McConnell has his head on straight

Senator McConnell is one of the vew people involved in this dept discussion who is actually working to cut spending and keep taxes from going up.  This is not true of the Democrats, and it is not true of Eric Cantor and the supposed tea partiers.

As someone who considered myself a tea partier, until the tea party started arguing to not raise the debt ceiling, I think it is importaint to state why it hurts the GOP to argue against raising the dept ceiling, and why it hurts the GOP to risk losing the 2012 election war over smoke-and-mirror phantom cuts, and cuts that do not further debt reduction.  Here are the facts:

1. The US currently spends about 40% or so more each month than it takes in as revenues.  If the debt ceiling is not raised, the US will not have funds to pay for entitlements.  The math just doesn’t work out.

2. Unless the plan is to cut entitlements for people currently recieving benefits, the US will need to continue to borrow money for several more years.

3.  The sole way to avoid raising the debt ceiling or not paying entitlements at current levels is to raise taxes.  The ONLY way to avoid raising taxes is to increase the debt ceiling.

4.  In 2012 the Bush tax cuts will expire.  Only a new law, passed by the House, the Senate, and signed by the president will avoid the return of pre-bush tax rates.  So, for all intensive purposes, taxes will go up unless a Republican is elected president in 2012, and the republicans keep the House and gain the Senate.

5.  Failure to raise the debt ceiling is far worse than a government shut down.  During a government shut down federal employees don’t get paid.  However, if you take away the government’s ability to borrow, you don’t just harm people who work for a living; you also harm people who get paid by the government without working.  There is a huge difference between these two groups.  First, federal workers are used to be screwed by the government; whereas those on social security, medicare, and medicaid are not and are used to getting paid.  Second, the government has a need for federal workers (without them we cannot fight a war, collect taxes, protect homeland security, sell and manage the broadcast spectrum, conduct the Census, maintain the courts, have diplomatic relations with other countries, etc); there is no need for the government to pay any of the entitlements.  They are, in effect, optional for government.  Third, unlike government workers who are more educated than the general public, and typically able to obtain jobs outside of government at equal or higher pay; many on government benefit programs are unable or unwilling to work for a living.

As a result of these differences; whereas federal workers have continued in the US to work despite a pay freeze, and despite government shutdowns (where in the past many federal workers worked unpaid; including those overseas willing to risk their lives, unpaid); however, that is likely not true of benefit recipients.

Benefit recipients will likely react to not getting paid in the same manner that government workers in Greece and Frace did — by protesting, rioting, etc.  This would case all sorts of chaos.  It would likely trigger looting, riots, and all sorts of problems, including property damage.  These people expect to be paid, and a percentage of them will respond with violance when their meal ticket is taken away.  Unlike federal employees who have marketable skills they would perform elsewhere, those on federal benefits programs often do not.

A federal employee who is a lawyer, accountant, MBA, engineer, analyst, economist, software engineer, IT specialist, or some other highly trained speciality (as most federal workers are), can get feed up and leave.  They can get a new job, typically making more money.  Federal workers, typically want to work for a living, and are used to it.  Benefit recipents, whether due to dissability, old age, lack of desire to work, or whatever, are not in the same boat.  Unlike federal employees — who the government hires for a service provided — those who recieve benefits do not provide the government or fellow citizens, currently, with a service for those benefits.  In otherwords, they do nothing, but get paid.  They will not be able to find another source willing to pay them to do nothing as generiousily as the government does.  While they can get some help from churches, states, and noprofits, they will not get the same level of payment and benefits from the government in exhange for offering nothing.

Someone who worked for 40 years and now is on social security may have worked hard for thse 40 years he worked.  He may deserve and have earned a social security check.  However, the government doesn’t get a service from his non-work now.  In the past, the government had to pay him or else it would be untrusted and the full faith and credit of the united states would be at risk.  However, if the government can not borrow money or raise taxes, it has no means to pay him.

The government made a large number of promises to a large number of people.  If it can not borrow, its only choices are to raise taxes or to break promises.  Once the government breaks one promise, its reputation gets hurt, and it gets hurt with each promise broken.

Here are just some government promises:

1- government promised social security payments in exchange for the taxes paid.  Older americans expect to get their benifits without change to the program.  Changing social security benefits for older Americans would be breaking a promise.  Changes need to be made; but not for people who have lived their lives and pain into the current system; rather, for younger people.

2- government promised medicare and medicaid, in exchange for the taxes paid; again older americans expect to get those benefits.  Changing this for older americans would be breaking a promise.  Again, changes need to be made to reduce costs; but not at the expense of breaking the promise to old people who have paid in and planned financially under the current system.

3- just like with social security, government employees expect not to have their pension system changed on them either.  Additional contributions, lowered benefits, etc would be breaking that promise.  In the 1980s, the federal government changed from a more generious pension system to a less generious one.  That only applied to new hires.  We should make another change that applies only to new hires.  But applying a new system, or new contributions, or a reduction in benefits to employees already vested in a retirement system would be a broken promise.  Whether civilian or military, when people have put in 5, 10, or even more years of federal service in the military or as a civilian, taking away or changing their retirement is essentially going back in time and taking money from them.  The same is true of asking them to put in more money in their pension or getting less in benefits.

