Truth or Consequences – The U.S. Deficit

It could have been mistaken for a weekday game show…men and women running around in a frenzy making last minute decisions acting like children.  Unfortunately, it was our congressional representatives trying to hammer out a compromise deal for raising the federal debt ceiling.

This past week, President Obama signed a bill that allowed America to pay its bills on time and included an equal amount of spending cuts.  It was interesting to witness the pride and puffed-out chests of our lawmakers who ‘battled hard to save the country’ from the catastrophe of default.  But are they telling us the truth?  They, along with the national media, portray this event as if it were a biblical ‘parting of the sea’.  In reality, the debt ceiling deal did nothing to solve America’s debt problem.  This deal did not reduce the deficit; it merely reduced the ‘rate of climb’ of the deficit…and only by an almost imperceptible amount.

When you take a closer look, here’s what happened.  They raised the debt ceiling $2.4 trillion which they’ll spend over the next 18 months while they cut expenses $2.4 trillion to take place over the next 10 years.  That’s five election cycles and you can bet the mood of the spenders in Washington will change at least five times over the next decade.  If they were to tell us the truth, they’d say the cuts are ‘window dressing’ to make us feel they’re serious about solving the nation’s debt problems. They are not.  To satisfy the conservative Tea Party Republicans, they included a provision that requires a ‘conversation’ about a balanced budget amendment.  The conversation will happen, the balanced budget amendment will not. 

To further satisfy Republicans who insisted there be no tax increases in the bill, the bill does not increase income taxes but you can bet higher taxes are coming.  The Obama insiders are already planning to raise taxes by allowing the Bush tax cuts to expire at the end of 2012.  This can easily be accomplished by presidential veto, if necessary…. even if President Obama were not reelected. 

So who were the winners and losers in this debt ceiling bill?  Some say the Tea Party members won while the Democrats and President Obama lost.  The Tea Party did win in the sense that they were able to change the conversation from one of ever and ever more spending to one of reducing the deficit but the results of this bill do nothing to solve our debt problem.  America remains on a debt trajectory towards financial catastrophe so the Tea Party ‘win’ was largely symbolic.  Our government continues to spend 60% more than it takes in each year, piling a minimum of $1 trillion on top of the $14 trillion we already owe.  This is not the end of the debate…merely the beginning.

What then are the solutions? 

Balanced budget amendment.  If we ran our personal finances like Congress and the President run our country, we’d all be bankrupt or in jail.  A balanced budget amendment would force Congress to become fiscally responsible.  You could add enough flexibility to allow limited deficit spending during times of extreme financial stress such as wars or economic chaos. 

Tax overhaul.  Virtually everyone recognizes that our tax system is a mess.  There are plenty of simple solutions that provide for fairness in taxation without all of the complexity.  We should choose one and solve this decades old problem.

Term limits.  For the vast majority of our congressional representatives, this is the best job they have ever had and they will do just about anything to keep it.  In many cases, the ‘anything’ is contrary to the American people’s interests.  Term limits would encourage ‘citizen statespersons’…as our founding fathers intended; people who are there to serve the best interest of America rather than self-interest.  In addition to term limits there needs to be campaign reform so that it doesn’t take millions to win an election.

What’s it going to take to create real change in government?  It’ll never happen until enough people raise their window sill, stick their heads out and scream, “I’m mad as H*** and I’m not going to take anymore!”  So far that has not happened.