The federal government faces two budget crises. One is the attempt to reduce the deficit in the next annual budget as well as the remainder of this operating fiscal year. Many economists believe that cutting spending and reducing jobs as we are coming out of the Great Recession will stop the recovery and cause another recession. In fact a recent study commissioned by Goldman Sachs contends that the Republican budget cuts will cost the growth in GDP 2 percentage points at a time when we are struggling to reach 4%. Cynics believe the Republicans don’t care a double dip recession because they’d just blame it on Obama and use it to defeat him in 2012.
The second budget crisis is how to get long term federal debt under control. This is the question that the Presidents’ Debt Commission tackled last December. Most of the politicians of both parties make noise about cutting items like foreign aid and earmarks - items which would have no real impact on trillions of dollars of federal long term debt.
The only way to reduce the long term debt is to deal with the three parts of the budget that make up 88% of it. One of those is Military spending --which is almost untouchable in our political system. We won the Cold War with the Ronald Reagan strategy of forcing the Soviet Union to spend itself into collapse in an arms race. Now we’re spending ourselves into collapse and racing with no one.
The second of the three big ticket items is health care - the costs to the federal government of Medicare and Medicaid. We could raise the payroll tax contribution for Medicare, and do it in some progressive fashion – that might be fair; and we should allow those who retire on partial social security to buy into Medicare.. We won’t solve the problem until we get the costs of health care down. Instead of rearguing “Obamacare” we should be finding ways to reduce health care costs in America.
The third item is Social Security - while it does not really impact on the federal deficit it will soon unless we revise the system to take in more money to cover the costs. I am amazed that Republicans and Democrats fall all over each other to fight against the small retirement age change proposed by the debt commission. Currently the retirement age for those born after 1960 is 67. The proposals are to gradually increase that age to 69 by the year 2075 (people born in 2006). It affects no one working today and in no way violates the social security compact. I also see no reason why workers shouldn’t contribute something to SS on their incomes over $106,000. That contribution could be progressively scheduled so that the next $100,000 might withhold 3% and income above $206,00 1.5%.
The remaining big portion of the federal deficit is the interest on the debt. That can only be reduced by ending the annual deficits and that is difficult because only about 12% of the federal budget is discretionary spending which can be cut. On those cuts there is a great philosophical divide between the two national political parties. Republicans want to reduce the federal deficit by cutting the programs that created the middle class and help those who need help without a commensurate increase in the taxes that the very rich pay.
Republicans in the House want to cut from energy conservation programs; gut Americorps and heating assistance to working poor (LIHEAP); eliminate the operating budget of the Environmental Protection Agency; cut $5 billion for hi-speed rail programs that would catch us up to China and Europe; and cut the Corporation for Public Broadcasting (the only Corporation that Republicans don’t like).
A country that would balance it’s budget by ending Sesame Street for it’s children and continue to spend $2-4 billion a week in wars in Iraq and Afghanistan so that men and women can be killed and can kill others is not the country that the USA was meant to be.
What is occurring today is a national debate on the role of government in our lives; Republicans argue that government is inefficient and should be limited; Democrats contend that government plays an essential role in regulating and making safe the services that are critical to our daily lives. Our country is at a crossroads - one fork rears to an imagined past and one to an uncertain future. If we choose the fork to that mythical past we take a dead end.