Thursday, February 18, 2010

How to balance the budget in the age of exploding underwear

How do you win a war against an enemy that wears exploding underwear? This is just one of the seemingly unanswerable questions faced by President Obama after a turbulent first year in office.

While the deficit is expected to reach $1.6 trillion by 2011, the President's proposed budget would increase military spending next year to $750 billion, up from around $720 billion this year. To put this in perspective, military spending will be 26 times the outlay for humanitarian aid and development assistance and six times the outlay on education.

Government programs such as Medicare, Medicaid and Social Security, along with military spending, take up pretty much all the tax revenue of the Federal Government. That explains why we won't be returning to the moon anytime soon. While we can put off for a decade or two our need for a Starbucks on the moon, we can't discontinue most other spending, much of which is needed for national security or to keep the economy from collapsing. That is why we are in so much debt to the rest of the world, mostly China. Some things we can't cut: homeland security, unemployment compensation, infrastructure such as roads and bridges, environmental protection and conservation, emergency relief and reconstruction (from natural disasters like Hurricane Katrina), and the judicial and penal systems. Programs such as food stamps and other welfare programs are needed, even though some people would like them to go away.

The best example of gridlock in Washington is the battle for health care reform. Most of those who swept Obama into office were in favor of a major overhaul of the health care system. Even the public option was thought of favorably by a majority of Americans. Even most Republicans agree that the status quo is unsustainable, and others, like Sarah Palin, are just plain misinformed...or worse. She talks of government “death panels” as if she actually believes it. The sad part is that she probably does. Many Americans believe what they hear, especially when it comes from Palin, who is now more of a rock star than a politician. Palin is trying to position herself as the Republican nominee for the 2012 presidential election, but although she has a loyal following, it's not big enough to win.

Comedian/talk-show host Bill Maher has challenged Obama to “stand up for the 70% of Americans who aren't crazy”. I assume he's referring to the other 30% of Americans who support Sarah Palin or listen to Rush Limbaugh. And don't forget those who believe Dick Cheney knows what he's talking about. Maher, though, had harsh words for Obama. He called the current administration “cowards” for not fighting back hard enough against right-wing attacks on everything from end-of-life counseling (i.e. Palin's “death panels”) to Obama's speech to schoolchildren, which the far right warned was an indoctrination to socialism and a viral spread of liberal propaganda.

As for his criticism of Obama, Maher had a point. Obama has said he'd rather be a “really good one-term president than a mediocre two-term president." If that's really the case, Maher points out, why is Obama trying so hard to win over his “delusional” critics, the “sentient majority” as Maher calls it. Maher makes a lot of sense, but it is safe to assume it's easier being a comedian/talk-show host than president of the United States.

Obama is the first to agree that his first year in office wasn't a complete success. But even Bill Maher agrees that we would be in a lot worse shape had John McCain and his side-kick Sarah Palin been on the winning side. In this age of government bureaucracy and partisan political in-fighting, there is a lot that Obama has accomplished. The economy, for example, would be in much worse shape had Obama not stepped in with government stimulus money and help for the banking and auto industry. For example, did he move too quickly, not regulating bonuses for bailed out company's executives? As Sarah Palin would say, “You betcha!” But Obama averted something that could have been much worse – a depression, or at least a more severe recession.

A short-term and effective boost to the economy was Obama's $787 billion stimulus package, which included a $288 billion middle-class tax cut, $275 billion to bail out financially strapped states and a large-scale infrastructure plan. Addressing House Republicans at their annual policy caucus in Baltimore on January 29, the President noted: “A lot of you have gone to appear at ribbon cuttings for the same projects you voted against.” As Obama's approval rating declines, it's clear that much of the public isn't paying attention to the Republicans' obstructionism and hypocrisy.

Well into his second year in office, now is the time for Obama to reclaim his popularity. After all, as Bill Maher has said, there are 70% of Americans who aren't crazy. So how does Obama govern from here on?

First, we must answer the question: How do you reduce the deficit without raising taxes? The answer: Apparently you don't.

If Obama truly believes his statement about being a one-term president, he may need to take a cue from George H.W. Bush, who famously said, “Read my lips,” when declaring that he wouldn't raise taxes, and then changed course. Even if we immediately pulled our troops from Afghanistan and Iraq, we'd still be deeply in debt. Health care costs are still spiraling out of control, including Medicare and Medicaid, which could surely be made more efficient. But even in the area of health care reform, where doing nothing isn't really an option, we're fighting an uphill battle. How do you offset the rising bills that are inevitable, given our aging population? The good news is that because of medical advances and new technology, every child born today will have a 50% chance of reaching 100. The bad news is, what happens to Medicare, Social Security and other government services? Even if we reform the core entitlement programs, we're not going to be able to see any substantial savings. Eliminating the infamous earmarks would save less than 1% of the budget deficit.

Obama's campaign pledge of tax cuts for all households earning less than $250,000 per year got a lot of votes. That promise is not feasible if the government is going to bring back some form of fiscal responsibility. There is no way to close the budget deficit by merely cutting waste and taxing the wealthy.

