If you have paid a lick of attention to the recent budget/debt charade, you may be as sick to your stomach as I am. Presiding over the sinking ship is a president who in all honesty does not have a resume to run a tiny business, never mind the most productive country in the world. In my post “The Tea Party’s Biggest Concern Is The Old Boy Republican Leadership,” Speaker John Boehner is correctly profiled in, shall we say, unpleasant fashion. For what to me is inexplicable reasoning, former speaker Nancy Pelosi and Harry Reid were in 2008 reelected. On the budget/debt charade, Ms. Pelosi opined, “We’re trying to save life on this planet as we know it.” One would hope that Nancy Pelosi is not looking to save much about the legislation that she and accomplices Barack Obama, Harry Reid and John Boehner have jammed down the throats of Americans.
Look, I have no special ax to grind with Republicans or Democrats. I am an independent. My goal is promote the type of federal republic common sense that I know, after nearly 50 years in business, is best for my clients. My clients are America’s job-creating, small business owners as well as conservative Americans investing for a comfortable retirement. Nothing radical here. We Americans continue, in large measure, to elect, politicians who could not get a low level job at most of the businesses my clients run. Not to pick on neophyte President Obama or Nancy Pelosi, but who among us finds the skill set of either appealing? And yet fellow Americans have voted Obama and Pelosi as competent to run our country. It’s a real head scratcher.
Regarding the budget and the national debt, here is a quick top-down primer. You will not get this easy stuff from the Washington crowd as most of them are engaged simply in playing the “save my job” game. Five basic spending sectors account for about 70% of total government spending. Worry about this group first and everything else will fall into line: (1) social security, (2) defense, (3) Medicare, (4) Medicaid & health subsidies, and (5) interest on the national debt. For today, leave interest alone, although I assure you that interest on the debt is a massive ticking time bomb that will eventually break the bank. OK then, we are laser focusing on four dominating spending categories.
Defense: Don Rumsfeld recently remarked that more than $80 billion in unnecessary spending for pet projects has been shoved down the Pentagon’s throat over the last decade. I would point out that due to Neocon pressures, America, over the last decade, has engaged in three power-projecting military excursions that should not have been undertaken. Clearly military spending can be cut without sacrificing America’s security. A start to the military housecleaning would be an orderly withdrawal from Iraq and Afghanistan.
Social Security, Medicare, Medicaid: Lyndon Johnson introduced Medicaid and Medicare. Medicaid cost $4 billion in 1966, $41 billion in 1986, and $243 billion last year. These programs include legislated annual funding increases. As to Social Security, the always-sensible Senator Tom Coburn advises pushing full-claim Social Security off to age 70.
When you read about spending deficits and debt, I encourage you to look at each in terms of percent of GDP. Your vision will be in focus. I target base percents for the following: (1) deficit to GDP—1%, (2) debt to GDP—35%, (3) fed government outlays to GDP—19%, (4) fed government receipts to GDP—17% (Our latest revisions). Today, receipts to GDP are not worrisome. Today’s triumvirate of concerns are debt to GDP, deficit to GDP and outlays to GDP. For these temporary imbalances, we have the incompetent George Bush and the more incompetent Barrack Obama to thank. Each has over-committed America in dramatic fashion. George Bush is gone, and, in 2012, Barack Obama will probably be gone. Only a 2008 perfect storm allowed this ill-prepared fellow to move into the White House. The man’s weaknesses have now been totally exposed.
OK, the picture is not pretty. Americans in 2012 have a historical chance to vote the country back on a federal republic track, but I wish I were enthused about the chances for a positive outcome in the Senate.