The Wrong Budget Debate

Is your hair hurting yet? The Obama administration is tossing around so many numbers, most with a "T" after them, and so many inside baseball definitions that you need PhD's in economics and Washington-speak to grasp it all. 

Here are a couple examples:

1) The budget reduces the deficit by $1.1 trillion over ten years.

Now you might think this means that the debt will be reduced from where it is today to a number $1.1 trillion lower by 2021; wrong; all it means is that at some point over the next ten years, the annual deficit will be $600 billion, which is $1.1 trillion lower than next year's deficit of $1.7 trillion; clear now? What team Obama leaves out is the fact that their budget is never balanced over the next ten years and the US debt swells from $14 trillion today to $21 trillion in 5 years, before the annual deficit levels out at about $600 billion, giving us about $25 trillion and rising in total debt by 2021.

2) The main component of the $1.1 trillion deficit reduction is the savings from freezing discretionary spending at 2010 levels.

Leaving aside the probability that this category will indeed be frozen for so long, how is it that a "freeze," which we all believe means current spending levels will remain constant, constitutes a "savings"?  Nothing is "saved" if there is no reduction, no? Well, not so in DC speak; you see, the fixed annual spending number is compared to the previous budget, which has assumed continued increases from an already inflated base, so if we do not spend what we had expected to spend, we are saving money even though the actual dollar outlay never goes down; still not clear?

Couple that with ignoring the deficit commission, refusing to address the 800 pound entitlement gorilla in the room, smiling optimistically while proposing a $3.7 trillion budget, highlighting longer term deficit issues while hiding the fact that taxes would be raised by $1.6 trillion, and economic growth is projected at levels way above the professional consensus, and you have the recipe for even some in the main stream media describing Obama as "unserious."

The media continues its preoccupation with optics and tactics, as in "isn't Obama clever to side step the big issues and make the GOP go first so they can be ridiculed," and on cue the Left lined up to blast minor proposed cuts in education, Planned Parenthood and the EPA as anti-child, anti-women and anti-fill-in-the-blank. It's worked in the past, and Obama is happy to have the debate settle on this plateau.

And the GOP is no help; what we hear is how they can work with Obama to negotiate whether the budget cuts should be $60 or 100 billion, and what the internal debates are like between the tea party cut at all cost crowd and the more moderate get along establishment. The professional pundit/political adviser class urges caution, doesn't address entitlements until after we "win," and focuses on "debt," which seems to be the focus group-tested word du jour. That may be fine as a base targeted campaign tactic, but does nothing to engage the full electorate critical to the mandate needed to effect real and massive sea changes.

The GOP cast of characters for the 2012 top job is abiding for the most part by conventional wisdom -- attack Obama to see who gets the biggest laugh lines, fawn over 6 people in Iowa to "gain the momentum" for early primaries, avoid controversial entitlement issues, repeat the focus group tested phrases about controlling debt so "our children and grandchildren aren't stuck with the bill," and live to fight another day. I'm not a campaign pro, but it seems to me that with minor exceptions they are all missing the boat.

The main issue isn't which programs should be cut or whether the right number is $60 or 100 billion; that is tinkering around the edges while we continue to see our freedoms whittled away by ever more intrusive government. If we get lost in the weeds of "negotiating" between two unserious proposals we will wind up with more of the same, just a bit less of it. The real issue is quite simply the role of government in our lives, and what the current budget proposals actually mean for the individual -- how does it really affect me.

Rep. Paul Ryan has tried to frame this issue by connecting the private sector growth dots to federal debt levels, as in the private sector will not invest and grow jobs if it believes that the federal government will inevitably cause inflation and have to raise taxes because of the spending and debt; if only spending and debt were brought under control, certainty would rule, and low taxes, interest rates and inflation would spur private sector investment and jobs would follow. Decent analysis, but it loses most people halfway through and isn't relevant to the individual. Even the give and take over the State of the Union address seemed to focus on which party was more optimistic, with Obama beaming with "faith in America" while the GOP response focused on green eye shade budget affordability. No one seemed to care that behind every Obama "pillar" for developing America was a government program, not individual initiative; the big picture of whether or not we want a society reliant on government picking winners never seemed to get traction.

