Democrats Should Vote To Raise Taxes; Republicans Should Vote to Cut Spending to Balance the Budget

People who support President Obama and the Democrats should demand they raise the taxes necessary to pay for all this government spending. They want more government: they should propose ways to pay for it.

People who support Republicans or the Tea Party should demand they reduce spending dramatically if they really want smaller government with more limited reach into our daily lives and checkbooks and banking accounts.

If they won't do even those basic things as political figures, why do we vote them into office anyways? To mystify and amaze us on a daily basis like a ventriloquist who never really 'says' what he believes in his heart?

Raise taxes or cut spending...but no more debt! "Debt is for political cowards!"...always remember that like "'Remember the Maine!", "Remember the Alamo!" or 'Remember Pearl Harbor!"

Here is how both political parties should follow their own core beliefs and help reduce this debt enormously and in the process, show you how hypocritical they are when they fail to do the following things:

If the democrats were truly 'serious' about the debt:

1) They would vote for 'No!' to any changes to the expiration of every single one of the Bush tax cuts due to expire between the end of this year, December 31, 2010 and 2020. Every one of the Democrat elected leaders who have been squealing and pointing their fingers at the ‘dastardly’ Bush tax cuts of 2001 and 2003 should stand firm in their belief that 'the Bush tax cuts were terrible for the country' and allow them all to expire. No vote to grandfather, transition or waiver any repeal of any of these tax cuts which will happen automatically at the end of this year and successively for smaller provisions throughout the decade.

2) None of the Democrats will support or propose any adjustment to the AMT (alternative minimum tax) income thresholds and will instead just let ‘bracket-creep’ or inflation slowly seep into the lower higher-income and then the middle-class income taxpayers’ pockets to extricate more money from them on an annual basis without them ‘really feeling too much pain’.

How much projected increased revenue could be realized if the Democrats were really and truly honest and let these tax provisions expire in total over the next 10 years?- $5.6 trillion (see CBO Expiring Tax Provisions)

Now that is one way to blow a hole in this enormous debt buildup, isn't it?

Not indexing the AMT (alternative minimum tax) beginning at the end of this year would eventually bring in perhaps an average of $2000 per year from an additional 40 MILLION taxpayers, up from the 4 million who are hit by it nowadays. (you might be the next to have your wallet sucked up by the AMT vacuum so watch out!)

If Democrats were really honest about their desire to expand government to provide all of these great services for your fellow Americans, they would allow the AMT to surreptitiously ensnare more and more unsuspecting taxpayers each year and not vote to extend the dastardly tax cuts that President Bush and the GOP Congress passed.

If the Republican Party was truly 'serious' about reducing the debt:

They would have already introduced Congressman Paul Ryan's 'Roadmap for the Future' Budget for a vote in committee and on the floor of the House. They would also introduce all of the spending options from various sources they could introduce as a package or by line-item from the CBO and The Committee for the Fiscal Future of the US. There are over $3 trillion in scored proposals we have mentioned previously that can be passed tomorrow to bring our spending more in line with revenues.

But the GOP has failed to do either yet...for some reason. Maybe they are not really serious about reducing these deficits and national debt either...just like the Democrats? Nah, it just makes your brain reel if it had to believe that both major political parties in the United States of America could be so nonchalant about the threats of exploding deficits and compounding interest on the national debt now at $14 trillion and heading higher daily.

Watch them both very carefully on each of these fronts. If you see either side take either respective action, you will know for a fact that they are actually taking this explosive debt seriously and taking action to prevent it from growing even worse.

But just to reiterate, and make it as easy as possible, here are a couple of things Congress could pass this afternoon which would start to reduce the structural deficits in the federal budget and cost next to nothing in terms of outlays from Washington:

1) Tort reform and malpractice insurance reform will knock the pillars of spiraling cost out of health care inflation and flatten the costs of Medicare and Medicaid which are the two programs that are killing us fiscally.

