Right Wing Nut House


The Real Crisis Facing America

Filed under: Decision 2012, Deficit reduction, Entitlement Crisis, Politics — Rick Moran @ 10:24 am

Stanley Kurtz writing at The Corner:

As the Romney campaign sees it, the tiny sliver of remaining undecided voters consists of mildly disillusioned former Obama supporters, or at least voters who personally like Obama. Coaxing these folks to “break up” with their erstwhile beau means not making them feel like they were fools to buy into Obama’s vision to begin with. That cuts against any effort to unmask the president’s overweening leftist ambitions. Let’s just say that the president’s a nice guy who’s in over his head instead.

Okay, but Michelle Obama did a very effective job of pressing undecideds to give her nice-guy another try. And the convention as a whole did a better job of redefining government as nice-guyism writ large than Republicans would like to admit. Charles Krauthammer says that the counter to all this is exposing Obama as “a deeply committed social democrat” using his presidential power to enact the same “ambitious left-wing agenda” he “developed in his youth.” Well, yes. So far as I can tell, however, this sort of argument is the last thing the Romney campaign wants to make right now. Don’t want to drive away that tiny sliver of Obama’s wavering admirers.

I can’t say for certain that Romney’s strategy is wrong. But I do think it’s far riskier than we realize. Treating Obama as a nice guy in over his head, rather than a smart leftist who knows exactly what he’s doing, leaves the Democrats’ bogus narrative about government unanswered. America is changing, and Republicans are naive to rely on the public to simply recognize the problems in the Democrats’ claims without significant help from our nominee.

This is the civilized version of the internet right’s demand that Romney begin to savage Obama by calling him a socialist or communist, and start attacking the president for “taking away our freedoms.” Kurtz actually hits the nail on the head when he says America is changing and that the Democrat’s Santa Claus vision of government is gaining ground. Even if Romney were to point out that Obama’s ideas are liberal dogma going back to the 1960’s, the average voter would shrug his shoulders and say, “So what?” Government as a goody factory is just fine with a growing number of Americans who want their lives made easier by latching on to government programs that promise free or cheap services.

The bulk of government cash no longer goes to what we would define as “the poor.” As Nicholas Eberstadt points out in an essay based on his book, “A Nation of Takers,” it’s the “Middle Class” that is now the greatest beneficiary of entitlements:

According to a Census Bureau data run requested by the Wall Street Journal, just over 49 percent of U.S. households were using at least one government benefit to help support themselves in early 2011 (see Figure 16). This was a tremendous increase over the early 1980s, at which time about 30 percent of households were already estimated to be on at least one of the government’s many benefit programs, although the rise was not entirely uninterrupted. In the late 1990s (in the aftermath of welfare reform and at a time of relatively robust economic growth), the prevalence of benefit recipience declined temporarily before continuing on its further ascent. If the Census Bureau reports that over 49 percent of U.S. households are obtaining at least one government benefit, we can safely say that the true number is actually already well over 50 percent. To put it another way: a majority of homes with voters in them are now applying for and obtaining one or more benefits from U.S. government programs.

The prevalence of entitlement program usage is by no means uniform by age group or ethnicity. Meaningful variations within American society and the public at large are illustrated in Figure 17, Figure 18, and Figure 19. In 2004, according to a study based on CPS data conducted by a researcher at AARP (formerly the American Association of Retired Persons), nearly 48 percent of American families were already obtaining at least one government benefit (a somewhat higher level than Census Bureau researchers indicated for 2004 [see Figure 16]). By these numbers, nearly every household (98 percent) with someone sixty-five or older was obtaining at least one benefit, with 95 percent of them obtaining benefits from two programs—generally speaking, Medicare and Social Security / Old-Age and Survivors Insurance (OASI).[18]

Perhaps more striking, though, is the proportion of households with no one sixty-five or older obtaining government benefits: entitlement prevalence for this group was already at 35 percent in the year 2004. Relatively few of these beneficiaries were Social Security / OASI or Medicare cases—and of the rest, only a minority was accounted for by unemployment or disability benefits. The overwhelming majority instead were accounted for by households and families availing themselves of means-tested benefits or antipoverty programs.

Fewer and fewer of us are willing to make self reliance part of our value system. And why should we when one is seen as a chump for not taking what’s being so generously bestowed by government? “Our tax dollars fund these programs so why not take advantage of them?” might be a common justification for grabbing for your share of the goodies, but if that also means trillion dollar deficits, unsustainable levels of debt, and eventual national bankruptcy, one might legitimately inquire, “Who’s the chump now?”

We are not going to grow our way out of this crisis. We are not going to spend our way out of it either. Nor will economic growth alone, or government spending by itself lead to a resurrection of a strong Middle Class. Raising the tax rate on the “rich” won’t fix our budget problems, nor will cutting a trillion dollars from the budget solve our long term spending problems. At bottom, entitlements, the budget, taxes — these are all manifestations of how we define our relationship with government. What do we want from Washington? What can we afford? How much do I want to pay?

