And here is our lesson for the fiscal cliff. The types of deals that are being discussed by both the president and Boehner don't cut spending or reform the drivers of our future debt (Social Security, Medicare and Medicaid). Instead, they keep taxes low for 98 percent of taxpayers. But this basically means keeping 98 percent of the failed policies of the Bush years. And the failed part, as I noted above, is the growing burden of federal spending.Perhaps Marc Thiessen is right that we should just let taxes go up on everyone so that people start to realize how much government spending is costing us. Americans have gotten used to the fantasy that we can have low tax rates and just keep spending.
This country is at a crossroad. We have to choose between raising taxes on everyone to pay for big government or keeping taxes low and seriously cutting spending. Big government spending and relatively lower taxes are not an option. We learned that during the Bush years.
Extending the tax cuts shielded the economy from the full brunt of Obama’s economic failures and allowed him to put off job-killing tax increases until his second term. It’s ironic: Obama never passed up an opportunity to blame President George W. Bush for his economic woes, yet he rode the Bush tax cuts to reelection.As Mort Zuckerman writes, nothing being discussed as a last-minute fix for the fiscal cliff is addressing what is really driving our debt.
Extending the tax cuts also shielded Americans from the costs of Obama’s spending spree. Shopping on a credit card is fun until the bill comes due. But if the bill never arrives, what incentive do people have to stop the spending?
Big government is great if you don’t have to pay for it. Well, now it’s time to pay the bill. Maybe when the costs of the stimulus, Obamacare and exploding entitlements are finally deducted from their paychecks, Americans will rediscover the virtue of smaller government. If they don’t like paying higher taxes to allow for more spending, there’s a simple solution: Demand that politicians in Washington cut taxes and spending instead of expanding them. And if they won’t do it, elect men and women who will.
We are on a trajectory of cumulative fiscal deficits that cannot possibly be sustained. We have gone from being the world's largest creditor nation, with no foreign debt at the end of World War II, to the world's largest debtor, with roughly half of our public debt held by foreign lenders. Over the last four years, our national debt has grown by more than $5 trillion to over $16 trillion. We have to service that debt. The Federal Reserve is keeping rates historically low but here's the cost of paying interest on the debt for fiscal 2012: $359,796,008,919.49.The news just keeps getting worse the more you look at our unfunded liabilities. But the Democrats refuse to talk about any reform of entitlements as part of the fiscal cliff negotiations and they've ignored those problems for the past four years. Obama gave the brush-off to his own commission established to address these problems and all we got were platitudes from him during the campaign and scare talk about what Ryan and Romney proposed. Yesterday, he answered David Gregory's softball questions by lying about how much spending he'd cut in 2011. He's still putting up the pretense that counting money he was never intending to spend in Iraq is a spending cut. Everyone knows that is just as laughable as if I'd decided to count in my family's budget the money we are saving by not buying that second house in the Bahamas that we have no intention in purchasing. But such is how accounting is done in Obamaworld. I prefer this explanation of the U.S. Budget for Dummies that has been going around the internet.
What do you get for that? Nothing.
The greatest fiscal challenge to the U.S. government is not just its annual deficit but its total liabilities. Our federal balance sheet does not include the unfunded social insurance obligations of Medicare, Social Security, and the future retirement benefits of federal employees. Only in the small print of the financial statements do you get some idea of the enormous size of the unfunded commitments. Today the estimated unfunded total is more than $87 trillion, or 550 percent of our GDP. And the debt per household is more than 10 times the median family income.
* U.S. Tax revenue: $2,170,000,000,000
* Fed budget: $3,820,000,000,000
* New debt: $ 1,650,000,000,000
* National debt: $14,271,000,000,000
* Recent budget cuts: $ 38,500,000,000
Let’s now remove 8 zeros and pretend it’s a household budget:
* Annual family income: $21,700
* Money the family spent: $38,200
* New debt on the credit card: $16,500
* Outstanding balance on the credit card: $142,710
* Total budget cuts so far: $38.50