By Lee Roberts
In the first presidential debate Mitt Romney said he would not borrow money from China to subsidize expenditures such as the Public Broadcasting System, even though he personally likes “Big Bird.”
Liberal pundits quickly attacked Romney for his stance on cutting PBS to reduce the deficit. These purely political attacks are unfortunate, because the nation really needs to embrace any position that is nested in responsible spending.
To put it in perspective, imagine racking up $200,000 on 10 credit cards, then being asked to donate money to a charity. The thought crosses your mind to put the donation on one of your 10 credit cards. Most consumer credit counselors would highly recommend not contributing and to instead focus on paying down an almost insurmountable debt.
So why is it so difficult for Americans to grasp that the federal government should only pay for “must have” items and reform programs that are not cost effective?
America’s debt crisis
America is more than $16 trillion in debt, and will surpass $17 trillion next year.
The Congressional Budget Office just released its report that the federal budget deficit amounted to about $1.1 trillion in fiscal year 2012. “At 7 percent of gross domestic product, the 2012 deficit was down from 8.7 percent in 2011 and 9 percent in 2010 but greater than any year between 1947 and 2008,” the CBO reported.
It’s the fourth straight year the U.S. has eclipsed $1 trillion in deficit spending, signaling the government’s credit card is racking up debt it ultimately cannot sustain.
The CBO also recently released “An Update to the Budget and Economic Outlook: Fiscal Years 2012 to 2022.” In it, it states that current tax relief provisions are set to expire Dec. 31, 2012. In addition, sharp reductions in Medicare’s payment rates for physicians’ services are set to take effect. A law to restrain discretionary and mandatory spending will go into effect and extensions of emergency unemployment benefits and a 2 percent reduction in payroll tax for Social Security are also expiring in 2013, according to the report.
Even if these changes take effect, the CBO indicated in this report that the deficit would still be $641 billion in 2013, or 4 percent of GDP.
The debt problem
The debt is piling up and at $1 trillion a year it’s unsustainable.
One report by Market Watch suggests America’s budget deficit is reaching a point of no return.
Jack Nutter writes that in simple terms the federal budget is made up of three components. The first is defense, discretionary programs and mandatory entitlement programs, such as Social Security and health services. The second is revenue, which about half comes from taxes. The last component is interest paid on debt.
Nutter writes there is a conundrum because Democrats believe that the more revenues can be raised, the larger government can become. Conversely, the Republicans believe “denying revenue to the government will somehow make it smaller.”
The problem is the federal government and its expenditures are both large and debt is growing. Policies are not conducive to growing business and thus tax revenue, and the politicians have stark differences that result in a budget stalemate. The loser in this is everyone.
The debt solution
Before it is too late, everyone will have to come to the conclusion that 100 percent of the country will have to feel the pain of less money for programs and paying some taxes, Nutter wrote.
In another report in Moneynews, Forrest Jones and John Bachman write that deficit ills are treatable if the nation acts, and it must be soon.
They wrote that “fiscal and entitlement reforms are needed, and such measures don’t come without austerity and pain.”
Everyone will have to give up something for the fiscal woes to end.
“Cutting deficits and reforming entitlement programs must accompany policies that foster economic growth, and for the U.S., that means doing away with anything that prevents entrepreneurs from crafting business models, opening up shop and hiring workers,” Jones and Bachman added.
Regulations and health care mandates are strapping small businesses and preventing them from growing and hiring new employees. As a result revenues are not increasing in the federal treasury. In the current climate, businesses have to have incentive to reinvest and grow. Laws, regulations and policies such as energy have to be changed to promote business growth.
The federal government must also stop borrowing money. It’s that simple.
The country is divided on the way ahead, as evidenced by the Rasmussen presidential polls. However, it’s obvious America vitally needs leadership, someone who has experience fostering economic growth, reforming programs and reducing government deficits.
Before becoming president, Obama was a community organizer and then U.S. senator. He had no practical experience running government or business. As president he grew the debt and stifled business. And his energy policies have caused gas prices to more than double. It’s a far cry from the hope and change he promised four years ago.
Romney, although not perfect either, talked in the debate about cutting any unnecessary program that he would have to borrow money from China to pay for. Yes, he targeted PBS and “Big Bird,” but he did so to let people know those are “nice to have” programs that can no longer be supported. He is sending a message that must be heard. He is a proven businessman and former governor who created budget surplus in Massachusetts when the legislature there was heavily Democratic.
As governor, Romney was an executive officer who had to submit budgets and operate state government. It’s well known what he accomplished in his service to Massachusetts. He’s a leader and the best chance America has to reform government, promote small business, and reduce the deficit.
Will the process of turning America around be painless? Undoubtedly opponents will attempt to block reform. Regardless, the status quo and eventual collapse of the federal government under the weight of debt is the alternative to succeeding in this effort. It’s not an acceptable one.
Results matter. If politicians don’t address debt and deficits and promote business, they need to be replaced. America is running out of time and the federal government has to spend responsibly.