Cliffhanger – Part. . .(I Don’t Know, I Lost Count)

I’m back after a break, and I’m afraid I’m going political again.  I try very hard to be non-partisan here, to focus on facts, underlying causes and solutions that might actually work, to bash systems rather than people.  Today, I’m going to allow myself a partisan moment, although in this case I don’t think it’s a violation of my general policy.

This week will bring a steady stream of President Obama blasting Republicans for being irresponsible, for refusing to compromise on taxes, for having only the interests of the rich at heart, and for being the ones who are to blame for the across-the-board spending cuts known as the “sequester.”

This is disingenuousness and fecklessness at their finest.  Three things are worth noting here:

First, the sequester was Obama’s idea, which he presented first to Harry Reid, and then to John Boehner, in August of 2011, when the three of them couldn’t come up with a budget deal.  The idea was to create a threat of spending cuts so draconian that these three wise guys would be forced to come up with a real solution in order to keep the sword of Damocles from falling.   Obviously, they were not draconian enough.

Second, while taxes clearly are a factor in restoring fiscal responsibility, the lion’s share of the problem is spending growth, especially on social programs (read “Social Security, Medicare and Medicaid”).  Take a look at the following graph, which comes from an article by (yes that) Henry Blodget (don’t worry about the source, focus on the data), and which shows spending (in red) and revenue ( in blue) as a percent of GDP.  That gaping maw on the right is your grandchildren’s future disappearing.

blodget-federal-spending-and-revenue-as-a-percent-of-gdp

Click on the graph and you can see Blodget’s entire slideshow, which is brief and worthwhile.  In there, you’ll see the this graph, which shows the growth of transfer payment spending – checks the government writes to people – over the past 50 years.  It has grown from 4% of GDP to 16% of GDP.  Tax revenues currently are 17% of GDP, so the programs encompassed by the graph below consume 95% of revenue.  If we get revenues up to their historical average of 19% of GDP, social program spending will still consume 85% of revenue.

blodget-over-the-past-50-years-social-program-spending-has-exploded-as-a-percentage-of-the-economy

The debt/deficit problem is the signal issue of our day.  For more on that, read this terrific Wall Street Journal interview with Leszek Balcerowicz, the guy who solved that problem in Poland (the only European country to avoid recession in 2009).   We will not solve that problem unless and until we make some serious, and painful, changes in the spending trajectory of these programs.  It’s just math.

And that brings us to point three:  Obama already got a big chunk of the tax concession he wanted from Republicans.  Not all of it, but a lot – back in January because the Republicans wanted to buy time and avoid being blamed for running the country off the “fiscal cliff.”  He is now acting as if that never happened, as if this negotiation is starting from scratch.  Meanwhile, neither he nor the Congressional Democrats have been willing to engage in any sort of serious discussion about spending cuts.  By “serious,” I mean things like raising the Social Security retirement age by more than the 2-year increase that’s now being phased in over 20 years, and that I’ll bet you haven’t noticed.  Making some very hard decisions about things Medicare perhaps shouldn’t pay for.  Making patients accountable for their role in their own wellness.  Means testing these programs so that the money goes to people who actually need it.

The closest our bold and brave president has come is to offer up “unspecified spending reductions.”  He wants to solve the entire problem through tax increases, which simply is not possible.  Again. . .it’s just math.

I am not an Obama-basher.  I actually kinda like the guy.  But this is simple dishonesty, and an abject failure to act in the public interest.  It’s a shame. . .Nixon was the president who could go to China.  Obama could have dealt with spending, but he hasn’t and won’t.

This is enough to make me feel sorry for John Boehner, of whom I’m not a fan.  Whatever their ideological foibles, and there are many, the Republicans are right that spending has to be front and center in this debate, and many of them are serious about it.  In the minority and having no one with whom to negotiate, they really have no choice but to go nuclear – to allow the sequestration to go forward, to hold the debt ceiling hostage,and to threaten a government shutdown in an effort to get the Democrats to face up to the issue they most don’t want to talk about, let alone solve.

One last note: The people who elected these knuckleheads, who make it politically impossible for them to talk about the rational, necessary, unpleasant and difficult things we need to do. . .that would be us.  This is a classic case of PEIM – Problem Exists In Mirror.

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3 Responses to “Cliffhanger – Part. . .(I Don’t Know, I Lost Count)”


  1. 1 samuraibusinessgroup February 26, 2013 at 12:10 am

    Great blog, sad but true. Makes you wonder if the big kids will ever grow up?
    BL

  2. 2 Spencer Rice March 2, 2013 at 1:08 pm

    Dan
    As I think I have mentioned before you really should consider at least being a guest contributer to a national newspaper editorial page. Great blog as always – bulls eye.
    Spence


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