Sunday, November 28, 2010

Alert: Obama Wins Presidency

Time to have a little fun with The Capital's editorial staff, who ran an editorial that--much like the title of this post--has urgency only in the fact that it's been going on for a long time. "Our say", they say, is that Washington is going to have to worry about the budget deficit.  Alert the press!.....what?? Oh.  They've been alerted.

Washington may be hard of hearing, but it is not stone-deaf. If the electorate shouts loudly enough, it reacts. And here's what the voters were saying in this month's election:

Nice [sic] right off the bat with the 'stone-deaf' bit.  Good editing, editors.  My favorite spelling error is when "it's not" turns into "it snot", a space-bar mistake that I myself rely on Spellcheck to correct.  Also I really hope I don't have any errors in this post, because then I would look like a jackass.

Government has gotten too big and can't keep spending money it doesn't have. We've had to cut household expenses back to what we can afford, and we don't see why you politicians can't do so as well. Get this done - or we'll find someone else who can.

This is an editorial comment that was appropriate, like, BEFORE the election.  Wtf? In case you didn't realize, most of America did find other people who can reduce the deficit.  Or at least say they can.  Also, a report from Obviousville confirms that you can't spend money you don't have, at least in the long term, even if you're the government.  Also #2, which specific household expenses do you think the editors had to cut?  Pipe tobacco? Cognac by the fireplace? Sailboats? What are some other stereotypes?!  Actually, that sounds like an awesome lifestyle...does anyone have any VSOP.....

As Sheila C. Bair, the chairwoman of the Federal Deposit Insurance Corp., wrote inThe Washington Post recently, "total federal debt has doubled in the past seven years, to almost $14 trillion. That's more than $100,000 for every American household." Our long-term structural deficit, and the borrowing needed to sustain it, could easily destabilize our finances and wipe out any recovery.

National debt always goes up during war times, but even so, the editors--or 'my homies' as they will be known for the rest of this post--are correct in having concern over ballooning debts.  My homies use the term 'structural' deficit to highlight what I just touched upon.  War expenditures and economic downturns surely produce cyclical deficits, which are easier to ignore because politicians can proclaim that everyone will resume finding gold bars in their storage sheds once some miscellaneous miracle happens, then they don't have to address the problem.  A structural problem implies that even if all the bullshit turns into roses, there would still be a financial imbalance.  Also, my guess is that one of my homies bet another one that he/she couldn't reference 'Sheila C. Bair' in a published work, and that bet is now paying off big.

The first remedy Congress has in mind - symbolic but important - is a moratorium on earmarks. This is the practice of slipping funding of individual projects into bills and committee reports, avoiding hearings and circumventing the usual federal budget process.

First of all, does anyone not know what an earmark is? Earmarks are the embodiment of inside-the-beltway politics.  Earmarks are why Congress has terrible approval ratings but people's own Congressmen have high ratings. And earmarks are a relatively small portion of the budget.  I would be stunned if Congress voted to decrease the advantage of being an incumbent just to save 1% on the federal budget.  Plus, I suspect that if specific earmarked projects were ended, some type of direct discretionary funding to states would pop up, which negates the whole point, but is still better (see below).

Earmarking is a treasured perk of the most senior legislators, a way of pleasing constituents (and perhaps rewarding campaign donors). That does not mean that all earmarked projects are bad. But the Tea Party movement has swung the Republican leadership into the anti-earmarking camp, where they are being joined by some Democrats and President Barack Obama.

I tend to agree that not all earmarked projects are bad.  I mean, after all, the federal government is a government, and governments are there to spend money on necessary projects that the private market will not  facilitate.  However, the bigger the particular government that's spending the money, the less likely it's spending money on the right thing.  I would much rather the feds give money to the state of Maryland, who then gives the money to Anne Arundel county, who then gives the money to my homeowners association, who then builds a lazy river and pool house in my backyard.  See how government can work for you?

Earmarks, however, account for less than 1 percent of federal spending. Two recent reports have sketched out the painful changes that would be needed to really reduce deficits.

Life is full of 'painful changes'.  I recently had to downgrade cognacs from VSOP (Very Special Old Pale) to XO (Extra Old), so I know what it's like to make painful changes.

One is by former Clinton White House chief of staff Erskine Bowles and former Republican senator Alan Simpson of Wyoming - the co-chairmen of a presidential deficit reduction commission that is supposed to report its findings on Wednesday. The other is by the independent Bipartisan Policy Center. Both documents have been under withering attack - by conservatives because they recommend raising some taxes, by liberals because they seek cutbacks in Medicare and Social Security.

Fat chance that I'm going to look up these reports, so let's just ignore that paragraph.  However, if any proposal is hated by both sides of the political aisle, it's probably a good proposal.

Before joining such denunciations, people need to grasp the facts laid out in the Bipartisan Policy Center report: Medicare and Medicaid consume 21 percent of federal spending. Social Security accounts for another 20 percent. Defense requires 20 percent. Other mandated spending (on such things as veterans' compensation, unemployment insurance and food stamps) takes up 17 percent. Paying the interest on the national debt requires 6 percent.

-necessary evils, defense, government waste, and bullcrap mandated by law account for 84% of the budget.

So everything else is just 16 percent of the budget. The budget can't possibly be balanced just from that 16 percent.

It's even worse for the city of Annapolis, where 85% of the budget is salaries and wages, 10% is corruption, 7% is illegal payments to bloggers, and -2% is money regained by stealing the lunch money from St. Mary's students and midshipmen.

Also, without knowing the numbers off the top of my head, I initially doubted the claim that the federal budget 'can't possibly be balanced' by a 16% adjustment'.  Then I looked it up.  OMG.  The federal budget deficit for 2010 is 49%.  The government proposed spending 49% more money (like $1.2 trillion more) than they plan on taking in.  Take a second to absorb that, then take a minute to pour yourself a cocktail, because XO cognac is the only thing that will make spending $1,200,000,000,000 that you don't have seem like an acceptable thing to do.

Deficit reduction will be the big domestic political challenge of 2011, and possibly for years after that. It urgently needs presidential leadership. And it will require our two polarized political parties to come together and strike a compromise in the national interest.

If that seems like too much for today's pols, they should remember the message of the election. If they can't do it, the voters will find people who can.

Entitlement programs and mandated spending must be overhauled.  Hopefully the voters can provide the accountability to make this happen.  It's not just the political challenge of 2011; it's a challenge for many political and socio-economic cycles to come.

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