Ashamed

I'm saddened. Here comes "the best of the best" scaring the daylights out of everybody in a two-full-page ad in the Sunday New York Times on September 7, 2008, with a $53 trillion hole in the federal budget supposedly caused by Social Security and Medicare entitlements. This financial group must know of the CBO study of the cause of the increase in the national debt the first four years of President George W. Bush's term. The CBO finding: 48% due to tax cuts, 37% due to war and security costs and 15% due to increased spending. The devastating affect of Bush tax cuts over the past eight years have added over $4 trillion to the debt. But averaging a $500 billion deficit each year for eight years hardly a peep out of the eminent Peter G. Peterson or Concord Coalition. I have the highest regard for both. I've worked with them. And now there is the Peterson-Walker initiative on the budget. But somehow they get lockjaw when a Republican president takes over, and only surface when a Democrat might take over.

None other than Alan Greenspan set the scene for tax cuts on January 25, 2001, when he testified that we were paying down too much debt. At the moment of his testimony, the Secretary of the Treasury reported that we were $65 billion in the red. But the Secretary of the Treasury was soon to be given his walking papers and the idle rich got a tax cut causing us to go from surpluses as far as the eye could see to increasing the debt by $4 trillion. Addressed To the Presidential Candidates and the American People, the ad states: Federal office-seekers cannot realistically be expected to propose detailed plans for Medicare, Social Security, health care, and other spending and tax reforms during campaign season. Why not? For over a year that's exactly what they've been doing. And we have almost two months to go before election day. It is the two-page ad that is unrealistic. As of this minute the Secretary of the Treasury reports a deficit for fiscal year ending on September 30th of $722 billion. Rather than advertise an impossible "53 trillion" hole, it ought advertise the reality a $700 billion deficit that one of the candidates will be faced with in January. That means that before money can be appropriated for health care, infrastructure and energy that both candidates are promising, we'll have to cut spending and increase revenues $700 billion before we have money for new programs. The next president will at best have to set a course for recovery with a budget freeze, spending cuts, and tax increases. This is exactly what was required in 1993 when we changed course and fixed the economy for its best eight years in history. Of course, it wasn't easy. Half of the Senate and House of Representatives in government committed not to pay for government is a cancer on democracy. This is the scandal that should be exposed in a two-page ad.

Bush tax cuts have caused the national debt to increase $4 trillion, requiring an annual payment of $200 billion in interest costs each and every year until the debt is eliminated. The ad should point out that the President and Congress in eight years have launched a new $200 billion spending program for nothing. This is the waste that we've got to stop next year not any $53 trillion hole.

Entitlements continue to get a bum rap in the ad. Both Social Security and Medicare are in surplus. Yes, something will have to be done about health care costs. But Social Security presently has a surplus in excess of $2.4 trillion, with another surplus this fiscal year of $198 billion. These surpluses will carry the program through 2041. In 2017, instead of adding to the Social Security surplus, we'll start spending from the surplus. The Social Security bonds will have to be honored, and the President and Congress in 2017 will be looking for money to honor these bonds. This is the reality which the ad ought signal not a $53 trillion hole.

Finally, the ad mentions a trade deficit without mentioning its principal cause outsourcing! Since NAFTA with Mexico and Permanent Normal Trade Relations with China, we have outsourced our jobs, outsourced our production, outsourced our research, outsourced our investment, outsourced our economy. Tax cuts have caused a cheap dollar, and what production has not been outsourced is now being bought up with the cheap dollar. We've even outsourced our business and financial leadership. Every attempt in Congress to put a tourniquet on the outsourcing gets knocked down by the business leadership shouting free trade, protectionism.

The banks and business in their zeal for profits have forgotten about the economy and the country. At the same time that the federal government is financing outsourcing, the states are headed in the other direction, with Tennessee putting up $577 million to get Volkswagen and Mississippi putting up $300 million to get Nissan. The local Chambers of Commerce are making every sacrifice to create jobs while the United States Chamber of Commerce lobbies to get rid of them. The country has got to get its act together. Globalization is nothing more than a trade war for market share with government as a "comparative advantage." The United States government is AWOL with its generals as a fifth column. The signatories know this and, rather than boosting the banks and multi-nationals for bigger profits with this scandalous ad, they ought to be preparing the American people to compete in globalization.

Most of all, the people of America should be preparing once and for all to sacrifice. We keep borrowing to pay for the wars in Iraq and Afghanistan. We're asking young GIs not only to sacrifice and die; but if they are lucky enough to come home, they're the ones who'll pay for the wars. We are not going to pay for them we need a tax cut! The ad ought to emphasize that tax increases will be necessary.

As a member of the Senate Budget Committee for thirty years, I have worked with the principal signatories to this double-page ad. They know the nation has to sober up from this binge. Charging the candidates and people now with an understanding of the sacrifice necessary in January is more in order rather than scaring them for a blue-ribbon commission. They ought to be ashamed.

