Bankrupt Nation
Published on Tuesday, April 4, 2006 by TomPaine
Bankrupt Nation
by Adam Hughes

As the 2007 budget debate moves forward, the complete disregard of the precarious state of our government's finances is, unfortunately, more apparent than ever. The current year deficit is projected to top $400 billion for the second time in history—the first time being two years ago. According to the president's own projections, large and persistent deficits will remain part of the budget landscape for decades if current policies are continued.

The country's fiscal health has been deteriorating rapidly without a sound steward at the helm, and it seems nobody in Congress or the administration has the first clue about how to fix it. Worst of all, it appears most members of Congress have given up trying—preferring instead to invoke fiscal restraint as an excuse for cutting social service programs they have long wanted to do away with.

Politicians often make hay about "tough choices" and prioritizing in an environment of limited resources and this year will be no different. While budget restraints are real, the current crunch is an outgrowth of our leaders’ unwillingness to confront the harsh realities of our current budget morass. The reality is we simply do not have nearly enough revenues to meet the country's needs. Nothing will change until that is addressed.

Case in point is a letter sent last week to House Speaker Dennis Hastert, R-Ill., from 23 moderate Republicans meekly demanding more funding for education, health care, housing and other key urban programs—certainly a worthwhile goal. Yet the letter asks for only a 2 percent increase—a level even the signers acknowledge will not be enough to cover inflation for the very services they supposedly want to maintain. What's worse: Despite their claims of fiscal responsibility, the letter makes no mention of the insufficient tax base and lack of revenue to pay for these vital services.  

For their part, the GOP leadership is no better. Newly-crowned House Majority Leader John Boehner, R-Ohio—more out of touch on fiscal issues that almost anyone in Washington, as recent statements reveal—is overseeing his first budget. Over the last few weeks, he has repeatedly claimed the 2007 budget will commit to fiscal discipline. He proposes including tight limits on the same discretionary spending moderates want to increase, and he wants to implement irrelevant and ineffective process changes.

But Boehner's benchmarks will make very little fiscal difference. The changes to the budget process–such as the president's line-item veto proposal or earmark reform–will have no bearing on the dangerous long-term structural imbalance in the budget. Emphasizing these changes only serves to distract from what Boehner doesn't want anyone to realize—that this budget will increase deficits and ultimately make America’s fiscal woes worse.

Boehner and Hastert, along with a host of conservative Republicans in the House, are likely to push back on moderates to hold discretionary spending down. In fact, it is highly likely the crux of the entire budget debate this year in Congress will be over as little as $7 billion in discretionary spending. That is one quarter of one percent of the total money the government will spend in 2007.

The main issue here is that members of Congress have failed to realize that shaving a few extra billions off of discretionary spending will make no difference whatsoever in the long-term fiscal outlook. But cuts to those accounts will have a huge impact on the everyday lives of millions of Americans across the country. As the House moderates aptly state in their letter, "It is the taxpayers at the local level in our districts who are bearing the brunt of these cuts. It is the families who we represent who will have to make up the difference."

With the House set to debate their budget resolution this week, moderate Republicans will once again determine the fate of the budget–just as they did last year. Yet the dissatisfaction of those moderates may be even greater now than at anytime in the past. Without changes to the bill approved by the House Budget Committee last week, it is unlikely the House will pass a budget this year.

Those moderates in the House (as well as all Democrats) are reacting to years of federal budgets with severely misplaced priorities. Investments in communities, people and infrastructure have been cut or scaled back each year under Bush. The average American family has more debt, less income, higher expenses, fewer government services and supports and less opportunity than four years ago. Yet huge tax cuts for the wealthy continue and have resulted in a government in debt up to its eyeballs.

To make a real difference in the terrible state of our government's finances, it will take far more than bickering around the edges of discretionary spending programs. It will take a fundamental re-evaluation of the tax cuts passed over the past five years now that is clear we cannot afford them. It will take an honest re-assessment of our defense and military spending and an end to ad-hoc funding of military conflicts. It will take long, reasoned and intense debate about the future structure of entitlement programs and whether all of us, as a country, are willing to pay for the promises we have made to future generations. And most of all, it will take a realization that we cannot have it all.

The worst part is not the looming fiscal challenges we face, but that our leaders have continued to hold the bar so unbelievably low when searching for solutions. While doing nothing to stop the deteriorating trend, recent budget and tax policies will only make things worse—much worse. Unfortunately, the blind allegiance to those policies by the White House and far too many in Congress shows little sign of dissipating.

To bring the government books back to balance and tackle the current and future fiscal challenges facing the nation, we need a drastic change in our budget and tax policies and we need it immediately. We can no longer afford to consider budgets that tweak spending around the edges as successful simply because they are passed in a partisan environment after much political infighting when they do nothing to address our eroding tax base. We need our leaders to rise above the fray and begin to make real progress toward overcoming the real fiscal challenge of insufficient revenues—not the usual hand-wringing and pandering we are witnessing once again this year. We need real leadership. Time is running out.

Adam Hughes is a senior policy analyst at  OMB Watch, a nonprofit research and advocacy group based in Washington, D.C.

© 2006