Cut! Now!

Posted: Mar 24, 2011 11:21 AM
It’s past time our government got serious about the deficit and debt. Tough decisions are required from our leaders -- but that’s their job.


The April issue of Townhall Magazine (which is already making serious waves with the Shariah Law cover story. Oh, did you miss that? Read more about it here) includes a primer for Americans and, more importantly, our elected officials on what to cut from our bloated government and why we must do it now.

Alison Fraser's piece, "Cut! Now!", offers the important and necessary budget answers that tea partiers and other concerned Americans have been asking for day after day from their government -- both the Republicans and the Democrats. The politicians won't give them the real answers -- so Townhall Magazine will.

You can read the entire piece in the April issue of Townhall Magazine. Order it here today to make sure you don't miss out.

Here are some excerpts from the feature:

Admitting that the federal budget is wildly out of control? Not hard to do, especially after the shellacking the voters delivered to Washington last fall.

Actually making the cuts that will fix the problem? That’s hard.

Indeed, that broad agreement disintegrated into partisan clashes the moment members of Congress sat down to write a budget for the rest of the year.

Look no further than the White House. President Obama speaks of the need to “free ourselves from the burden of historic deficits and growing debt.” Yet he delivered a budget starkly at odds with that goal. One wonders how badly the situation will have to get for the nation to get real leadership. Only the House of Representatives has proved willing and able to begin the necessary course correction to prevent fiscal disaster.

Two questions arise: Which cuts are possible, and which cuts are necessary?

The budget facts are irrefutable. Fiscally speaking, we’re hemorrhaging. Between 2008 and 2010, total federal spending grew $474 billion, or 16 percent. Over half of that spending was on entitlements -- Social Security, Medicare and Medicaid -- and interest on the debt. In 2010, the deficit was $1.3 trillion, the second highest in dollar terms. Publicly held debt soared to $9 trillion. By the end of this year, we’ll still be borrowing 40 cents out of every dollar. Better be nice to China!

And that’s the good news.

While today’s spending is unaffordable, tomorrow’s is unsustainable.

Entitlement spending is set to explode as baby boomers flood into the programs. It really starts in earnest this year when the first boomers begin getting Medicare. This tsunami of spending is so massive that, in less than two generations, it will claim all taxes. It will drive total federal spending from its historic average of 20 percent of the economy to nearly 40 percent. Deficits nearly as large as the entire federal budget today would drive the debt to 370 percent of the economy by 2052 (see Chart 1: National Debt Set to Skyrocket).

Even eliminating all other spending, from earmarks to defense, wouldn’t solve our long-term budget problem. The simple but painful fact is that Social Security, Medicare and Medicaid must be fundamentally altered if they are to continue. To pay for them as they are today would mean taxes must soar.

According to the Congressional Budget Office, every income tax rate would have to double and continually increase, reaching 25 percent for the lowest income and 88% for the highest (see Chart 2: Paying for Entitlements With Tax Increases Would Cause Tax Rates to Double).

Instead, some have even proposed a European-style Value Added Tax to solve the problem. Sounds innocuous enough, right? But don’t be fooled. Without entitlement changes, this would mean a rate of well over 20 percent on everything we buy or use. Either way -- perilous levels of debt or crushing taxes -- would mean permanently lower standards of living. Even then, at some point these programs would inevitably be subjected to abrupt, wrenching slashes. The best “investment” in our future is to prevent these scenarios by ratcheting down spending.

We need to understand the severity of our current and long-term problems and the forces driving them so we can accept the changes (read: cuts) necessary to fix them. New Jersey Republican Gov. Chris Christie has it right: We’ve been deceived and betrayed. Just as New Jersey and dozens of other states did, Washington “has promised benefits it had no way of paying for, promises they knew they couldn’t keep.”

So Congress and the president have two urgent obligations. First, immediately roll back the recent spending binges. Second, confront the deceit of over-promised and unaffordable benefits head-on and tackle the entitlement problem.

You're not going to want to miss the budget solutions offered in the April issue of Townhall Magazine. Order today.