America is living like my 18-year-old son. He's got a good part-time job for $8.00 an hour, but he hits me up for $20 a day for things like food, clothes, headphones and sneakers. He's living beyond his means. He's spending more than he's making, and he'll probably repay me someday when I'm 90 or 100. To complicate matters, he's planning to go to college, but doesn't quite know or care who's going to pay the $53,000 a year in tuition. The only way he can afford his lavish lifestyle is by still living at home. When he leaves for college, it will be a different matter. He'll have to take out student loans, guaranteeing that when he graduates, he'll owe $200,000 plus, and the only thing he'll be guaranteed is his $8.00 an hour job. I guess he won't have enough money to repay me when I'm 90 or 100, so I'm on my own. President Obama is in a better position than my son, however. Not only can he set this country on a path of fiscal responsibility, but he can help college students and the elderly, the two groups most impacted by our country's staggering financial inefficiency.

When our children are older, will they still be dealing with the financial burden of the previous generation? That's a tough question. Obama must make decisions that can somehow be explained to the American people so that they don't start believing the rants of people like Rush Limbaugh and Glenn Beck. If Sarah Palin can so eloquently explain the falsehood of “death panels”, why can't the Democrats expose the truth?

Still, the biggest question remains: Does it really take $750 billion to stop a bunch of fanatics who are trying to build a better underwear bomb?

21 comments:

  1. This gives you something to think about. National security is an expensive proposition, for sure. The underwear bomber has made us re-think our strategy. Obama is ultimately in charge. Evidently he has an exit strategy. I just hope it comes quick.

    ReplyDelete
  2. The Republicans and Democrats need to get their act together. It's not Obama's fault that nothing gets done. Under the circumstance he's done a pretty good job. How do you balance the budget, or get anything done for that matter, when the Republicans say no to everything the Democrats want to do? On the other hand, as you say in your example of the "death panel" issue, the Democrats need to explain things better to the American people. I have to agree, fhe underwear bomber incident has changed the way we think of our enemy.

    ReplyDelete
  3. This is one big mess that no one party can solve. we need some folks with big boy/girl panties in office who learned in kindergarten to work and play well together...

    ReplyDelete
  4. You hit the nail right on the head with this one!

    ReplyDelete
  5. The "underwear bomber" has changed the way we look at terrorism. Hopefully we'll figure out a cheaper way to fight these extremists. I agree, we must cut costs, even military costs, and it might be time to take a look at the tax situation. Obama has his work cut out for him. Lunitics like Sarah Palin and Rush Limbaugh are only confusing the American public (except for the 70% who Bill Maher says aren't crazy).

    This is a very informative and at times humorous look at the situation. The situation is anything but funny, but I am starting to wish we could put a Starbucks on the moon, as opposed to Afghanastan, for instance.

    ReplyDelete
  6. I don't know whether to laugh or cry.

    ReplyDelete
  7. Obviously, Obama hasn't considered his third option: being a really good two-term president. He will have to pull a rabbit out of his hat to accomplish that trick.

    ReplyDelete
  8. Where is our sense of adventure. Don't cut out the space program, Obama. Stop the wars

    ReplyDelete
  9. You can't blame Obama for this mess. The Republicans will stand in his way no matter what he does. Sarah Palin and her Tea Party followers are just plain nuts. Bill Maher may not have his numbers right, but definitely there are some crazy people out there, and most of them seem to be Republicans.

    ReplyDelete
  10. Nice post...well thought out...I certainly agree in essence with everything you raised here....

    ReplyDelete
  11. This is too much politics for me and a bit long, although it seems interesting. What happened to Paul Solomon's entertainment stories?

    ReplyDelete
  12. Someone has to stand up for Sarah Palin, so I guess that would be me. To afford the health care that Obama wants, where do you expect to cut corners so we can pay for this unpopular mess. Exactly! As the population ages, health care reform will mean that the goverment will make decisions based on the bottom line. "Death Panels" may be a scary catch-phrase, and maybe it should be called something else. But it does make sense, and Palin is just stating an obvious problem with the whole health care debate. More power to her.

    ReplyDelete
  13. Sarah Palin is a big joke. She has little political experience, so she quits being governor? She is the best thing to happen to the Democrats in a long time. I hope she runs for president because there's no way she could win.

    With the problems facing us today, Obama is the man for the job. He can multi-task, and he is a good speaker. But more importantly, he is a good listener. He's is trying to get things done, and if just a few of the Republicans in the House and Senate co-operate, we may actually get some things done.

    ReplyDelete
  14. It's obvious that there's no way out of this mess. We will leave the next generation deeply in debt.

    ReplyDelete
  15. if the Democrats cram the health care bill down our throats, the Republicans will win big in the next elections...other bills that include millions of dollars will add to the deficit and again the Democrats will be blamed...Obama needs to bring down the deficit. health care is one are that will cost a fortune if done the way he wants.

    ReplyDelete
  16. As for the healthcare bill, the status quo is unsustainable. We can't balance the budget without doing something about spiraling healthcare costs. I agree with the premise that we must take a closer look at the system of taxation.

    ReplyDelete
  17. this is a timely article... I hope the Republicans and Democrats can come to some sort of agreement...

    ReplyDelete
  18. Obama's plan is deja vu all over again. Has public sentiment changed that much since HillaryCare in 1993? However, even that fiasco didn't keep 'Billary' from being re-elected.

    ReplyDelete
  19. Excellent blog. I'm not happy with the health care bill that just passed, but as one of the 70% of Americans who aren't crazy, I realize that SOMETHING had to be done. I look at it as a step in the right direction.

    ReplyDelete
  20. We still haven't had a major terrorist attack on American soil. How long will our luck last?

    ReplyDelete