We Must Halt Run Away Deficit Spending … NOW!
THINKING OUTSIDE THE BOX
By: Dr. Charles Ormsby – February, 2011
In my article last month (“It’s Time to Take Out the Meat Cleaver!” The Valley Patriot, January 2011), I outlined a downsizing of the federal government that would reduce spending by $1.2 trillion in the first year. The proposed plan, if implemented, would reduce the federal government’s share of our Gross Domestic Product from 25% in 2010 to 17% next year and to 10% to 12% within ten years.
This plan would avoid the highly probable collapse of our economy caused by the criminal irresponsibility of our elected officials. It would replace this collapse with a new era of economic expansion and prosperity.
Of course this plan, to substantially reduce the size of government, is an anathema to liberals. Their appetite for control over our lives and our fortunes is unbounded. If permitted, they would grow government until we are all bankrupt. Well, we have permitted it and that is precisely what is happening.
Some have said that the plan I outlined to reduce spending by $1.2 trillion is too drastic. Is it?
President Obama has suggested savings of $450 billion over ten years – a measly $45 billion per year. Even these savings are an illusion since they represent reductions in planned increases. He cannot be taken seriously. The emperor has no clothes.
Newly elected, libertarian-leaning Senator Rand Paul has suggested immediate budget cuts totaling $500 billion. That sounds like a good start, but it is also inadequate. The problem created by the last 60 years of liberal spending is bigger than this. The disease needs even stronger medicine. Much stronger medicine.
As substantial as my original prescription may seem, I’m now concerned that even it may be inadequate … or, if one is optimistic, barely adequate. An immediate cut of $1.2 trillion is inadequate or barely adequate? How can that be?
The Congressional Budget Office (CBO) just reported that the current federal budget will run a deficit of $1.48 trillion. That’s right. My suggested budget plan will still leave us with a CBO-projected deficit of $280 billion!!! That is nearly $1,000 for every man, woman and child in the U.S.!
On the bright side, if we committed to $1.2 trillion in immediate cuts, it is likely that the economy and stock market would react very favorably which would, in turn, lead to somewhat larger than expected tax revenues. With luck, this might result in a balanced budget in FY2012. The bottom line is that $1.2 trillion in immediate cuts is the very least that should be considered and that nothing less than this should be accepted in trade for any relaxation of the federal debt ceiling.
Talk of economic collapse seems like hyperbole. It is hard to imagine life in America taking a dramatic turn for the worse. Unless you are over 90 years old, you have never lived through times as tough as what we will face, along with our children, if we don’t right our economic ship.
It is uncomfortable to think about the prospect of a downward spiral into poverty. But it is better to think about it, in a serious way, and insist on tough corrective measures than to cover our eyes and be blind-sided by reality.
The government-induced financial/economic problems we face are enormous. Our elected officials, even those that are conservative-minded, will shrink from this task unless the public demands strong medicine.
But the public will probably not demand that medicine since it will cause some short term pain, unless the substantially greater pain that is just over the horizon is clearly understood.
To that end, I turn this article over to the eminent economist Walter Williams.