"Debt - A Thorn by any Other Name"
Sydney M. Williams
Complex problems require simply stated solutions. They also require adult conversations. The Republican Party, in its attempt to defend the Ryan plan for Medicare reform, failed the first test. The Democratic Party has failed the second.
When President Obama presented his fiscal 2012 budget (a budget that was rejected in the Senate 97-0,) he called for an “adult conversation on the nation’s finances.” Then he went out and played golf. (Or, maybe I am confusing that day with Memorial Day!) On April 13, when he was expected to deliver his plan to “pay down our debt” during a speech at George Washington University, he spent the first half bashing Representative Paul Ryan’s plan for Medicare and the second half speaking in terms of twelve year plans, a concept which makes the five year plans of the former Soviet Union look reasonable. What is needed, as former Canadian Finance Minister Paul Martin demonstrated in the early 1990s, is a plan for this year and next, recognizing that the future is nothing more than a collection of tomorrows. The President is a master of portraying a world we would all like – yellow brick road and all. He is incapable of embracing a world we can afford.
Representative Paul Ryan took a bold stand when he outlined a plan to save Medicare. He knew he would be slammed and ridiculed, but the President had called for adult conversations; so he took a shot. The President professes to be a man who is interested in ideas and the dialectics of logical discussions as a means of incorporating differing views. He has proven, though, to be a far better practitioner of Chicago gutter politics – pillorying those who dare to disagree, while offering nothing in return.
Republicans failed their constituents when they proved incapable of defending a plan that is designed to save, not destroy Medicare. The commonsense-challenged former House Speaker, Newt Gingrich referred to the plan as “right-wing social engineering.” Their loss of New York’s 26th District was portrayed as a referendum on the Ryan Plan, so when a Democrat won this historically Republican district it was determined that the voters had said “no” to Medicare reform. The Senate defeated the Ryan Plan on May 25th 57-40, with five Republicans voting against it. (Kentucky Senator Rand Paul voted no on the Plan, because it does not reduce costs enough.) Massachusetts Republican Scott Brown said he would not back the Plan. House Ways and Means Chairman, Dave Camp of Michigan, said: “People in my district like Medicare.”
Mr. Camp stated the obvious. Medicare is popular. That is indisputable. The problem is that it will be insolvent in less than ten years. As a child, I used to like my birthday for the gifts I received. I wanted a birthday every week, but was told that wasn’t going to happen. Mr. Ryan wants to save Medicare for future generations. Left alone, it will go bankrupt. Thomas Dolan, writing in Barron’s put it bluntly: “The public wants what it wants, when it wants it and it doesn’t want to pay for it.” Mr. Ryan’s Plan may not be the best plan, but it should have been a starting point for adult conversations. Ignoring a problem, any more than knocking possible solutions, will not make that problem disappear. The role of leaders is to help people recognize the world as it is, not as they would prefer it.
With the exception of former President Clinton, the response of Democrats has been non-serious. Michael Barone reported last week in Investors Business Daily that 1,372 organizations, covering 3,095,593 individuals, have been granted waivers from Obamacare. Union members make up 12% of the workforce, but they constitute 50.3% of workers now exempted from Obamacare. Thirty-eight waivers were granted to businesses in Nancy Pelosi’s Congressional District in San Francisco. So much for “we’ll find out what’s in it once we pass it.” In place of proposing alternatives, their idea is to let Mr. Ryan dangle in the wind, the bulk of which emanates from their own lungs. Proudly, they showed Mr. Ryan “throwing grandma off a cliff.” “Mediscare” has become the Democrats’ new buzz word. And of course, Democrats said nothing about Obamacare’s ripping $500 billion from Medicare, so the President’s new healthcare entitlement would be financially viable, at least according to their accounting.
On Tuesday, Republicans put forward a bill to increase the debt ceiling with no concurrent plans to rein in deficits. The Democrats called it a sham – the staging of a bill Republicans didn’t want passed. Of course. That’s exactly what it was, but it proved the point. Of 192 House Democrats, only 82 voted for the measure. Even spendthrift Democrats have to recognize that so much wool has been pulled over the eyes of their constituents that the sheep are bleating. The debt ceiling will surely be increased, probably in July or early August, but astounding to me is that Treasury wants to increase the level by 17%. It’s debt, not the debt ceiling, that’s the problem Last year federal spending constituted 25% of GDP. How big do they want government to be? Whatever happened to fiscal prudence?
