Avoiding the ‘Most Predictable Economic Crisis Ever’

Last year, the Democrats failed to even do so much as set forth a budget for Fiscal Year 2011, worried about how the ensuing conversations and debates about everything from scientific research to entitlement reform would affect the Democratic Party’s already dismal chances at the polls.  Partisan politics and the perpetuation of power took priority over fiscal discipline and governmental prudence.

And now, as the Republican Party struggles to finally address the 2011 budget while at the same time releasing proposals for 2012 and beyond, the Democrats are already taking up defensive poses and brushing off the age-old arguments used to combat conservative frugality. On Tuesday, The New Republic confronted Wisconsin Republican Congressman Paul Ryan’s proposed budget, “The Path to Prosperity” by invoking a tired meme in a passionate piece entitled Ryan to 32M Americans: No Insurance For You. An excerpt:

In the hours and days to come, you’re going to hear a lot of different numbers from his proposal. But let me draw your attention to a figure that’s not in there: 32 million. Based on the available information, that’s roughly the number of people likely to lose health insurance, relative to current law, if the budget were to become reality.

The spending blueprint calls explicitly for repealing the Affordable Care Act. That means taking insurance away from all of the people who are supposed to get coverage in 2014, when the Act is fully implemented. And Ryan’s budget document proposes no alternative mechanism for significantly expanding coverage or making insurance itself more secure.

The professional left’s myopic focus on health care reform betrays the reality that, should the American economy reach the levels that Paul Ryan warned of in his Path to Prosperity and the media tour he embarked on following its release, the federal government will have no means for funding Medicare, Medicaid, or the various institutions created by the Affordable Care Act … at all.  Essentially, it is an issue of whether we want to reform (and, in some cases, eliminate) entitlements NOW, in a relatively controlled environment, or if we want to be forced to do so down the road when our economy looks like Japan’s on a good day.

Like Erskine Bowles said yesterday: we are looking at the most predictable economic crisis ever.  It’s akin to being run down by a steamroller — you have ample time to slowly change its direction, but if you don’t, it’ll crush you.

Meanwhile, Democrats like New York Sen. Chuck Schumer worry that any cuts made in government spending would adversely affect things like student aid, scientific research, and public broadcasting.  Yet, should the economy continue down this road, there will be no jobs to be had by college-educated students, all scientific research and medical manufacturing will be outsourced to thriving economies like those in India and China, and public broadcasting — well, you make an argument on that one.

Similarly, Nancy Pelosi tweeted on Tuesday that Ryan’s proposed budget is a “path to poverty for America’s seniors and children and a road to riches for big oil,” and that the budget “eliminates guaranteed benefits for seniors under Medicare.”

In his Wall Street Journal op-ed the same day, however, Congressman Ryan maintained that his proposal was about “saving Medicare.”

The open-ended, blank-check nature of the Medicare subsidy threatens the solvency of this critical program and creates inexcusable levels of waste. This budget takes action where others have ducked. But because government should not force people to reorganize their lives, its reforms will not affect those in or near retirement in any way.

Starting in 2022, new Medicare beneficiaries will be enrolled in the same kind of health-care program that members of Congress enjoy. Future Medicare recipients will be able to choose a plan that works best for them from a list of guaranteed coverage options. This is not a voucher program but rather a premium-support model. A Medicare premium-support payment would be paid, by Medicare, to the plan chosen by the beneficiary, subsidizing its cost.

In addition, Medicare will provide increased assistance for lower- income beneficiaries and those with greater health risks. Reform that empowers individuals—with more help for the poor and the sick—will guarantee that Medicare can fulfill the promise of health security for America’s seniors.

On one hand, I try not to read too much into Pelosi’s blustering.  It’s par for the course for a politician and a party whose default response to any spending cuts advocated from across the aisle is that they adversely affect children and seniors.  It’s the Democratic Party playbook:  if the race card doesn’t work, bring up grandma. On the other hand, however, there are many people across this country who take Pelosi’s words as rote.  When it comes to seniors, I’d be willing to bet that AARP will be listening, and many of her talking points will be echoed in the next issue of whatever periodical the group sends out and leaves strewn about doctor’s offices from coast to coast.

It’s a shame, too, because of what those seniors are hearing.  From comments by Pelosi on Monday:

“In one of the bills before us, 6 million seniors are deprived of meals — homebound seniors are deprived of meals. People ask us to find our common ground, the middle ground. Is middle ground 3 million seniors not receiving meals? I don’t think so. We’ve got to take this conversation from a debate about numbers and dollar figures and finding middle ground there to the higher ground of national values. I don’t think the American people want any one of those 6 million people to lose their meals or the children who are being thrown off of Head Start and the rest of it.”

