Thursday, November 5, 2009

‘The Plan’ to Balance Our Budget…and Pay Off National Debt

Here is something neither side is bothering to tell you nowadays, even though we have crushing budget deficits, a Mount Vesuvius of national debt to contend with, an aging Boomer generation that is about to enter and bankrupt Medicare and Social Security completely and the Chinese government getting pretty squeamish about holding US dollar-denominated bonds when they know they are going down in value, not up:

“We don’t have a long-term, or even a short-term plan, to deal with any of our budget problems.  None. Nada. Not one!”

Scary, isn’t it?  It is like we are flying in a blinding snowstorm in the mountains and the pilot comes on the intercom to say: “We are not quite sure where we are going but we are sorta sure we will land alright.  We promise. Trust us.”

If you have heard anyone from the White House to Congress on either side of the aisle say they have 'a plan', please recite it for us in 30 seconds or less.   We have not heard one yet.

Let’s put something out there to show you just what we are up against.  Take a look at the CBO budget projections and sort down to page 4, 'CBO Baseline Projections'.

We are spending $3.5 trillion in outlays this year, 2009, including this 'not-really-doing-its-job' ‘stimulus’ money and all of the financial bailouts ad infinitum. The federal budget was less than $1 trillion in 1985, just for frame of reference.

Take a look at the revenue line in the CBO projections.  We won’t even be taking in $3.6 trillion in tax revenues from all sources until 2016….7 long years from now! 

Your beloved 5th grader or grandchild will be going to college by the time we have enough revenue to cover the expenses we are incurring right now in 2009

That just ain’t right, ladies and gentlemen.  In fact, it is downright dishonest, immoral, unethical and stupid, to be honest about it.  We used to berate banana republics in Latin America for running such huge deficits and being so irresponsible in the management of their nations.  We are making them look great by comparison.

The only way to hold down spending is to stop spending in the first place.  Period. We can’t afford any of these new programs really, regardless of what anyone in the fantasyland of Washington wants you to believe.

We ought to repeal what remains to be spent from the stimulus bill and the bailout bills right now. Instead of worrying about if this health care bill will be 'budget-neutral' over 10 years or not, (it really isn't due to some funny business going on budget accounting-wise), we ought to start over and not add any more spending above what was spent last year.

No one is willing to raise taxes on everyone, including the 50% who now pay zero income tax, because it will guarantee their loss in the next election. Most very wealthy people are going to be able to hide from it anyway so why even suggest it in the first place?

Here is a very simple way to balance the budget in the rest of our lifetimes: Hold overall federal spending at current FY 2009 levels of roughly $3.5 trillion. Like for the next decade or more. Once we do that, we can run annual surpluses to pay down the debt over the next 25 years or so.

What is so difficult about that?  We bet you have held your spending to a flat level, or below, over the past two years.

We know for a fact that there are enough obsolete, archaic, mismanaged federal programs across-the-board from defense to education to health care that we could save 3% in federal spending per year for the next 10 years to get us out of this mess in which we are now mired.  There is nothing 'magical' about increasing federal spending every year by 3%+; that is just the cowardly way out of making the hard decisions we elect people to go to Washington to make on our behalf.

There is a very simple-to-understand, albeit blunt, legislative instrument to enact this crucial national goal.

There is this thing called the “CR” or ‘continuing resolution’ that Congress passes almost every year to continue funding the operations of the federal government at last year’s ‘authorized levels’.

Did you know that we can’t borrow any more money unless Congress authorizes it by passing a new ‘debt ceiling’ which they are getting ready to do soon?  If we keep passing CRs for the next 10 years, then we won’t ever need to raise the debt ceiling, now at around $12 billion, now will we?  At least the debt wouldn’t go to $20 trillion as currently projected.

We would have to also pass annual ‘budget reconciliation’ bills to accommodate the many changes we will have to make in Social Security, Medicare and Medicaid in order to stay under the current $3.6 trillion spending limit for the next decade.  These two budget bills would force Congress to stay in session all night long for a couple of months to come up with reductions in spending.  But that is ok by us.  Congress can do it.  We have made major changes in entitlement programs every year a reconciliation bill is passed, even though these programs are called ‘mandatory’ and considered ‘untouchable’.

Former Congressman McMillan and a few nutty budget staff people like me presented $177 billion in Medicare reductions alone over a 5-year period in 1993 and no bolt of lightning struck us down then.  The core of those changes finally passed in 1997…it takes awhile for things to get done in Washington.

So there you have it.  A ‘plan’ to balance the budget, stop adding to the national debt and start paying down the debt in 2016 so your kids will not absolutely think you are part of the craziest and stupidest generation in American history.

Have you heard President Obama state a better plan?  The Republicans?  Anyone? Bueller? Ferris Bueller?

In the absence of a better alternative, we have to take the initiative and sound the charge. This is one selfless act we Boomers have to make and win.

Mount Vesuvius picture courtesy of

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