Ages ago, at the dawn of politics, by which I mean in late 2008, our country had just finished an election cycle of historic significance. Collectively, we knew that we needed something or other that fell under the term “change,” and that’s what we voted for. Along came the 2010 mid-term elections, and we felt confused and anxious. Somehow the meal of change we had voted for last time didn’t taste as good as we were expecting it to. We sent the plate back to the kitchen and asked the chef to prepare us a fresh plate of some other kind of change. Now, as the 112th Congress takes office, we can ask ourselves, exactly what is the chef whipping up back there?

In our hearts, I think we know that our change needs to embrace a new kind of fiscal restraint at the federal level. It’s hard to define, but deep down we know that annual trillion dollar-plus deficits, with federal debt now exceeding $14 trillion, just cannot be sustained. In fact, we voted in great numbers for those candidates who promised such things as “balancing the budget” and “reducing the federal debt.” But that was in the campaign season. As someone (Nixon, I think?) once said, one campaigns in poetry and governs in prose.

What do we know so far about the governing reality? One, we know that our elected officials chose lameduckedly not to capitalize on an opportunity to reduce future deficits — foregoing an opportunity to reduce our federal debt over the next decade by $2.7 trillion. Not that there weren’t good reasons for doing so, but the action did display the stark tradeoff between tax cuts and deficits.

Two, we know that House Republicans intend to trim $100 billion in spending from the next budget. Well, if one is a deficit hawk, I suppose you can at least say that points in the right direction. The federal government spent $6,412.7 billion in FY 2010. So the Republican idea is, apparently, to move us to the $6,312.7 billion annual spending level, an overall reduction of about 1.6%. Personally, I find it hard to discern why spending $6,412.7 trillion (and incurring a deficit of $1,555.6 trillion) is catastrophic, while spending $6,312.7 trillion (and presumably incurring a deficit of $1,455.6 trillion) — each amount being $100 billion less than FY 2010 — is good policy. Seems kind of like saying, you can eat 20 donuts a day and not gain weight… but if that 20th donut has sprinkles on top, then you’re going to rush headlong into morbid obesity.

Three, Republicans are putting a lot of stock into Rep. Paul Ryan’s fiscal “Roadmap.” I like his roadmap, at least in concept; like any smart politician (campaigning in poetry, as I said), he leaves the details fuzzy. But we also must understand how greatly the Roadmap departs from the campaign rhetoric. Taken at face value, the Roadmap envisions non-stop federal deficits for the next 41 years. Those deficits will decline annually until 2017/2018, and then will start to increase again, and will do so through 2037.

Let’s state the fiscal reality out loud, my friends. The Republican plan does not balance the budget. It does not reduce federal debt. It contemplates nearly endless deficits and non-stop additional federal borrowing. That’s not me saying it, that is what is in Rep. Ryan’s Roadmap. If anyone still thinks that deficits and debt accumulation are a function of recent Democratic policies, they are wildly information-averse. These deficits are structural to the core. They are the result of decades of entitlement spending growth and tax cutting.

If there is any remaining doubt that governing reality will fail to match the political rhetoric, let’s all watch today as the new House Republican leadership has the U. S. Constitution read on the floor of the chamber. There’s another bit of powerful campaign poetry: “Restore the government to its constitutional boundaries!!!” Really? Keep a list in the weeks to come of federal programs the Republicans deem unconstitutional and therefore targets for elimination. Then ask yourself, if those programs fail to pass constitutional muster, on what basis do these programs pass: Social Security? Medicare? Medicaid? Food inspections? NASA? National Parks? DEA approvals of prescription drugs? The EPA? Nursing home oversight? Financial market regulation? Are Republicans really going to propose elimination of all these federal programs? Or they are somehow constitutional, but “Obamacare” is not? Where is the line???

In other words, if the Republicans sincerely believe in strict constitutionalism, then go after them all. But if they only target a select few programs, then we will know that their actions are driven by political calculations, and not by true constitutional principles. Another plate of “change” served up to us that ends up being inedible.

Tune out the rhetoric. It is meant only to deceive and pacify you. Observe the actions, and assess the results.

