About a week ago, the hosts of the NPR program, "All Things Considered" (ATC), acknowledged the hackneyed nature of another of Washington's tired phrases, "The Fiscal Cliff." As Will Rodgers used to call them, "them birds" in Washington love to demagogue by calling things by catchy, sententious names that will, they think, win the public over to their point of view, and ATC invited all its listeners to come up with an alternative. So I made a suggestion. Why not call it the BBB: the Bipartisan Balanced Budget. The point I made is this. If you let all of the Bush era tax cuts expire and return to the rates prevailing in the Clinton years, which notably produced 23 million jobs, you gain $700 billion every year. Then, if you reduce all non-discretionary federal spending by 10%, you save another $500 billion...again, every year. Our budget deficit this past year was about $1.2 trillion, and guess what the BBB adds up to. That's right, $1.2 trillion. Of course, the tax increases won't be popular with anyone...including me. But sometimes a country's gotta do what country's gotta do. And as for the budget cuts, well, we have eleven fleets in the navy, each based on an aircraft carrier. The cuts would bring us down to ten, and there are only seven seas, so that shouldn't be much of a problem for the navy. As to the army and marines, the war in Afghanistan is being wound down, and that represents $100 billion per year, which is more than 10% of the $740 billion defense budget by itself if you consider it a recurring savings. And in light of the fact that we spend more than the next 18 countries combined, it seems justifiable. The other departments of the government, well, I'm not so sure where the money will come from there. But since Social Security and Medicare are not part of the federal budget (you have heard me obsess about the Republican conservative complex's (Rcc) insistent canard to the contrary, so I won't go into it again, though I invite you to reread some of my rants if you like), the most important of what the Republicans call "entitlements" in their slyly pejorative way is not affected. And all the congress and The President have to do is...nothing. Surely even they can do that. In the past, they've been quite good at it. Which brings me to a second point.
One of the problems with all of this budget talk is that the numbers keep shifting. The congressional Budget Office (CBO) has just come out with a new estimate of the cumulative impact of the BBB, as I like to call it, or the fiscal cliff if you prefer current jargon: $603 billion. Given that the last two presidents, representing administrations for twelve years total, have increased the national debt by federal budget deficits totaling about $10 trillion while the first of those administrations inherited a budget surplus, the question that comes to my mind is what have we been spending all that extra money on. The Clinton administration's legacy budget--that is the budget for the first year of the Bush administration that followed--generated a budget surplus of over $235 billion, but it was immediately followed the next fiscal year, Bush's first, by a deficit in excess of $30 billion if you exclude the money received into the Social Security Trust fund, which doesn't belong to the federal government anyway. Granted, that was the year of the 911 terror attacks, which damped the economy significantly, but the deficits just kept on coming...compounded by the infamous Bush Era Tax Cuts and two wars in the middle east. So how should we proceed? Well, there's a recent model we can follow and it will tell us with precision: the fiscal year 2001 budget. What I would suggest, and I have suggested this before, is that we start off with that budget and then determine what we can afford on that basis. We could begin with a surplus and diminish the national debt every year, or we could reduce the amount by which we paid down the debt and spend a little more, but that surplus could be the limit of increased spending, and thus the national debt would never go up again...and that at least would be progress over our current state of affairs. So, why hasn't anyone in power proposed this plan?
The answer is...I have no idea. I'd like to presume that there is a good reason so that I could have some faith, at least a little, in our elected officials. I am often criticized for my tendency toward reductionism--that is, reducing things to their simple elements--and then constructing a solution to the problem at hand from those elements. It seems a perfectly valid analytical technique to me, but somehow it isn't popular with people like...politicians. I guess there can be too much of a good thing, assuming that analysis is a good thing, and maybe that's the reason that politicians see no merit in the idea of going back to a period of success for a model on which to pattern the future. Maybe that kind of simple reasoning offends them. I don't see why, but perhaps that's just a limitation in me. So, I'm not going to propose anything like this to anyone in politics as none of them are likely read this letter anyway. But what the hell. I figure, we're friends, so I'll propose it to you. You're not offended, are you?
Your friend,
Mike
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