Tuesday, April 19, 2011

Federal Budget Deal - Part 2

In Part 1 of this budget series I concluded that the recent federal budget deal succeeded in making some spending cuts and moving the overall debate to a place where we're debating where and how much to cut rather than if we should cut. However those "cuts" still leave us with a Fiscal Year 2011 deficit approaching $1.5 trillion, which means that this deal is only a success if it leads to long-term reforms that bring down the deficit.

In FY 2010 the government revenues were $2.16 trillion and spending was $3.46 trillion. How long could a citizen avoid bankruptcy if he brought in $21,600/yr and spent $34,600/yr? This level of irresponsibility would be catastrophic to a regular person and it's a catastrophe for our country. In fact, just today S&P shockingly downgraded our country's outlook from stable to negative due to our mountain of debt. To understand what must be done starting with the FY 2012 budget, first we need to understand where the money is going.

Social Security cost $701 billion. Medicare was $446 billion. Medicaid cost $273 billion. These 3 entitlement programs by themselves cost $1.42 trillion. Important to note: in each program costs are projected to explode in the next 10 years. Currently those 3 programs alone are expected to nearly double to $2.67 trillion in 2021. They must be reformed if we have a chance at getting control of our budget.

Excluding the repaid TARP money, the federal government spent a total of $2.064 trillion in FY 2010 on entitlement programs. In addition, the government spent $196 billion on net interest payments to the holders of their debt. The government is obligated to make all of these expenditures.

The entitlement programs and net interest payments combined cost $2.26 trillion. Yet total government revenues were only $2.16 trillion. In other words, the government was already $100 billion in the hole before it authorized a penny of spending!

Security spending, which includes Defense spending, Homeland Security, Veterans Affairs, and other security-related expenses, totaled $815 billion. Non-security discretionary expenses were $491 billion.

With these numbers in mind, let's return to the recent budget fight. Congressional Republicans focused exclusively on non-security discretionary spending for their spending cuts. They ignored the other 86% of the budget. The government could shut down the entire military, all homeland defense, and all other discretionary spending, and it still wouldn't be able to balance the budget.

It's time for everyone to grow up. We can't afford any further tax cuts. We can no longer refuse to make significant changes to entitlement programs, that by themselves are consuming most government revenues. We can no longer exempt the military from spending cuts, pay freezes, and all other reforms that other government agencies are already being forced to accept. Needless to say, Democrats must accept the fact that non-security discretionary spending must be cut. But that can only be a start. Everything has to be on the table.

- Part 3 of this series will list a number of cuts and reforms that we must make if we are to save our country from a fiscal meltdown.

Tuesday, April 12, 2011

Dishonest attacks against Mike Wilson

I had planned on writing Part 2 of my series on the recent Federal budget deal tonight, but that's going to have to wait. Earlier today I read one of the most dishonest attacks on Cincinnati Tea Party President Mike Wilson that I've ever seen, and that's saying a lot considering the numerous false attacks against him during the 2010 campaign. At the end of this entry I'll post both the attack as well as his recent email on the budget situation so you can determine for yourself where the truth lies.

One main complaint focuses on his allegedly negative criticisms of Boehner and other Republicans, stating that he only knows how to complain, and for not understand that budgeting is a process and not an event. In actuality, Wilson's 4/9/11 email stated that there were good and bad in the budget bill. It also stated that it would be a good deal if and only if this was a first step towards greater reform. Finally, it acknowledged that this debate changed the conversation about budgeting in America. To misrepresent Wilson's email as an endlessly negative attack on other Republicans is nothing short of dishonest.

The other main criticism alleges that Wilson has retreated to couch, where he does nothing but complain and scream at the tv. It's hard to see how that is true given that he resumed his old position as President of the Cincinnati Tea Party and has remained active in a number of issues as he did before.

If the person/people making these type of attacks would spend more time working on their own personal and political shortcomings, they'd undoubtedly find themselves enjoying more success than they currently do. It's one thing to have honest disagreements, but it's never legitimate to criticize someone for statements that were never made. Furthermore, is there really much doubt this criticizer(s) spends most of their own time sitting at home crying in their milk rather than showing the rest of us how to lead? If I'm wrong they can always identify themselves and prove me wrong.

And no, I am not Mike Wilson, or anyone who was closely involved in his campaign or the local Cincinnati Tea Party. I don't believe that cheap attacks like these are doing anything positive for our limited government movement. While Wilson and I don't fully agree on the budget situation, I think his Saturday email was largely on the right track. Getting $38.5 billion in spending cuts was a positive, but it's not nearly enough. This has to be a first step towards much greater reform. Our side needs to turn our attention towards getting the 2012 budget right; we don't need to be criticizing others for statements they never made.

Here was the portion of Wilson's 4/9 email commenting on the budget deal:

Last night, House Speaker John Boehner, Senate Majority Leader Harry Reid, and President Obama agreed to a continuing resolution that will fund the government through the end of the 2011 fiscal year (9/30/2011). This cuts $38.5 billion from 2010 levels. There was good and bad in this deal. The good news is that this is the largest spending cut in American history that did not result from the end of a war. The bad news is that this amount is barely a week and half's worth of this year's deficit of $1.5 trillion.

