After initially looking as though they were going to punt on entitlement reform, the House GOP has grudgingly (thanks to Tea Party pressure) decided to tackle the issue this year. Outspoken members of the Tea Party have forced the issue into the discussion over this year’s budget, and plans for future budgets. Congressman Allen West, endorsed in his campaign by Richardcyoung.com, said this “This is about leadership. If we don’t deal with entitlements, then we are not serious. I am glad to see our leadership stepping up to the plate. They’re not backing away from the 99-miles-an-hour fastball. This really is about courage.”
The administration and both houses of Congress should be deadly serious. Entitlement reform is the most important issue facing America today, period. Medicare and Medicaid account for almost all the future budget busting spending growth. If those two programs were reformed, the federal government would be damn near solvent. Add in reductions to discretionary spending on domestic spending and a drawdown of troops in foreign countries and the budget is in much better shape. There are actually very few ways out of this mess. It is the political will that is lacking, not knowledge of the solutions.
The Federal Reserve, for its part, has created another bubble, this time in federal spending. By supporting treasury prices the Fed has allowed the White House and Congress to continue borrowing without anyone seeing spiking interest rates, which would be a sign that perhaps the country was borrowing too much. I hope market participants aren’t being bamboozled by this ruse.
When examining spending at the federal level, it is often important to ask yourself whether you have seen any changes in your life from increased spending. Over the past two years the president and the Democratic Congress have increased spending by more than 21%. Is the federal government doing more for you today than it was two years ago? Probably not. Unless you belong to one of the few special interest groups that have received the bulk of the president’s largesse (SEIU, the green industrial complex, and states with broken budgets), I doubt you are better off today. But the president’s new budget will lock in all that new spending, and while the taxpayers fund his spending, his special interest campaign donors will reap the rewards.
Why can’t a Washington budget be written that balances? Not once in the ten years of forecasting in the Obama budget does the budget balance. How long are Americans going to have to wait for a balanced budget? There should be a balanced budget written for this year. Anyone wanting to spend more should have to defend why, not the other way around.
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