If it 'only' saves 1% of the health care costs as opponents of tort reform claim, then what are they so afraid of? They will have been proven 'right' and we would have still 'saved' something like $26 billion per year in overall health care costs in this nation. (We think savings could be as high as $100 billion per year to the federal health programs, Medicare and Medicaid alone)

2) Raise the retirement age in both Social Security and Medicare in successive staged increments to 70, with the only exceptions being severe medical or physical handicaps attested by licensed physicians and psychiatrist.

3) Eliminate the anti-trust exemptions for the health insurance industry (and for Major League Baseball while we are at it…why those two industries are the only two legal exceptions from monopolistic regulations is beyond us anyway) and let the free market work to push prices down across-the-board.

We really want our elected leaders in Congress to 'do the right thing' and reduce spending first to balance the budgets. Maybe if each party would be honest with the American people and put forth proposals like we suggest above, we might have a chance to have a full-blown national debate this year on how to best achieve those goals.

But not if they run and hide and don't spell out the tough options we have before us. All of the 'easy' decisions have been made..and look at where that has gotten us as a nation.

courtesy of www.webspace.webring.com

Senator Bunning Was Right

Amidst all the hubbub about Senator Jim Bunning holding up the unemployment extension bill last week was one ‘inconvenient truth’ the news media always failed to point out when they were throwing beanballs to his head just like, well...just like the All-Star Phillies pitcher, Jim Bunning did to any opposing batter who was crowding 'his' plate: (he did pitch 2 no-hitters, 1 of them a perfect game, and hit 160 other players with 'beanballs' or pitches he threw to their body or head)


He was only trying to help President Obama, Speaker Pelosi and Majority Leader (for now at least) Reid be men and a woman of their word and honor.

On February 12, barely a month ago, President Obama, Speaker Pelosi and Leader Reid all touted the passage of the PAYGO legislation as some sort of Magna Carta of new fiscal responsibility they will show the nation as our big, brave, bold elected leaders.

Here are President Obama’s very own words from his very own press release about why he signed the PAYGO law in the first place on February 12:

"In a perfect world, Congress would not need a law to act responsibly, to remember every dollar spent would come from the taxpayers today - or our chiildren tomorrow. But this isn't a perfect world. This is Washington. And while in theory there is bipartisan agreement on moving on balanced budgets, in practice, this responsibility for the future is often overwhelmed by the politics of the moment. It falls prey to the pressure of special interests, to the pull of local concerns, and to a reality familiar to every single American -- the fact that it is a lot easier to spend a dollar than save one."

Blah, blah, blah….yada, yada, yada….and so on and so on…the beat goes on.

So the law he signed into law on February 12, 2010 is the same law that he and the Democrat leaders in your US Congress failed to enforce or follow the first week of March, the same year, 2010?  3 weeks later?

What is that, a land speed record for hypocrisy and failure to faithfully execute the laws of the land as passed by Congress?  If President Obama wasn't such a nice guy, he would be laughed off the Washington stage for such abject failure to lead and do what even he himself has promised to do just 3 weeks ago.

Why sign the darn thing in the first place if you are never going to be a strong leader and enforce it on the very next swing at the bat?  This Administration and current Democrat leaders of Congress are clearly not serious about holding down spending or reducing the deficit or debts in any way, shape or form.

Granted, Senator Bunning could have chosen another less contentious, less important bill to stand up against and try to make his point.  Millions of Americans need those unemployment benefits to survive week-to-week as this nasty recession lingers on, way past the point that the First Obama Stimulus Bill should be creating millions of new jobs if it was actually ever going to work as hoped.

But we stand by the Senator for the following 3 trillion reasons:  The amount of savings that are currently scored, explained and written in the CBO Budget Options, Volume 1 and Volume 2 (one volume is not enough anymore to point out all the savings that can and should be made from the spending side of the budget)

And then just recently, we brought to your attention the great 338-page tome that we hope you have read already (it is that important that you and all your friends should download it and read it),  “Choosing the Nation’s Fiscal Future” published by the ominous-sounding “Committee for the Fiscal Future of the United States”. There are trillions of dollars of savings in that book as well.

