Remember the imagery of an ostrich with its head buried in the sand? That is sort of how I view the average American taxpayer. They may be opinionated, but choose to remain purposely blinded to what is really happening around them. It is much easier to just not see anything in the periphery and keep to ourselves, or maybe just vent about what we think we don’t like and won’t try to understand.
The Concord Coalition (www.ConcordCoalition.org) was formed in 1992 to create a bi-partisan dialogue on fiscal responsibility by then U.S. Senators Warren Rudman (R-NH) and Paul Tsongas (D-MA). Obviously it has not made enough progress in the years since to raise awareness of the need to reform the U.S. budget or its drunken propensity to continue an endless cycle of spending growth and income reduction.
The coalition has a roadshow presently on national tour, and it made several appearances in Atlanta recently. For financial fans, it was an impressive group of real players who’ve been in the trenches preaching this responsibility message for years, along with serving our country in places where they could try to impact policy in real time, including:
– Dr. Alice Rivlin, founding director of the Congressional Budget Office, veteran of the Federal Reserve Board, and recently co-chair of the Bipartisan Policy Center Debt Reduction Task Force.
– David Walker the seventh Comptroller General of the United States and head of the U.S. Government Accountability Office (GAO) from 1998 – 2008.
So what is the real problem?
Well as anyone with a checkbook understands, it’s not the 12% of annual federal outlays that are made at the discretion of Congress. This sum is the current obsession of House Republicans, who want to cut $61 billion out of the 2011 budget as a symbolic gesture that they are serious about getting our financial house in order! They are ignoring the other 88% of the budget.
Anyone sober might also question why, if they are really serious, did they insist on extending America’s largest tax cut to the richest Americans only 90 days ago? Its scheduled expiration would have added about $480 billion revenue over 10 years to lower the federal deficit.
But theatrics aside, the problem is the projected growth of entitlement spending: the money promised to American workers through social security, and the medical safety net promised to the elderly and poor. Noble as those intentions are, they were not constructed with a sustainable financial model that we can present pay. Add to that 40 years of federal budget deficit spending and 30 years of steadily lower income taxesâ€¦. You can see the problem, right?
But, what’s the scale of the problem?
· Our annual outlays last year were $3.71 trillion, while government revenues were $2.23 trillion. [Note: spending included $225 billion interest on the federal debt]
· Congressional Budget Office estimated at present spending levels, the deficit would grow to $7 trillion within 10 years [Concord Coalition estimates $13 trillion.]
· Federal spending doubled in real dollars per person since end of WWII.
· Federal debt doubled in real dollars per person since end of WWII.
· Federal debt owned by non-Americans has exceeded 50% since 2005
What to do about it?
The panelists had some obvious answers based on real numbers, rather than ideology. For starters, Dr. Rivlin stressed the absolute requirement of a bi-partisan effort due to the cold hard reality that the solution:
1) Cannot be based on annual spending reductions alone;
2) Cannot rely on entitlements to be reined in fast enough. They can’t;
3) Must include defense spending, based on its mammoth size and recent growth; and
4) Must include tax increases, best made through broad tax policy reform.
There are plenty of worthy strategies that can make a meaningful change in this gloomy outlook, but it will require politicians willing to understand that nobody will get everything they want, many politicians will lose their jobs in the process, and other priorities may have to be set aside for the greater good.
In other words, we need political courage, intellectual honesty, and a focus on the greatest threat to our society.
Is Congress up to it?
Are you willing to make it their job requirement? After all, you vote them into office.