Past v. Future

I watched a clip featuring Bill Maher from an appearance on the Lawrence O'Donnell show on MSNBC. I find I agree with him far more often than not and this time was no exception. He made a specific statement that struck me. While talking about the debt ceiling negotiations he noted it's stupid to lump the debt limit with budget deals because the debt ceiling is about the past and the budget is about the future. This seems to nail the issue rather well.

Few will argue that our past spending habits as a nation were flawed, to say the least. Too many short-sighted decisions, most of them completely unaccounted for in the budget, have piled up a tremendous amount of national debt. Some expenditures may well have been necessary, but many were not. Put simply, it was just easier to put it on credit than to bother adjusting our budget to pay for it. Don't get me wrong, there are times when you have to do that, but they should not be that common. So now our debt is in the $14 Trillion range and projected budget deficits are still way into the red. This has to not only stop, but we have to put some plans into place to begin paying down the national debt to a more manageable level. But let's be clear, the debt is the past. Debt: "Something, typically money, that is owed or due." Past-tense. The money is spent, the clothes have been worn and the food has been eaten. No amount of whining, moaning or cuts to current spending will change that. If we didn't spend one more penny on new expenditures, we would still owe $14 Trillion. So let's stop fighting about the balance of our current debt. We owe the money and we have to pay it back, honoring our prior commitments. So let's just raise the limit on a clean, no frills bill and move onto the next crisis!

Where the real debate should be taking place is with the federal budget. This is about future spending and has no place in a debt ceiling debate. This is the messy part. It would be nice if we could debate it without all the partisan crap that has brought the sticky gears of Congress to near standstill. We really do have to look at everything, including the military, Social Security, Medicare/Medicaid, federal agencies and programs. But this needs to be done with a scalpel, not a hatchet. We want the patient to make a full recovery, not require prosthetics and plastic surgery!

We didn't get into this mess in a single decade, so we ain't getting out of it overnight. We need to approach the problem of the national debt and the budget deficits calmly and rationally. All sides must be willing to give a little. That means looking at entitlement programs for any possible savings without cutting benefits, such as raising the retirement age a few years. It means closing stupid loopholes in the tax code that allow highly profitable companies and fund managers to get special breaks that have no purpose other than to make them richer. It means looking at the military budget, especially drawing down the wars and reducing permanent overseas bases. It also means killing the unpaid for Bush era tax cuts for the wealthy.

I admit I'm not optimistic because these days there seem to be so few reasonable people in Congress. Especially after the November 2010 election debacle which ushered in a wave of uber-conservative politicians who seem to be completely out of touch with reality. Look, we've wasted months arguing about this and accomplished nothing. The debate has even managed to fracture the Republican party itself. The Republican Speaker of the House can't even get his own bills passed without days of delayed votes and arm twisting. And worse yet, he wasted all that time and effort on a bill that was never going to pass the Senate! Bottom line, we have to pay our bills, and meet our obligations, so raise the debt limit with no strings. The budget must be addressed, but not like this. Not in the last seconds before the car goes over the cliff. Stop risking a full blown depression for political leverage!

The Wrong Problem

America has a bunch of pressing problems. We have unemployment topping 9.2%, the national debt at around $14 Trillion, budget deficits pushing a Trillion per year and an economy that may have climbed out of the hole, but remains prostrate and panting in the dirt. Now one of these problems is key to solving all the others. No, it's not the budget deficits or the debt itself. It's the economy! As long as the economy is immobile we cannot solve any of the others.

It's easy to try and compare the federal government's budget to a business or an individual's finances, but it's also nonsensical to do so because there are significant differences. If you and I get into debt, our main options are to cut our spending or increase our income by getting a better or second job. Or better yet, both. So far so good, but here is where the paths diverge. For you and I, this is pretty much all we need to do, since we are only responsible for ourselves and immediate family. The federal government, however, must balance the needs of the country and the complex interplay of finances, services and policies that affect the entire US economy. Every cut you make ripples outward across the country and sometimes even beyond our borders. Now when the economy is cruising along, these ripples are fairly easily absorbed with minimal shock. But the more fragile the economy the harder it is for the system to ride out the spikes and dips caused by large changes in federal fiscal policy.

The thing that gets lost in the brain bleeding cacophony of the budget fight and debt 'negotiations', and I use that term loosely, is that none of this happens in isolation. It's all connected. When the economy is bad and the unemployment rate is high, as it is now, it's a bad idea to start cutting federal and state jobs like a madman. This only makes the problem worse by reducing the total jobs available and increasing those looking for work. Conservatives like to pretend that government jobs aren't 'real' jobs, but that's just part of the 'government is bad' propaganda they like to spew. These are real people doing real work. So while cutting government programs, and thus public sector jobs, will indeed reduce overhead costs what's forgotten is that this only takes them off the government payroll and puts them on unemployment. This means more people drawing unemployment checks and more people flooding the job market. So really, you're just moving them from one government ledger to another. Their drop in income will lead directly to more bankruptcies and more foreclosures. This also leads to less consumer buying and thus more pressure on companies who are seeing their sales of goods and services continue to slide. Inevitably this leads to more layoffs as companies hunker down to ride out the storm. Oh, and let's not forget that people out of work and not buying equals less tax money being collected, which makes federal and state budgets even worse! It's a very logical and vicious downward spiral that is often completely ignored in the press and on the Sunday talk show circuit. Partly because it's an inconvenient hiccup to the Conservative narrative and partly because it doesn't fit into a one sentence sound byte.

