Like a speeding train headed for a cliff, the conductor knows impending catastrophe is rapidly approaching and the time to act is running out. Just like that conductor, America is now facing a similar scenario as the deficits the country is racking up are reaching unsustainable levels.
The current White House administration has enacted record breaking spending packages like, TARP part two, stimulus one and two as well as a new trillion-dollar health care entitlement program.
While the country continues to face a stubborn recession and families tightened their budgets in order to wait out the economic storm, President Obama continues to put forth larger than life yearly budgets with massive spending programs and no budgetary control in sight.
However, team Obama has put together a debt commission. The co-chairs, Erskine Bowles a Democrat and Alan Simpson a Republican are searching for a solutions regarding America’s impending financial doomsday.
The commission says that at all options are on the table during their first once month meetings. They expect to present the President with their findings right after the November mid-term elections.
The commission is made up of 10 Democrats and eight Republicans and for a recommendation to move forward they must have 14 of the 18 members in agreement. This will not be easy considering the Senate cannot come up with 60 of 100 votes to move legislation ahead.
Adding insult to injury, Washington Post writer Dana Milbank said, “Holding a ‘fiscal responsibility summit’ at the White House in the middle of a government spending spree is a bit like having an Alcoholics Anonymous meeting at a frat house on homecoming weekend.”
Seeing the writing on the wall Congress has not put forth its normally straightforward budget resolution by the April 15 deadline. If House Speaker Nancy Pelosi (D-CA) doesn’t act it would be the first time since 1974 that Congress failed to pass a yearly budget.
In the midst of record level deficits it looks like Congress may be coming to their senses regarding the federal government’s budget as they are having trouble passing a bill with overwhelming numbers skewing in the Democrats favor.
If Congress isn’t operating with a budget, Congressional appropriators could ignore standard caps on discretionary spending for fiscal year 2011. On top of that the debt commission holds no real power in Washington D.C. Any recommendations made by the panel must be adopted by Congress and the panel lacks any public input.
Until Congress realizes debt is the symptom and spending is the disease gridlock in Washington will remain intact.
According to a Fox News report the prized-jewel health care reform bill could be a sitting duck for the newly formed debt commission. In the discussions this week President Obama said everything was on the table – including the new health care bill, Social Security, Value Added Tax (VAT) and steep tax increases for those making less than $250 thousand per year.
On word of Greece’s reduced credit rating the stock markets tumbled in Europe and America.
"We live in a global economy," Commissioner Bowles said. "We've got a deficit this year of $1.6 trillion. Half of what we're borrowing every year we borrow from foreign countries. Forget if China starts to sell our (Treasury) bonds. Think if they just quit buying and what that will do to our interest rates, what that will do to the dollar, and what that will do to the economy in America. We've got to fix this debt problem or there's not going to be a great future for this country."
Republican co-chair, Simpson of the commission concurred. "These things are known to guys in Dubuque, Iowa, and Cody, Wyoming. You just don't realize how alert the American people are to what's happening. And they'll come up to you on the street and say I'm willing to pay more taxes or I'm ready to cut back on this. Unsustainable is not a good word. It's called going broke."
The Heritage Foundation acknowledges the problem is far larger than Washington is alluding to. “The only reason to consider the VAT is because the current tax system cannot support the massive spending surge the President has already pushed through let alone the additional spending he envisions or the entitlements wave to follow. Either he finds a way to finagle the VAT or he will be forced to pare spending back to previous levels. Either Washington puts a much bigger squeeze on the taxpayers, or Washington must go on a crash diet. It’s time to send the federal government to a fat farm.”
The debt commission’s goal is to reduce the federal budget to three percent of the country’s gross domestic product by 2015. The 10 percent number the U.S. is currently saddled with means there are some tough choices on the horizon.
Big-ticket entitlement programs the debt commission is looking at include, Medicare, Medicaid and Social Security.
Earlier in the week Obama said he would ask the panel to scour the current U.S. tax code and he said he would not rule out any tax increases for the middle class if the debt commission believes it is necessary to begin chipping away at the deficit.
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