To his credit, Senator Bunning did propose a possible offset to this bill, one that is very common-sensical and doable:  Cut $10 billion of unspent stimulus monies out of the $787 billion dollar bill that has failed to generate a lot of jobs so far anyway.

There were no takers in the US Senate, Senator Bunning stood alone....you could almost hear the sound of crickets chirping in the background of the Senate. 

The cost of this unemployment extension bill is $10 billion.  That is a lot of money.  But in the federal budget nowadays, that is almost a rounding error!  When we were working in the coal mines of the House Budget Committee way back in 1992, eons ago by now it seems, any savings under $1 billion was not even considered….it was considered almost a ‘rounding error’ and not worth the time to put into a deficit-reduction bill.

Senator Bunning is not running for re-election so some will say he did this because he didn't have to face the wrath of the voters.  We need to reward any elected official who will stand up and be counted and say what programs they will cut to pay for any new one.  You can do that today by telling any Senator who voted with Senator Bunning that they have your eternal gratitude and vote in 2010.

The Committee on the Fiscal Future of the United States

Rudolph Penner, formerly director of the Congressional Budget Office, recently put out a report aptly named 'Choosing the Nation's Fiscal Future' sponsored by the Committee on the Fiscal Future of the United States.

Derek Thompson of the Atlantic has a nice lead-in to the report with the great alluring title "How to Control Debt Without Touching Taxes" so if all you can do right now is read his brief article, do just that.

It might make you feel a little bit better about the future of this country for today at least....it can be done, as long as we, the living, breathing adult Americans of this nation, decide it is the right thing to do and put pressure on our elected officials to pass these much-needed reforms and new responsible fiscal policies.

The full report is 338 pages of clear explanations of how to at least get our fiscal house in order to keep public debt to GDP ratio to 60% by 2020 which is at least a manageable level by most economic experts nowadays.

We don't suggest you read it all tonight but we do suggest you read it all at some point in time (it is free if you read it on-line) and send around to all of your concerned friends, neighbors and countrymen as soon as you can.

In it, you will see what it takes to get our fiscal house back in line all with federal budget cuts, 'federal liposuction', if you will, and no tax hikes...unless you consider capping 'Cadillac' health insurance plans at some standard level of benefits a 'tax hike'.  You are paying for the difference nowadays anyway so if you don't mind subsidizing the status quo so groups like the labor unions can enjoy health benefits roughly triple or quadruple those in the standard BCBS plans you might be in, come up with some other massive change that will make up the difference.

And, if you are so inclined, you can see what it would take if we keep federal spending at the same high level of spending relative to GDP that we have currently in place....and then have to pay for it through higher taxes on ourselves, not pass it along to our children to bear on their young shoulders all by themselves.

Our thought is that if something is good enough to pass for the whole country, then everyone should pay for it some way or another. Continuous perpetuation of the urban and rural 'myth' that 'all we have to do is pass higher taxes on people making over $250,000 per year and we'll be ok' has done irreparable harm to the people of this country who have been convinced that there is a free lunch out there waiting to be delivered to their tables by the same rich people.  It ain't gonna happen and there are not enough rich people to shake down to balance our budgets anyway....they'll all go to Switzerland before the IRS can shake them down to take all of their wealth.

So the next time someone like Chris Matthews on MSNBC's 'Hardball' challenges you and says: "Well, then, Mr. or Mrs. Smarty-Pants, since you know everything about everything, what would you cut in spending to balance the budget?", you can whip out this 338-page report and start reading every single proposal out to him on national television.

Or at least the meager number of folks who actually still watch the chattering head shows on MSNBC, that is.

picture courtesy of www.democraticunderground.com

So President Obama and the Democrats Are Going to Use the Reconciliation Route to Pass Health Care ‘Reform’ (sic)?

Are there any odds in Las Vegas on this yet?

If so, you might want to place some money down on it…it would be a humdinger of a Super Bowl contest of wills, patience and parliamentary maneuvering unlike any we may have ever seen before.

