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Friday, November 12, 2010

Fiscal Surgery with a Machete

When President Obama appointed the debt commission, I dismissed it as nothing but farcical pandering to his critics who accused him of his soaring deficits. We are staring down the barrel of a trillion dollar a year deficit gun that will turn us into another Greece. The sustainable debt to GDP ratio is 5.5%, we're cruising at near 9% for the next decade. So we get this blue ribbon committee with all the illusions of bipartisanship to solve our problems. I thought we would get some timid proposal about raising the soda tax a nickel to offset expenditures. Well color me embarrassed.
The debt commission took a machete to the way Washington does business. Tax increases, spending cuts, and a reevaluation of our entitlement programs. They hit this one out of the park. The problem with our debt is that to fix it, you need to combine the best ideas of both sides and that very seldom happens. Republicans and democrats are both mad about the report, which means it is most likely on the money.
The beauty of the proposals is that they pull no punches. Defense, medicare, and social security all take hits because they are what is driving this problem. 40 billion dollars for a spare engine to a plane we hardly ever use, put that in the bank.
Paul Krugman, still a little weepy eyed over the stimulus not worsening our long term t economic picture enough, is mad about the proposals. He has a noble prize and we learned last year they just don't give those things away, takes at least a week of doing something. The one complaint of his that stood out the most in my mind was that they set a spending ceiling but not a spending floor. That seems borderline moronic. Think about this. He's mad a commission trying to cut spending didn't limit just how much we could cut spending. I've often taken exception to his hyper partisan view of government debt, he thought it was satan's hand in the Bush years and the only thing that could save us under Obama, but this one might just take the cake. A floor for spending will be naturally found and can be easily gauged by voters ire. His complaint also misses the point, because our problem has never been spending too little, but that we spend like a Saudi prince on vacation. Who knows, maybe with a GOP house he'll roll back to the good ol' days of despising budgets.

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