spine to tackle our nation’s budget crisis. So far, we have few volunteers.  Yesterday the White House unveiled a timid budget proposal that would trim a modest $1.1 trillion from future deficits over 10 years. That saving is keyed off a projected gap this year alone of $1.6 trillion, which pretty much sums up the plan’s lack of firepower. President Obama proposes a series of tax hikes and a cap on discretionary spending at today’s level; there is no reduction in current spending and no attempt to rein in outlays on long-term entitlements.

Meanwhile, Republicans are being savaged by the liberal media for their efforts to actually cut current spending by $100 billion. For reference, the estimated current year deficit jumped more than $100 billion from the projections made by the Congressional Budget Office just a few weeks ago. In other words, the $100 billion in cuts proposed by Republicans in the House – cuts that have Democrats wailing -- is smaller than the one-year rounding error in recent CBO forecasts.

The reason the proposed GOP cuts have caused such anguish is that they will impact spending right away; they are not a futuristic wish list. Also, they mostly involve cuts to discretionary nonmilitary spending, about 19 percent of the total budget. As a result, some of the reductions are indeed meaningful. Spending for Agriculture, for instance, would be docked 22 percent; that might seem harsh, except that the 2011 budget for this department is $152 billion, up from $114 billion in 2009 – a gain of 33 percent.   

Here are some numbers that put all this in perspective. In fiscal 2010, our nation took in $2.2 trillion and spent $3.5 trillion; accordingly we had a budget gap of $1.3 trillion. Of the $3.5 trillion in spending, $1.9 was classified as “mandatory” and included $700 billion in Social Security payments, $520 in Medicare and $273 in Medicaid outlays.  Also falling into this category were outlays of $438 billion in “income security programs” like unemployment compensation and earned income tax credits. Also, we spent $139 billion in federal civilian and military retirement benefits. In reality, not all these outlays are untouchable.

Still, the $100 billion in cuts proposed recently by the House Appropriations Committee mostly focused on discretionary spending. Though Democrats have labeled these reductions as draconian, note that discretionary spending rose 26 percent over the past two years. Thus, there would appear to be sufficient fat to dull the knife.

Where are these drastic reductions? First, the committee calls for a return of any monies not yet spent under the stimulus program. Unfortunately, not much is left, but a “cease and desist” action on the ill-designed Recovery Act would probably be popular with most Americans. Beyond that, there are reductions in a large number of programs, including defense, and eliminations of all spending for the Corporation for Public Broadcasting and Americorps. There are some purposefully confrontational proposals, such as eliminating spending for abortion and needle exchange programs, and some common sense decisions to reduce duplicative outlays or programs that have never gotten off the ground.

My personal favorite is the defunding of the White House positions of Health Care Czar and Climate Change Czar. If they had added Asian Carp Czar and Cyber Czar to the list I would have been ecstatic.  

Even with all these proposed cuts, which will now totally occupy Congress, lobbyists, pundits and the blogosphere, the truth is we have not meaningfully changed our dismal budget outlook, and everyone knows it. No one has the courage to assault the entitlements that everyone targets but no one has the political nerve to attack. President Obama’s hand-picked deficit commission launched a few well-aimed grenades in this direction, but our commander in chief immediately ran for cover.

CBO, in making its latest projections, concluded its report by noting, “Spending on the government’s major mandatory health care programs – Medicare, Medicaid, the Children’s Health Insurance program, and health insurance subsidies to be provided through insurance exchanges – along with Social Security will increase from roughly 10 percent of GDP in 2011 to about 16 percent over the next 25 years ... that rise in spending will lead to rapidly growing budget deficits and surging federal debt.”

On fixing our entitlements programs (and by the way, it might help to come up with new nomenclature), Republicans and Democrats are like gunslingers at the O.K. Corral, waiting to see who draws first. President Obama certainly doesn’t want to upend his re-election prospects; arguably, he should and could take the lead, given his rank and popularity. Republicans fear losing their momentum, and hesitate to give their opponents even more reason to paint them as Enemies of the People. 

We hear there is a group of senior statesmen – from both parties – preparing to lead the charge on these unsustainable programs. They are doing so quietly, knowing they will face immediate outrage and vilification. Those on the left consider these programs off limits. Nancy Pelosi’s dismissal of the deficit commission is illustrative: “Simply unacceptable,” was her response.

Our budget travails will not be solved by anything other than courageous and difficult measures. They certainly won’t be dismissed by the halfhearted program just outlined by the White House. President Obama said last week, “It’s time Washington acted as responsibly as our families do.” He’s right, but so far he’s not even coming close. Where is that Whiskey Party when we need it?

Related Links
US Treasurys Calm In Face Of Budget Storm May Prove Fleeting (Wall Street Journal) 
GOP Disses Obama’s 2012 Budget (CNN) 
Obama’s 2012 Budget Resists Research Cuts (Scientific American)