Debt ceiling is only first step in debate over federal spending

“The fiscal consolidation plan … falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.” S&P, August 5

When President Obama finally signed legislation to increase the federal debt ceiling on August 2, many in Washington, D.C. may have breathed a sigh of relief that a potentially devastating default crisis had been averted. Unfortunately, our nation’s fiscal woes haven’t been resolved — as reflected in the S&P’s opinion above. In fact, this is just the first step in what must be an ongoing campaign to clamp down on government overspending.

They called it the “Budget Control Act of 2011,” but that title represents wishful thinking and not reality. The federal budget deficit is estimated to stand at $1.4 trillion this year, while the national debt is more than $14.5 trillion, a number that is growing rapidly, even with the proposed savings in the debt ceiling compromise.

On August 5, three days after the president signed the debt package, the credit rating agency Standard & Poor’s downgraded the U.S. credit rating for the first time in history, setting off another round of unconstructive partisan recriminations. The S&P sent a clear message: What has been done is not enough. Rather than pointing fingers, Washington leaders should get the message: The United States simply has too many liabilities on its ledger, and if we’re going to seriously address the country’s fiscal health, we have to enact significant spending reforms. S&P’s move on the credit rating was, in part, a signal that the debt package was inadequate to the task at hand.

Let’s consider a few of the facts about the final compromise the president signed:

◆ The compromise allows for up to $2.4 trillion in additional debt. In about a year and a half, we will hit the ceiling again.

◆ Spending caps on discretionary spending (which represented nearly 39 percent of all federal spending in 2010) will save an estimated $917 billion over the next 10 years, according to the Congressional Budget Office. That’s a drop in the bucket of federal spending.

◆ The compromise fails to deal with runaway entitlement spending for Social Security, Medicare and Medicaid, though these are among the most rapidly growing parts of the federal budget. (Medicare is expected to go bankrupt in just nine years, and the looming retirement of the massive baby boomer generation is only going to place a heavier strain on our retirement security systems.)

◆ The compromise creates a special Joint Committee in Congress to develop additional spending reduction plans — essentially kicking the can a little further down the road rather than dealing with the need to cut spending outright.

While the Budget Control Act did manage to delay the threat of default and bring some modest fiscal restraint to bear on the federal budget, it’s just a start. “We’re no longer running toward oblivion; we’re walking toward it,” Sen. Lindsey Graham (R-SC) said of the compromise on ABC’s “This Week.” “And now we need to stop and turn around, go back the other way.”

That’s exactly right. The organization I head, Public Notice, has been a leading voice about the need to bring real budget reform to the table. That means not only addressing the low-hanging fruit of earmarks and pork-barrel spending, but also the tougher reforms to be made in defense spending, Social Security, Medicare and Medicaid. Unfortunately, this bill didn’t directly take on any of those sacred cows.

  • Anonymous

     47% PAY NO TAX LIE EYE OPENER $ numbers are adjusted gross incomeThe 47% make 1000 Billion incomeThe deficit in 2009 was 1400 BillionThe 47% are 70,000,000 workersIf we take 25% of that large number we cover 250 of 1400. Big dealIf we take 50% we get 500 of 1400. Bigger deal. Do you want 70,000,000 workers to pay a 50% tax which would get us only 500 for 3800 budget.Top 70,000,000 pay 13% of their Income in Income taxTop 70,000,000 would need to pay 32% tax rate to cover 1400B deficit.Only the Top Income can pay for our budget. Top 50% paid 13% Rate.We borrowed 1400B which helped many of them get richer and others deeper in Debt.It is time to have a Flat Progressive Tax System.$25,000-$50,000 pay 25%$51,000-$100,000 pay 35^$101,000-$1,000,000 pay 40%$1,00,000 up pay 50%Payroll Cap lifted—how dumb are we? $10 million income pays 1%—$100 Million pays 1/10th of 1%John Paulson paid 1/100th of 1% or $106,000 whereas under no cap he pays $250 million. Means Test Social Security-Medicare—Yes Amigo! The Rich do get it, My dead late pal worth 50M + and income1Million + got it.. Winter apartment renting rich at hotels in Miami Beach get it.How dumb can we get?$1 Trillion of Exemptions eliminated.OECD study revealed that America is 27th of 28 nations on Least Taxed list.In 2010, Corporations paid 1% of GDP in taxes lowest since Jesus preached against the rich.Individual Incomes paid 9% or least since 1953.Are you proud that America ranks 25th of 28 rich nations on Equality.Want to rank 28th on Equality and 28% on Least taxed then send more Republicans into Congress.Yes! Conservative Republican Ideology got into this mess that will take years to recover.Huge Tax Cuts for the Rich.. Fight the world’s wars for Defense industry buddies. Let Wall Street Casino Derivative gamble billions that contribute no value or jobs to our economy. Let Big Banks, that own 80% of deposits in 7600 Banks, get rich buying/selling unaffordable mortgages to middle class stagnated incomes via many fraudulent techniques making hundreds of billions while millions of families get pain and construction industry hurts for years.What would Jesus Christ say about our Wall Street of 2011??? “Close that sucker”end of weekly rant cswinney2@triad.rr.com..