Until we answer those questions, a government that leans right or left won’t matter. For it is not in ideology that we will find the answers but in placing more value on our liberty, than on what government can do to make our lives easier.



Filed under: Decision 2012, Deficit reduction, Politics — Rick Moran @ 11:19 am

I am at a loss to explain how any bunch that calls themselves “The Reality Based Community” could believe that the president was serious last week when he introduced a plan to increase spending for education, transportation, energy, and health care while purporting to cut $4 trillion of federal spending in 12 years - without messing significantly with Medicare, Medicaid, and Social Security. Even raising taxes on “the rich” and cutting an unstated amount from defense doesn’t come close to that 4 trill in savings. Besides, has there ever been a US congress in history that, when presented with more cash as a result of a tax increase, didn’t spend $2 for every dollar in budget cuts? The answer to that question is no. Hence, this titanic disconnect from reality that many on the left continue to experience.


You have a government set to steadily increase spending on autopilot as a result of demographic change and rising health care costs. And you have a Democratic President urging congress to enact spending cuts. But you have conservative politicians refusing to make a serious effort to reach an agreement out of some blend of taxophobia and fear of giving the President a win. The result, again, whether the right realizes it or not, is a gift to the wing of the Democratic Party that disagrees with Obama about the desirability of enacting spending cuts.

Our deficit problem is not a consequence of profligacy or lack of discipline, says Matthew. Federal spending is on “autopilot” - which must be a liberal wet dream or something - and it is simply a matter of “demographics” that’s the cause of our budget woes. In this scenario, Yglesias and other liberals posit deficit ghost riders - sort of like the Furies but without the redeeming characteristic of being figments of the classical Greek imagination - circling high above the capitol, putting lawmakers to sleep as the federal budget spins wildly out of control, whispering in their ears that all is well…all is well…

Despite my conservative leanings, like most liberals, the left side of my brain has a deficit of operable neurons, so my math skills leave much to be desired. But even a math-challenged twit like me can see that unless the president plans on increasing taxes even more than he has suggested, and cutting defense spending a lot more than he has let on, or actually attempt to deal with the unsustainable spending on entitlements, 2+2 are not adding up to anything close to 4.

Elise Foley:

“I remain skeptical that the administration will take this effort seriously, especially after it all but ignored its previous debt commission and President Obama had to be dragged kicking and screaming to consider minimal spending cuts for the rest of this fiscal year,” Cantor said in a statement.

“A serious effort to get our fiscal house in order is sorely needed, however, which is why I believe this commission should commence with a clearly defined target and purpose, under a time frame to produce that result — so that it doesn’t end up in the graveyard of previous commissions that failed to improve our nation’s finances.”

At the same time, some Democratic sources said their own party’s picks for the meeting aren’t as credible as they could be. Senate Majority Leader Harry Reid (D-Nev.) and House Minority Leader Nancy Pelosi (D-Calif.) only named a total of four appointees instead of eight: Senate Finance Chairman Max Baucus (D-Mont.), Senate Appropriations Chairman Daniel Inouye (D-Hawaii), House Budget ranking member Chris Van Hollen (D-Md.) and Assistant Democratic House Leader James Clyburn (D-S.C.). But it’s not the numbers that are the problem.

Pelosi’s picks for the talks make the meeting “look silly” because Van Hollen and Clyburn “are just going to do what Pelosi wants, and she’s not interested in compromise,” said a senior Democratic aide. “The picks for this task force all reflect a lack of seriousness.”

Obama called for the bipartisan talks during an April 13th address on fiscal policy and announced that Vice President Joseph Biden would take the lead. During his speech, the president bashed the House GOP budget proposal put forward by Budget Chairman Paul Ryan (R-Wisc.) and said he would not accept more tax breaks for the rich at the expense of entitlements. Ryan, who was seated in the audience during the speech, later called Obama’s remarks “excessively partisan.”

The president of the United States has zero interest in seriously cutting either his own budget deficits or sign off on any plan that would address our massive national debt, now at $14.3 trillion. We know this because his proposals in his speech for closing the budget gap don’t even come close to addressing the current $1.6 trillion deficit. They don’t come close to addressing the deficit as far as they eye can see either - a number that is conservatively estimated at $9.3 trillion over the next decade..

Revenues from increased tax rates on the rich are expected to bring in $1 trillion of the $4 trillion Obama says he can bridge that gap but the rest of the president’s proposal is laughable. $2 trillion in unspecified budget cuts - including a giggle-worthy statement that the Secretary of Defense will be able to find hundreds of billions more in cuts beyond the $400 billion in savings over the next decade already proposed. And $1 trillion saved in “interest on the debt.”