It has been four  five six days since the mid-term elections, and during that time I have started and abandoned four six seven different posts on that topic. So many different emotions have filled me. I may have needed at least little space to make better sense of them. A fable (kind of) to start off…

Once, there was a group of three Mexicans who set out on a fishing boat to catch sharks.  However, their boat soon experienced adverse winds and mechanical difficulties, and they were lost at sea. The fishermen existing on nothing but raw fish, rain water and the tiny amounts of additional fresh water they could condense and trap. Finally, after nine months and nine days, they were picked up by another fishing vessel, some 5500 miles from where they had started. (True story)
Of course, the Mexican fisherman were malnourished and emaciated. The captain of the ship that rescued them, a Democrat, immediately ordered that a sumptuous feast be brought forth for the starving men. They ate and ate until they had had their fill, gorging themselves on rich roast meats and delectable baked goods and every manner of decadent indulgence.
The First Mate of the rescue boat, himself a Republican, thought ill of the captain’s plan, however. He immediately dashed off a wire to the corporate office, complaining that the feast had ruined the food budget for the vessel’s entire trip. What is more, he strenuously objected to the eating habits of the rescued men. “They ate with reckless abandon,” he reported. “Plate after plate of rich, fatty food. To eat like that only will lead to grave ill health — obesity and heart disease and diabetes and worse. This must be stopped immediately,” he concluded.
The corporate managers summoned the boat back to the harbor, and launched an inquiry into the captain’s actions. They heard evidence from nutritionists and health experts, who confirmed the First Mate’s fears. No one could remain healthy on such a diet as this, they concluded. The captain was reprimanded for his poor judgment, and ordered not to pick up any more lost fisherman for the remainder of his commission. The next day, he apologized to the corporate managers, although many, including the First Mate, felt that he still didn’t really ‘get’ it. They vowed to watch his every move with great vigilance, lest his insidious plan come to pass, and every fisherman on the sea become obese and unhealthy.

And that is where I find myself after the elections. I am not disheartened that the electorate has focused its attention on putting America on a healthy diet. I am disheartened that the electorate seems not to have distinguished between the necessary government actions to turn back a catastrophic recession — a spending “feast” fed to starving fishermen, if you will — and the long-term fiscal realities that we must face.

Somewhere, somehow, successful candidates managed to turn the government’s response to the recent economic crisis upside down. Not only did they portray the government’s response as ineffective, they managed to sell it as the cause of the crisis. That is absurd. Without the Bush/Obama TARP and stimulus interventions, today unemployment would be much higher, and economic growth would be much weaker (perhaps even the economy still contracting), and bankruptcies and mortage defaults would be at even higher levels, and government spending (on safety net programs) would be considerably higher, and government receipts would be much lower (on a smaller economy; all capital losses, no gains), and federal deficits would be much higher, and federal debt would be growing much faster.

But that’s not what seemed to be in people’s minds last Tuesday. Voters seemed to think that runaway spending and an expansionist view of government had created the economic crisis, had created the huge deficits and growing federal debt.  They seemed to be oblivious to the reality that the campaign promises of many of the newly elected — to move immediately toward cutting spending and balancing the budget — likely would push the fragile economy right back into recession, economic contraction, job losses and all the woes that derive from that.

I would love to have an honest debate in this country about the proper size and scope of government, about how we really do address structural over-spending; about how to use tax policy to most effectively promote economic growth. Unfortunately, the mid-term elections were not that debate. They were a debate between the cynical fantasy of the minority party (to cut taxes and cut spending so as to balance the budget, all to end the current recession) and the naive oblivion of the majority party (failing to put forth a necessary agenda to address the country’s long-term structural deficits).

Gahhh.

I have been saying for years that the orthodoxy of tax cutting that originated back in the Reagan administration is as responsible for today’s vast deficits and federal debt as over-spending. After all, say what we will about FDR and the New Deal, or Johnson and the New Society — at least through the 1970s we pretty much paid for the government we demanded. Jimmy Carter left office with less than $1 trillion in federal debt. Since then, though, it has exploded, driven by both steadily rising spending and by tax cutting measures. Debt doubled under Reagan, and nearly did so again under Bush 43. By the time we get to Obama, debt is piling up at the rate of more than $1 trillion a year.

As a result, I have been highly critical of Tea Party and other right-wing types who espouse a “cut spending, cut taxes” view of fiscal policy. I believe that deficits and the resulting debt are the great threat to our future. Tax cuts in this environment are not merely illogical, they are irresponsible. If your family is deeply in debt, you work to cut spending and raise your income. You don’t cut spending and ask your boss to cut your pay. We cannot in good conscience cut today’s taxes, which raises the deficits and puts an even greater burden on future generations.

Now, along comes a front page piece in USA Today, of all places. The headline reads “Tax bills in 2009 at lowest level since 1950“. On average, 9.2% of our personal income is paid in taxes at all levels of government. Our taxes are at their lowest level in 60 years. Let’s have that sink in: lowest in 60 years. What could possibly be the argument for cutting taxes even further than a 60-year low when we are saddling our children and children’s children with more than $1 trillion in debt by the year?