The one who has gotten it mostly right was Gov. Daniels at CPAC, but you would never know it from the media coverage, which focused mostly on whether he was too short to be president. Daniels aimed his remarks not only at the economics, but mostly at the philosophical issue of what kind of society do we want, and what the proper role of government should be. His key point was that the only number worth discussing in the debate over deficits and cuts is $3.7 trillion -- the proposed budget for next year. Its sheer size is the problem, and if the size of government continues to grow and the debt obligations continue to explode it will be impossible for us to remain "self governed"; we will inevitably cede control over more and more of our lives to feed the central authority that needs to cover its self-fulfilling obligations. He uses the simple example of ObamaCare to make the case -- why shouldn't we simply trust the folks to use their own money to buy the kind of health care best suited to them, allow choice and competition to work, and minimize the role of government to supporting only the truly needy; that's a trillion dollars that stays with the folks, and doesn't pass through government hands on its way toward redistribution after the bureaucracy takes its cut. If you couch the debate in those terms, the choices become not which program to fund or not, but what government the people choose to have.

The overreach of the last two years has given us enough of a preview of inevitable coming attractions to frame the discussions. What is needed now is for the GOP leadership to embrace this debate plateau of the role of government as the single guiding tenet, and stand on principle -- start with defense, protection of sovereignty, justice systems, transport systems, foreign relations, and support for the truly needy, and get out of the weeds. Anything else starts from the premise that it is not in the playbook and must be justified under the constitution; return to the mantra of self government, local control and minimal federal intrusion. Remember, the government only has the money that we either give it, or are on the hook to repay after it borrows it. Growth in government simply takes more of our choices and centralizes them in folks we don't know.

It may be political pundit heresy, but I think in spite of the last few years -- where economic uncertainty could have driven more into the arms of protective government -- the folks are ready to embrace a return to limited government, not just because we can't afford otherwise, but because it's in our DNA. If explained in simple terms and made personal, not only is it the recipe for the candidate espousing it to win elections; it is the recipe for rescuing the country.
Is your hair hurting yet? The Obama administration is tossing around so many numbers, most with a "T" after them, and so many inside baseball definitions that you need PhD's in economics and Washington-speak to grasp it all. 

Here are a couple examples:

1) The budget reduces the deficit by $1.1 trillion over ten years.

Now you might think this means that the debt will be reduced from where it is today to a number $1.1 trillion lower by 2021; wrong; all it means is that at some point over the next ten years, the annual deficit will be $600 billion, which is $1.1 trillion lower than next year's deficit of $1.7 trillion; clear now? What team Obama leaves out is the fact that their budget is never balanced over the next ten years and the US debt swells from $14 trillion today to $21 trillion in 5 years, before the annual deficit levels out at about $600 billion, giving us about $25 trillion and rising in total debt by 2021.

2) The main component of the $1.1 trillion deficit reduction is the savings from freezing discretionary spending at 2010 levels.

Leaving aside the probability that this category will indeed be frozen for so long, how is it that a "freeze," which we all believe means current spending levels will remain constant, constitutes a "savings"?  Nothing is "saved" if there is no reduction, no? Well, not so in DC speak; you see, the fixed annual spending number is compared to the previous budget, which has assumed continued increases from an already inflated base, so if we do not spend what we had expected to spend, we are saving money even though the actual dollar outlay never goes down; still not clear?

Couple that with ignoring the deficit commission, refusing to address the 800 pound entitlement gorilla in the room, smiling optimistically while proposing a $3.7 trillion budget, highlighting longer term deficit issues while hiding the fact that taxes would be raised by $1.6 trillion, and economic growth is projected at levels way above the professional consensus, and you have the recipe for even some in the main stream media describing Obama as "unserious."

The media continues its preoccupation with optics and tactics, as in "isn't Obama clever to side step the big issues and make the GOP go first so they can be ridiculed," and on cue the Left lined up to blast minor proposed cuts in education, Planned Parenthood and the EPA as anti-child, anti-women and anti-fill-in-the-blank. It's worked in the past, and Obama is happy to have the debate settle on this plateau.

