12.20.2010 0

The Tough Road to Balance

By Rick Manning

The failure of Harry Reid’s pork laden $1.27 trillion Omnibus bill is the first step in the long battle to get the federal budget under control. Round two occurs this upcoming week as the Congress tries to agree on a new short term budget to keep the federal government running.

Typically, the Continuing Resolutions (CR) either freeze spending at current levels, or modestly increase spending to account for cost of living changes that are built automatically into the budget. Ideally, Senate Republicans will push hard not just for a short term CR, but also for one that actually cuts the size of government by 5 percent of what it would have spent during that time period.

This setting of a new baseline is important to allow the next CR, with the House controlled by the Republicans to be even more aggressive as they would be working off of a lower baseline spending total.

To put some perspective into how massive the budget problem has become, a 5 percent cut in discretionary spending essentially only pays for the 13 month unemployment extension that became law when Obama signed the tax compromise.

Overall, the budget problem becomes more acute when you realize that entitlement programs and other “mandatory” spending make up almost 60 percent of the total budget, so the battle over discretionary spending only covers a little over 42 percent of the budget. Of that, around 5% of the budget is interest payments on the debt, lowering the percentage of the budget that Congress will be appropriating to just over 37 percent of the total amount spent by the US government.

The Department of Defense is more than half of that 37 percent, spending a little more than 19% percent of the total budget. At a time when we are fighting wars in Iraq and Afghanistan, with North Korea threatening nuclear holocaust, and China looming as a national security as well as an economic threat, it is unlikely that the Defense Department budget will get trimmed much. In fact, in historic terms, the Defense budget presently consumes a relatively low percentage of the U.S. budget.

However, given the fiscal emergency, it seems clear that the Pentagon will be required to make some significant cost reductions, perhaps delaying delivery of weapons systems and pulling back from some operations around the world.

The rest of the discretionary spending only makes up about 18% of the entire budget.
Even if Congress cut the total discretionary budget by ten percent, it only would be a cut of 3.7 percent of the entire budget, and would not put a dent into the budget deficit which totaled more than $1.3 trillion in 2010.

If the number $1.3 trillion sounds familiar, it is because Harry Reid’s attempt to fund the federal government for the remaining ten months of the fiscal year was about $1.2 trillion dollar spending bill.

That’s right, unless the Congress is willing to tackle the 60 percent of the budget that has heretofore been untouchable — Medicare, Medicaid and Social Security — we would have to essentially shut down our entire Department of Defense, as well as the rest of the government for about nine months in order to balance the budget.

Like a family with a $50,000 a year income and $100,000 in credit card bills, our nation faces serious choices that need to be dealt with immediately. For some final perspective, the 13 month extension of the unemployment benefits is projected to cost the taxpayer about $56 billion, or about 3 ½ times the entire annual budget of the U.S. Department of Labor.

The best gift this 111th Congress could give to the new one, would be to agree to a short term extension of discretionary funding containing a 5 percent cut in the baseline spending. The new Congress can then roll up its sleeves and cut another 10 percent for the remainder of the year, while working on a budget and spending bills that make the really difficult choices that are necessary for our nation’s economic survival.

Just as it isn’t fun this time of year for a parent to tell his/her child that we cannot afford a new DS system when the old one works just fine, the 112th Congress is not going to have a lot of fun saying no. But adults say no, when no is the right answer, and hopefully unlike the Pelosi/Reid credit card spree of the past four years, the new Congress will act like responsible adults, and our nation can recover our financial bearings.

Of course, the job is so difficult that not even Obama’s deficit reduction commission could envision a path to a balanced budget within the next thirty years. So, it is going to be a rocky road, and every ox is going to need to get gored if we are going to avoid economic Armageddon. November 2010 was the start, let’s hope that Congress doesn’t blanche from the enormity of their task between now and November 2012, because for the U.S government, there can be no do over through bankruptcy or default.

All the chips are on the table, and failure is not an option. Let’s hope that America can come together in mutual sacrifice to meet the challenge, and that our new leaders have the courage to lead where political polls warn them not to go. This is not a time for the faint hearted. So, on this week before Christmas, I wish Speaker-designate John Boehner courage and good fortune, our nation’s fate depends upon you.

Rick Manning is the Director of Communications for Americans for Limited Government.

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