Saturday, December 18, 2010

The 'Great' Obama/Congress 'Compromise' of 2010?

Our wonderment over this 'grand compromise' is similar to the one Clara Peller, the great lady who did the Wendy's commercials in the early 1980's, had when she said: 'Where's the 'Beef'?

Our 2010 questions are these:

1) Where's the 'Compromise'?
2) Where's the 'Courage'?
3) Where's the 'Sacrifice'?

It is 'easy' to strike a compromise when every party gets everything they want in the final deal. It is far more difficult to get a deal with 'shared sacrifice for the long-term good of the nation', apparently, once again.

Let's go to the videotape:

Check out the official CBO scoring of this tax extender/jobless benefits extension.

Unless our eyes deceive us, it is pretty clear that the cumulative effect of extending these tax cuts for 2 years, and the unemployment benefits for 13 months and, of course, the usual gang of earmarks and excessive spending to the tune of close to $337 billion by some accounts, is just under $1 trillion.

Or about $892 billion more in debt over 5 years, give-or-take a few billion dollars here and there.

So what is that amongst friends, huh?  We'll just borrow close to $1 trillion more from the Chinese or the Saudi Arabian sovereigns at least until they wise up and demand 10-15-20%+ in interest costs to cover the risk of holding our bonds or dollars, both of which could continue to slide in value.

Best of all, we'll just steal it out of our children and grandchildren's piggy banks and they'll never even know we did it! How great is that?

So congratulations, President Obama and the out-going U.S. Congress! You have successfully managed to somehow come up with another $1 trillion in deficit-spending for the next 2 years, over and above the $5 trillion you have already rung up in the last 2 years which the voters supposedly 'rebelled against' in the November elections!

Is there a gas leak under the entire city of Washington, DC?

The official debt estimates have now jumped from a measly $14 trillion as of two days ago to $15 trillion the second President Obama signed this tax cut/job extension package into law yesterday. In the blink of an eye.


Because until yesterday, the 'official' budget scoring did not include the extension of the tax cuts beyond December 31, 2010. Nor did it include the extension of unemployment benefits for 13 more months on top of the 99 weeks already spent. So once President Obama's pen left the paper after signing the bill yesterday, we loaded up close to another $1 trillion in debt obligations on ourselves and especially our children to pay off.

The heck of it is that it could have been avoided. Very easily in some regards and without almost any current 'pain' or 'suffering' by those of us who are working nowadays.


Long-time readers of this blog will know that federal budgeting is completely nuts and contrary to almost every other known system of accounting since the cave men started marking inventories of carcasses and nuts on the walls of their caves with charcoal.

In this case, a very subtle thing could have been added in this bill as a spending offset that would not even take full effect until say, years 6-10 of the 10-year budget window typically used by CBO to score the costs of new legislation.

Something as innocuous as raising the retirement age of SS and/or Medicare by a matter of a few days by the year 2020 would have most likely offset or 'paid' for this entire tax cut/jobless benefits extensions of close to $1 trillion. Seriously.

With such a measly but powerful spending offset in the out-years, this entire bill could have been 'paid for' in budget terms and our national debt would not be going up again in a dramatic fashion. Perhaps the rest of the world would have seen that adult leadership had returned to Washington in the wake of those long-forgotten already 'transformative' elections of 2010 after the budgetary Romper Room atmosphere in Congress and the White House for the entire first decade of the new millennium.

Adult leadership has yet to return, apparently.

Instead of having to reach age 67 for SS benefit eligibility, you might have had to reach age 67 and 30 days or so by 2020. Would that have been so 'painful' to do to keep our nation from financial insanity?

'Where's the Beef?' indeed.

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