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June 04, 2012

When You've Lost Fred Hiatt....

The editor of the WaPo doesn't seem to think Obama has the spine to do what's needed to fix the budget crisis:

To fund the services Americans expect, the government will have to spend at least 19 or 20 percent of GDP, probably more like 21 or 22 percent as society ages. It has to find a way — not this year or next but over the next decade — to raise as much as it spends.

Revenue will have to go up, and the rising arc of health care and pension spending will have to be bent down. Democrats hate the latter, Republicans hate the former, and voters don’t like either. Achieving a grand bargain will require a leader with the steel to stand up to his own party; the charm and muscle to assemble a legislative coalition; and the eloquence and passion to persuade voters.

Hiatt's framing of the problem (as one of funding "the services Americans expect") is revealing, particularly since quite a few Americans have no desire to pay for those services. The budget problem is consistently framed as being a function of the parties but the real problem seems to be not the parties, but an electorate that wants an ever increasing number of services, but only if someone else pays for them. Politicians base their promises on what they think we want, and are only too happy to promise us the moon but elide past what that will cost down the road. So the real question seems to be, who has the courage to tell voters from both parties what they don't want (but need to) to hear? In this regard, Obama's record isn't promising:

The reason to doubt Obama can be summed up simply: He’s had his chance. When the Simpson-Bowles commission presented its plan to reduce the federal debt, with bipartisan support, the president ducked. “If it had been President Clinton, he would have said, ‘God, I created this, this is wonderful. It was all my idea,’ ” co-chair Erskine Bowles, a Democrat, later recalled. “So we were really surprised.”

When Obama was nearing a deal with House Speaker John A. Boehner (R-Ohio), the president upped the ante — from $800 billion to $1.2 trillion of tax hikes— dooming its prospects. The White House says Boehner never agreed to a genuine $800 billion and couldn’t have delivered anyhow; we’ll never know. This year, with the nation hurtling toward a series of potentially devastating fiscal deadlines, Obama is inert, apparently trusting that all can be put right in a lame-duck session.

Given the opportunity to assess Romney's fiscal record, one might expect Hiatt to examine Romney's efforts to rein in spending and address the deficit as governor of Massachusetts. Instead, he focuses like a white hot laser beam of truthiness on blissfully fact free generalities .... and the obviously relevant No Child Left Behind:

... good luck finding evidence of spine in Romney’s political career. In moderate Massachusetts, he was a moderate. In conservative national primaries, he was a conservative. From big things (immigration) to less big (flak over his appointment of an openly gay spokesman), Romney’s default position has been to pander and cave.

Still, both men have occasionally bucked their bases. On education, for example: Obama has for the most part resisted pressure to give up on teacher evaluation, while Romney (unlike his rival Rick Santorum) has, at least to an extent, withstood states-rights pressure to abandon No Child Left Behind and the idea of accountability.

Fortunately, USA Today does the work Hiatt can't be bothered to do:

Massachusetts' Democratic-dominated Legislature blocked many of Romney's proposals, said Maurice Cunningham, chairman of the political science department at the University of Massachusetts-Boston .

"The ideas that he proposed were good ideas and workable ideas," Cunningham said. "I don't think he got as much done as he might have wanted to, but he did work on consolidating agencies, and I think those things were way past time to do it and they made logical sense."

Romney has offered few details about what exactly he would cut from the federal government as president, but has pledged major overhauls, spending cuts and efforts to streamline the federal government's bureaucracy.
"The president has made little effort to rein in redundancy and waste," Romney said during a recent speech in Iowa. "My approach to federal programs and bureaucracy is entirely different."

To illustrate his point, Romney noted a 2011 report issued by the Government Accountability Office that identified 34 areas where redundancies were found in the federal government.

During a closed-door fundraiser in April, Romney was overheard telling attendees he may seek to eliminate the Department of Housing and Urban Development. He has also mentioned paring back the Department of Education.
But reforms like these are easier said than done, as President Obama has experienced as recently as this year.

Obama has requested authority to merge a litany of trade-related agencies, but the proposal has languished in congressional committees and is unlikely to see the light of day this year.

Presidents from 1932 until 1984 had the authority to reorganize the federal government, Patricia Dalton, the GAO's chief operating officer, told a Senate hearing on Obama's proposal recently. The authorization lapsed during President Reagan's first term, and no president has had it since.

President George W. Bush pushed to regain the independent reorganization authority but Congress never acted on it.

Presidents and candidates often promise consolidation, but their intentions rarely consider Congress' role, said Paul Light, a professor of public service at New York University.

The programs "belong to congressional committees, subcommittees and individual members, they put them there, they knew that there was duplication and overlap when they created each one of these programs," Light said. "They were put there because they were in their institutional and electoral interests."

