Sunday, March 14, 2010

What Do We Really Want the Federal Government to ‘DO’ Anyways?

E.J. Dionne of the Washington Post wrote a pretty interesting, (albeit wrong, in our humble opinion) opinion piece recently where he asked this important rhetorical question:

"What do we want the federal government to do?”

That is a very, very good question and one we have not had a solid national debate on in many decades.

So let’s play a little game since everyone likes to do interactive video games and such. Go to the CBO website right now and open up this link in an adjacent window.

It is one of the better ways to present 'real budget truths' to come out of government in many years.

Take a look at the chart and see where the expected federal budget deficit baseline goes. ('Baselines' are projections based on current law that is now in place, and does not include the trillions of dollars that will be associated with the health care bill since that bill has not been passed into law…yet.)  The budget deficit is expected to go ‘down’ to ‘only’ $500 billion or so for the next decade, assuming we get out of this nasty recession anytime soon like in the next couple of years.

Not pretty.

But let’s say you really don’t like the two wars begun under President Bush and you want to reduce the number of troops in Afghanistan to ‘only’ 30,000 troops by 2013. (down from 120,000 today) You can click on the blue X and another line will form to show you just how much those savings will reduce the budget deficits going forward.

Not much, but some…the deficits will ‘only’ average $400 billion or so for the rest of the decade. Every little bit helps....and nowadays in federal budget circles, $100 billion is 'a little bit', sad to say.

How about if we allow every non-military, non-entitlement discretionary program (like education, environmental control, cancer research and transportation…all the things that people say they like in the abstract) to grow at the expected rate of inflation for the next decade and not be ‘frozen’ at FY 2010 levels as indicated by President Obama in his SOTU speech? That drives the deficit up dramatically, to an average of ‘only’ $800 billion or so per year and increasing in velocity.

How many ways can we emphatically say:  “not good” ?

How about if we don't allow all of the Bush tax cuts to completely expire (purple X) and go back up to the rates they were in 2000 before he took office (during the so-called ‘glory days’ under the Clinton Administration and the GOP Congress)? Mind you, this means all the ‘terrible tax cuts’ like in marginal income tax rates, corporate income tax rates, estate or ‘death’ taxes, capital gains taxes and so on and so forth. This would constitute, in practical effect, possibly the greatest increase in tax revenues in the history of all known upright humanoid history going back at least as far as the Roman Empire.

The deficit ‘explodes’ to an average of close to $1 trillion PER YEAR for the next decade!

Our question is: ‘If these Bush tax cuts were so ‘terrible’ to Senators like Obama, Reid and Durbin in 2004 and beyond, why don't they just allow them to completely expire and prevent the deficits from exploding to close to $1 trillion annually?”

The current Obama budget projections assume that most of the Bush tax cuts, including the annual indexation of the dreaded AMT (alternative minimum tax) won't be allowed to expire but rather will be EXTENDED for the entire decade. Not one of the very vociferous opponents of the Bush tax cuts have indicated any stomach to oppose the repeal of these ‘terrible’ tax cuts.  Not one.

What a wasted amount of ‘wind power’ and ‘natural hot air’…if we could harvest all of the hot air from the US Congress on a daily basis, we would have harnessed the greatest source of renewable energy in the world! (call Al Gore)

Play with this chart and make up your own mind about what can or should be done. Bring your family in, especially your children, so they can get a glimpse of what we are leaving behind for them to pay for once we are all gone. (The ratings on this should be “R” for “Not Suitable for Children Under 12” like some horror flick with Jason or Michael Myers in it)

The takeaway point for everyone is that we have not even come close to seeing any proposals from either side for what will take us back to balance or even close to it in the next decade. The next decade, 2021-2030 will be even worse by a factor of 2 at least.

Unless we slam on the brakes of federal spending right now and try to prevent it from being like one of those terrible Toyota incidents, that is.

courtesy of

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