Do you know what is “conservative”? Conservative is paying for what you buy, and not acting like a god-damned socialist and expecting someone else to pay for it instead. Spending cuts and tax increases, please.

There are only two possibilities, mathematically speaking — either we have a balanced budget, or debt goes up. Can people of all political stripes agree on that?

Here is my question to my friends on the conservative end of the spectrum. Assuming that continuously increasing debt is intolerable, we must balance the budget, right? Okay, how do we accomplish that? There are only two variables in the balanced budget equation: spending and taxation. But you flatly reject taxation as a solution. So that leaves us trying to balance the budget ENTIRELY through spending cuts. With the deficit running at $1.3 trillion annually, we would need spending cuts in that amount to balance the budget. I would be curious just what cuts you have in mind of that magnitude. If you cannot cut $1.3 trillion in spending, and if we cannot raise taxes, then how is it mathematically possible to balance the budget? And if you cannot balance the budget, are you not advocating for for increased federal debt? The math is inescapable.

Here is my question to my friends on the liberal end of the spectrum. This is a breakdown of Obama’s FY2010 budget:

Mandatory spending: $2.184 trillion (+15.6%):
$695 billion (+4.9%) – Social Security
$453 billion (+6.6%) – Medicare
$290 billion (+12.0%) – Medicaid
$0 billion (−100%) – Troubled Asset Relief Program (TARP)
$0 billion (−100%) – Financial stabilization efforts
$11 billion (+275%) – Potential disaster costs
$571 billion (−15.2%) – Other mandatory programs
$164 billion (+18.0%) – Interest on National Debt

Discretionary spending: $1.368 trillion (+13.1%):
$663.7 billion (+12.7%) – Department of Defense (including Overseas Contingency Operations)
$78.7 billion (−1.7%) – Department of Health and Human Services
$72.5 billion (+2.8%) – Department of Transportation
$52.5 billion (+10.3%) – Department of Veterans Affairs
$51.7 billion (+40.9%) – Department of State and Other International Programs
$47.5 billion (+18.5%) – Department of Housing and Urban Development
$46.7 billion (+12.8%) – Department of Education
$42.7 billion (+1.2%) – Department of Homeland Security
$26.3 billion (−0.4%) – Department of Energy
$26.0 billion (+8.8%) – Department of Agriculture
$23.9 billion (−6.3%) – Department of Justice
$18.7 billion (+5.1%) – National Aeronautics and Space Administration
$13.8 billion (+48.4%) – Department of Commerce
$13.3 billion (+4.7%) – Department of Labor
$13.3 billion (+4.7%) – Department of the Treasury
$12.0 billion (+6.2%) – Department of the Interior
$10.5 billion (+34.6%) – Environmental Protection Agency
$9.7 billion (+10.2%) – Social Security Administration
$7.0 billion (+1.4%) – National Science Foundation
$5.1 billion (−3.8%) – Corps of Engineers
$5.0 billion (+100%) – National Infrastructure Bank
$1.1 billion (+22.2%) – Corporation for National and Community Service
$0.7 billion (0.0%) – Small Business Administration
$0.6 billion (−14.3%) – General Services Administration
$19.8 billion (+3.7%) – Other Agencies
$105 billion – Other

Why must we have a 13.1% increase in discretionary spending? Isn’t that the height of irresponsibility in these times? The economy is booming again. The stock market is up by 60% in the past year. The massive job losses  of 2007-08 have ended, and all signs point to job creation around the corner as the economy continues to expand. Surely we can have a budget that acknowledges the economic drag that $1.3 trillion annual deficits, and $13 trillion of cumulative federal debt, have.

No matter how I look at things, I come back to the same conclusion. Ideologues are America’s greatest enemy.

Do you want to know why government keeps growing and growing and growing? Do you want to stop it?

I am going to whisper the secret answer to you. But you may not like it. The scope of government has been expanding rapidly since the 1980s because no one has to pay the cost. The culture of debt means that we borrow the funds needed to add the Americans with Disabilities Act, and No Child Left Behind, and Medicare Part D, and wars in Kosovo and Afghanistan and Iraq, and so on and on. Why not do all these things? What senior wouldn’t appreciate prescription drug coverage, or what community wouldn’t appreciate federal funds for its schools?

And there is no constituency to oppose these things, or to moderate them, because there is no levy on taxpayers. We just borrow the money.