Some might see this as an indictment of Romney's leadership skills, but as the article makes depressingly plain, it is also very much an indication of structural problems that make it unlikely (absent some sea change in public opinion) that even a Republican-led Congress would do much to change the status quo.

Tell me where I'm wrong here - what, specifically, do you expect a Republican president to do to cut spending and how - specifically - would he get Congress on board? Or do you think Congress can be bypassed? If so, how?

Posted by Cassandra at June 4, 2012 08:45 AM

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Senior costs - Health care, Social Security and Housing are huge. Death panels are out. But what about a voluntary death panel of 1? "Do not resuscitate" transfers x$ credits to your designated beneficiary for health care, education and so on. Or a one-time-only bulk payment.

This is truly sick. But potentially very effective and very free market.
I suppose this has already been the subject cheap futuristic novels and movies

But how else will the people with the highest maintenance cost give up what they viewed as rightly theirs?

I can't believe I wrote this.

Posted by: tomg51 at June 4, 2012 10:22 AM

Two ways to deal with this hole. One, cut spending. Much of the current overspending is one offs, "Stimulus", and all Romney will have to do is not sign off on it. The rest of it is not going away so long as we have the Civil Service. If Congress tries to deal with the problem, Congressmen will be capped by the Bureaucrats. See what happened to Ted Stevens.

The second way it to free the economy. Double the economy, and the deficit is, by all sensible measures, halved. This is something Romney can do quite easily, and I think many people are going to be surprised at how quickly things turn around. The important thing is to educate people, so we don't have another idiot "Porkbusters" moment. Sigh.

Posted by: Robert Mitchell Jr. at June 4, 2012 11:05 AM

It seems to me that the problem suggests a solution. Clearly, Americans are happy to trade short-term benefits for long-term costs they don't understand very well.

So, bills need to be structured to provide immediate candy in return for the long-term structural reforms that are needed. The name of the bill should be something like the "Free Money for Everyone Act of 2013," and in return for (say) immediate tax cuts, we also include deep in the bill some Federal pension reforms and/or Medicare/Medicaid reforms.

If anyone objects, we point out that all that's way down the road, not coming online for five or six years; and anyway, it's just our way of being responsible by making sure the tax cuts are 'paid for.'

Posted by: Grim at June 4, 2012 12:34 PM

The problem is that the next congress will dispose of those systemic reforms as the new "Free Candy" and they'll never happen.

Posted by: Yu-Ain Gonnano at June 4, 2012 12:38 PM

At the risk of making everyone hate my guts and livers, when you amass large amounts of debt, simply cutting spending isn't enough. You have to pay off the old debt first before spending anything but essential bills.

Grim's suggestion (though probably offered in jest) has real promise but I fear Yu-Ain is right - the moment the rubber hits the road, Congress just rewrites the rules and kicks the can farther down the road.

I don't really think growth would solve the problem either. I truly believe that *modest* increases to the marginal tax rate are needed. I also think that the 50+% of people who pay no federal income tax have got to pay something, even if it's a modest amount. You can't have half the tax base with no skin in the game.

Neither change would make either party happy, I fear.

Posted by: Cass at June 4, 2012 01:05 PM

Every thought I have on this subject leaves me depressed. All I can think about is pigs and troughs. I don't see how Farmer Romney can make pigs into cats. Bacon maybe, but not cats.

Posted by: spd rdr at June 4, 2012 01:43 PM

Spending cuts alone will not solve it. Tax increases (even if we assume they'll raise revenue, which is a debatable issue) alone will not solve it. Deep cuts accompanied by increased revenue are the only solutions to the debt crisis. No more "reduced increases in spending = cuts", no more "future cuts to be implemented five years from now". Cuts now, cuts across the board (entitlements too, not just discretionary cuts), and austerity measures for the future. And the worst thing is, I doubt any of it will ever happen.

Posted by: MikeD at June 4, 2012 01:51 PM

...everyone hate my guts and livers....

I've always hated livers, Ma'am. [g] I grew up on liver and onions, and I've never looked back.

...*modest* increases to the marginal tax rate are needed.

Since government doesn't need the money, not only are tax rate increases not needed, the rates need to be reduced. Some back of the envelope calculations:

In 2007, according to Census Bureau data collected from IRS-aggregated Form 1040 filings, Americans earned $17.8 trillion dollars from all sources: wages and salaries, interest payments, dividends and capital gains, gambling earnings, pass-throughs from their small businesses, and so on. In 2007, according to Government Accounting Office data, Americans paid an aggregate of $1.15 trillion dollars in taxes on that income--about a 6.5% rate.

A flat tax of 10%, with no deductions beyond an exemption of half the then Federal Poverty Guideline returns that federal revenue plus a taste that can be put solely toward paying down our debt. Put businesses in the same boat, absent the FPG exemption.

