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Daily Archives: March 1, 2011


David Brooks: austerity, “death panels” and spending exemptions

David Brooks helps demonstrate the problem we face in doing anything meaningful about the fiscal mess our government has gotten itself in.  To give him his due, he is trying, at some level, to address the problems facing the country. But he manages to end up putting himself in precisely the position which seems  prevalent today among those not really serious about doing what is necessary to put the fiscal house in order (but like to pretend they are)  – that is “we want budget cuts but don’t touch my favorite programs”.

Let me give you an example from his column today entitled “The New Normal”.

He begins by acknowledging that there is going to be (needs to be?) a whole lot of deficit cutting over the next few years.  And, his first principle of austerity, as he calls it, is that lawmakers must, as he inartfully but correctly puts it, “make everybody hurt”.  He’s right – no exemptions.  Every program, department, echelon, you name it, associated with government (yeah, that means you public sector unions) are going to have to sacrifice something.  Fine to that point.  When you’re looking at 1.3 trillion in a single year deficit, everyone does have to “hurt” if you hold any hope of eliminating it.

However, in this column  he launches into his second principle of austerity and loses me immediately.

A second austerity principle is this: Trim from the old to invest in the young. We should adjust pension promises and reduce the amount of money spent on health care during the last months of life so we can preserve programs for those who are growing and learning the most.

This “principle”  is based in a very nasty premise that “we” are in control of all the money “spent on health care” during the last months and should use that power to help balance the budget (and the fact is, with Medicare, that premise is true).  In other words, “we” will decide to pull the plug on the treatment for oldsters in favor of treatment/”investment” in youngsters.  Not the old folks themselves, mind you.  They’ll have no say in it. He’s talking about the collective “we”.  But don’t you dare say “death panels” you hear me?  And note, he immediately violates his first principle of making “everyone hurt” by claiming that if we throw the oldsters under the bus, we can “preserve programs” for the young.  Where’s the cut in spending when we’re “preserving”?

Oh, it’s not “spending” … we’ll call it “investing”, shall we?

Brooks then expands his “for the children” campaign with this bit of nonsense where he takes a shot at House GOP members:

In Washington, the Republicans who designed the cuts for this fiscal year seemed to have done no serious policy evaluation. They excused the elderly and directed cuts at anything else they could easily reach. Under their budget, financing for early-childhood programs would fall off a cliff. Tens of thousands of kids, maybe hundreds of thousands, would have their slots eliminated midyear.

You’d think Brooks, someone the NYT pays to be informed about how government works, would understand that the legislation he questions isn’t a budget, but a continuing resolution (CR) to fund government in the current fiscal year.   That’s not where you make “serious policy evaluations”.  You do that in budget legislation, something which the Democrats in the House failed to pass last year.   The government has been running on a series of CRs all year.  That doesn’t remove the crying need for cuts in spending, but the only spending under their control in a CR is discretionary spending.  And that’s where they’re cutting.

Brooks prefers to ignore those facts in favor of the emotional argument that they’re going after children in favor of old folks.

What is instructive about the Brooks argument is this is precisely the type arguments that you’re going to see from now on.  Arguments like the one Brooks puts forward here are going to begin with statements like “we must make cuts” and then spend the entire rest of the time arguing against making them.   And 90% of those arguments are going to be based in emotion, not facts or sound reasoning.

Mr. “Make Everyone Hurt” then advances his third austerity principle:

Which leads to the third austerity principle: Never cut without an evaluation process. Before legislators and governors chop a section of the budget, they should make a list of all the relevant programs. They should grade each option and then start paying for them from the top down.

I don’t necessarily disagree with the point, but it is again inconsistent with his first principle, isn’t it?  If everyone has to “hurt”, then something must come from every spending point – to include children’s programs and education.  What Brooks wants is some sort of arbitrary “evaluation” which will – wait for it – justify or rationalize exempting certain programs, policies, departments from spending cuts.

Any guess as to which programs he wants exempted?  Certainly not those effecting older Americans.

Brooks isn’t really serious about cutting spending.   Like many politicians and pundits, he mouths the words and makes the point about all of us sacrificing something, but he really doesn’t mean it. When pressed, he falls right into the “cut everything else but don’t cut my favorite program” group in which you find much of the populace today.  That’s not “shared sacrifice”.

Its hard to take someone seriously who doesn’t seriously address the fact that we have massive debt, massive deficits staring us in the face, a huge new entitlement program on the books and and conclude there’s an urgent need to cut spending in all areas, period.   Brooks should have stopped with his first principle, if he actually wanted to be taken serious.  That is the “new normal”.

