Is anyone serious about debt?
The “fiscal cliff” deal House Republicans and President Barack Obama are debating can be called many things — the “avoiding a political nightmare” deal or a “Yes, Mr. Obama, may I have another” deal — but please let’s stop referring to it as a “deficit reduction” deal. We’ve yet to see a serious proposal on debt.
Actually, by proposing a tax increase for spending with no real corresponding cuts, the president has been arguing for growing deficits. And with a priority on “fairness” over prosperity, any chance of easing the $16 trillion national debt through an economic boom in the near future is improbable.
When you cut through the coverage, in fact, you’ll also find that the second most pressing item on the president’s agenda — after tax hikes on the wealthy and small businesses — is winning the unlimited authority to raise the country’s debt limit. Obama — who personally sat down with CEOs at the Business Roundtable to press his case — argues that having a cap on debt, rather than unlimited debt, is a “bad strategy” for the nation.
After that, much of the deceptive “savings” or “cuts” offered by Obama were already coming from the winding down of campaigns in Iraq and Afghanistan — this itself supposedly temporary spending that is now baked into the baseline. You will remember that for Democrats, including the president, funding these wars by borrowing was unconscionable. Turns out, only the wars were the problem, not the trillions.
Similarly, Americans may also remember our “one time only” stimulus bill. That dramatic bump in spending is also now a forever spending baseline. The imagined “savings” from that kind of accounting is very much like the “savings” a person might realize after someone steals their car but is nice enough to throw them a couple of dollars for bus fare home.
But all of Obama’s pro-debt expansion policies don’t excuse Republicans for calling their own proposal a “credible” $2.2 trillion plan on “deficit reduction.” Even if we were to concede for a moment that the plan would cut the debt, by the time we realized $2.2 trillion in savings, the Congressional Budget Office projects that debt as a share of GDP will have reached 100 percent. By 2035, we’re looking at 200 percent.
Or put it this way: The entire Republican plan would only pay down the $220 billion in net interest the United States owes on its debt every year. Well, if by some miracle that interest stayed at $220 billion. Which it won’t.
The Republicans’ offer also contains $800 billion in new “revenue” garnered from tax reform — partially from closing loopholes on the wealthy — which surrenders to the notion that “revenue” rather than “spending” drives the deficit.
The Republicans’ offer has $300 billion in cuts to discretionary spending over 10 years. Well, the U.S. government’s outlays in October alone were $304 billion.
The GOP offered $600 billion in 10-year health care cuts through Medicare and Medicaid, which is less than Obama was willing to risk as seed money for Obamacare. Then again, the president’s new budget only reduces Medicare and Medicaid spending by $340 billion over a decade. Democrats have no interest in reform.
Our potential unfunded liabilities, what our government has promised to spend on entitlement programs in the future and won’t have money to pay, are estimated to total anywhere from $87 trillion to $100 trillion. That doesn’t even include Obamacare’s unseen costs.
Fiscal cliff? We’ve already taken that dive.