On the Next Budget Challenge: Radio Essay for April 16, 2011

I remember that great scene in “Butch Cassidy and the Sundance Kid” when the two outlaws were forced to jump off a cliff into a raging river below. A fearful Sundance said to Butch, “I can’t swim.” To which Butch replied, “Are you crazy? The fall will probably kill you.” I can’t help think that there is some similarity to any elixir one has to offer to fix the budget deficit. Face the armed posse or jump off a cliff. Some choice.

For now, it is time to turn the page. The last act of a dysfunctional and dishonest 111th Congress is now behind us. The Fiscal Year 2011 budget is finally put to rest, passed halfway through the year that officially started on October 1, 2010. Amid the cacophony of protestations proclaiming the end of the progressive era, a modest reduction to the annual increase was taken. In fact, the actual budget cutting was quite minor. Much of the so-called savings were portions of budgets that were not ever going to be spent.
What the debate did do, however, was set the stage for the 2012 budget showdown to come. And what a battle that is shaping up to be.

The 800 pound gorilla in the room is clearly the issue of reckless deficit spending and its’ concomitant affect on the national debt. There are only so many levers to pull and buttons to push in working towards balancing a budget. We know that the lion’s share of the budget is contained in a handful of program areas. On the entitlement side is Medicare, Medicaid and Social Security. We all know that these are the third rail in politics. We can’t touch the interest on the national debt; we have to pay that. That leaves National Defense as the largest remaining non-entitlement program available.

The remaining budget items make up about 12% of the budget. And that was where a lot of the hullaballoo was focused last week. The Republicans picked a legitimate budget fight but the Democrats were successful in focusing the attention on the draconian cuts to the increases in spending. The debate on social issues was a distraction to the main intent of cutting spending. In the end, the Republicans seemed to win on paper but maybe the Dems got the best of them: actual spending reduction was far less than the advertised $38.5 billion dollars. And with an increase in Defense spending, the net reduction to the 2011 budget was only $353 million over 2010 levels. All in all, we will have a $1.6 trillion deficit this year. All of the hand wringing got us nowhere.

Two things must be tackled simultaneously. Reducing spending is obvious but reducing spending without growing the economy is like death by a thousand cuts. If a rising tide floats all boats, so will a strong economy with real job growth provide the oxygen to fuel the recovery, end this blasted employment recession and restore confidence in an American Century.
So, let the 2012 budget battle begin. Everything is on the table and I mean everything. Every proposal in life is a beginning of a dialog. Government proposals are no different (except maybe that pesky Patient Protection and Affordable Care Act that gave us ObamaCare). The Republican budget proposal offered by Representative Paul Ryan of Wisconsin takes aim at all of the sacred cows in the budget. You may not like it. Those who are seniors and those who intend to become seniors may not like it. Special interests who benefit from tax incentives may not like it. The Pentagon may not like it. Everyone’s ox may get gored but in the words of one notable patriot named Franklin: “If we don’t all hang together, then surely, we shall all hang separately.”

I challenge the parties in Washington to put country first, not special interest. I am not optimistic that fiscal reform will make much progress prior to the Presidential election but the stakes in this game are incredibly high. This is not a game the nation can afford to lose.

Press on.

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