Daily Archives: February 19, 2010

Spender-in-Chief Seeks Debt Counseling

On Thursday, President Obama used an executive order to create a debt commission. The commission will be charged with “taking on the impossible” and designing a plan to reduce the federal deficit.  To lead the commission Obama chose former Sen. Alan Simpson, R-WY., and Democrat Erskine Bowles, former chief of staff to President Clinton. 

“They’re going to try to restore reason to the fiscal debate and come up with answers,” said Obama. “The politics of dealing with chronic deficits is fraught with hard choices. And therefore it’s treacherous to officeholders here in Washington.”  

White House spokesman Robert Gibbs said Obama’s executive order sets up a debt commission to study options on spending and taxes because the U.S. Congress failed to create a congressional deficit panel of its own. The presidential commission will make recommendations but lacks the power to bind Congress to them.

Obama also signed the bill to raise government borrowing authority to $14.3 trillion and reinstall pay-as-you-go rules to require Congress to offset spending with cuts, Gibbs said. The White House is forecasting a record $1.56 trillion deficit in the fiscal year that ends on Sept. 30, 2010.

Vital creditors such as China and other investors question whether the White House is serious about fiscal responsibility. Failure to convince them will have a significant impact on the dollar and bond markets. They want to see a plan to control the deficit and spending. Obama’s current budget forecast show the debt level reaching 80% of GDP by 2020. The federal deficit reached an unprecedented $1.4 trillion in 2009 and most predict it will go even higher this year. 

The commission will consist of 18 members, six will be presidential appointees; there will be 12 sitting lawmakers, 6 appointed by Republican congressional leaders and 6 appointed by Democratic congressional leaders. A 14 vote majority would be required to implement any recommendation. The recommendations are due Dec. 1. 

The Republicans are wary but plan to participate. Their fear is that solutions may aim toward increasing taxes instead of cutting spending. 

“Americans know our problem is not that we tax too little but that Washington spends too much — that should be the focus of this commission,” McConnell said. 

House Minority Leader John Boehner, R-Ohio, says the GOP has proposed immediate spending cuts through a rescissions package. If they aren’t considered a Boehner spokesman said “That doesn’t mean we won’t participate in this commission, but it does indicate that Washington Democrats aren’t serious yet about shutting down their spending binge.”  

Jerry Lewis, R-CA., is the most vocal critic of the panel. “Instead of acting appropriately to rein in spending and control skyrocketing deficits, the Democrat Congress and the President have outsourced their constitutional responsibilities to a powerless commission apparently created to provide political cover,” Lewis said. “The American people are demanding accountability from their elected officials,” he added. “This commission, which isn’t slated to produce anything until after the November elections, is essentially a way to avoid this accountability.” 

Lewis is dead on in his assessment. Fixing the deficit will be a complex task to be sure but it starts with common sense. The first way to reduce a spending deficit is to stop spending. The way to stimulate growth in the tax base is to help it grow. The proven way to do that is to cut taxes and stimulate investment. The math is simple – example: would you rather have 5% of $10,000,000 (500,000) or 7.5% of $5,000,000 (375,000). 

It is also difficult to take this idea seriously from an administration that does not mention that it has nearly quadrupled the deficit in a year. It is kind of like asking Tiger Woods for advice on marital fidelity. 

Americans need to watch this closely as it appears as Rep. Lewis has pointed out to be another distraction from the real job of reining in out of control government spending. This gives the President a new way to avoid accountability and set up scapegoats if his policy failures continue. 

Wake up, America! It is time to clean house in Washington and start over with common sense solutions that cut spending and promote fiscal responsibility. Keep speaking out and letting your representatives know we are not going to take it anymore. 

Restore the Republic, Reject the Agenda of the Progressive Left, End Big Government Now! 

“The principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale”. – Thomas Jefferson, letter to John Taylor, May 28, 1816