Deficit Commission And Debt Ceiling Sleight Of Hand

Hearken back to 2008. The government’s budget (yeah, they had one back then) was what it was. The debt was what it was also. Since that time, we’ve seen what we were told were ‘bailouts’ for various and sundry items that were going to save the economy from collapse. Instead, what happened was that the size of government grew.

Now, the president’s Deficit Commission dutifully omitted the part about going back to where we were in 2008, as if the new bloated government was the new starting point to work on decreasing the debt. They, through this sleight of hand, have assumed the massive growth in government in the last two years as a given, instead of the temporary booster shot that the bailouts were sold to us as being.

Putting aside all the minutiae and detail, the crux of the proposal comes down to two points: capping federal government expenditures at 22% — and eventually 21% — of GDP, and capping revenues at 21% of GDP.For virtually all of the Clinton and G.W. Bush years – and during all the Kennedy/Johnson/Nixon years – federal expenditures ranged between 18 and 20% of GDP.

The more important problem is on the revenue side. According to Office of Management and Budget figures, federal revenues have NEVER reached 21% of GDP. In fact, only in Bill Clinton’s final year in office – and during WW II – did revenues even exceed 20% of GDP. During the whole time from 1960 through 2008, federal tax revenues almost always fell between 17 and 19% of GDP, only occasionally rising above 19% (chiefly in Clinton’s second term) or below 17% (G. W. Bush’s first term). Even President Obama’s FY 11 Budget has federal revenues rising only to around 19% of GDP by 2015. So the 21% “cap” represents two full percentage points of GDP above what we have experienced even during historically “high” tax environments.

The next project for the new congress (remember we still don’t have a 2011 budget) is whether or not to raise, I said RAISE, the debt ceiling. That is a process that allows Washington to put us further into debt. It is also the process that will codify and approve the smoke and mirrors of the stimulus spending as being temporary, to being the new bloated state and size of our government as being permanent.

Question is will the American people see it this way? When Obama says we need to cut spending, he means that after increasing spending by orders of magnitude that we should be content with that, keep the size and reach of government where it is,  and then we shouldn’t be spending any more.

Which brings us to ‘put our money where your mouth is’ day. Will congress acquiesce to the current size of government and all the bureaucracy that goes with it or will they say NO to raising the debt ceiling? If they approve raising the debt ceiling, will they follow up with the drastic cuts needed so we will not have to raise our grandchildren’s debt again?

Here is something else to ponder. No matter the spin about spending out there, our national debt has now surpassed, or on its way to soon surpass, our GDP. Put simply, we’re spending, and continue to spend, more than we make.

Link: What Am I Missing?

Venezuela – U.S. Without Ambassadors

Venezuelan President Hugo Chavez, the hemisphere’s idiot, kept the heat up and bolstered his domestic street creds by refusing to accept Larry Palmer as our U.S. ambassador. Palmer is the White House nominee for ambassador who is awaiting Senate confirmation.

In response, the Obama administration revoked the visa of the Venezuelan ambassador to the U.S. Bernardo Alvarez who was out of the country at the time. Great move by the State Department and the President. What we have down there in Venezuela, aside from a maniacal communist dictator, is another Kim Jong Ill of the West that is building his political career on hating the United States and supporting all sorts of things that can ultimately bring harm to the United States.

Both sides have shown firmly entrenched stances and no willingness to compromise in the past week as the U.S. government revoked the Venezuelan ambassador’s visa in response to Chavez’s refusal to accept the chosen U.S. envoy.

“Much of the cooperation between the United States and Venezuela in recent years has involved lower-level and lower-profile individuals and agencies than the ambassadors, so the immediate fallout will be limited,” said Shannon O’Neil, a fellow for Latin American studies at the Council on Foreign Relations in New York.

“But this latest round of escalating tensions ends any hope for calmer relations or more expansive cooperation. Demonizing the United States remains too important a political foil for Chavez,” O’Neil said.

This news account does not say what input Sec. of State Clinton had in the decision, but I’m reminded of a James Carville quote, when he said ‘if Hillary gave [Obama] one of her balls, they’d both have two.’ Regardless of how it came about, Obama did the right thing.