~McQ


One picture tells the US’s problem

It is sort of surprising that it is even necessary to put this up, but as most of us know, people pay more attention to visual evidence than written. And written is sometimes open to misinterpretation. I challenge anyone to misinterpret this:

 

usa-income-statement

If the US were a business, this would be it’s “Income Statement”.   And this isn’t a one time “it’ll get better next year” sort of statement either.  Neither income nor spending are projected by the administration to be much different in its 10 year budget projections.

Note where 58% of the spending comes from.  Do your own calculations -the most simple, of course is taking $2.2 trillion from $3.5 trillion and understanding that you have a shortfall of S1.3 trillion.

The chart comes from a very interesting report from a financial analyst at KPCB, Mary Meeker.  She takes a look at the US’s finances as if the country was a business.  Business Insider (HT: Pundit Review) lays out some of the gory details and what is discussed in the report as recommendations:

• Spending as a percent of GDP rose 3 percent each year from 1790 and 1930. Worse: It rose 24% in 2010.

• Debt levels will be three times current levels by 2030. Entitlements and interest alone will exceed total revenue by 2025.
• Only 1 in 50 Americans needed Medicaid when it was first created in 1965, 1 in 6 Americans receives Medicaid now.
• Extended unemployment benefits could set back America Inc. $34 billion in the next two years alone.
• The only good investments: technology, education and infrastructure.
• The crucial reforms: entitlement and tax policies
• There is no quick-fix to America’s deficit problem. While raising taxes could help, the only real solution is cutting costs.
• Why we should cut Medicare benefits by 53%
• Why we should increase the retirement age to 73 or cut Social Security benefits by 12%.

Emphasis mine.  Essentially the ground truth about the country’s financial situation is the only way to get it in order is to commit to massive cuts in spending. Superfluous to that argument is any argument claiming certain programs or government departments or any other aspect of government should be exempt. That said, it is clear to anyone with eyes that the major problem lies in too much spending for entitlements. For instance how is it a program that was designed to fund medical care for the poor in this country and when started had 1 in 50 Americans enrolled now enrolls 1 in every 6 Americans?  My guess is you’ll find the same to be true of most so-called “anti-poverty” programs today. 

And the billions upon billions we throw at education through the Dept. of Education which hasn’t raised the yearly results of our students one iota since its inception.  Or the Department of Energy – created in Jimmy Carter’s day to do what?  Lessen our dependence on foreign oil.  That’s worked well hasn’t it?

We’re talking drastic action here, folks.   And we’re talking getting a grip and facing reality – not this “hey, make cuts but don’t touch our entitlements” nonsense that  some polls reflect.  Nor can these cuts fall victim to whining by special interests.  And it would be wonderful, in an obvious era of austerity, if the White House could manage a little leadership as well:

Last July, Obama announced that he wanted federal workers to cut down on business travel and commuting by car in order to reduce emissions produced by the federal government:

The White House was announcing Tuesday that the government will aim to reduce carbon dioxide and other greenhouse gas emissions from indirect sources like employee driving by 13 percent in 2020, compared with 2008 levels.

That’s for everyone else.  The Obama’s of course, are exempt from such things and as an example, fly in their personal trainer every week for a workout.  Imagine the reduction in emissions if they were to actually practice what they preach and hire a local personal trainer.

Pulling it all together, this is the problem we face in getting the country’s house in order.  Those that are talking about (and actually trying) cutting spending are now cast as bad guys.  Special interests are spooling up their sob stories.  The bureaucracy is beginning to fortify the walls around its huge and expensive kingdom.  And much of the public wants cuts without pain.  Meanwhile, other than lip service, the so-called leadership of this country doesn’t seem to understand what leadership is, what it entails and why it is important to set a good example –  that is if they’re actually serious about doing what they claim we must do.

If this were a company, as Mary Meeker lays out in her study, investors would be cashing out as quickly as they could and others would be avoiding anything to do with this wreck.  The bottom line of Meeker’s report is the road down which we’ve kicked the can for decades has come to a dead-end.  We’re there.  We can’t kick it one single foot further.

The time has finally come and the question is, are we up to the task at hand?  Do we have the political will and leadership necessary to get done what must be done?  Unfortunately,  I don’t think so – financially speaking and addressing the quality of leadership available, the election of the empty suit in the White House couldn’t have come at a worse time. 

There are at least two ways this crisis will be solved.  Deliberately through tough and painful measures enacted by a leadership that directly confronts the problem and makes tough choices, or spontaneously when we reach a tipping point and everything collapses in a heap and we’re left surveying the ruins and wondering what happened.

Any guess as to which scenario I think is most likely?

~McQ

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