This sort of argument worked when it came to derailing former President George W. Bush’s effort at Social Security reform.  The Democrats, working with the senior lobby, were able to convince the nation’s 55-plus crowd that Bush’s plan meant immediate change and inevitable loss, when in reality it was focused on preserving Social Security for future generations while not affecting those currently drawing benefits.  The argument worked then, and Pelosi and her crowd are betting that it will work again now.

The Washington Post, however, called out the former House Speaker this morning on some of her factual inaccuracies.  They used the term “absurd math,” not me.  From the piece:

The first problem with Pelosi’s statistic is that, according to the agency’s budget documents, only about 2.6 million seniors receive such meals. That’s even less than what she decried as the mushy middle ground of compromise.

After we pointed out that fact, Pelosi spokesman Drew Hammill said “she means meals for seniors — 6 million meals.” In 2011, the agency is expected to deliver a little over 200 million meals, so that’s a cut of about three percent.

That’s a pretty big “oops.” She referred to “6 million seniors,” “3 million seniors” and “6 million people.” We understand slips of a tongue, but three times in a row, so emphatically, is hard to fathom.

But there are other problems with Pelosi’s 6 million number.

First, the administration requested the elimination of $6 million in earmarks, so it seems strange for Pelosi to call that a Republican cut. That should not be included, leaving us with $65 million in possible cuts.

Second, in the administration’s 2012 budget request, President Obama identified $150 million in cuts to the agency’s budget. It seems that those already-identified targets would be a more logical place to start looking for trims than meals for senior citizens, most of whom have incomes of less than $20,000.

Finally, the agency’s budget justification notes on page 55 that it has kept spending on senior meals essentially flat from 2010 to 2012, resulting in 36 million fewer meals for senior citizens. That’s six times higher than the figure that Pelosi has decried as an affront to “national values.” The administration’s budget, in fact, has earned the ire of some advocates for hungry seniors. Perhaps 1600 Pennsylvania Avenue would be a more appropriate place for Pelosi to direct her outrage.

Pelosi’s rhetorical problems aside, what we’re seeing from the professional Left in the wake of the unveiling of Paul Ryan’s “Path to Prosperity” is this stubborn insistence that the United States of America is not facing a big-picture economic crisis, and that even if it were and cuts were needed, certain programs and institutions are off limits.

Frankly, I don’t think it’s fair to pin that sentiment solely on Democrats, either.  Budget cuts, in a way, are similar to the prospect of congressional seat turnover.  Just as everyone knows that drastic cuts are needed, nobody wants to cut their program, much like Congress could maintain a 19 percent approval rating and yet incumbency rules the day, as people may hate Congress as a whole but are absolutely content with their guy.  When it comes to addressing the pending big-picture fiscal problems, Democrats and traditional Republicans alike must realize that sacrifice is the order of the day.

Yesterday morning, as the prospect of a government shutdown dominated the conversation on local morning talk radio, I listened intently to a caller who had been planning a family vacation in our nation’s capital.  For a long time now, he and his family were planning to see the sights, visit the memorials, and browse the Smithsonian and other museums.  A government shutdown, the caller insisted, would get in the way of those plans, leaving his family able to do little more than “press their faces up to the glass” from outside the Smithsonian.  Similarly, down here in Charleston, people are disappointed that the National Park Service hiatus will disrupt plans to commemorate the 150th anniversary of the first shots of the Civil War–uh, I mean The War Of Northern Aggression–at Fort Sumter.  At some point, all Americans are going to need to understand that forestalling the realities of the big-picture crisis we will face must take priority above our favorite trappings of the federal government, whether it be shut down or running as usual.

So many on the left want the government to be ultimately responsible for nearly everything, from health care to education to food stamps to CAFE standards.  And yet, as the economy spins out of control, what value will the government bring to those industries and sectors?  In Britain, we see that reality has finally set in and Prime Minister David Cameron is looking for reform of the National Health Service — not toward more government involvement, but away from it.  In Germany, we see increasing private sector development and reliance in an attempt to grow an economy out of the doldrums.  In France, we see a government scrambling to get entitlements under control.  The lessons are the same across the world, and we need to heed them here.

Either we address the big-picture problems we face down the road now, relatively removed from the throes of immediate crisis, or we address them later amidst the social and societal upheaval that will inevitably come from massive overnight changes that could have been implemented with less impact and over time.  We are indeed looking at the most predictable economic crisis ever.  We need to fight the urge to focus myopically on single issues at the expense of addressing our problems on a macro level.  The looming crisis is real — either we chip away at it while we are still capable of doing so, or we let it crush us later.

