Three deadly sins of rational budgeting

Presidential candidates are avoiding the hard choices about federal entitlements

Excerpt:

Because we're running a deficit of $244 billion, much of the spending increases are likely to be financed. Interest on the federal debt is running about $250 billion, or 9 percent of the total budget.

Solving the larger problem of entitlement spending, though, receives scant attention from the candidates vying to be Bush's successor.

"The campaign rhetoric hasn't made me feel any better about all of this," Bixby said.

Candidates from both parties have said little about the rising cost of entitlements because slowing the advance of the big money requires hard choices — saying no to good programs or popular tax breaks, for example.

That's not a message that plays well in an election year.

"Both sides are over-pandering to their base," Bixby said. "The implication is that Republicans won't ever raise taxes and Democrats won't ever cut benefits."

Actually, if we're going to bring the deficit under control and embrace fiscal discipline, we'll have to do both.

Instead, Congress and the administration opt to simply embrace what Bixby calls the "three deadly sins of rational budgeting": delay, denial and diversion.

Comment: We are close to the finacial tipping point. Politicians are studiously avoiding the giant elephant in the room!

What the candidates won't tell you

The Big Lie of 2008

Excerpt:

Social Security, Medicare and Medicaid -- three programs that go overwhelmingly to older Americans -- already represent more than 40 percent of federal spending. A new report from the Congressional Budget Office projects that these programs could easily grow to about 70 percent of the budget by 2030. Without implausibly large deficits, the only way to preserve most other government programs would be huge tax increases (about 40 percent from today's levels). Avoiding the tax increases would require draconian cuts in other programs (about 60 percent). Workers and young families, not retirees, would bear the brunt of either higher taxes or degraded public services.
...
A moral cloud hangs over our candidates. Just how much today's federal policies, favoring the old over the young and the past over the future, should be altered ought to be a central issue of the campaign. But knowing the unpopular political implications, our candidates have lapsed into calculated quiet.


Comment: These comments are from a respected economist, Robert J. Samuelson! The expanded Medicare drug program is an unfunded promise! The Social Security program is either at or near its tipping point. See his article for solutions (none easy!).

Despondent conservatives and the Swedenization of America

Why even Reagan couldn't stop spending from skyrocketing--and what to do about it

Excerpts:

The numbers confirm what every despondent conservative already knows. Since Reagan's stunning victory in 1980, conservative journals have annihilated forests to print articles about excessive government spending. Conservative think tanks have produced sweeping plans for reducing the welfare state. Republicans occupied the White House for 18 of the 26 years after 1980, and held a Senate majority for 16 1/2 years and a House majority for 12 years. Yet the result is a federal establishment bigger and more influential today than in 1980.
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Looking forward, government spending as a percentage of GDP is about to rise dramatically. The oldest baby boomers, born in 1946, will be eligible for Social Security's early retirement benefits in 2008 when they turn 62, and become Medicare beneficiaries when they turn 65 in 2011. These two programs, along with Medicaid, accounted for 41% of federal spending in 2006, even before the baby boom cohort had started collecting benefits. All three will increase relentlessly due to the longevity and sheer numbers of Americans born between 1946 and 1964. The columnist Bruce Bartlett estimates that the magnitude of this growth will be "on the order of 10% of the gross domestic product over the next generation even if no new government programs are enacted or current ones expanded." This is the Swedenization of America on autopilot.

Comment: Washington has an insatiable appetite to spend. Both the Democrats and Republicans are guilty!