Debt commission chiefs give gloomy fiscal outlook
By Dan Balz
Washington Post Staff Writer
Sunday, July 11, 2010
BOSTON -- The co-chairs of President Obama's debt and deficit commission offered an ominous assessment of the nation's fiscal future here Sunday, calling current budgetary trends a cancer "that will destroy the country from within" unless checked by tough action in Washington.
The two leaders -- former Republican Senator Alan Simpson of Wyoming and Erskine Bowles, White House chief of staff under former President Bill Clinton -- sought to build support for the work of the commission, whose recommendations due later this year are likely to spark a fierce political debate in Congress.
"There are many who hope we fail," Simpson said at the closing session of the National Governors Association meeting. He called the 18-member commission "good people with deep, deep differences" who know the odds of success "are rather harrowing."
Bowles said that unlike the current economic crisis, which was largely unforeseen before it hit in the fall of 2008, the coming fiscal calamity is staring the country in the face. "This one is as clear as a bell," he said. "This debt is like a cancer."
(More here.)
Washington Post Staff Writer
Sunday, July 11, 2010
BOSTON -- The co-chairs of President Obama's debt and deficit commission offered an ominous assessment of the nation's fiscal future here Sunday, calling current budgetary trends a cancer "that will destroy the country from within" unless checked by tough action in Washington.
The two leaders -- former Republican Senator Alan Simpson of Wyoming and Erskine Bowles, White House chief of staff under former President Bill Clinton -- sought to build support for the work of the commission, whose recommendations due later this year are likely to spark a fierce political debate in Congress.
"There are many who hope we fail," Simpson said at the closing session of the National Governors Association meeting. He called the 18-member commission "good people with deep, deep differences" who know the odds of success "are rather harrowing."
Bowles said that unlike the current economic crisis, which was largely unforeseen before it hit in the fall of 2008, the coming fiscal calamity is staring the country in the face. "This one is as clear as a bell," he said. "This debt is like a cancer."
(More here.)
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3 Comments:
I can't believe anyone would question the absolute authority of President Obama. He's the smartest president we've ever had and according to Nancy Pelosi, unemployment checks are the best way to grow an economy. Couple that with the fact that Obama this week had to assure the country that he is 'pro-business'. Um, Mr President, if you have to actually say you are pro-business in a speech, then there must be a considerable amount of doubt that your administration is pro-business.
Whatever problems Obama inherited - never mind that Bush signed in to law the first two Pelosi/Reid/Obama budgets in 2007 and 2008 and never mind that Joe Biden was in the Senate since 1970 so he gets a pass on knowing how bad things could have been - he has exascerbated beyond all imagination to the point where we can't pay back our debt. We can't tax, borrow or inflate enough to pay back the $20 trillion that Obama will leave his successor in 2012 or 2016. The only option will be to massively cut government and we will just see how much Obama sticks to his word about presenting hard choices to the nation next year. You can be rest assured that I will be calling his bluff because I do not for one minute believe Obama is serious about anything other than ensuring election victories for himself and Democrats. Obama and the Democrats will bribe whichever constituency they have to bribe to get their vote regardless of the consequences to the fiscal health of the USA.
I must agree with Patrick on one comment that he made – Obama is “ the smartest president we've ever had” … however, I must disagree with some others.
As the article pointed out, the “Bowles and Simpson said the commission would have had a stronger hand politically had it been created by Congress, rather than through an executive order. Simpson was pointed in his criticism of seven Republicans who once co-sponsored such a measure but who helped block it in the Senate. "As far as I can discern, it was to stick it to the president," Simpson said”
Will the Commission really make any suggestions … I am doubtful. To get consensus will be difficult … so it may be broader with simplistic goals than hardcore policy statements.
That said, Commission member Tom Coburn (R-OK) has challenged the group on Defense spending … noting that the DOD budget has grown $1 Trillion since 2001 … and that’s not counting Iraq and Afghanistan.
IMO, the Republicans are prepping for yesterday’s Cold War instead of realizing that today’s enemies are stateless terrorist groups.
Let’s look at our global military presence. U.S. presence isn't central to European security any longer. There's little danger of serious conflict in Europe these days (and certainly no potential threat that the European states can't handle), and all that's needed from the United States is a mostly symbolic presence to help hold NATO together and remind Europeans not to let security competition reignite on the continent. And please don't try to tell me that Putin's Russia poses a resurgent threat to the rest of Europe. NATO Europe spends roughly $300 billion on defense each year compared to Russia's $40 billion; if our European allies can't handle Russia's not-very-impressive military, then they don't deserve U.S. help.
Consider these points :
The Pentagon’s base budget request for fiscal 2011 represents an increase of about 1.8 percent over fiscal 2010, when defense spending rose 2.1 percent. Those budgets follow eight years of 4 percent average annual growth.
Congress approved $104.8 billion for weapons buying this year and is considering proposed procurement spending of $111.2 billion for fiscal 2011, which begins Oct. 1. The Pentagon may request $120 billion in 2012, rising to $137 billion in 2015, according to Pentagon Comptroller Robert Hale. AND don't forget that Congress writes its own EARMARKS to pay for F-22, F-18, etc. that the Pentagon does not want.
According to the 2010 edition of the IISS Military Balance, in 2008 the US spent about 4.9 percent of GDP on national security, and the defense budget has grown in real terms by about 3 percent per year since 2001. By contrast, China spent about 1.4 percent of its GDP on defense, Russia 2.4%, Great Britain only 2.3 percent, and German and Japan roughly 1.3 percent and 0.9 percent respectively. Lucky them.
If the U.S. cut defense by 20-30 percent (an enormous reduction), it would still be devoting roughly $400 billion per year to keeping Americans safe. Our national security spending would still be six times larger than China's, ten times larger than Russia's and a whopping forty times larger than Iran.
The above comment addressed one spending program that we can trim … now how about looking at the tax rates.
For example, let’s look at one tax that most of us never pay … the Death Tax.
As part of the $1.6 trillion tax cut in 2001, the Bush Administration gradually whittled away the estate tax ... from an estate valued at $675,000 in 2001 to $3.5 million per person. It also reduced the tax rate for bequests from 55% in 2001 to 45% in 2009. The final change was that this year ... 2010 ... there is no estate tax and then in 2011, the Bush tax cuts expire and the rates return to the 2001 levels.
With this year being a “free” year,“an estimated 25,000 taxpayers have died whose estates are affected by current law, according to the nonpartisan Tax Policy Center … that’s 25,000 estates valued at over $3.5 million … with the debt crisis, why not ask them to pay. The House passed legislation last year to maintain the $3.5M / 45% tax rate … but the Republicans rejected it.
When will Republicans face this debt crisis that they helped create? What’s their plan ?
And borrowing from Patrick Dempsey's comment ... couldn't we just as easily say "the Republicans will bribe whichever constituency they have to bribe to get their vote regardless of the consequences to the fiscal health of the USA" ?
This should not be a Party thing, but based on Senator Simpson's comments of "sticking it to the President", both political parties distort and ignore facts ... just to get re-elected.
Understanding politics is relatively easy … there are only two questions that need be asked :
#1. Who is motivating this change ( i.e. what special interest is pulling the strings) ?
#2. Who are the winners and losers giving consideration to consumers, businesses, workers and the government … and of course, the politician ?
In short, too often business is the winner and we are the losers.
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