Here is something we just don't quite fully comprehend:  The Democrats have already 'won' the silver medal.  The House can pass the Senate version of the health care bill today and have it signed into law by the President in no time flat. That is 'two/thirds-bad' or 'three quarters-good', depending on where you sit. They could go home today knowing they have already passed most of what they wanted to get in the first place.

Perhaps they sense that this might be their one and only chance to pass such a major expansion of federal control over the health care system in their lifetimes so they are willing to risk it all to get the 'gold-plated' platinum medal in terms of health care reform bills, at least in their eyes.

If that is the case, let’s close our eyes and try to imagine what this ‘budget reconciliation’ (BR) process really looks, acts and feels like. Imagine you are the BR Bill itself. You have been conceived and birthed by 60 US Democrat Senators, 255 House Democrats and a President in the White House and nurtured and fostered by a dizzying array of labor unions and other nannies along the way.

So your collective DNA has a lot of complexities to begin with.

You are mad and frustrated that Thomas Jefferson and the other Founders set up the procedures of the US Senate so that the rights of the minority party can not ever be completely trampled underfoot no matter what the other party has won in the last election. In fact, it used to be that only 1 single Senator could hold up the proceedings of the Senate as long as he would stay on his feet and ‘filibuster’ a bill 'til Kingdom Come. (see Jimmy Stewart in “Mr. Smith Goes to Washington’)

That is the concept of ‘unanimous consent’ which fosters and breeds compromise and collegial negotiation and comes from the days of the Roman Republic itself. ‘SPQR’ or ‘Senatus Populusque Romanus’ meaning "The Senate and the People of Rome" which shows you how much the Senate back then thought of their special relationship with the public.

In fact, we submit that going back to the full filibuster rules might actually yield more compromise, not less, than under current 60-vote cloture rules but that is a thought-bomb for another place and another time.

Anyway, you now look at the gauntlet of Senate rules and parliamentary procedures between you and your utopian Olympian dream: being passed into law as President Obama’s signature piece of legislation. It could go down in history as one of the greatest works of legislation in the history of the American Republic or be infamous as the undoing of the first African-American President the United States has ever had.

“This is so unfair!” you think as the BR bill. “Why should I, the brainchild of the smartest people in the country right now have to subject myself to these demeaning rules?”

Because Mr. Jefferson and Madison and the other geniuses back then wanted you to be subject to those rules today and forever here in the United States of America. That is why they made it so difficult to pass legislation in the Senate in the first place…it is supposed to be the place where the hot cup of soup of legislation passed by the House is ‘cooled off’ in the saucer beneath it when it spills.

So here is what you are up against in the gauntlet:

- Any knife that will cut out a thick piece of your skin if you dare exceed the budget rules and parameters.

- A hatchet that will cut off any finger that seeks to bring in any extraneous legislation that is not ‘germane’ to the issue at hand, namely budget and tax issues relating solely to health care, nothing else.

- A tomahawk to your scalp if you even dare violate any of the so-called ‘Byrd Rule’, named after the senior Senator from West Virginia, Senator Robert Byrd himself who is still serving (Something to watch for: if he votes for any waivers from his own Byrd Rules, then you will know that the goose is cooked, the cards are stacked and someone from Chicago has gotten to him and made him an ‘offer he can’t refuse!”)

- Hot coals under your bare feet as you run down the Senate hallway to the Senate chamber to vote.

- Various other atrocities committed to your physical person as you try to skirt the reconciliation rules and procedures and increase the deficit, all intended to keep the debate focused on tax and budget issues in the health care debate, not on broader issues of policy.

‘War is hell!”, said William Tecumseh Sherman and 'budget reconciliation' is just ‘war by other means’ (Baron von Clauswitz)

Take some time to read this fantastic, easy-to-read summary of the entire budget reconciliation process by a Senate expert, Keith Hennessey.  All of it, both sections (it was written last August but is still germane)…don’t skip a word cause there will be a test on it later.

