Debt & Deficits: Necessary vs. Unnecessary

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Deficit spending by the federal government, (spending beyond the budget year's revenues), has at various times in our history been essential and necessary. Necessity has been defined as insuring the integrity of the nation, as in World War 2, or, insuring humane conditions for the American people, as in the Great Depression or Dust Bowl era. Defining essential and necessary deficit spending is not difficult. Defining non-essential and unnecessary spending is a highly improbable endeavor for our American system of government. Therein lies the economic threat going forward. A potential solution sits idly in Congress.

Highly respected and educated folks such as David Walker, former U.S. Comptroller and President-CEO of the Peter G. Peterson Foundation, insist that deficit spending is essential and necessary today to address the financial crisis and recession. Walker also says the Congress must embrace the SAFE Commission bill, if the United States and Congress are to save the nation from imploding and crushing national debt going forward.

David Walker appeared for an interview on CNBC a couple days ago, and his commentary offered a rare non-partisan glimpse into the real world of deficit and debt challenges before the Congress and Pres. Obama, and the American people. Before proceeding to an analysis of the political - economic threat going forward, some of David Walker's quotes and ideas are worth noting from the interview.

"Deficits and debt levels are going to go up in the near term, and that is understandable due to financial and economic crises. Obama's first budget blueprint contains many commendable provisions. Obama must focus first and foremost on turning the economy around. Obama's pledge to cut deficit over the course of his first term is encouraging. Universal Health Care is necessary, but, must be done intelligently. "

"What we have got to do is deal with the short term crises, but also, put in place a process by which fiscal discipline is imposed once the economy recovers. We must demonstrate we can change the cost curve. The total of all direct cash, loans, and commitments to date to meet the short term crises equals 4 Trillion dollars."

David Walker went on to say that the debt and deficit going forward is a dirty bomb in our path. We can and will deal with the short term challenges, but, the longer term structural challenges must be dealt with now as well, because the urgency to act upon them is greatest now. Congress is dysfunctional, Walker said, adding that the SAFE Commission is the only way forward, because the regular order of Congress is incapable of dealing with health care reform, which is essential to stopping the rising government cost curve that threatens our future.

The SAFE Commission is called forth in a bill and would establish a bi-partisan commission to address federal entitlements, discretionary spending, and tax policy going forward. It would engage the public, educate the public of the necessity for reforms, and seek their input into devising a fiscal discipline plan to save our economic future from crushing debt. That plan would then be set before the Congress to receive an up or down vote in the House and Senate, Walker said.

Walker pointed out that our future will change by design or by consequence, since the U.S. economy now represents only 21% of the global economic activity, as opposed to the 50% or more in decades past. He said we can no longer afford to fend for the rest of the world's nations, and must get our own accounts together, or we will be in no position to help ourselves economically, let alone other nation's.

I was struck by his reference to the need for Congress to pass the SAFE Commission bill. He seemed to insist that without it, our Congress will be incapable of a piece meal approach to the problem of crippling debt in Committees and through regular order in the Congress. The regular order of Congress is governed by its member's view of every bill as another opportunity to secure their next reelection by paying back wealthy campaign donors with legislative favors and bringing federal dollars back to their district on any and every project possible, regardless of necessity. Fiscal discipline is not possible by this regular order of business in our Congress. I recognized the wisdom and truth of it upon organizing my hastily scribbled notes of what he had to say.

This is why the passage of the SAFE Commission bill is mandatory if the United States is going to exercise the absolutely essential fiscal discipline necessary to avert the unsustainable rise in national debt that will be created by Congress' regular order of budgeting and appropriations, and failure to reform the entitlement programs and health care system which will bury our economy going forward.

The SAFE Commission Act (H.R. 3654), if passed, would require the Congress to address the Commission's plan to install fiscal discipline in future budgeting, appropriations, and entitlement processes on an up or down vote. This up or down vote provision is the key to understanding why this can work.

Let's take Medicare Reform for example. If the Congress attempts to reform Medicare to drive down its current steeply rising and fiscally crippling cost curve, it will engage in a process of compromises which will fail to curtail the rising cost curve sufficiently to get control of our debt in our lifetimes. Any attempt to reduce or qualify benefits for Medicare recipients would be met with a barrage of threats by special interest groups like AARP, and attempts to exclude non-needy recipients from benefits would be met with a barrage of election threats by the likes of the American Enterprise Institute. And Congress persons know that this will be the case. Which is why Congress has never endeavored to reform Medicare.

The SAFE Commission bill, if passed, would give elected Congress persons political cover in adopting the bi-partisan SAFE Commission plan to meet the long-term fiscal challenge of Medicare. Republicans and Democrats alike could vote for this plan defending their vote on the basis of rescuing our nation's economic future from certain ruin. And thus, there would be no partisan advantage or disadvantage to either party for having voted to adopt the Commission's fiscal future rescue plan.

There is bi-partisan agreement in Congress that if our federal government does not reform its discretionary spending, entitlement and tax policies, our nation's economic future is doomed to failure and collapse. Therefore, our Congress has before it a very simple choice. Adopt the SAFE Commission bill or, be forever labeled as one of those who chose to condemn America's economic future to ruin.

There is no guarantee that the SAFE Commission's plan, once drafted and laid before the Congress, will receive a bi-partisan vote to accept it. That provides Congress the opportunity to pass the SAFE Commission bill without incurring political consequences in the present. The hope is, that once the Commission's plan is devised and presented, it will be sufficiently sound in achieving its objective to rescue America's economic future, that voting against it would be tantamount to political suicide.

And this is potentially how America can circumvent the impossible political obstacles that now stand between America and a sustainable and viable economic future, in which partisan and special interests will otherwise, never agree on such a future. I suspect however, that voters will need to contact their representatives to urge them to bring HR 3654 to the floor for a vote, and to vote for its passage. Such a bill with the potential to save our nation's future will surely be viewed by some in Congress as too scary a bill to undertake of their own volition. The bill currently has 112 co-sponsors according to Thomas.

Writer's Note: The quote marks surrounding David Walker's comments, accurately reflect his words and sentences. The order of the sentences within those quote marks however, do not reflect the order in which Walker strung together those sentences, as the interview was lengthy and his responses followed a great number of questions in which responses frequently revisited previous statements in part and added new variations. They were then, strung together here to fit the topic, not the order in which his sentences occurred.)

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This page contains a single entry by David R. Remer published on April 11, 2009 1:01 PM.

Obama: Reality vs. Ideology was the previous entry in this blog.

Gephart vs. Obama: Health Care is the next entry in this blog.

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