This agreement is good news if and only if it is a first step. Bigger battles over raising the debt ceiling and the 2012 budget are coming up in the next months and the stakes are much higher. This initial skirmish was only over a small fraction of federal spending as I will explain below.

Now is the time to redouble our efforts. As disappointing as $38.5 billion is in the great scheme of things, it represents a shift in the conversation brought about by our tea party activism.

On Monday, call John Boehner's office at 513-779-5400 or 202-225-6205 to let him know that this must be the first step on a path that ends with reduced federal spending and elimination of our debt.

On Friday, join us on Glendale Square to rally on Tax Day. Bring your signs and let the world know that we will see this fight through to the end.

Now here is the anonymous e-attack on Wilson, which I'm sure you'll all agree contains minimal accuracy.
That Tea Party Messiah who was going to be crowned state rep-tile has once again proven that he only knows how to complain and doesn't know how to do anything constructive in public service. Defeated for political office, he has gone back to doing what he always did best: sitting on the couch and yelling at the television.

Most people consider forcing any President, let alone Obama, to sign a budget bill that spends $78 million LESS than the previous year to be a great victory. Most people consider GOP House Speaker John Boehner to have accomplished something extraordinary, considering that he and the GOP only control one-half of one of the three branches of government. Clearly, if the situation were reversed, with a Republican President demanding less spending and then being forced to sign a budget with more spending, the Left would be doing cartwheels.

Lost on losers like the Tea Party Messiah is the fact that the GOP-controlled House did something in 90 days that usually takes nine months. So why is this sore loser and failed candidate given so much media attention? It's because he is attacking Republicans. He attacks the people, like Boehner, who are actually successful because he is a bitter sore loser. The budget is supposed to begin on October 1, but because the Dysfunctional DemocRATS led by Nancy Pelosi failed to do their job last year, it fell to Boehner to clean up last year's mess first.

Too often, political amateurs like the Tea Party Messiah think one event means everything. They aren't in the trenches day in and day out and fail to realize that government is a process and not an event. Republicans have already begun work on the 2012 budget, for the Fiscal Year beginning October 1.

Boehner and the Republicans will be working on even more cuts while losers like our Tea Party Messiah sit home and throw hissy-fits.
I close by challenging this dishonest attacker, and others like him/her, to get off their own couch and do something useful for the movement they claim to support.

Sunday, April 10, 2011

Federal Budget Deal - Part 1

Congress and The White House have finally reached a budget deal for 2011 - more than 6 months after the fiscal year started. The deal will cut an additional $38 billion from the 2011 budget, in addition to cuts agreed to during negotiations for previous Continuing Resolutions. Overall, the 2011 budget will be $78.5 billion less than Obama's initial request.

On the positive side, Congressional Republicans, who control only 1/2 of one of our three branches of government, were able to secure $78.5 billion worth of "cuts". They have succeeded in changing the national conversation. We are no longer debating whether to make spending cuts or whether to reduce the deficit, it's now a question of how much and where. However, the end result is the government will run an astounding deficit of $1.5 trillion for the year, with no cuts to the items that comprise 86% of the budget. This is not good enough. Much more progress must be made.

Whether this is a good deal will not be known for some time. Realistically no wholesale changes can be made during budget negotiations of the current year. Our first chance at real change comes in the 2012 budget, and every day Congress debated the 2011 budget is one less day they had to get working on the 2012 budget. The federal budget is a neverending list of pages and programs. It takes much time to understand the budget at the level required to make substantive change.

In that regard, it can be a tremendous positive for Congress to get $78.5 billion in spending cuts now and get the 2011 budget behind them. It will be a victory if it means we'll be able to make significant reforms in the 2012 budget.

Economists were concerned about budget deficits during the Bush years, and increasingly worried when it reached a record $458 billion in 2008. If $458 billion is enough to be deeply concerned, we should be petrified that the government ran a $1.4 trillion deficit in 2009, $1.3 trillion in 2010, and will likely reach $1.5 trillion in 2011. In 2010 the government brought in $2.16 trillion, while spending $3.5 trillion.

If this continues, the biggest threat to our country won't be nuclear war or terrorism, it'll be fiscal catastrophe. Annual deficits of $1 trillion and more are unsustainable. When we have to borrow 40% of our expenses, it's only a matter of time before we go the way of Ireland, Greece, and Portugal. Except, when we become beggars to the world, who's going to want to bail us out? Who would even have the resources to do so?

Congress, the White House, and the American people need to get serious about getting our fiscal house in order. Not because it would be a nice or because it would be a good thing, because it's necessary if we want to keep our country as we know it. It's time for everyone to grow up.

- In the coming days, I will dig deeper into the budget and list a number of specific spending cuts and fiscal policies that must be made.