Stop spending! Stop spending! Seriously … stop spending!!
By David H. Landon
The U.S. budget deficit has reached critical mass. President Obama’s budget for fiscal year 2012 is projected to be $3.818 trillion. Unfortunately, revenues are projected to only be $2.228 trillion, leaving a deficit for the fiscal year of $1.590 trillion. We continue to spend more than we take in. Adding to your viewing pleasure, last week the U.S. deficit hit a new deficit milestone. Our national debt has now surpassed $15 trillion. Greece and Spain are bankrupt. Italy is in financial crisis. The Euro is teetering on the brink of insolvency. What is our response here in the U.S.? We keep spending.
At the present time, there are 28 countries which are holding U.S. debt, usually in the form of bonds. Our debt to China is approaching $1 trillion. There are now signs that China has decided to slow its pace of lending to the U.S. Twenty-five percent of the overall U.S. foreign debt is owed to China.
The latest attempt to reduce our federal deficit ended last week in the spectacular failure of the Joint Select Committee on Deficit Reduction. Although I am calling it a failure, this delegation of power to this supercommittee should never have happened. It was destined to go down in flames. The Democrats on the committee were never serious about reducing the federal deficit by the targeted $1.5 trillion dollars. In fact the Democratic committee members, in the words of Democratic committee member Jim Clyburn on Nov. 13, “never coalesced around a plan” themselves.
Although they never announced a plan, there was one uniting principal binding the Democratic committee members: they insisted and required $1 trillion in new revenue. Just so there’s no misunderstanding, new revenue means new taxes. They sold this tax increase to the American public by insisting that they are only making the wealthiest Americans pay their fair share. There’s only one problem. There’s not enough revenue from those Americans making $250,000 or more annually to meet the target. If the Bush tax cuts are allowed to expire, the income generated from those wealthy taxpayers would be about $41 billion dollars annually. That’s only 40 percent of the $1 trillion revenue over the next 10 years that they were seeking in the supercommittee. That means during this awful recession (brought on by unsound Democratic housing policies), the Democrats in Congress want to raise the taxes on all Americans.
So what did the Republicans put up in the way of a plan? It also involved new taxes. The essence of the plan was to dramatically reduce the deductions and credits wealthier taxpayers can claim to reduce their tax liability. That would generate enough revenue to both permanently reduce marginal rates for all taxpayers and provide more than $250 billion in new taxes for deficit reduction. They also wanted to close other loop holes that allowed corporations like Obama pal Jeffrey Immelt’s company, General Electric, to earn $14.2 billion in 2010 and not pay any tax. Added to other receipts, taxes and fees, the Republican plan amounted to more than $500 billion in deficit reduction revenue and $900 billion in spending reductions. They argued that this lowering of the rates and broadening of the tax base would have spurred economic growth and created jobs. In the process, the plan would have generated billions more in revenue from growth in the economy. The total in deficit reduction would have been more than the $1.2 trillion needed to avoid the across-the-board spending cuts. It was a serious effort to reach a consensus and the Democrats wouldn’t even consider it.
Where was Obama during the supercommittee process? He made no effort to be involved in the negotiations. There was no public leadership from the White House. You can’t blame the president if he was less than engaged in the debt reduction process. Immediately after the supercommittee was formed, the president first lectured the country about “living within our means” and then trotted out his “son of stimulus” plan. He was asking Congress to spend another $450 billion dollars that we don’t have on his next round of “shovel ready” jobs. He was also, according to his press secretary, “very engaged” with the Europeans on settling their debt issue. Here is the most prolific spender in the history of the world (running up $5 trillion dollars in deficit spending in three years) telling Europeans to get their fiscal house in order. The enormity of his hypocrisy is mind boggling.
News flash: The president wanted the supercommittee to fail. He wants to run against the Republican members of Congress as obstructionist to the common good. If there was a deal by the supercommittee, a deal whereby the Republicans agreed to close some tax loopholes thereby generating tax revenue as part of the deficit reduction, it would damage his already fleeting hopes for a second term.
The media are already full of stories attempting to paint the Republicans as the culprits. Why can’t the Republicans go along with one more stimulus package to rev up the sputtering economy? Why can’t Republicans abandon this notion that tax increases kill jobs and growth? If we’ll just give in on tax increases, the Democrats promise to get serious about cutting spending. That’s like Charlie Brown believing one more time that Lucy won’t pull the football out as he attempts to kick the ball. Don’t do it, Republicans … you’ll end up like Charlie Brown … flat on your ass and out of office.
Seriously…why can’t Democrats stop spending?
David H. Landon is the former Chairman of the Montgomery County Republican Party Central Committee. He can be reached at