Yes, we have lots of problems and the debt is certainly one of them. But while it is a problem, it is not THE problem. The debt is not going to destroy anything today, tomorrow or next year. However, not getting the economy moving and getting people back to work only makes the debt issue more intractable and increases pressure on future deficits. None of this should be surprising. This is simple economics. Just basic cause & effect that anyone willing to use that ten pound lump on their shoulders should be able to work out. We don't need more anti-abortion laws or any of the hundreds of other things the GOP controlled House has wasted time on this year! What we need is action to resurrect our economy before it stumbles back into the abyss from whence it came!

Priorities

We've all been in the position where we had multiple problems but limited time or resources to address them. So what do you do? You look at your problems and figure out which is the most pressing. The one that absolutely can't be put off. The problem that threatens to overwhelm you if not dealt with as soon as possible. You may have several that at first glance seem equally important but, in almost every case, when you look closely and weigh the facts you will see that one is more of an emergency than the other. It may not be by a lot, but there is a difference. Once this is sorted out, you focus as much as you can on this one problem and resolve it, or at least make enough progress that you can set it aside in favor of a more pressing issue. Put simply, you prioritize.

This is what we all do everyday. We prioritize errands, bills, obligations and all the other things in life we have to address both good and bad. But as often seems to be the case, our elected leaders appear to have forgotten this, whether by intention or incompetence. I think most Americans would agree that the two most pressing problems, on a national level, are the economy, which includes unemployment, and the national debt. Since being swept into office last November on a wave of impatience and discontent, the Republicans have, between inexplicable bouts of anti-abortion and anti-union zeal, screamed to the rafters that we must cut spending. Cut, cut, cut. Now, now, now! They say the government is spending too much and while true this is hardly different from the previous eight years, when they were in charge.  I agree that the debt is a huge problem. One of my early posts from 2004 was about the need to address the problem. Of course then the problem was only dire. It hadn't yet reached the level of obscenity we now face. So I'm fully in agreement that the debt must be faced and a plan set in place to reduce it.

However, one other thing has changed since 2004, when I first waved the red flag on our debt. You may even have noticed it when it occurred. It was when the economy dropped through the floor like a tank on balsa wood. Ring any bells? So here we sit, with unemployment hovering around 9% nationally and far worse in some areas. We've had some marginal growth, but it's been stuttering and uncertain. Foreclosures and bankruptcies are at eye watering levels. In fact, the only people doing well are those who either had lots of money to cushion the fall or the robber barons who parked the tank there in the first place! To top it all off, Republicans, with misguided and grudging Democratic support, ladled another $700 billion to the debt over the next few years so the richest people in the nation wouldn't see a slight tax hike.

This complicates any plan to balance the budget and put even a smudge on the national debt. It's the same old story, when the economy is booming and we could actually afford to reduce the budget and make inroads against the debt without major cuts, everyone wants to spend, spend, spend. As soon as the economy sags, everyone is suddenly calling for the end to NPR funding and home heating oil subsidies for the poor. Aside from the questionable morals of taking aid away from the poor after ensuring the wealthy don't see a tax increase, there is the fact that cuts like these have no real effect on the budget. Most of the cuts I see proposed are all focused on balancing the budget from the tiniest slice of the whole pie, discretionary spending. They ignore the largest percentage made up of Social Security, Medicare/Medicaid & Defense. Why? Because those would require real effort and debate. So much easier to just go for the easy pickings. The stuff you can get the base riled up about, but that won't really make a difference.

Want to deal with the budget? Focus on the economy! The most important thing is to get the economy growing and get millions back to work. That will scale back the bankruptcies, the foreclosures and spending on unemployment benefits. It will also generate revenue that can be used to balance the budget, along with some modest cuts. Remember, the underlying reason for the huge budget problems at the State and Federal levels stem from the recession. Yes, government has spent a lot in the last 3 years, but the reason it did, whether you agreed with the choices or not, was in direct response to economic strife. Propping up huge corporations so they wouldn't collapse and take large chunks of their fiscal neighbors with them. Trying to pump money into the system to keep the economy from flat lining. That's where the majority of our recent deficits came from. So focus on the economy. Get that running on all cylinders again and a significant percentage of the problem will correct itself.  No, it won't solve it, but it will have a far greater and long lasting effect than any discretionary spending cuts. And if you're going to look at cuts, consider EVERYTHING, not just your pet, partisan punching bag. We will never balance the entire budget if we are only willing to make cuts to 15% of it!