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Comments

  1. Bob Upton says:

    Another solid commentary Jeff, keep it up!

    We have some voices of reason and hope on the scene (including you) and we need to support and encourage them.

    I can’t believe that the American people are going to continue to listen to the “chicken little” group, with their message of fear, gloom and impending doom if we actually DO SOMETHING, when the obvious truth is the crisis we will face if we do not. That groups leaders have fallen a long way from the one who said “Ask not what your country can do for you – ask what you can do for your country”

    If we continue to appeal to people’s experiential common sense and communicate a message of hope (a’la Reagan) we can win this battle.

  2. John Broad says:

    From a liberal point of view, government must have enough money to perform the functions that they now see as basic in the 21st century. Liberals believe that providing unemployment benefits, health care, food stamps, etc. etc. are basic functions that the government should provide. And, unfortunately, more and more people in the U.S. also believe this. They will push for more taxes so that government can maintain what they believe are the basic functions.

    The liberal has pushed for these basic functions to be provided by the government for years and years and now the vast majority of people have become accustomed to receiving them. The liberal has concluded that the government will provide these functions. They did not worry about how to pay for them. Now that these basic functions have become part of the American fabric, they believe that the American people will be willing to raise taxes to pay for them, rather than eliminating any of the now basic functions.

    The conservative believes that responsibility should be shifted from government to the individual. As the responsibility is shifted from government to the individual, spending should be cut without raising taxes. In order to shift responsibility from the government to the individual, you must have a willing population of individuals.

    A large number of people are not willing to assume individual responsibility. Another large number of people believe that only the government can provide for the collective good of the American people.

    I pray that we find a leader who can transform this country back to its founding principles. That leader must be attractive, young, passionate, energetic, intelligent, and articulate. The conservatives that have stepped up so far meet some of these requirements, but no one individual has come forward that can meet all of these requirements. We do have some people that meet all of these requirements, but they feel they are not experienced enough.

    Someone has to step up.

  3. Anonymous says:

    Our parents went thru a Great Depression, that HURT.
    We expect, like a bunch of pansies, that getting thru and past this financial mess will not hurt. Sad. Keep leaving it to the grandkids Harry Reid (D).

  4. Anonymous says:

    If we really loved our grandkids, or kids (those with fresh ones), should we adopt them to those living in China?

  5. whats_up says:

    Jeff,

    I agree with your piece. What I dont agree with is that Conservatives are willing to partake in this shared sacrifice that you are talking about. They still want to give tax breaks to their buddies. They still want their pet programs to be financed. Until that changes I will be skeptical of any proposal that they put out. Having said that, there is much in Ryan’s plan that I could agree with, as well as with the plan recently put out by the RSC. However until you get Conservatives on board without the poltical games involved it will be a no brainer that nothing gets done.

  6. Ima SoBelle says:

    This is insane. The democrats are ruining this country and laughing while they do it. Where do they think the money is going to come from to cover all of these social programs? Guess they figure they can just PRINT MORE! This country doesn’t owe anyone anything much beyond national defence. The states need to step up to their responsibilities and help us get it right. Quit spending what we don’t have.

    I just heard Rush Limbaugh say today that the government has taken 6 (six) pages of Obamacare concerning Medicare and written 429 PAGES OF REGULATIONS THAT REFER TO IT!!! Stop, please stop! This has to stop now. Close down the country and see what happens. It is the fault of Obama and the democrats who have ignored their responsibility for the past two years. Republicans have got to stand firm and refuse to give in on this mess. Cut out the excess and get us back on a balanced budget. PLEASE!

  7. Randy Wills says:

    To “whats-up”:

    As you know, I’m a “conservative” and, if you’re referring to the “wealthy” as my “buddies”, you’re dead wrong.

    The deal is that the federal government is nowhere authorized to redistribute wealth by taking from a targeted group of citizens to fund social programs.

    I would be all for a flat income tax, coupled with a consumption tax to encourage savings, sufficient to meet legitimate government expenditures, such as infrastructure and defense, but NO federally-funded, non-contributory, social programs. The moral hazzard, in the form of personal irresponsibility, of these programs simply overwhelms any good intentions.

    These programs turn out to be basically “chits” that the politicians use to curry favor with voters and hence are inherently divisive and economically suicidal.

