We have a spending problem. We’ve all heard that before. While that is true we have an even bigger problem – we have a corruption and waste problem. Fiscal responsibility seems to be a bad word to the government.
We live in a world where the government spends $41,000 replacing 36 toilets; Where $1.5 million goes to remove mold from a building scheduled to be torn down; where the unions take member dues and instead of putting that money into pension accounts, they promote campaigns and expect us to bail out the pensions and where the government is seriously contemplating it; where billions are spent in Iraq and Afghanistan and the money turns up lost.
US Budget Watch in 2008 put out a list of the Twelve Principles for fiscal responsibility. It’s time to revisit them:
1.ADMIT THAT WE FACE SERIOUS FISCAL PROBLEMS
Admit we face serious fiscal problems: The first step toward restoring the nation’s fiscal health is to admit that we have a problem. Structural budget deficits remain a problem, and they are projected to get much worse in the coming decades. Long-term budget projections are daunting—the long-term fiscal gap over the next 75 years is an astonishing 7 percent of GDP (remember, this was written in 2008). The government will have to significantly reduce spending, raise revenues, or both, in order to rebalance the budget.
2. ELEVATE THE ISSUE OF FISCAL RESPONSIBILITY
Politicians need to use the bully pulpit to focus attention on the nation’s fiscal problems. Through speeches, public forums, town hall meetings, and conversations with the press, they should work to expand public awareness of these problems and place them on the national agenda. Ultimately, the public will have to demand that politicians act responsibly, but voters cannot be expected to lead the charge.
3. COMMIT TO REDUCING THE DEFICIT
Simply pointing out that there is a problem does not go far enough; politicians need to commit to reducing the deficit. Growing deficits divert capital from economically productive investments, lead to increased interest payments as part of the budget, leave the country reliant on foreign lenders, diminish the projected growth of future U.S. living standards, and shift the costs of today's spending onto younger and future generations. Over the past few years, both the president and Congress have proposed budgets that would increase the deficit, even while pledging to reduce it. This pattern of passing budgets that make the problem worse instead of better must be broken.
4. SUGGEST SOLUTIONS TO FIX SOCIAL SECURITY
Deficit reduction and balancing the budget are not the only major fiscal challenges facing the country; they are not even the largest. The nation faces an astonishing $53 trillion in fiscal exposures over the next 75 years. Rebalancing this gap would require immediate spending cuts equal to 20 percent or tax increases of 25 percent.
5. SUGGEST WAYS TO ADDRESS RISING HEALTH CARE SPENDING
The options being considered to slow the growth of Medicare and Medicaid, and more generally the delivery and consumption of health care throughout the economy, include: improving incentives for both providers and consumers, reforming insurance markets, reforming the tax treatment of health care, improving the effectiveness and efficiency of health care services and delivery systems, and limiting services or beneficiaries that are covered by government spending. It is likely that no matter what steps we take, health care costs will continue to grow faster than the economy, which means that as a nation, we have to decide what we are willing to accept less of in return.
We should not, at this time, expect any politician to have a fully developed plan to control
the rising costs of Medicare and Medicaid, but we should expect them to acknowledge the
magnitude of the problem of health care cost growth and explain what sorts of options
they support.
6. SUGGEST SOLUTIONS TO OUTSTANDING TAX ISSUES
Unavoidable tax issue is the Alternative Minimum Tax (AMT), which was designed to catch very wealthy taxpayers with low tax payments, but is hitting more and more taxpayers each year because it is not indexed for inflation. Congress has shown its commitment to keeping the tax from dramatically expanding by passing patches yearly, but it has thus far failed to enact a permanent solution. The annual cost of these patches is high and growing—and, if the Bush tax cuts are renewed, will reach $100 billion by 2012 and almost $200 billion by 2017. Eliminating the AMT would be even more expensive.
7. PLAN TO REFORM THE BUDGET PROCESS
The budget process is, in many ways, broken. Congress regularly fails to pass a budget. Accounting conventions are outdated, deadlines are routinely missed, restrictions are waived, and enforcement mechanisms are bypassed with distressing regularity. As Congress labors over appropriations bills, the larger portion of the budget—mandatory spending—operates on “automatic pilot.” Particularly relevant to the question of how to reform the budget is the problem that because of how Congress is organized, policy making tends to be overly compartmentalized, and major comprehensive reforms that stretch across budget categories are difficult to enact. As the next president and Congress work to confront our fiscal problems, they should also reform the budget-making process. Budget process reforms will not replace the need for hard choices—indeed, they can serve as a distraction from or an excuse to avoid taking the specific policy actions that will be required—but process reform should be part of any comprehensive effort to reform the budget.
8. USE HONEST NUMBERS
Budgeting decisions should be made transparently and tax and spending decisions should be made democratically. Politicians often find it convenient, however, to avoid this principle by employing budget gimmicks that cloud the budget-making process. If their proposals are worth their true costs, politicians should be willing to defend them on the merits without resorting to budget trickery.
9. OFFSET THE COST OF NEW POLICIES
The pay-as-you-go (PAYGO) principle—that new entitlement spending and tax initiatives not increase the deficit—is a fundamental precept of sound budgeting practices.
10. DO NOT PERPETUATE BUDGET MYTHS
Elected officials should be careful not to perpetuate budget myths. Too often, these myths are used to justify fiscally irresponsible actions.
11. DO NOT ATTACK SOMEONE ELSE’S PLAN (Unless You Put Forward an Alternative)
Politics is filled with criticisms and accusations. Fiscal policies that would improve the budget situation tend to lend themselves to greater attack since they involve increasing revenues and cutting spending rather than the reverse. While rejecting policy solutions may be a useful way for a politician to define himself, by itself it is counterproductive in addressing the country’s fiscal problems.
12. THE MEDIA SHOULD DO THEIR JOB
The media need to do a better job of covering all of the issues raised here.
Although the numbers have changed since 2008 – the above is sound advice. Each issue must be addressed in order to strengthen the fiscal and economic position of our country. Instead of the government worrying about creating jobs, redistributing wealth, protecting their special interest buddies and transforming America they should just do their job and address the 12 Step Program!
