The paramount economic issue confronting our nation at this time is determining the action to be taken with regard to the $14.3 trillion national debt and the about $1.3 trillion ongoing annual federal budget deficit . About $5 trillion of
The paramount economic issue confronting our nation at this time is determining the action to be taken with regard to the $14.3 trillion national debt and the about $1.3 trillion ongoing annual federal budget deficit .
About $5 trillion of this debt has accumulated in the past three years since the current recession.
Most of this time has been under the Presidency of Barack Obama.
When organizations as diverse as the International Monetary Fund bank and Standard and Poors debt rating agency express concern about the size of the national debt it warrants our urgent attention.
The national election in November 2010 in which the Republican party gained control of the House of Representatives and increased their Senate seats by six, has generally been accepted as an expression by the electorate of their concern about the size of the national debt and the ongoing deficit in the federal budget. In that election Republicans vigorously campaigned to curtail federal spending.
Although the Democrat Party was in control of the two Congressional houses and the presidency since the 2008 election, no 2011 budget had been adopted. This should have been done prior to October 2010. Faced with the imminent threat of a government shutdown the parties managed to come together earlier this month and agree to a $38.5 billion reduction in federal expenditures for the 2011 year. The consensus seems to be that this agreement was not a clear cut victory for either party.
However, the 2011 budget agreement set the stage for action on the budget for the year 2012. Last month Republican Representative Paul Ryan introduced a proposed budget for the 2012 year which included no tax increases and proposed to reduce federal spending by $6 trillion over the next 10 years This proposal was adopted by the House in a partisan vote with no Democrats voting favorably.
On April 13, 2011 President Obama delivered a 45-minute speech devoted to the budget and his visions for America. Mr. Obama did not choose to make any specific proposals for budget control but he acknowledged the need for spending restraint and criticized the Ryan proposal for its selection of items where the cuts should occur. Mr. Obama also renewed his call for increased taxation of “millionaires and billionaires” and asserted in these times of fiscal restraint “all need to make sacrifices”.
One of the issues intertwined with the budget debate is the national health care law adopted last year. Partisans and opponents of Obama care, as it is commonly known, have strikingly different view of its cost and benefit. In addition to its political and economic aspects, the law is under legal attack. The question of its legality has now been before several courts with varying results. There is a futility in pursuing at great length other questions about the law when its validity remains in doubt. A request was made by one State Attorney General opposed to the law to have it “fast tracked” to the Supreme Court for a validity ruling. However, this request was opposed by Obama’s Justice Department, and the Supreme Court noting the absence of agreement for accelerated treatment denied it. The matter is expected to be decided sometime next year, but well after the current budget debate.
A point of division between Republicans and Democrats is whether tax increases should be included in a deficit reduction program. This issue was considered at the end of last year in the context of the expiration enacted for the 2002 tax cuts. At that time a bi-partisan agreement supported by President Obama was reached continuing the cuts. There is certainly a good case to be made for having some tax increase to supplement the spending cuts. But when only about 52 percent of American citizens pay any income tax it is difficult to square the fact that only about half of our taxpayers should face an increase when our President has declared that all should sacrifice.
While it appears that both parties are prepared to recognize that sharp reductions in spending must occur to restore fiscal responsibility there is no common determinations of where cuts are to be made and how deep. Resolution seems elusive in the climate of partisan animosity which is evident. Although the Ryan proposal is on the table for consideration, no comparable presentation has been made by Democrats. Debating something against nothing is difficult.
Perhaps there is an opportunity for resurrection of President’s Debt Commission report. The commission under the leadership Democrat Bowles and Republican Simpson last year issued a thoughtful proposal that was then relegated to the scrap pile. However, there is currently a group of Senators, three from each party, the so-called gang of six. Their work product remains undisclosed but it is rumored that it relies heavily on the Bowles-Simpson efforts.
If America is to regain its fiscal integrity a 2012 budget must be crafted which shows clear resolve to replace irresponsible deficits with broad and substantial spending reductions and some tax increases. The budget must obtain bi-partisan support and demonstrate that Congress and the administration are committed to reform the existing reckless dissipation of our financial resources. Is it too much to expect that the parties will avoid stumbling along the way by using the debt ceiling issue to bolster their positions? The path to success will not be easy, but failure to achieve it would be a disaster.
• Walter Lewis is a resident of Princeville and writes a biweekly colum for The Garden Island.
