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After the Shutdown Showdown: Reality Still Bites

April 18, 2011


Reality bites. Sometimes it bites hard!

With both sides claiming victory in the recent budget battle brouhaha, it’s important to realize that, when the partisan rhetoric is stripped away, there are no winners and the American people are the ultimate losers. Trimming our discretionary budget by $39 billion reduces our deficit by around 2%. Meantime, our debt was increased by more than $50 billion in just the 8 days preceding the “historic cuts” deal. Our wings have already fallen off… and we’ve convinced ourselves that, since we are still above the ground, we must be still flying. Sadly, the law of lift only supersedes the law of gravity for as long as the wings are generating lift. Denial of that fact will only produce a moment of surprise as we impact the ground.

We had a National Debt of $6 trillion when the balance of power in Congress shifted 4 years ago and Pelosi/Reid took the helm. In 4 years, they spent us into a debt of $14 trillion. It took 230 years and 44 presidents to rack up $6 trillion in debt… and Pelosi/Reid added $8 trillion in 4 years! So today the Democrat-controlled Senate and the President can’t agree to more than $39 billion in cuts to a $1.6 trillion deficit? There is no rational argument that can be made that the trillion dollars added to the annual budget during the Pelosi/Reid tenure represents necessary spending! Yet they’re unwilling to scratch the surface of dismantling that new structure. Why? Could it be that they are simply puppets executing the orders of one whose stated intent is to collapse the economy of the United States, and who is the money-man behind their campaigns and many of their pet projects? Obama, Pelosi and Reid are so beholden to George Soros that if he tells them to jump they ask permission to come back down while they’re on their way up!

Reality Check: There are only three ways to reduce a deficit. Increase Revenue, Reduce Discretionary Spending, and Reform and Reduce Entitlement Spending.

On the revenue side, we have shown by experience that tax rates and tax revenues are not directly proportional. Cutting tax rates has increased revenues every time it’s tried. We’ve also shown that Congress has an awful track record in dealing with revenue enhancements… When Reagan’s tax cuts doubled revenues, the Tip O’Neill congress spent $1.84 for every dollar of new revenue.

But still the cries go up to “soak the rich”.

Unfortunately, pronouncements by Michael Moore notwithstanding, it is mathematically impossible to balance our budget if we simply confiscated all earnings from everyone earning $200K or more annually. We’d still fall $600 billion short.

Bill Whittle of PJTV produced an excellent video outlining what is required to fund our current spending levels for one year, titled “Eat the Rich.” As he frighteningly points out, you can actually meet the spending for the year if you “eat the rich.” But what’s for dinner next year?

There is no way we can appropriate enough funding to meet the insane spending levels we’ve reached. This spending is un-sustainable! The revenue side of the equation is simply not an option.

That leaves cutting either discretionary spending or making adjustments to entitlements.

Our current discretionary budget runs about $1.3 Trillion. That includes the military, all our departments, agencies, and non-entitlement programs. With our current deficit at around $1.6 trillion, that means that if we eliminated our entire discretionary budget, and funded only entitlements and interest on the debt, we’d still fall short by $300 billion.

Obviously the only viable answer to our spending problem is to address entitlements!

Paul Ryan’s “Path to Prosperity” may not be perfect (nothing coming out of Washington ever is!) but it’s the first serious attempt to treat the disease and not simply give an aspirin for Cancer. Lifesaving surgery is often painful, and recovery is lengthy, uncomfortable, and difficult… and usually requires adjustments and accommodations. America has entered a new era and is faced with a new paradigm. It is time to acknowledge it. Prior administrations and prior congresses have “kicked the can down the road” for decades… knowing the problem was there, but delaying its inevitable consequence for as long as they remained players in power. But there was always a day of reckoning coming. The profligate spending of the last 4 years has merely hastened its arrival by a few years. The fact is, it’s here, and Americans must face that fact and be prepared to deal with that reality.

John Boehner declared that the 2012 budget battle will be over trillions and not billions. It remains to be seen whether he holds to that promise – but unless the GOP prevails in making draconian cuts and significant structural reforms, the house of cards built by the Progressives since Woodrow Wilson, FDR, and Johnson will collapse – and soon.

And remember, that is exactly what the puppet master, George Soros, has unabashedly stated he wanted from the get-go.

Copyright ©2011 Doug Edelman

 


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