Monday, January 25, 2010

Curbing the Deficit

In the next week there will be a lot of discussion about our rising national debt and the growing deficits projected over the next ten years. How to break the trend?

No matter what you hear, the real problem is the entitlements: social security and medicare. Medicare impacts not only federal deficit projections but imperils state fiscal survival as well because the states are also significant funding partners for medicare. Slowing any other spending items will not help. Even eliminating the military budget entirely will not help. Only a serious and realistic readjustment of social security and medicare has any hope of preventing a national bankruptcy.

The public is alarmed about the rise in the national debt. No honest politician would suggest that anything other than curbing entitlements has any hope at all of tackling this problem.

Obama will suggest Wednesday two solutions to the rising national debt: 1) a freeze on a minor part of the budget's discretionary spending component; 2) a bi-partisan commission that would recommend spending cuts and tax increases that would receive an up-or-down all-or-none vote in Congress. These are smokescreens and would actually divert the public's attention from the real issues regarding the national debt.

The reason we don't get anywhere on deficit reduction and slowing the growth of the national debt is an unwillingness on the part of politicians to face up to the real problem -- the entitlements. Obama shows that, in this regard as in others, he is an old style politician. He probably doesn't realize that the entitlements are a problem (how would he know?) and it is unlikely that he much cares what happens to the national debt. But the rest of us do.

In fairness to Obama, he is not alone. Neither Democrats nor Republicans are honest about what is driving our looming national debt disaster.