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).


Below is the text of the President’s remarks made today, in kicking off the first meeting of the National Commission on Fiscal Responsibility and Reform, tasked with trying to create a financially responsible path forward for the federal government. I am posting it because I was struck, and not for the first time, by the President’s candor and ability to speak above the din of partisan noise that usually dominates our political discourse. He defends his performance by bluntly reminding us that the deficit was running at a $1.3 trillion annual pace when he took office, with $8 trillion in deficits projected over the coming decade. He candidly acknowledged that the actions taken to combat the financial crisis and recession have added another trillion dollars to the coming decade’s deficit.

I think perhaps his most important words remind us of “the years in which those in Washington refused to make hard choices and live within their means.  And [the initial steps the President has proposed] will not make up for the chronic failure to level with the American people about the cost of the services that they value.” That is pragmatic and hearteningly forthright. He is conveying that he understands that government spending cannot be controlled without shrinking popular programs, and that government debt cannot be curtailed without increasing taxes.

Hard choices will have to be made.

The President’s comments:

Good morning, everybody. 
As a nation, we continue to experience the consequence of three distinct but closely related challenges.  One is a financial crisis, born of reckless speculation that threatened to choke off lending to families and to businesses.  And this crisis, in turn, led to the deepest recession we’ve known in generations –- costing millions of Americans their jobs and their homes, closing thousands of businesses and devastating Main Streets across the country.  And over the past two years, this downturn has aggravated an already severe fiscal crisis, brought on by decades of bad habits in Washington.
As a result, the day I walked into this door — the Oval Office — the deficit stood at $1.3 trillion, with projected deficits of $8 trillion over the next 10 years.  Partly, this was caused by the recession, which meant the government was taking in less while demanding — while demand for assistance for those who had lost their jobs was far greater.  Another contributor to our deficit has been the rising costs of health care.  Each year, more tax dollars are devoted to Medicare and to Medicaid. 
But what also made these large deficits possible was that, for years, folks in Washington deferred politically difficult decisions and avoided telling hard truths about the nature of the problem.  The fact is, it’s always easier, when you’re in public life, to share the good news -– to tell people want they want to hear instead of what they need to know.  And, as the gentlemen behind me, Alan Simpson and Erskine Bowles, can attest, this has been the norm around Washington for a very long time when it comes to our finances. 
Now, over the past year, we’ve had to take emergency measures to prevent the recession from becoming another depression.  And at a time when millions of people are out of work, we’ll continue to do what it takes to spur job creation while investing in a new foundation for lasting economic growth. But the emergency measures have added about $1 trillion to the deficit over the next 10 years.  As a result, even as we take these necessary steps in the short term, we have an obligation to future generations to address our long-term, structural deficits, which threaten to hobble our economy and leave our children and grandchildren with a mountain of debt.
And that’s why I asked Congress to restore the “pay as you go” rule.  This rule says that Congress can’t spend a dollar on a new tax cut or entitlement program unless it saves a dollar elsewhere.  It’s what helped lead to the balanced budgets of the 1990s.  In fact, it was only by abandoning “pay as you go” that record surpluses turned into record deficits during the course of a decade.
Next, we’ve been scouring the budget, line by line, identifying more than $20 billion in savings this year alone.  We’ve cut or eliminated scores of outmoded or ineffective programs and begun to reform our bloated contracting system. We’ve also successfully challenged the custom in Congress of courting favored contractors by approving weapons systems the Pentagon itself said that it doesn’t want or need.  Because in these hard times we have to save where we can afford so that we can pay for what we need –- the same way families do.
Finally, I’ve proposed a freeze in government spending for three years.  This won’t affect benefits through Medicare, Medicaid, or Social Security.  And it will not affect national security, including benefits for veterans.  But it will affect all other discretionary spending.  My budget ends loopholes and tax giveaways for oil and gas companies and for the wealthiest 2 percent of Americans –- because we just can’t afford them.  And I kept my promise to pass a health reform bill without adding a dime to the deficit.  In fact, by attacking waste and fraud and promoting better care, reform is expected to bring down our deficits by more than $1 trillion over the next two decades. 
But all these steps, while significant, are simply not enough.  For even as we rein in waste and ask that Congress account for every dollar it spends, this alone will not make up for the years in which those in Washington refused to make hard choices and live within their means.  And it will not make up for the chronic failure to level with the American people about the cost of the services that they value. 
This is going to require people of both parties to come together and take a hard look at the growing gap between what the government spends and what the government raises in revenue.  And it will require that we put politics aside -– that we think more about the next generation than the next election.  There is simply no other way way to do it.
That’s why I appointed the National Commission on Fiscal Responsibility and Reform -– based on a proposal originally presented by a bipartisan group of senators.  And today, the commission will have its first official meeting.  I am grateful to all of its members –- Democrats and Republicans, folks in government and folks from the private sector –- for participating. 
I especially want to thank Erskine Bowles and Alan Simpson for chairing the commission.  These two men may have different political affiliations, but they share a strength of character, an ability to work across party lines, and a willingness to tell the hard truths even when it’s hard.  These qualities will be essential, as will the courage they’ve already shown by taking on this assignment. 
Now, I’ve said that it’s important that we not restrict the review or the recommendations that this commission comes up with in any way.  Everything has to be on the table.  And I just met briefly with the commission and said the same thing to them.  Of course, this means that all of you, our friends in the media, will ask me and others once a week or once a day about what we’re willing to rule out or rule in when it comes to the recommendations of the commission.  That’s an old Washington game and it’s one that has made it all but impossible in the past for people to sit down and have an honest discussion about putting our country on a more secure fiscal footing.
So I want to deliver this message today:  We’re not playing that game.  I’m not going to say what’s in.  I’m not going to say what’s out.  I want this commission to be free to do its work.
In theory, there are few issues on which there is more vigorous bipartisan agreement than fiscal responsibility.  But in practice, this responsibility for the future is often overwhelmed by the politics of the moment.  It falls prey to special interest pressures, to the pull of local concerns, and to the reality familiar to every single American — it’s a lot easier to spend a dollar than to save one.  That’s what, at root, led to these exploding deficits.  And that is what will lead to a day of reckoning.  
But I believe, with the help of these gentlemen and this commission, we can begin to meet this challenge in a serious and thoughtful way.  And I believe we must, for the future of our country. 
So, Alan, Erskine, thank you for your participation.  I want to thank all the members of the fiscal commission.  We’ve got a serious group in there of Democrats and Republicans, private sector and public sector, people who are sincere about this effort.  And I told them that we are serious about it as well. 
I think I’ve shown over the last year that I’m willing to do things even when they’re not popular.  A lot of the decisions in terms of getting our budget under control may not be popular, but I think the reason that Alan and Erskine agreed to take on this assignment is that they were convinced I was serious about it.  And I’m going to be standing with them as they come up with the recommendations.
So, thank you very much, everybody.

