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.

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Do you consider yourself a limited government type of voter? Are you looking for a path to find the political solution to runaway government spending? I am here to provide a word of caution. Consider, please, these facts:

  • Ronald Reagan: Federal spending in 1981 (the oldest year I have comparable data for) = $697.8 billion. Federal spending in 1988 = $1,066.9 billion. Average annual increase: 6.3%.
  • George HW Bush: Federal spending in 1988 = $1,066.9 billion. Federal spending in 1992 = $1,427.8 billion. Average annual increase: 7.6%.
  • Bill Clinton (pre-Gingrich with Democrats in control of the House): Federal spending in 1992 = $1,427.8 billion. Federal spending in 1994 = $1,463.0 billion. Average annual increase: 1.2%.
  • Bill Clinton (with Gingrich & Republicans in control of the House): Federal spending in 1994 = $1,463.0 billion. Federal spending in 2000 = $1,788.6 billion. Average annual increase: 3.4%.
  • George W Bush (with Republican control of Congress): Federal spending in 2000 = $1,788.6 billion. Federal spending in 2006 = $2,659.2 billion. Average annual increase: 6.8%.
  • George W Bush (with Democratic control of Congress): Federal spending in 2006 = $2,659.2 billion. Federal spending in 2008 = $3,145.3 billion. Average annual increase: 8.8%.
  • Barack Obama First Year: Federal spending in 2008 = $3,145.3 billion. Federal spending in 2009 = $3,516.1 billion. Average annual increase: 11.8%.
  • Barack Obama Second Year (annualized): Federal spending in 2009 = $3,516.1 billion. Federal spending in 2010 = $3,445.6 billion (annualized using data through September). Average annual decrease: 2.0%.

All information sourced from http://www.fms.treas.gov/mts/mts.xls.

The Tea Party serves us much better as a valuable gadfly, forcing the two parties who can actually govern this country to recognize fiscal restraint and the limitations of government. Apparently, neither major political party is capable of keeping that message in mind.

As a paradigm of governnance, though, the Tea Party is inane. Their candidates promise both balanced budgets and tax cuts. Really? They have $1.3 trillion in spending cuts to offer? I’d like to see the list. I’d like to see how those spending cuts will be implemented without pushing our economy into a nuclear winter of a depression, leaving us yearning for 1930, or at least 2008.

Their candidates promise to return government to its proper constitutional boundaries. Really? As just one example, Alaskan Senate candidate Joe Miller says unemployment benefits are unconstitutional. Fair enough, but why stop there. The same reasoning renders most of our current government apparatus unconstitutional: Social Security, Medicare, Medicaid, student loans, housing programs, energy assistance programs, science funding, farm subsidies, food inspections, drug approvals, the space program, aid to education. So, just like “balance the budget and cut taxes,” this talk of proper constitutional boundaries leads to an absurdist model of governance.

I say, let’s take the sober message of the Tea Party — which I define to be, live within our means — and discard the actual Tea Party candidates. We don’t have time for this foolishness.

My simple federal fiscal policy formula:

  1. Accept that these severe short-term federal deficits are an unavoidable consequence of many decades of spending growth, several decades of tax cutting, and the severe recession. It is unwise to sharply rein in these deficits until the economy is stably back on its feet. I define that as when job creation reaches the level needed to start making serious inroads into the unemployment rate — i.e., private sector job creation in the 250,000 per month range.
  2. Courageously attack long term deficits by starting to raise the Social Security/Medicare retirement age (but not for near-term retirees) and by tightening means-testing for Medicaid so that it is restored to its original purpose: a safety net for the indigent, not a middle class entitlement.
  3. In between, restore fiscal sanity by a formula of $2 of spending cuts matched to every $1 of tax increases. Real math, not Washington math.

Is that so hard? Apparently so, because I have not heard a single congressional candidate in this election cycle — not Republicans, not Democrats, not Tea Party folks, not libertarians — not one who espouses anything resembling a coherent fiscal message. This would be the time to do it, too, because for the first time in memory, the electorate seems to be ready to hear that entitlements need to be reformed. I don’t know about tax increases though. Most people still seem in denial about that stone-cold reality.

My blogfriend Moe posted this recently. What a great historical perspective her post provides. Can it be any more clear that the election of Reagan in 1980 marked a hugely important tipping point in our fiscal history? Pre-Reagan: government funded with taxes. Reagan and beyond: government funded with debt.