Let it all sink in and then you will know just how difficult it really and truly is to get everything the Democrats want in the gold-plated platinum health care bill through the budget reconciliation 'nuclear option'. (President Truman used the real 'nuclear option' and to equate this debate with that ominous decision is ludicrous)

We remain persuaded that win-or-lose, we are going to have to start over again next year and keep pushing this rock up the health care reform hill time and time again like Sisyphus…another great story for which we have great affinity.


picture courtesy of fourthandverylong.wordpress.com/

When Higher Interest Rates are a ‘Good Thing’...Honest!

Amidst all of the excitement about the Vancouver Olympics and consternation over the still-lingering jobless recovery, there was a flickering, glimmering light that sparked in the ashes of this nasty recession about a week ago and hardly anyone noticed.

The Fed announced a 'teeny-tiny' rate hike on the money they loan the largest banks.

“What a minute! How in the world can higher interest rates be good for anything? I thought the lower the rates the better’.

(When you think about it, we have had darn near zero and close to negative real interest rates when you factor in any inflation over the past several years.  How much lower could we go anyway?)

It is a complicated saga but bear with us for a moment.

When the world seemed to be imploding in 2008 and Wall Street was crashing like so many alpine skiers seem to do every day in Vancouver, we called one of our friends who works at the Federal Reserve in Washington for some insight into what the heck was really going on at the moment.

This is one of the true public servants you never read about, one of the faceless, unsung people who do their job diligently day-in and day-out without ever having their name in the paper or becoming a pretentious chatterhead on one of those insanely contentious and ultimately self-defeating ‘talk shows’ on cable tv. He is one of the legion of 80% of federal public servants who are good at what they do and we are fortunate to have serve our public interest.

Anyway, as we were asking a lot of questions about incipient inflation due to the Fed ‘printing’ more money to bail these banks out, etc., this gentleman calmly interrupted and said, quietly, in his best former high school coach voice: “We have it all under control.”

When we asked how in the world could that possibly be when the tectonic plates of the world's economy seemed to be shifting all around, he said: “Mr. Bernanke knows precisely what he is doing. He has been training for this moment his entire life and he is the exact right person to be in the exact right place to navigate our way through these troubled waters.”

He went on to explain: “There will be no explosive inflation coming out of this recession for one very simple reason. All of this support we are giving to the banks right now is not from running the printing presses to print massive amounts of new currency til they melt down. In fact, we are telling the banks not to ever use any of this 'money' we are extending them for lending purposes no matter what. It is simply a matter of extending credit to the banks from the newly expanded Fed balance sheet via debits and credits on the books of the banks and the Fed concurrently. The purpose is to shore up the bank reserves to meet their reserve requirements and hold them there until the economy recovers enough that the banks can meet the reserve requirements on their own.”

“And when will that moment be, Sir Deep Throat of the Fed?” we asked.

‘When we see enough economic activity to justify it, we will start to raise interest rates ever so slightly to start siphoning that credit back to the Fed from the banks. Eventually, we will have to recover all of that extended credit which we will then de-leverage off the Fed’s balance sheet by simply destroying it.”

Meaning 'make it disappear' just as quickly as they made it appear when they ‘expanded’ the Fed balance sheet in 2008 and 2009. Just think of a video game where you shoot down space aliens or something and they just disintegrate on-screen.  That is what will happen to these trillions of 'dollars' on the computer screens with the expanded Fed balance sheets on them when they are 'returned' to the Fed from the banks in the form of higher interest rates.

Now that might not be the fancy-dancy theoretical economic politispeak you might hear in congressional testimony from Alan Greenspan or read in some advanced economic publication such as the Financial Times or the Wall Street Journal. But he seemed to be saying: “Whatever the Fed can create out of thin air to help us through this crisis, the Fed can make disappear the same way.”

And with its disappearance, significantly reduce the possibility of explosive interest rates due to a massive expansion of the money supply the 'old way'...printing up trillions of new greenbacks on paper.

We hope he is right. And we hope our limited knowledge of high finance allowed us to hear Deep Throat’s words and comprehend them with understanding.