All of this elides the premise that tax reform needs to be revenue neutral. It doesn't. It's not the government's money.

To answer your other question, though, getting Congress on board with this would be...problematic.

Eric Hines

Posted by: E Hines at June 4, 2012 02:15 PM

If I'm not mistaken just about all the revenues received by the Federal Government are spent as payments to individuals (granted some of those payments are for services such as Medicare.)

In other words there are no revenues for other needed government services. How the heck are you going to fix that? I don't think it can be done. I do understand about possibly raising taxes but you'll never fill the gap that way.

On one thing I am dead certain, if no one makes changes, is that by 2020 spending on government (local, state, and federal) will exceed all the income, from every source, of every person in the nation. At that point who knows what might happen, but paying off debt just isn't going to be done. What everyone is going to get another job?

Unless you're Paul Krugman who happens to think we are just borrowing from ourselves. BTW has anyone got any idea what exactly that means? "Honey, I turned myself down for that loan we wanted" (blink... blink.)

Posted by: Allen at June 4, 2012 02:20 PM

"Honey, I turned myself down for that loan we wanted" I pity the poor fool....

Now I, on the other hand, would be saying, "Hey, Babe--quit your job. I just loaned my self what we need to buy the Cayman Islands. Self assures me that he's good for it. Paul Krugman even co-signed the note."

Eric Hines

Posted by: E Hines at June 4, 2012 03:04 PM

"I don't see how Farmer Romney can make pigs into cats. Bacon maybe, but not cats."

Should he succeed, then pigs, by proxy, will fly!

Posted by: Mr. Peabody at June 4, 2012 05:13 PM

Well, if that isn't the most ingenious use of a dead cat that I've ever seen. Can it be armed?

Posted by: spd rdr at June 4, 2012 05:23 PM

"Well, if that isn't the most ingenious use of a dead cat that I've ever seen. Can it be armed?"
A modified and miniaturized M61 Vulcan cannon, capable of firing 6k hairballs a minute, is in the works.

There's a carpet bombing weapon on the drawing board, but I'm not willing to discuss that weapon while sober and without profanity...

Posted by: Mr. Peabody at June 4, 2012 05:41 PM

Allen, you have put your finger squarely on what bothers me.

I think government is there to provide things the private sector can't due to the free rider problem: roads, a national defense, infrastructure.

We're spending all our money on payments to individuals to insulate them from the same business cycle that has existed since the dawn of time. That doesn't provide any value added to future generations and doesn't really help us prosper now. It's throwing good money after bad.

Posted by: Cass at June 4, 2012 06:01 PM

"We're spending all our money on payments to individuals to insulate them from the same business cycle that has existed since the dawn of time. That doesn't provide any value added to future generations and doesn't really help us prosper now. It's throwing good money after bad."

The only positive thing to be thankful for as we watch the current crop of vote for me and I give ya < fill in the goodies > spendthrifts and the avarice of their voting/enabling recipients crater the West, is that it can't go on forever.

As someone once said,

"when you amass large amounts of debt, simply cutting spending isn't enough. You have to pay off the old debt first before spending anything but essential bills."

And if not, it's good to be well armed. Of this I am positive.

Posted by: Norman’s Vincent Peales at June 4, 2012 06:35 PM

We are in a terrible fix, there is no getting around that.
Interest rates are at an all time load due to the vast amount of deficit cash floating about, yet people are afraid to borrow and risk against the future.
Taxes are due to go up quite a bit next year, as the dreaded "Bush Tax Cuts" expire and the new taxes for the Affordable Health Care Act begin.

Our service on our huge national debt will go up substantially (never mind reducing debt) if the economy ever starts to grow substantially again, as interest rates must rise. If the interest on the debt goes to 5%, we will probably be shoved right back into big deficits again and see a nascent recovery wrecked.

If Romney is truly going to be the heavy cutter he must, he will also probably only be a one term president, as the cuts will certainly inflict "pain" on the welfare and entitlement class.

The incredible amount of debt amassed by the Obama Regime in the past three years is a feature, not a bug, to these people. Like ACA will morph into a single payer plan in a decade (as insurance companies go out of business), our huge national debt will result in a command economy and the socialization ("corporatism") of many major business and banking corporations.

"A Republic, if you can keep it"- Benjamin Franklin.

It is fading fast, and the future we will see would not have been imaginable 20 years ago.

Posted by: Don Brouhaha at June 4, 2012 09:24 PM

Being da eternal optimist and ya know, what wit dat Wissconnsin brouhaha yesterday puttin' me in da mood for some music.

Elwood! Let's do a tune for da HMWIC, at least HMWIC until January, eh...

Hey O! Baby don't you want to go?!

Posted by: "Joliet" Jake Blues at June 6, 2012 09:27 PM