So, here comes the painful conclusion. You want to control federal spending? You want to limit the scope of government? You want to, as the Tea Party folks like to say, ‘return government to its constitutional boundaries’? Simple answer: Demand taxation. Demand an end to deficits and debt accumulation. It is no different than managing your finances at home. If you discipline yourself to pay cash for everything, and cut up the credit card, your finances will be fine. Demanding taxation to fund our government is the same thing. Sure it will be painful for twenty years. But then we’ll be fine.

You think this is nuts? Fine. Just remember this post when federal debt hits $15 trillion… $20 trillion… $30 trillion……….

I have been having a very thoughtful exchange with another blogger about these tea parties, and what they represent. It finally dawned on me why I am vaguely mistrustful of the tea party movement, even though I support its basic message. I suspect I differ from most tea-party folk in terms of our understanding of what the ramifications of such a movement will mean.

Much anger is directed at frivolous, wasteful and excessive spending. By all means, let’s light the torches and demand an end to all that. But, once all of that has been taken away — all the Congressional perks, all the earmarks, all the unambiguously pork projects — what do we have? An annual deficit of maybe $700 billion instead of $1 trillion.

People have to be ready for the cold, hard reality that this means large-scale reductions in government services. This may mean that Social Security and Medicare start at 68, not 65. And that grandma has to live in the spare room instead of the nursing home, due to Medicaid cuts. And that I have to fork over $700 for a laptop for my highschooler, because the schools don’t have enough computers. And that expressways become tollways because of cuts in federal transportation funding. And that food plants are inspected less often. And that national parks are closed from November through March. And that we withdraw precipitously from Iraq and Afghanistan. And that the cost to ride Amtrak or mail a letter goes up by 50%.

The list is endless, and more importantly, it isn’t painless. In fact, it will be extremely painful.

Government may be broken, but WE broke it. Candidates told us we could have all these services, and pay less in taxes, too! Glory be! Sign me up!!! We got exactly what we asked for.

There was no betrayal, except of ourselves, by ourselves. We are not the victims, we are the perpetrators. And the pain of restoring order will be our pain, not theirs. I pray that people get that.

I hope that people are rallying for the right things and with the right motivations. It sure would be unseemly if it turned out that most people at yesterday’s “tea parties” were driven solely by the personal desire to pay less in taxes (who doesn’t want that?!!!), and not by a desire to see our country embark on a fiscally responsible future.

What does “a fiscally responsible future” actually mean, when it comes to the federal government? More than anything else, it means that government live within its means. And, as much as any of us hate to admit it personally, that is going to mean we end up contributing more to the government, not less.

Why is this? Our government runs vast deficits. Deficits accumulate into debt. This is not conservative. This is no different than you or I living beyond our means while our credit card balances grow ever larger.

Our federal government essentially adhered to conservative fiscal principles until 1986. Conservatives may not have liked government adding Social Security in the 1930s, massive road construction projects in the 1950s, or Medicare in the 1960s. But, the government paid its bills. Whatever we as a society decided our government should do, we paid for it. Between 1932 and 1980, the top federal income tax rate ranged between 63% and 92% (with a brief bump to 94% during WWII). It was a period of tremendous growth and prosperity in America. When Jimmy Carter left office at the beginning of 1981, federal debt stood at a modest $900 billion.

Then came the dawn of the Age of Tax Cutting. The top federal rate was cut to 50% in 1982, and again to 28% in 1988. It has ranged between there and 39.6% ever since. This would have been a wonderful expression of fiscal responsibly, except for one ugly fact: federal spending continued to rise unchecked: the Reagan years +7.6% annually; Bush 41 +6.7%; Clinton +3.3%; Bush 43 +6.2%. But the federal revenue is not there to support it. Beginning in the 1980s, spending up, taxes down: the federal government no longer could pay its bills.

How have we gotten by? Debt. Debt and more debt and more debt. Since 1980, our federal debt has exploded from $900 billion to $11 trillion. Our pandering politicians decided to further their own interests at the expense of our country’s financial future. They started giving us tax cuts, the political equivalent of distributing crack on the playground. It feels great to pay less taxes, and we can turn a blind eye to the giant pile of debt that builds up.

Now we have reached the point where the current deficits are so steep, and the accumulated debt is so high, that only more taxes can ever address the issue. Ask yourself this: Do you think the political leaders you sent to Congress are going to cut spending by such an astonishing amount that it balances the federal budget? And even if by some miracle that happened, what do you think is going to happen to the $11 trillion that already has been borrowed? Do you think the US is going default on its debt? No. You have to pay it. I have to pay it. There is no Chapter 7 for our government.

For these reasons, I caution people about their desire for tax cuts. Cutting taxes is our dessert. First, we have to eat our vegetables. First, we have to balance our budget and pay back our debts. Dessert will not be served for a long time.