    Randy

  8. kcrailroader says:

    Well the 11th hour deal has been struck and there will be no shutdown (never mind that many government agencies started shutting down at 3PM Eastern today and will take 3 days to start back up completely)
    My question is whether they were arguing the $30 Billion or the $60 Billion, how is this country going to get the deficit under control (? what $1.4 Trillion for this year)?
    Right now, part of the reason we are paying $3.61 a gallon for gas (today in Kansas City) is the relative weakness of the US Dollar. The weak dollar is caused by all the funny money the Treasury has been printing of late. What has to happen is Congress must get the budget under control, and to do that sacred cows on both sides of the aisle are going to have to be sacrificed (? – slaughtered). That means entitlement programs AND corporate welfare AND farm subsidies.
    This is all going to hurt, but the other option is going to be going back to the economy of the late 70′s and the obscene interest rates and inflation that came with it. If we don’t get this train wreck turned around I am going to be wishing I bought a bunch of Gold years ago when it was $600 an ounce. The Gold prophets said we were headed here, and here we are. What isn’t going to cut it is all of these Bovine Scat arguments over Planned Parenthood / EPA / USDA / Ethanol Subsidies / etc.

    M.

  9. Anonymous says:

    Somebody divide 38 billion, by 1,600 billion, and then multiply by a 100 to move a decimal.

    Yeh, I am impressed. I am moving to China. Adios, oops wrong language.

  10. Anonymous says:

    And leave Donald Trump alone.

  11. Anonymous says:

    An animated cartoon from 50 years ago showing liberty & freedom vs ‘ism’
    Very prescient!

    http://www.youtube.com/watch?v=WB6p5QPVhPI

    Obama is definitely ALL ABOUT the ism

  12. Randy Wills says:

    To “kcrailroader”:

    At what point would you suggest that we address “these Bovine Scat arguments”? Inappropriately spent taxpayer money is still taypayer money that would be more appropriately used to reduce the budget deficit.

    People complain about the Republicans bringing “social” issues into the negotiations, but aren’t the “social” issues a significant part of the soaring deficit? I can’t think a more obvious “no brainer” than scratching Planned Parenthood and NPR from the budget. I’d be embarrased to be a “social liberal” after listening to the rhetoric about the Republicans wanting to “kill women” by the elimination of Planned Parenthood.

    What part of “WE CAN’T AFFORD IT” that these people don’t understand?

    But the big one (along with the EPA) that I would go after is the Education Department. I understand that President Obama is proposing a 21% increase in spending on education in his 2012 budget, yet there has been NO increase in educational outcomes for the last 40 years, no matter how much we spend. Now, there’s a problem that, as a businessman, I would love to have the chance to attack. You can rest assured that there would be no teachers unions at the table.

    Randy

  13. William A. Rose says:

    Our relatively cushy lives are about to change. Y’all better know how to grow food and be able to protect it. That’s all that’s gonna matter.

  14. Patrick Henry says:

    William A. Rose is right.
    And we let it happen on our watch.
    Saddest part…. Cloward and Piven win.
    My apologies to my State of Virginia Founding Fathers.

  15. kcrailroader says:

    Mr. Willis,

    Right now! My point is that it is BS for congress to continue to argue over issues like Planned Parenthood or if it comes up the Department of Education or whatever while the budget is in a severe deficit and almost bringing the government to a stand still to do it (after all the Democrats added the PP budget line item in a simillar fassion in the past, right?). At some point, I would hope some sense, reason and decorum could return to that body. Instead, we spend weeks arguing over something that likely should not have been funded in the first place and the real meat and potatoes issues like health care, social programs, corporate welfare and farm subsidies that all must be trimmed or cut are still sitting there waiting on action. we are 1.4 trillion in the hole for the year, we are what 14 or 16 trillion in the hole for total gvmt debt? I really don’t care where they cut, I just want this mess cleaned up.

  16. Randy Wills says:

    To “kcrailroader” @ 10:43AM:

    I don’t disagree with your point, particularly “I really don’t care where they cut, I just want this mess cleaned up.” But if they can’t even agree on the “low hanging fruit” (such as NPR, PP, EPA, and the Department of Education), regardless of the dollar amount relative to the total budget deficit, where are they going to cut?

    Our pervasive dependence on “the government” to “make all things right” in society is a curse that will be almost impossible to extricate ourselves from simply on the basis of the demographics. This is the “moral hazzard” factor in our form of government which, I believe, virtually guarantees its eventual demise.

    Randy

  17. Anonymous says:

    What are all these dependent people gonna do when the nation bellies up and the teats are gone? No forward thinking in this nation anymore.
    Anarchy is gonna really suck I am afraid.
    Once again, apologies to my beloved Founding Fathers, especially the ones from Virginia. Give me Liberty, or give me death.

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