‘That is our story and we are sticking to it’ as the great country song declares. At least it is one small flicker of positive hope….isn’t that good enough nowadays?

ski crash courtesy of www.sportingnews.com/blog/zamboni77/225492

The Lost Tension in the Spending Versus Tax Debate

You know, we have been writing for close to a year now on federal budget, taxes and health care issues. Not normally your most exciting or intriguing political issues to discuss coming out of Washington when compared to such issues of gravity as Sarah Palin’s eyeglasses; President Obama’s generous use of the teleprompter and whether Glenn Beck is the new national leader of the Tea Party Movement or not…you know, the important things in life.

But it occurred to us like a bolt of lightning from above that despite all of this talk and writing about fiscal issues, there is one critical issue missing in the whole national debate, one that would accelerate the decision-making process on the part of Congress and most importantly, the American public towards some sort of fiscal sanity once again.

That critical missing link is ‘fear’.

There is zero ‘fear’ by any of the affected parties right now that anything different will happen to them if we don’t take any action to solve these enormous, bone-crushing deficits and build-up of national debt. Nobody is afraid of the consequences of their inaction…so consequently, they do nothing. It is a vicious, insipid and ultimately completely stupid circle.

Let’s go to the videotape:

Democrats won’t cut spending, unless it is in defense, in which case they will reduce spending with abandon. They will raise taxes, but only if it is all borne by the upper 1% of the income-earners in America. What they incorrectly presume with impunity is that these wealthy people will part with their hard-earned money without a fight or the advice of expensive tax accountants and lawyers. The Democrats also incorrectly presume that amount of money they can confiscate from the highest 1% of Americans will make any difference at all in balancing our budgets. (it won’t..we can confiscate all of Bill Gates and Warren Buffett’s $75 billion in assets and that will run the US government for less than 70 hours)

Republicans always want to cut taxes at the drop of a hat, but they do not want to cut spending with the same abandon which would at least honor their ‘limited government’ heritage bequeathed to someone by Jefferson. (No one believes that anymore apparently) That is why the GOP so unceremoniously let the only thing that has ever worked on budget discipline, PAYGO, die an ignominious death around 2003-2004 without even giving it a proper burial. In fact, between 2001-20006, Republicans spent more money than even the most liberal of all liberals, Speaker of the House, Tip O’Neill could have ever imagined spending during his reign in office.

So, there you have it….all of the easy avenues have been used forever with impunity….raise spending; cut taxes, spend freely and never stop adding on additional debt for your kids to pay back…one day…after we are all dead and gone.

Here’s what is missing and what we would like to support as a ‘new way’ out of this conundrum: Think of enormous debt being far worse than lower spending or higher taxation could ever be on this economy and your future. ‘No New Debt! No New Debt!’ Can’t you just hear the roar of the crowds at the Democrat, Republican and Tea Party Conventions next time around? (ok, maybe not yet...but you should)

Why is this true? No republic we can find in history has ever succumbed due to low taxation alone. Or higher spending alone. But thousands of them have succumbed to the killer of humongous national debt caused by an excessive spending/taxation imbalance and the attendant interest that has got to be paid on the principle each and every year.

When those payments can’t be made to bondholders, especially foreign credit holders, that is when things start to go sour for any spendthrift national government. Just ask the president and parliament of Greece right now….we bet they wish they had paid attention to balanced budgets 10 years ago.

Here’s what we suggest any political leader should say to the American public so we can all see the consequences of not taking action on this enormous budget deficit dilemma: “I am going to attack this budget deficit by voting for every spending reduction first and foremost that is presented, especially from the great CBO Budget Options books (see Vol. 1 and Vol. 2). However, if you don’t agree with that approach, and we don’t get to balance by spending reductions first, I am going to support taxes across the entire population, not just the super-wealthy, so we can generate enough revenues to cover the spending you say you don’t want to reduce.