And the GOP is no help; what we hear is how they can work with Obama to negotiate whether the budget cuts should be $60 or 100 billion, and what the internal debates are like between the tea party cut at all cost crowd and the more moderate get along establishment. The professional pundit/political adviser class urges caution, doesn't address entitlements until after we "win," and focuses on "debt," which seems to be the focus group-tested word du jour. That may be fine as a base targeted campaign tactic, but does nothing to engage the full electorate critical to the mandate needed to effect real and massive sea changes.

The GOP cast of characters for the 2012 top job is abiding for the most part by conventional wisdom -- attack Obama to see who gets the biggest laugh lines, fawn over 6 people in Iowa to "gain the momentum" for early primaries, avoid controversial entitlement issues, repeat the focus group tested phrases about controlling debt so "our children and grandchildren aren't stuck with the bill," and live to fight another day. I'm not a campaign pro, but it seems to me that with minor exceptions they are all missing the boat.

The main issue isn't which programs should be cut or whether the right number is $60 or 100 billion; that is tinkering around the edges while we continue to see our freedoms whittled away by ever more intrusive government. If we get lost in the weeds of "negotiating" between two unserious proposals we will wind up with more of the same, just a bit less of it. The real issue is quite simply the role of government in our lives, and what the current budget proposals actually mean for the individual -- how does it really affect me.

Rep. Paul Ryan has tried to frame this issue by connecting the private sector growth dots to federal debt levels, as in the private sector will not invest and grow jobs if it believes that the federal government will inevitably cause inflation and have to raise taxes because of the spending and debt; if only spending and debt were brought under control, certainty would rule, and low taxes, interest rates and inflation would spur private sector investment and jobs would follow. Decent analysis, but it loses most people halfway through and isn't relevant to the individual. Even the give and take over the State of the Union address seemed to focus on which party was more optimistic, with Obama beaming with "faith in America" while the GOP response focused on green eye shade budget affordability. No one seemed to care that behind every Obama "pillar" for developing America was a government program, not individual initiative; the big picture of whether or not we want a society reliant on government picking winners never seemed to get traction.

The one who has gotten it mostly right was Gov. Daniels at CPAC, but you would never know it from the media coverage, which focused mostly on whether he was too short to be president. Daniels aimed his remarks not only at the economics, but mostly at the philosophical issue of what kind of society do we want, and what the proper role of government should be. His key point was that the only number worth discussing in the debate over deficits and cuts is $3.7 trillion -- the proposed budget for next year. Its sheer size is the problem, and if the size of government continues to grow and the debt obligations continue to explode it will be impossible for us to remain "self governed"; we will inevitably cede control over more and more of our lives to feed the central authority that needs to cover its self-fulfilling obligations. He uses the simple example of ObamaCare to make the case -- why shouldn't we simply trust the folks to use their own money to buy the kind of health care best suited to them, allow choice and competition to work, and minimize the role of government to supporting only the truly needy; that's a trillion dollars that stays with the folks, and doesn't pass through government hands on its way toward redistribution after the bureaucracy takes its cut. If you couch the debate in those terms, the choices become not which program to fund or not, but what government the people choose to have.

The overreach of the last two years has given us enough of a preview of inevitable coming attractions to frame the discussions. What is needed now is for the GOP leadership to embrace this debate plateau of the role of government as the single guiding tenet, and stand on principle -- start with defense, protection of sovereignty, justice systems, transport systems, foreign relations, and support for the truly needy, and get out of the weeds. Anything else starts from the premise that it is not in the playbook and must be justified under the constitution; return to the mantra of self government, local control and minimal federal intrusion. Remember, the government only has the money that we either give it, or are on the hook to repay after it borrows it. Growth in government simply takes more of our choices and centralizes them in folks we don't know.

It may be political pundit heresy, but I think in spite of the last few years -- where economic uncertainty could have driven more into the arms of protective government -- the folks are ready to embrace a return to limited government, not just because we can't afford otherwise, but because it's in our DNA. If explained in simple terms and made personal, not only is it the recipe for the candidate espousing it to win elections; it is the recipe for rescuing the country.

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