Federal Reserve Chairman Ben Bernanke seemed to be channeling Chicken Little when he warned congressional Republicans that any delay in raising the debt ceiling beyond the current $14.3 trillion cap could have "catastrophic" consequences.
Continuing America's borrowing and spending addiction will have even greater catastrophic consequences, but people in government don't think this way. For them, all government spending is good spending and any attempt to begin the arduous process of restoring fiscal responsibility is viewed by those with vested interests as greedy, selfish and unsympathetic toward the needs of others. Perhaps advocates of unlimited spending might tell us how much is enough if they can't live on $14.3 trillion?
If Congress doesn't start the process of cutting spending now when the polls favor Republican economic policies, when will it? Rarely has "if not us, who? If not now, when?" had greater resonance.
The Wall Street Journal reports, "Governors around the U.S. are proposing to balance their states' budgets with a long list of cuts and almost no new taxes, reflecting a goal by politicians from both parties to erase deficits chiefly by shrinking government." So, if states can do it, why can't the federal government?
Congressional Democrats, for whom a much smaller debt was a big deal when Republican presidents Ronald Reagan and George W. Bush were in the White House, seem unconcerned about debt now that a Democrat is president. Some Democrats, hoping to make Republicans blink, are making noises about another possible government shutdown. Republicans should keep their eyes wide open.
On the same day Bernanke made his "catastrophic" comment, House Republicans unveiled their plan to cut $32 billion out of the budget for the remainder of this fiscal year. That's short of the $100 billion in cuts promised by Speaker John Boehner before the November election. The Republican Study Committee, a conservative bloc of House members, wants to hold Boehner to his original promise.
Republicans should argue that raising the debt ceiling would pay for the continued implementation of Obamacare, which the latest Rasmussen Reports survey shows 55 percent of Likely Voters want repealed. Public opinion and a dubious legal future offer an opportunity for such a strategy. The Study Committee estimates a savings of $2.5 trillion over 10 years if all of its recommendations are implemented.
Rich Galen, former press secretary for Dan Quayle and former executive director of GOPAC (www.gopac.org/), "a national organization dedicated exclusively to electing Republicans to state and local offices" lists on his blog, Mullings (www.mullings.com), some of the committee's recommendations and adds a few of his own, including a 15 percent reduction in the number of civilian federal employees, "accomplished by attrition rather than outright firings." Galen proposes, "Only one new employee could be hired for every two who left until the reduction number was met." (This should apply to all branches of government.) Cuts in programs are also warranted, including "cutting out the Hope VI Program, charged with proposing a National Action Plan to eradicate severely distressed public housing, which "will save $250 million per year." Anyone notice such a plan, or the relief of "stress" on public housing?
AMTRAK costs $1.565 billion per year in federal subsidies. Couldn't private enterprise do better?
Galen thinks congressional travel should be cut. Each member, he says, ought to get six trips home per year at public expense. "More than that, they have to use campaign funds." The Republican Study Committee estimates cutting other federal travel would save $7.5 billion.
Ethanol cuts aren't in the GOP plan, but they should be. So should responsible cuts in defense spending. Entire cabinet agencies, like Housing and Urban Development, Education and Energy should be eliminated and any essential work folded into other government agencies. That isn't likely to happen in the short term, but if Republicans stick with the principles that got them elected and demonstrate their plan works, the public might go along with cutting major expenditures, including modernizing and reforming Social Security and Medicare.
There may well be a "catastrophe," as Bernanke predicts, but it is more likely to occur if we don't reduce our spending than if we raise the debt ceiling and keep on spending with borrowed money.