4- Americans expect certain services from their government.  They expect to have protection and national defense.  They expect that consitutional requirements be met, which cost money.  Even small programs, like conducting a Census every year to ensure 1 person 1 vote, and to follow the law and count every person (rather than using formulas to estimate the number of people), costs money.  It requires federal employees.  Studens who rely on government loans, and have already started school expect and rely on the loans remaining there.  Cuts should be made limiting or eliminating the benefit for new reciepents; however, current recipents expect the program to continue.

5- etc.

The point is that it is not a serious option to not raise the debt ceiling.  Real cuts need to be made in spending; especially in entitlements.  However, these need to be made over time.  The government should not break its promise to anyone.  No serious person suggests simply ending social security as of August 2nd.  Nor medicare, nor medicad.  Those 3 programs, and Defense all need to be cut substancially.  Due to ending the wars in the middle east, significant cuts can be made in the next couple years in Defense without harm done.  But those are not real cuts.  That is simply realizing the cost savings from those conflicts ending.  They were initially off budget, called GWOT spending (now OCO).  Seperate from those easy cut, cuts in entitlements and defense — where the bulk of spending is — will take time.  For entitlements, there are a number of reasonable plans and alternatives to reduce the rate of growth sufficiently to make thoes program solvent.  For defense, cutting pork can make some progress.  Real choices also need to be made.  We need to decide whether to keep military spending at a level amount or to raise taxes.  We can’t afford to make military spending sacrosanct.  DOD’s budget is twice that of all other discretionary spending combined.

The only reasonable option, other than raising taxes, is to borrow money and avoid new spending.  Overtime, it is possible to decrease spending.  However, there are limits to what can be done.  The first key limit is that cuts need to take place in entitlements and defense.  That is where all the money really goes to.  This cuts need to be over time, and need to not effect people already bought into the system.  The second key is that budget tricks need to be stopped.  We need to stop playing games.  Here are some common games:

1.   Expiring tax cuts.  1 year extionsions to the Alternative Minimum tax, or the Bush tax cuts are fake.  These have been extended year after year.  CBO and OMB continue to assume the government will not extend them again, and they are always extended again.  These need to be dealt with.  There should be permentant solutions provided that will put an end to 1 or 2 or 3 year fixes.

2. Pay cuts and pay freezes.  The federal government, like any other entity, needs people to work for it.  When it can’t find people who are qualified and willing to work at a given salary, it makes adjustments to overcome that.  Due to years of increasing federal pay less than private sector pay, the federal government start simply promoting groups of people within 1 year.  Since most MBAs make far, far more than what the government can pay a new hire who is an MBA (under $50,000 to a person with a degree in engineering from MIT and MBA from Harvard is not a realistic salary), the federal government started providing for automatic promotions for the first 3 years; brining pay up to a compeditive rate.  In other words, agencies work around the pay system.  This creep has gotten worse and worse, and as a result the federal government does not have a valid pay system for many jobs.  How many lawyers are willing to work for 1/3 what they could make elsewhere.  To make salaries compeditive, the government simply give automatic promotions until their salary is doubled, making it 2/3 of what they could get in the private sector, and then to make up for that difference, requiring only 40 hours a work a week, as opposed to 50+ in the private sector.  Thus, they can obtain people.  Although in the short run pay freezes reduce federal pay, in the medium and long run they only make the federal labor system more and more top-heavy, as the government cannot find qualified people to work in many occupational specialities at entry level salaries without automatic promotions.

3.  Future imaginary cuts.  These are planned cuts that we all know are going to be patched later.  This needs to be ended.

4. Pretending that discretionary, non-defense spending is even relevant to the debate.  That represents 12% of total spending, and is now LOWER than it was when Reagan left office.  This has not been where the growth is, is not where the problem is, and has been trimmed and cut over and over.  Expecting to balance the budget but cutting this just will not do it.  It is a scapegoat for avoiding the real debate.  Real cuts need to be focused on entitlements primarily.  Defense can be cut some due to the ending of the conflicts overseas.  However, real cuts mean entitlement cuts.

So, the bottom line is that there is no realistic way to achieve a balanced budget in August; or even in the next 2 years.  Failure to support increasing the debt ceiling is not a realistic option.  It can only be done with a very high tax increase; which would place a substancial burden on Americans, or but breaking promises to Americans.  The resonsible solution is to raise the debt ceiling; beat Obama in 2012, win the Senate, and then focus soley on entitlement reform.  Anything else is a waste of political capital.

We need a GOP president, House, and Senate in 2012 to focus soley on entitlement reform from 2012 – 2014.  Nothing else until entitlement reform is done.  That should be the plan.  Get the GOP in power, and then get them to focus first-thing on entitlement reform.  Stop wasting time expecting a deal with Obama.  Raise the ceiling, and then beat him in 2012 and then reform entitlement.  That is needed if you want any chance of balancing the budget.