Because I am simply not going to vote for any more debt to be laid on our children in any fashion and I will only vote for any debt ceiling increase if we are on a rapidly-declining glidepath to balance in the next 10 years.”

And if you don’t like that, send someone else up there to Washington to fill that seat. Because I am not going to be a part of the strangulation of the American economy by this idiotic and totally insane national debt.”

That should lay out the options in a much more clear way for the American public to understand what is really at stake here. If you don’t support Congress as they cut spending; you are saying you want to pay higher taxes. And so they should give it to you.

It is your choice.
 
glasses courtesy of http://celebritystyleblog.wordpress.com/tag/sarah-palin-glasses/

Check Out What the Greeks Are Having to Do Regarding Raising Their Retirement Age...by Force

No sooner had we posted our last observation about the critical need for the FY 2011 Obama Budget to include a rapid increase in the eligibility age for Social Security and Medicare than the news came on CNBC that Germany was forcing the Greek government to its knees to raise its retirement age in return for any financial bailout assistance to help stabilize the euro. (see “Greek Debt”.)

They are taking the ‘radical’ step of raising their retirement age to 63…from 61!

Good Grief!  Imagine what sort of peace and prosperity the world would experience if America and the EU nations jointly raised their retirement ages to 70!  The fears about every industrialized nation’s burgeoning debt would diminish, if not evaporate overnight and at least one major financial sword of Damocles would be put to rest.

And then we found the following article about Spain taking pre-emptive action to raise the retirement age of its citizens to 67. (see Spain)

What in the name of Sam Hill is going on here?

We are of the opinion, without being too apocalyptical about it or alarmist in a very pessimistic way, that we are now in the time period where policy-makers 30, 20 even 10 years ago always warned about when the ‘chickens will come home to roost’. (interesting derivation here….maybe pigeons would have been more appropriate)

We remember sitting in untold numbers of House Budget Committee hearings from 1991-1994 and Entitlement Commission meetings from 1993-94 where expert economist after expert economist all said the same thing: “We can run deficits up to a point but whatever that point is, we will have to pay higher taxes and/or dramatically reduce our federal spending to come back into balance and reduce this enormous debt we have been building up since 1970…(pick any year since whatever the debt level was at the time was considered 'way too large’ at the time as well)

And they would all conclude by saying, in essence: “And besides by (1990/2000/2010… whatever was 10-15 years out in the future), the American people will have wizened up by that time and the people in Congress will have already taken care of the long-term structural problems.  The American people are not that dumb to allow it to happen forever.”

Uh, sorry about that, sirs and madams….but we have not ‘taken care of it just yet’…and we are showing zero signs of taking this seriously and doing so now in 2010.

That is why you need to pay very close attention to how Germany and the European Union deals with the profligacy of the Greek government and society right now, today.  They are going to force some ‘painful’ reforms on the Greek people that they are incapable of forcing on themselves apparently.  What an embarrassment that the birthplace of democracy, Greece itself, is now having to be forced by outside creditors and guarantors to make the hard decisions they should have been making through their own legislative process for the past 30 years.

Sound familiar?  It should because we have followed the exact same course as the Greeks: “We want it all, we want it now and we don’t want to pay for it out of our pockets so we’ll just borrow it from the Germans and future Greek children with loads of debt and live and and dance like Zorba the Greek”.

Greek budget deficits now run about 13% of GDP.  US budget deficits run about 10% of GDP.  Greece’s GDP is $357 billion per year. Greece would be the 13th largest state in the US ranked by GDP just behind Michigan and just ahead of Massachusetts.

Presumably, if Greece were a US state, they would be running to Washington asking for a bailout of their finances just like California ($1.85 trillion GDP) and the others have already done.

The party is over for the Greeks and the contagion is about to spread throughout the EU.

Why don’t we just do the right thing now, bite the bullet, cut back on all of these excessive spending programs, reform and scale back on these entitlement commitments and return to a life of economic growth and prosperity?

That would be a lot more fun than the last 2 years, which might become 10 years if we don’t watch out…wouldn’t it?

courtesy of www.greek-islands.us