That might make it into late night comedy routines soon. Those savings are assuming interest rates will stay at or near 0%. Anyone who has taken a trip to the grocery store recently knows that this will be impossible once inflation begins to heat up. It is much more probable that the part of the budget dedicated to servicing our debt will outstrip Medicaid spending by 2018.

This is the reality of our debt situation:

Over the 10 year budget window, the net annual cost of servicing the federal debt is expected to grow at a 15.8% annualized rate, from $196 billion in 2010 to $928 billion in 2021 (S-1). If this weren’t bad enough, closer analysis reveals that the actual debt servicing costs could be much higher. Absent a string of good fortune (that’s sadly unlikely to materialize), the federal government could be effectively insolvent within the decade – as debt levels and servicing costs exceed financial capacity.

In the Administration’s baseline estimate, the public debt will rise from 62.2% of GDP in 2010 ($9 trillion) to 77% of GDP in 2021 ($18.9 trillion). Amazingly, this doubling of the national debt and 23% increase in the debt to GDP ratio relies on very favorable assumptions about the directions of interest rates. Over this period, the effective interest rate implied by the ratio of net interest expense to public debt is 3.5%. This happens to be the average for the 5-year constant maturity Treasury rate over the past 10 years. However, the average 5-year borrowing cost for the 10 years ending in January 2000 was 6.3%, while the average 5-year borrowing cost for the 10 years ending in 1990 was 10.4%. Stress testing the President’s budget against these different interest rate assumptions reveals that public debt dynamics could trigger federal insolvency in relatively short order.

Republicans are treating the proposed “commission” with as much seriousness as the president showed in announcing it. Obama’s savaging the GOP in that speech while piously proclaiming his desire to work together to solve the deficit problem was easily one of the most cynical political ploys in my lifetime. He will demagogue the deficit issue from now until November and, given the Punch and Judy GOP field of candidates to face him, it is likely he will win a second term.

But then where will we be? A couple of trillion more in the hole with still no chance to come to an agreement that would meaningfully address the deficit. Obama has chosen political expediency over the health and happiness of the American people.

Goddamn him for it.



Filed under: Deficit reduction, Entitlement Crisis, Government, Politics — Rick Moran @ 11:13 am

I have an article up at FrontPage.com critiquing the president’s speech from yesterday. Needless to say, we were not amused.

As sample:

As for his own plan, the president proposed massive tax increases on the “rich,” cuts in defense spending, Medicare and Medicaid “reform,” and closing tax loopholes, while continuing to “invest” in clean energy, education, medical research, and transportation. He would leave Medicare and Medicaid relatively untouched, while claiming that his plan would cut $4 trillion over the next 12 years.

Yet, the president offered no specifics on the cuts he was advocating except broad, unrealistic dollar amounts. For example, the president believes we can realize budget savings by cutting $1 trillion from interest payments on the debt over the next 12 years. But interest rates are near zero now, and it is highly unlikely that they will remain that low for the next 12 years, especially given the fact that inflation is rearing its head. Some analysts are predicting debt service payments to rise from its current $196 billion to a whopping $800 billion by 2016 as a result of rising interest rates.

The president’s Medicare proposal is equally unclear. Obama proposed that the Independent Medicare Advisory Board can keep costs down. The president said he would do this by “chang[ing] the way we pay for health care — not by the procedure or the number of days spent in a hospital, but with new incentives for doctors and hospitals to prevent injuries and improve results.” Obama clearly believes he can slow the growth of Medicare by strengthening the advisory board, which will recommend the best ways to reduce spending while still providing seniors with adequate care. The president claims that these measures will save an additional $500 billion by 2023. If this number is as real as his $1 trillion in Medicare “savings” to come out of Obamacare - savings that are dubious in the extreme - the result will be little or nothing done about an entitlement program that is going broke and could sink the US economy by itself eventually.

Obama offered no specific cuts in defense beyond savings that would occur in winding down the wars in Iraq and Afghanistan and a promise to look into more cuts. He will do this by conducting a “fundamental review” of our “role in a changing world” and examine our mission and capabilities. Practically speaking, he will look to reducing our readiness, which is the easiest and least painful part of the military budget to cut, but the one which is the most dangerous to skimp on.

The president’s plan was claimed to have been based loosely on the report issued by his Deficit Reduction Commission, which recommended broad cuts in government programs and smaller tax increases. Both parties rejected the findings of the commission as unrealistic and unworkable.

Perhaps most disturbingly, the president seems to believe he is scarcely culpably for the deficit crisis himself. Obama’s long, misleading narrative on how the deficit was created at the beginning of his Wednesday speech, completely absolved him of any responsibility for the $4.5 trillion in debt his administration has piled on in just two years. At times, it was a surreal performance, as the president talked about problems with the deficit as if his administration’s increase of nearly 40% in federal spending never happened. He placed the entire blame for our fiscal woes on his predecessor - something he has been doing since he was sworn in.