Those who are prone to inside-the-Beltway thinking have already drawn hard and fast battle lines over the emerging healthcare legislation in Congress. Mind-numbingly predictable congressional Republicans are barking about the cost of the program, the inevitability of tax increases, and how it is an unforgiveable overreach of federal government. Mind-numbingly predictable congressional Democrats are incapable of articulating any coherent defense for the fiscal responsibility of their ideas, or why a public solution is preferable to market or other private reforms. And this new president of ours, whom I supported and whom I trust, continues his pattern of cool detachment from the workings of legislation in Congress.

Here is a rough outline of how the Democrats should be countering the Republican attacks. Say this, over and over and over again: “You, the American people, already are footing this bill.” Firstly, the 47 million uninsured Americans are not denied healthcare, they (merely) lack insurance. We pay for their healthcare now. We pay for it every time a hospital treats an uninsured patient and cannot collect the bill; those costs are spread to those who can pay. We pay for it every time an uninsured American ignores the nagging pain until he lands as an advanced case in the cancer ward. The cost of healthcare to the uninsured was calculated at $125 billion per year way back in 2004, and surely is much higher now [].

The CBO calculates a net federal budget burden of $60 billion per year for the legislation being considered, and estimates that about 20 million Americans would gain health insurance coverage []. That seems right about in line with what we have now, roughly the same cost per person as we currently lose providing uninsured care.

The point is, we already pay for this healthcare. The debate is, or should be, about how we do so. Do we want to keep paying as we do now, with clumsy and inequitable mechanisms of hospitals and doctors being forced to provide charity care, and passing along the costs to your insurance plan and mine? Or do we want to shift to a coherent, orderly, public insurance-based system?

We, the American people, already are footing this bill.