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David Harsanyi: No One Is Serious About Debt

By David Harsanyi | @davidharsanyi |

The “fiscal cliff” deal House Republicans and President Barack Obama are debating can be called many things — the “avoiding a political nightmare” deal or a “Yes, Mr. Obama, may I have another” deal — but please let’s stop referring to it as a “deficit reduction” deal. We’ve yet to see a serious proposal on debt.

Actually, by proposing a tax increase for spending with no real corresponding cuts, the president has been arguing for growing deficits. And with a priority on “fairness” over prosperity, any chance of easing the $16 trillion national debt through an economic boom in the near future is improbable.

When you cut through the coverage, in fact, you’ll also find that the second most pressing item on the president’s agenda — after tax hikes on the wealthy and small businesses — is winning the unlimited authority to raise the country’s debt limit.

Obama — who personally sat down with CEOs at the Business Roundtable to press his case — argues that having a cap on debt, rather than unlimited debt, is a “bad strategy” for the nation.

After that, much of the deceptive “savings” or “cuts” offered by Obama were already coming from the winding down of campaigns in Iraq and Afghanistan — this itself supposedly temporary spending that is now baked into the baseline. You will remember that for Democrats, including the president, funding these wars by borrowing was unconscionable. Turns out, only the wars were the problem, not the trillions.

Similarly, Americans may also remember our “one time only” stimulus bill. That dramatic bump in spending is also now a forever spending baseline. The imagined “savings” from that kind of accounting is very much like the “savings” a person might realize after someone steals their car but is nice enough to throw them a couple of dollars for bus fare home. Thank you, Mr. President!

But all of Obama’s pro-debt expansion policies don’t excuse Republicans for calling their own proposal a “credible” $2.2 trillion plan on “deficit reduction.” Even if we were to concede for a moment that the plan would cut the debt, by the time we realized $2.2 trillion in savings, the Congressional Budget Office projects that debt as a share of GDP will have reached 100 percent. By 2035, we’re looking at 200 percent.

Or put it this way: The entire Republican plan would only pay down the $220 billion in net interest the United States owes on its debt every year. Well, if by some miracle that interest stayed at $220 billion. Which it won’t.

The Republicans’ offer also contains $800 billion in new “revenue” garnered from tax reform — partially from closing loopholes on the wealthy — which surrenders to the notion that “revenue” rather than “spending” drives the deficit.

The Republicans’ offer has $300 billion in cuts to discretionary spending over 10 years. Well, the U.S. government’s outlays in October alone were $304 billion.

The GOP offered $600 billion in 10-year health-care cuts through Medicare and Medicaid, which is less than Obama was willing to risk as seed money for Obamacare. Then again, the president’s new budget only reduces Medicare and Medicaid spending by $340 billion over a decade. Democrats have no interest in reform.

Our potential unfunded liabilities, what our government has promised to spend on entitlement programs in the future and won’t have money to pay, are estimated to total anywhere from $87 trillion to $100 trillion. That doesn’t even include Obamacare’s unseen costs.

Fiscal cliff? We’ve already taken that dive.

David Harsanyi is a columnist and senior reporter at Human Events. Click here for more information, or click here to contact him. Follow him on Twitter: @davidharsanyi.




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» on 12.07.12 @ 04:43 PM

He’s right. Interesting that almost nobody in D.C. is talking about Simpson-Bowles anymore.

How come?

Regardless of the future tax and deduction rates, new tax revenue could pick up a lot the next couple of years if all the Fortune 500 corporations and NY financial mega-groups started investing the huge hordes of cash they’ve sat on the last 18 months for new products to domestically manufacture and sell.

That would prime the recovery pump more than any top-down action from either Congress or the White House.

As people are living much longer now than when Social Security was created in
the ‘30s, or Medicare in the ‘60s, raising the age for eligibility, and capping
payouts to those so comfortably retired that they truly don’t need them would
be logical steps.

Helping Republicans extricate themselves from the Gover Norquist oath or trap
they voluntarily stuck their heads in years ago would be another good step.

After all, a lot of them are part of the same crew who busted post-Clinton budgets with uncontrolled earmarks, a big Bush II tax-cut with no reduction
in program spending, a Medicare donut gift to voters that had no revenue behind it, and two foreign wars with no identified revenue sources to pay for
them. 

That’s a whole lot of non-Nancy Pelosi fiscal mismanagement they have to
answer for.

Maybe now is the time for Obama and Boehner to can the public rhetoric, and
start work on a real, long-term solution that fixes what’s broken, rather than
just doing a Band-Aid to pull back from the fiscal cliff.

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