Debt diet: Heroes, jerks and charlatans?
Just before Thanksgiving is an unwelcome time to be writing about going on a diet. Unless, of course, the subject is putting the U.S. Government (USG) on a fiscal diet in order to reduce the $13.8 trillion national debt. But like that ten pounds a lot of folks promise themselves to lose, the chance that the Obama White House and the Democrat-controlled Senate will do anything meaningful about reducing the national debt is somewhere between slim and none.
Crash diets rarely work. Unfortunately, it looks like the National Commission on Fiscal Responsibility and Reform is about to propose a crash diet for the federal budget. Former Republican senator and Commission co-chairman, Alan Simpson, predicts the Commission’s recommendations will provoke a “political blood bath.”
Earlier this year, the Democrat-controlled Congress raised the federal debt limit to $14.3 trillion. That was an unprecedented $1.9 trillion increase Congress said was needed to keep the federal government “solvent” into 2011. Come next April or May, former Senator Simpson predicts Congress will have to consider increasing the federal debt limit once again. Whether to raise the debt limit or not, “will prove who is a hero and who is a jerk and who is charlatan,” says Simpson.
Although the Commission’s report is not due out until December 1, 2010, we already know the commission wants to eliminate the home mortgage interest deduction, reduce farm subsidies, force Medicare patients and the disabled to pay more for their health care, and raise the Social Security retirement age. That’s just for starters. In other words, the Commission is about to ask the White House and Congress to touch the third rail of American politics. Sparks are going to fly.
Already some of Washington’s lobbyists have gone together to hire a lobbying firm to lobby against the Commission’s findings. If Washington’s lobbyists are opposed to the Commission’s recommendations, that might commend the recommendations to the American public. But with over half the population now employed by government at one level or another, don’t hold your breath.
Historically, the USG has viewed the home mortgage tax deduction as sound social and political policy. People who own their own homes tend to take care of their property. They tend to value the property of others because they want others to value their property. [Fair disclosure: Wonder Wife owns her own real estate company.] But facts are facts. The civilizing tendencies that come with home ownership have been recognized from the time of the German Chancellor Otto von Bismarck (1815-1898) who, by the way, also invented the concept of social security.
Yes, Medicare and Medicaid are under-funded. Hopefully, the Commission will recommend that Medicare and Medicaid allocate more dollars toward correcting fraud and abuse, the sort of investigative activity that can more than pay for its cost.
Reduce farm subsidies? Historically, the USG has had, compared to the UK and Western Europe, a “cheap food” policy. Over there, basic foods are relatively expensive while what we think of as luxuries such as fine chocolates, liqueurs and fragrances are relatively cheap. That said, any reduction in farm subsidies in this country will increase the cost of basic food stuffs both here and around the world.
After setting aside funds for the national defense, paying interest on the national debt, Social Security, Medicare/Medicaid and other mandatory spending, only 16-percent of the federal budget is available for reduction. But by putting the Wall Street bail-out money (TARP) back into the federal kitty, the figure for non-mandatory spending could rise to 20-percent.
Even so, 20-percent does not provide budget cutters with much room to maneuver, bringing the nation to the fundamental question: How much government can we afford? Hopefully, the answer is: A whole lot less government than we have now.
Nationally syndicated columnist, William Hamilton, was educated at the University of Oklahoma, the George Washington University, the U.S Naval War College, the University of Nebraska, and Harvard University.
©2010. William Hamilton.