Comments

[TRex86]

In 2017 we shall start drawing from the SS surplus and scrambling for funds. Where? Ever since Reagan's "tax cuts" the payroll tax has collected more than was needed for beneficiaries and the income tax has run a big deficit. The cost of government was shifted onto low-middle income workers as the SS surplus was borrowed to hide the magnitude of the revenue shortfall. In ten years that borrowing will start coming due.
In short, we have a decade to repair our tax system, to go back to progressive taxation. Raising the payroll tax to include all income is not the best answer. Far better to end it and support all federal programs with progressive income taxes. Bill Clinton had paved the way for this. His ever-burgeoning surpluses would have made it easy to restructure our entitlements and the tax code. We could easily have gotten to a place of zero sum budgeting in which new programs ALWAYS required cuts elsewhere or new revenues. Period.
Even 53 trillion of unfunded liabilities for Medicare and social security could be dealt with. Now we're looking at Draconian measures in a deflating and inflating economy torn between an unfunded war and the socialization of investment risk. Nonetheless, if we stop being the world's cop, slash defense spending, reform our tax system and means test entitlements we're on the way to solvency. On the other hand, four more years of Republican profligacy and we're going the way of the Weimar Republic.

[schatsie]

wow your response was fabulous....I hope people will talk more about the SS surplus and Greenspam.....

Love you and Senator Hollins so much for discussing this topic sensibly...

You know I was terribly impressed at how Bush rammed thru those tax cuts as soon as he got in the White House, that man really hit the floor running.... Imagine if he had waited until after 9/11.

[Zeroes]

I agree. America is totally wondering what meds the media is on. Obama can take care of Obama. If he wants to reference women to pigs that his perogative. I think everyone should just calm down and ignore PALIN, she's not running for the office. McCain will probably put her in charge of the nationwide PTA when he wins.

[schatsie]

I am not sure what McCain will delegate to her...

Think about it
Alaska #1 in taxes
Alaska #1 in spending
Alaska #1 in rape
Alaska #1 in incest...

With that kind of a record what can you possibly turn over to her...

[Dynamohum]

Don't forget Wasilla Alaska #1 in meth production and addiction.

[KarenM]

If only we could outsource the jobs of Congress and the lobbyists. Things might actually improve.

[PATina]

Great idea.

[mgloraine]

Just when you think it couldn't possibly get worse, outsource it, and it will!

[lostinNJ1]

Forgive my stupidity here. I don't understand the 53 trillion number- how can that be? Shouldn't it be 53 billion? Our entire national debt is 9.7 trillion...

I do think the reasons for this massive debt increase under Bush are tailor-made for the Obama camp to address in their campaign. And I agree that regardless who wins, this issue needs major attention.

[schatsie]

they really are serious about the 53 trillion dollars...But that is based on the projected increase in Medicare because Health Costs have increased so much and they are projecting that they will increase (I don't know when health care totally takes over the economy)...and I don't know how they factor in inflation....

I would like to see more details about how they came up with this number... and you are right about the debt....

[TRex86]

Most of that $53 trillion is Medicare. Nobody in 1964 expected an epidmic of aging. For example, in the late 1970's we discovered that 90% of humans to reach the age of 60 were alive!
Medicare was sold as a poverty program because the poor were the elderly due to health care costs. Ironically, those over age 65 now control the majority of wealth in this country. We have transferred money across generations to protect the assets of the elderly. (None of this is a bad thing BTW).
Medical spending multiplies about fivefold beyond age 65. The largest are beyond age 85--this is a problem since this is the fastest growing sector of our society!
Here are the politics of gerontocracy:
The wealth is controlled by white guys age 65-75.
By age 85 four out of five are women. They have run out of assets and lack the political clout of the "young/old" men.
Hence, part of the solution must be wealth transfer among the elderly (which is why the program should be means tested).
As with Social Security I would not increase the sliver of payroll tax that supports Medicare part A. We can solve the uninsured problem and the looming deficits simultaneously. Merge Medicare and Medicaid/SCHIP into one program with Medicare-quality benefits. Full eligibility extends to 300% of the poverty level. Graduated buy-ins above that level. Support the whole mess with federal income taxes. Unburden the States so they can rebuild infrastructure.

[biwee]

The $53 Trillion represents UNFUNDED liabilities. That is, those items we KNOW we must pay for under the current laws, but have no way of paying.

[BAVirago]

I'm unsure what direction this article is suggesting that we, as voters, should take. Though it calls for sacrifice on the part of the American people, I think that most Americans would argue that they have sacrificed. Or maybe it's that they have been sacrificed.

[twocanpete]

The solution is simple. Take a que from Obama and apply the Social Security tax to ALL income. Blue collar and middle income Americans pay income on all of their income and so should the rich. No execptions. No problem.

[schatsie]

I agree with you about applying it to all income and even to capital gains....I saw something a while ago couple months that indicated that 1 the government collects more payroll taxes than income taxes and that 2 only 50% of the GDP is actually taxed as income, the rest is subject to the dividend and capital gains taxes...