David Post: Seeds of deficit solutions
ěDealing with the debt limit without dealing with the underlying problem is irresponsible,î House Speaker John Boehner proclaimed soberly as Congress watched the government inch toward the debt limit this week.
Agreed. But what is the underlying problem?
Though the parties disagree on whether the solution is to be found exclusively in spending cuts or a mixture of spending cuts and tax increases, both parties agree on the goal: the need to trim the deficit by $4 trillion over the next 10 years. Some Tea Partiers believe $4 trillion is not enough. If the solution lies in the underlying problem, the Tea Party may be right.
President Clinton left office in 2001 after four consecutive years of budget surpluses and a national debt of $5.7 trillion, about three times annual revenues. Eight years later, President George W. Bush left office after eight consecutive budget deficits that more than doubled the debt to $11.9 trillion, almost six times annual revenues. In addition, unemployment was in the process of doubling, the nation was in the midst of its worst economic crisis since the Great Depression, the banks were collapsing, and millions were losing their homes as real estate values declined dramatically.
Those are the ěproblems.î
How did that happen over the course of a single decade? First, the Bush tax cuts reduced revenues by $4 trillion over the decade. Second, the U.S. started two wars that cost over $1 trillion directly, plus another $2-3 trillion indirectly in ongoing costs, medical care and veteran benefits. Third, the deregulation of the banking sector cost the government $700 billion and caused the real estate collapse, which erased an estimated $4 trillion in property values.
Thatís what caused the ěproblems,î Mr. Speaker.
Do the math: the ěproblemsî exceed $12 trillion. The goal is to recover $4 trillion. Government math!
A solution? Are not the seeds of most solutions found in the problem?
First, what happens if the Bush tax cuts expire? Doom and gloom, say some, even though taxpayers paid those taxes during boom times. Letting those tax cuts expire covers the $4 trillion that Congress and the president are searching for. Of course, with the majority of Congress having taken a ěno tax increaseî pledge, itís impossible to have a serious debate on taxes in todayís world. Even President Obama is not willing to let the Bush tax cuts expire on people earning less than $250,000.
Second, after fighting two wars for almost 10 years, is our ěmission accomplishedî yet? If not, how do we know when it will be accomplished? Historically, when America went to war, taxpayers were asked to share the sacrifice. The wars in Iraq and Afghanistan are the first U.S. wars for which taxes to cover the costs were not considered. Shared sacrifice ó some fight, some pay ó is how we protect our liberties. We sent our young and strong to fight and die; many returned with injuries and other special needs, and we didnít plan how to pay for it.
Third, sometimes only the government can step up to the plate and save the country. In a speech last week in a Las Vegas casino, former President Bush talked about making tough decisions. He called TARP ó the $700 billion bank bailout ó a ěfour-letter word.î After he got his laugh, he then said that saving (or ěbailing outî) the nationís largest banks was ěthe right decision.î
In September 2008, President Bush peered into the black hole of a potentially massive economic meltdown, saw the abyss, and said ěthis sucker could go down.î If money stopped flowing, water would stop flowing in our cities and grocery shelves would go bare within days. In his speech last week, he noted that his decision to bail out the banks went ěagainst every grain in my beingî but added, ěI couldnít take that risk.î
Trillions more dollars were lost by government and taxpayers alike on the collapse of the real estate markets, fueled by governmentís failure to regulate incredibly irresponsible lending practices and Wall Streetís penchant to follow the money.
But government stepped in, saved the banking system and saved the world from an unimaginable economic tsunami. Every nation on the planet should get on its knees and thank the U.S. government for having the power to preserve capitalism.
In the end, government matters. And does good. After all, the government is us.
Look closely, Mr. Speaker. The seed of the solution can be found in the root of the problem.
David Post lives in Salisbury and is one of the owners of MedExpress Pharmacy and Salisbury Pharmacy.