To understand the future we face if we don’t seriously address the problems of entitlements, one has to look no further than Europe and specifically to the PIIGS nations. The European Central Bank has backed a plan that would “encourage” banks to rollover maturing Greek debt, offer higher coupons and/or increased collateral. This morning’s recommendation by Jean-Claude Trichet for a new Euro Finance Ministry, with powers to affect tax policy in individual countries, seems more a pipe dream than a real possibility. An unidentified senior official in the Greek Finance Ministry, according to a news report in yesterday’s New York Times, said it meant: “Restructuring is off the table. For now it is all about growth, growth, growth.” Growth? From where? A condition of the loan extension is an emphasis on austerity. It reminds me of my mother-in-law speaking of hard times when meals consisted of wind pudding and air sauce. As much as they want to delay the inevitable, restructuring will happen. If they are lucky, time might ease the burden. If they are unlucky, it will worsen. In the meantime, wealthy Greeks have been voting with their feet. According to the same article in the Times, since the crisis began €60 billion in deposits have been withdrawn from Greek banks – almost 20% of their GDP! Equivalent withdrawals from U.S. banks would amount to just under $3 trillion.
For years, no American politician has dared touch entitlements. It was far more pleasant to kick the pail down the road. President Bush, coming off re-election in 2005, made an attempt to reform Social Security. He was ambushed by his own party. Attempts are being made again, but this time Democrats are playing ostrich, hoping the problem will go away, at least until 2013. However, each year we delay facing the debts we have incurred means an increase in the negative consequences. Whether the pail is too dented or the road has come to an end, I don’t know, but the option of doing nothing is no longer an option.
Dutch legend has it that there once was a small boy who, on his way to school, passed a dyke with a slight leak letting sea water trickle slowly through a little hole. Being more responsible than members of our representatives in Washington, or members of the European Union, he plugged the hole with his finger, knowing he would be in trouble for being late to school. But he also knew that trickles of water, unstopped, become torrents.
Our situation, unfortunately, is worse. The trickle has become a stream. While no politician will admit it, we can no longer afford the entitlements government has been granting and that the people have come to expect as their right. Our debt is destroying us. Our infrastructure is crumbling. Our military is spread too thin. Our space program is being dismantled. Our schools are uncompetitive. The country has to refocus on creating wealth for the middle class and less time distributing it. That may sound harsh, but it is the only way out of the morass.
Thought of the Day
“Debt – A Thorn by any Other Name”
June 2, 2011Complex problems require simply stated solutions. They also require adult conversations. The Republican Party, in its attempt to defend the Ryan plan for Medicare reform, failed the first test. The Democratic Party has failed the second.
When President Obama presented his fiscal 2012 budget (a budget that was rejected in the Senate 97-0,) he called for an “adult conversation on the nation’s finances.” Then he went out and played golf. (Or, maybe I am confusing that day with Memorial Day!) On April 13, when he was expected to deliver his plan to “pay down our debt” during a speech at George Washington University, he spent the first half bashing Representative Paul Ryan’s plan for Medicare and the second half speaking in terms of twelve year plans, a concept which makes the five year plans of the former Soviet Union look reasonable. What is needed, as former Canadian Finance Minister Paul Martin demonstrated in the early 1990s, is a plan for this year and next, recognizing that the future is nothing more than a collection of tomorrows. The President is a master of portraying a world we would all like – yellow brick road and all. He is incapable of embracing a world we can afford.
Representative Paul Ryan took a bold stand when he outlined a plan to save Medicare. He knew he would be slammed and ridiculed, but the President had called for adult conversations; so he took a shot. The President professes to be a man who is interested in ideas and the dialectics of logical discussions as a means of incorporating differing views. He has proven, though, to be a far better practitioner of Chicago gutter politics – pillorying those who dare to disagree, while offering nothing in return.
Republicans failed their constituents when they proved incapable of defending a plan that is designed to save, not destroy Medicare. The commonsense-challenged former House Speaker, Newt Gingrich referred to the plan as “right-wing social engineering.” Their loss of New York’s 26th District was portrayed as a referendum on the Ryan Plan, so when a Democrat won this historically Republican district it was determined that the voters had said “no” to Medicare reform. The Senate defeated the Ryan Plan on May 25th 57-40, with five Republicans voting against it. (Kentucky Senator Rand Paul voted no on the Plan, because it does not reduce costs enough.) Massachusetts Republican Scott Brown said he would not back the Plan. House Ways and Means Chairman, Dave Camp of Michigan, said: “People in my district like Medicare.”
