Federal Budget Battle 2011

by Gordon Cooper

From Broader View Weekly, March 17, 2011

I find it amazing when I see how quickly we seem to forget certain unpleasant realities and go forth as if our perceptions or wishes alone could somehow change what has been proven to be true. For example, it seems that some members of our government are shielding themselves from certain fiscal realities and going forward with failed practices as if by wishing and hoping they could make a “new reality” in which debt and deficits have no effect and spending by credit is somehow harmless and maybe even beneficial.

Another example of this type of wishful thinking is seen in those who are trying to forget what happened in November of 2010 when a historical shellacking took place and a new political reality was established. Perhaps they are trying to delude themselves into thinking the voters of 2010 were only throwing a temporary temper tantrum and they didn’t really mean it when they voted for fiscal responsibility and lower taxes.

Both examples cited above can be seen in the current budget battle taking place in our capital. President Obama exhibited this delusion when he presented a budget that deliberately ignores the fact of credit costs – i.e. Interest Must Be Paid! This was exposed by the Washington Post Fact Checker, Glenn Kessler (http://voices.washingtonpost.com/fact-checker/2011/02/obamas_misleading_language_on.html) where he quoted Obama’s words:

What my budget does is to put forward some tough choices, some significant spending cuts, so that by the middle of this decade, our annual spending will match our annual revenues. We will not be adding more to the national debt. To use a sort of an analogy that families are familiar with, we’re not going to be running up the credit card anymore. That’s important, and that’s hard to do, but it’s necessary to do. –President Obama, Feb. 15, 2011

Kessler then goes on to show how Obama used misleading (some may simply call a misleading statement a lie or untruth, but I, in an attempt to keep the peace, will just say he was less than truthful) language to say his budget “will not be adding more to the national debt”. When Obama was challenged by a clever reporter (Chip Reid of CBS – not FOX) who asked him how he could make such a statement when the submitted budget openly claimed the estimated deficits would rise throughout the next decade. Again using Obama’s own numbers from his own tables:
http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/tables.pdf

The deficit in 2015 is $607 billion. In 2016, $649 billion. It keeps going up and up until 2021, the last year of the budget blueprint, when it shows a deficit of $774 billion.

Endless deficits mean more debt. And indeed, the debt climbs and climbs. In 2012, the total national debt would be $16.6 trillion. In several years – 2015 – it would be $19.8 trillion. By 2021, it would be $26.3 trillion.
Now, to be fair, Obama did respond to the reporter with an explanation – well, sort of.

We still have all this accumulated debt, as a consequence of the recession and as a consequence of a series of decisions that were made over the last decade. We’ve racked up a whole bunch of debt, and there’s a lot of interest on that debt. So in the same way that if you’ve got a credit card and you’ve got a big balance, you may not be adding to principal, you’ve still got all that interest that you’ve got to pay; well, we’ve got a big problem in terms of accumulated interest that we’re paying. And that’s why we’re going to have to whittle down further the debt. – Obama, February 15, 2011

So, according to wishful thinking and selective memory, we can keep on borrowing and spending and pretending that, by not adding to the principal, we are not continually enriching our creditors (i.e. China) and decreasing our financial security.

Now, to the other example of forgetting the Election of 2010, Obama and the Democrats seem to go forward on the assumption that the voters didn’t really mean it when they pulled the levers for a new direction. The new majority in the House has been given a mandate from the people and that mandate is to change the direction of the past two years.

The hard facts of life demand certain responses from each of us. Laws of economics are as real and as immutable as laws of nature. We cannot ignore the cost of interest and the weakness of being a “debtor nation” any more than we can ignore the pull of gravity.

To restore our credit standing, there is no alternative to limiting our spending – and that means in every category from defense to Social Security – and we must look seriously at eliminating redundant agencies. Even Obama mentioned this in his State of the Union address when he outlined the number of agencies supported by our tax dollars:

“There are 12 different agencies that deal with exports. There are at least five different agencies that deal with housing policy. Then there’s my favorite example: The Interior Department is in charge of salmon while they’re in fresh water, but the Commerce Department handles them when they’re in saltwater.” (http://www.whitehouse.gov/the-press-office/2011/01/25/remarks-president-state-union-address)

In conclusion, budgets are never easy, nor are they fun, but they are necessary and we need to face them with a solid grasp on reality.