The Iceberg Approaches

On February 18, 2010 President Obama signed Executive Order 13531, which established the National Commission on Fiscal Responsibility and Reform, referred to by many as the US Debt Commission.  The panel of 18 lawmakers, business and leaders and others is co-chaired by retired Wyoming Senator Alan Simpson and Erskine Bowles, a White House chief of staff to former President Bill Clinton.

I was skeptical about anything Obama might instigate, but on this one it appears I might have been mistaken.  Based on the commission’s recommendations this week, it appears that this bipartisan committee has at least kicked open the dialogue door on what could be some meaningful and sensible reforms.   You may find all 58 of the commission’s recommendations at:

http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/Illustrative_List_11.10.2010.pdf

I’ve chosen to list eleven of the 58 commission recommendations below:

1.    Reduce Congressional & White House budgets by 15 percent
2.    Freeze federal salaries, bonuses, and other compensation at non-defense agencies for three years.
3.    Cut the federal workforce by 10 percent (2-for-3 replacement rate).
4.    Eliminate 250,000 non-defense service and staff augmentee contractors.
5.    Implement a 15% increase in the federal gasoline tax
6.    Merge the Department of Commerce and Small Business Administration into a single agency and trim its budget by 10 percent.
7.    Eliminate all earmarks.  (this one I’m most skeptical about)
8.    Cut funding for the Corporation for Public Broadcasting.
9.    Freeze federal salaries, bonuses, and other compensation for the civilian workforce at the Department of Defense for three years.
10.    Gradual raising of the Social Security retirement age to 69 by 2075, with an increase of social security taxes on wealthier Americans.
11.    Slowing the growth of the Medicare program.

Only the chairs of the commission have “signed off” as agreeing with the recommendations.  Lawmakers are already lining up to declare most of the cuts “dead on arrival” in Congress.  That’s a shame, because even if all of the 58 recommendations are passed by Congress, it will not cut the actual size of the Federal Government.

According to the Wall Street Journal:  “Overall, the plan would hold down the growth of the federal debt by roughly $3.8 trillion by 2020, or about half of the $7.7 trillion by which the debt would have otherwise grown by that year, according to commission staff. The current national debt is about $13.7 trillion.”

The United States of America has a huge spending problem.  There may be some areas where increased taxes are possible (such as the gas tax), but ultimately we need to actually cut plenty of government spending.  Nothing, and I mean NOTHING, should be considered “dead on arrival” in the future.  Our debt predicament isn’t something that can be postponed or assumed away; the jig is up.  Let’s hope the tea party folks recently elected to the new congress don’t forget why they were elected.

To conclude:  “ It’s a dark, calm night as the liner America heads through iceberg infested waters.  Up in the Crows nest of the forward mast, Frederick Fleet has just spotted the mammoth ice berg of fiscal bankruptcy.  He has notified the Debt Reduction Commission, who has notified our politicians.  Will our politicians steer the great ship America clear of the ice berg, or will they opt to continue playing cards in the comfortable confines of their luxurious, warm, smoking lounge?”

Stay tuned folks…the berg is near and our ship steams ahead at full speed.  Greece awaits us if we don’t act fast.  One way or another, this drama will play itself out in the next four years.

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