It's not about revenue or lack of compromise; it's about knee-jerk capitulation on spending
The day has arrived. Our total debt has surpassed $15 trillion. At
the close of business on Wednesday, the debt stood at $15.033 trillion,
and is on the cusp of overtaking our GDP. Overall, the federal debt has
risen $4.41 trillion (41.5%) since Obama took office and $6.36 trillion
(73%) since the Democrats took control of Congress in 2007. Our GDP
has grown by only $1.3 trillion during Obama’s presidency. Pick your
adjective of choice to describe this calamity: unparalleled,
unprecedented, uncharted. No word can begin to describe the destruction
that Obama has wrought on our republic.
Over the next few days, you will read many factoids and statistics
about the federal debt, but here is one acerbic point you may miss.
Ninety-one percent of Obama’s $4.41 trillion legacy of debt comes from
the debt held by the public.
You see, the national debt consists of two components; debt held by
the public and intra-government debt. The debt held by the public is
the sum of the treasury securities held by those outside the federal
government, with the lion’s share owned by foreign countries. The debt
held by the public currently stands at $10.31 trillion. The other
component, the intra-governmental share, is owed to other federal
agencies and accounts, most prominently, the non-existent Social
Security Trust Fund, as well as accounts holding pensions for military
veterans and government workers. That share of the debt currently
stands at $4.71 trillion. Overall, Obama has increased the public share
of the debt by $4 trillion (63%), more than Bush ever ‘accomplished’ in
his entire eight year presidency.
It is through this dour prism that we must view just how vacuous is
the current debate over the budget. The prevailing narrative is that
the entire supercommittee enmeshment is the result of the inter-party
(and intra-party) debate over tax hikes. The glaring reality is this:
IT’S THE SPENDING, STUPID.
Republicans and conservatives can agree to enormous tax hikes from
now until next year, but we still will not have a true compromise – a
balanced approach. This is because the Budget Control Act and the
supercommittee don’t plan to cut one cent of spending. The entirety of
the $917 billion ten-year discretionary savings comes from reductions to
the prodigal baseline. We will never cut one penny from current
spending levels. In fact, not only did we lock in the aforementioned
unparalleled spending rates, we committed ourselves to add over $800
billion more in deficit spending. In other words, we are applying
plastic breaks to a high-speed porkulous rail.
Moreover, the supercommitte plans to leave the other 65% of the
budget, the mandatory spending, virtually untouched. There will be no
prudent reforms of Social Security and Medicare, and the $950 billion in
mandatory welfare spending will go untouched. Worse, Republicans are
about to approve an Agriculture spending bill that raises spending on
Food Stamps to an unfathomable $80.4 billion, double its funding level
from just three years ago.
Outside conservative groups are often impugned as ‘intransigent’
bomb-throwers, unwilling and unable to compromise. The stone-cold truth
is that most of us would be willing to make some painful concessions on
the revenue side, in the event that Republicans would fight for real
reductions in government programs and departments. That would be an
authentic compromise; that would embody a true balanced approach.
Instead, Republican leaders are on the cusp of approving an
‘Israeli-Palestinian style compromise’, aka an unmitigated capitulation.
What you won’t hear coming out of this bipartisan concession super
duper committee is that we cannot possibly raise enough revenue from tax
increases to cover the deficits. The top 1% already pays 36.7% of
federal income taxes, even though they only earned 16.9% of all income.
The recession has reduced their adjusted gross income from $2 trillion
in 2007 to $1.3 trillion in 2009. Will tax hikes really offer them
incentives to earn more money? While we might gain some revenue in the
short-term, we will lose the golden goose in the long-run. Either way,
we will never recover enough revenue to deal with the perennial trillion
dollar deficits, the unfunded liabilities from entitlements, and the
burgeoning growth in future interest payments.
We’ve been in this situation a number of times this year, and sadly,
we will continue this tortuous cycle of submission to those who are
mortgaging off our future. Must we breach the $20 trillion milestone
before we wake up?
Cross-posted to RedState.com