Mr. Camp stated the obvious. Medicare is popular. That is indisputable. The problem is that it will be insolvent in less than ten years. As a child, I used to like my birthday for the gifts I received. I wanted a birthday every week, but was told that wasn’t going to happen. Mr. Ryan wants to save Medicare for future generations. Left alone, it will go bankrupt. Thomas Dolan, writing in Barron’s put it bluntly: “The public wants what it wants, when it wants it and it doesn’t want to pay for it.” Mr. Ryan’s Plan may not be the best plan, but it should have been a starting point for adult conversations. Ignoring a problem, any more than knocking possible solutions, will not make that problem disappear. The role of leaders is to help people recognize the world as it is, not as they would prefer it.
With the exception of former President Clinton, the response of Democrats has been non-serious. Michael Barone reported last week in Investors Business Daily that 1,372 organizations, covering 3,095,593 individuals, have been granted waivers from Obamacare. Union members make up 12% of the workforce, but they constitute 50.3% of workers now exempted from Obamacare. Thirty-eight waivers were granted to businesses in Nancy Pelosi’s Congressional District in San Francisco. So much for “we’ll find out what’s in it once we pass it.” In place of proposing alternatives, their idea is to let Mr. Ryan dangle in the wind, the bulk of which emanates from their own lungs. Proudly, they showed Mr. Ryan “throwing grandma off a cliff.” “Mediscare” has become the Democrats’ new buzz word. And of course, Democrats said nothing about Obamacare’s ripping $500 billion from Medicare, so the President’s new healthcare entitlement would be financially viable, at least according to their accounting.
On Tuesday, Republicans put forward a bill to increase the debt ceiling with no concurrent plans to rein in deficits. The Democrats called it a sham – the staging of a bill Republicans didn’t want passed. Of course. That’s exactly what it was, but it proved the point. Of 192 House Democrats, only 82 voted for the measure. Even spendthrift Democrats have to recognize that so much wool has been pulled over the eyes of their constituents that the sheep are bleating. The debt ceiling will surely be increased, probably in July or early August, but astounding to me is that Treasury wants to increase the level by 17%. It’s debt, not the debt ceiling, that’s the problem Last year federal spending constituted 25% of GDP. How big do they want government to be? Whatever happened to fiscal prudence?
To understand the future we face if we don’t seriously address the problems of entitlements, one has to look no further than Europe and specifically to the PIIGS nations. The European Central Bank has backed a plan that would “encourage” banks to rollover maturing Greek debt, offer higher coupons and/or increased collateral. This morning’s recommendation by Jean-Claude Trichet for a new Euro Finance Ministry, with powers to affect tax policy in individual countries, seems more a pipe dream than a real possibility. An unidentified senior official in the Greek Finance Ministry, according to a news report in yesterday’s New York Times, said it meant: “Restructuring is off the table. For now it is all about growth, growth, growth.” Growth? From where? A condition of the loan extension is an emphasis on austerity. It reminds me of my mother-in-law speaking of hard times when meals consisted of wind pudding and air sauce. As much as they want to delay the inevitable, restructuring will happen. If they are lucky, time might ease the burden. If they are unlucky, it will worsen. In the meantime, wealthy Greeks have been voting with their feet. According to the same article in the Times, since the crisis began €60 billion in deposits have been withdrawn from Greek banks – almost 20% of their GDP! Equivalent withdrawals from U.S. banks would amount to just under $3 trillion.
For years, no American politician has dared touch entitlements. It was far more pleasant to kick the pail down the road. President Bush, coming off re-election in 2005, made an attempt to reform Social Security. He was ambushed by his own party. Attempts are being made again, but this time Democrats are playing ostrich, hoping the problem will go away, at least until 2013. However, each year we delay facing the debts we have incurred means an increase in the negative consequences. Whether the pail is too dented or the road has come to an end, I don’t know, but the option of doing nothing is no longer an option.
Dutch legend has it that there once was a small boy who, on his way to school, passed a dyke with a slight leak letting sea water trickle slowly through a little hole. Being more responsible than members of our representatives in Washington, or members of the European Union, he plugged the hole with his finger, knowing he would be in trouble for being late to school. But he also knew that trickles of water, unstopped, become torrents.
Our situation, unfortunately, is worse. The trickle has become a stream. While no politician will admit it, we can no longer afford the entitlements government has been granting and that the people have come to expect as their right. Our debt is destroying us. Our infrastructure is crumbling. Our military is spread too thin. Our space program is being dismantled. Our schools are uncompetitive. The country has to refocus on creating wealth for the middle class and less time distributing it. That may sound harsh, but it is the only way out of the morass.
Labels: TOTD
posted by Thought of the Day @ 5:03 AM
0 Comments
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home