Obama had no intention of making this speech a statement of policy. It was a red meat, brutally partisan, dishonest, misleading hash that “poisoned the well” as Paul Ryan remarked, for any kind of bi-partisan negotiations. Extraordinarily irresponsible in its tenor and intent, one could almost hear his liberal base screaming “Yes! Hit ‘em again!”

Senior editor at the Atlantic Clive Crook:

My instant unguarded reaction, in fact, was to find it not just weak but pitiful. I honestly wondered why he bothered.

There was no sign of anything worth calling a plan to curb borrowing faster than in the budget. He offered no more than a list of headings under which $4 trillion of deficit reduction (including the $2 trillion already in his budget) might be found–domestic non-security spending, defense, health costs, and tax reform. Fine, sure. But what he said was devoid of detail. He spent more of his time stressing what he would not agree to than describing clear proposals of his own.

His rebuttal of the Ryan plan was all very well–I agree it’s no good–but the administration still lacks a rival plan. That, surely, is what this speech had to provide, or at least point to, if it was going to be worth giving in the first place. His criticisms of Ryan and the Republicans need no restating. And did the country need another defense of public investment in clean energy and the American social contract? It wanted to be told how fiscal policy is going to be mended: if not by the Ryan plan, with its many grave defects, then how?

Good question. The answer is, as my radio guests all agreed on Tuesday night, was that serious reform will only come when we have already been pushed over the precipice and are on the way to disaster. Only when fixing things won’t do a bit of good will the Washington establishment bestir itself and act.

This point will probably be reached sooner than any of us can imagine. It may come as a result of service on the debt skyrocketing to the point that we won’t be able to fund much of anything else. Or some other time bomb - pensions, another financial crisis, global depression - goes off and we are left staring at fiscal Armageddon. Maybe the Chinese will simply decide we aren’t worth the trouble and take the hit by dumping their US Treasuries.

The point being, there are so many land mines out there, it is inevitable that we’re going to step on one eventually. God help us when we do.



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Filed under: Debt ceiling, Decision 2012, Deficit reduction, FrontPage.Com, Politics — Rick Moran @ 8:42 am

My latest is up at FrontPage.com where I take a look at the looming battle over deficit reduction being tied to the vote to raise the debt ceiling.

A sample:

After mostly absenting himself from public negotiations over the federal budget last week, President Barack Obama has made the political calculation that he must show the voters that he is serious about long term deficit reduction by getting out in front of the issue, and proposing his own broad plan to address the nation’s fiscal woes.

To that end, President Obama will make an Oval Office address on Wednesday night aimed at convincing the American people that despite his record of compiling more debt in two years than all other presidents in American history combined, he can now be trusted to address the massive deficit. And he will be making the speech against the ticking clock of a congressional vote to raise the debt ceiling — a separate but related issue that Republicans plan to hold hostage in exchange for massive cuts in entitlement spending.

It is significant that Obama sent out his number one political advisor, David Plouffe, rather than an administration expert like the budget director, to make the rounds on the Sunday morning talk shows to offer a taste of the deficit reduction plan. The White House seems to view the fight over fiscal sanity as a political brawl that it plans to ride all the way to re-election in 2012. The hinge of their strategy is to use the bold deficit reduction plan introduced by Representative Paul Ryan, which will cut $6.2 trillion from federal spending by 2020, to portray the GOP as fundamentally uncaring and intent on “destroying” Medicare and cutting taxes for the rich.

In short, Obama plans to demagogue deficit reduction by offering limited cuts in his own plan while increasing taxes on “the rich” and closing other “loopholes” that he believes benefit the wealthy. Plouffe hinted that Obama will offer his own reform proposals for Medicare and Medicaid, but they will likely be superficial, with token cuts and little in the way of concrete ideas to reduce the cost of entitlements in the long-term.

This will not satisfy Republicans — at least, they are saying as much for now. The GOP has not eagerly embraced the Ryan plan due to its controversial proposal to basically privatize Medicare and end federal responsibility for administering Medicaid. But there is much more in the plan on which most Republicans can agree, including tax cuts, large cuts in discretionary spending, the elimination of several federal departments and agencies, and other common sense proposals many fiscal hawks believe are long overdue.

I’m not sure that John Boehner will be able to stand up to the firestorm that is about to be unleashed by every budget interest group in the country. When you’re talking about trillions in cuts, the effect will be huge on groups that have depended on the federal government for decades. Obama will portray himself being on their side, Democrats will demagogue the issue till the cows come home, and more moderate Republicans will bolt fairly early.

Expect a big win for Obama and the Democrats in deficit reduction that may not even be tied to the debt ceiling vote.

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