We'll Split the Difference

John Boehner's conference call was not the great pep talk to "Win One For The Gipper". He urged solidarity to his caucus so that President Obama doesn't get what he wants. I read his message that he doesn't have the votes of his caucus--yet and maybe not ever.

Nancy Pelosi surfaced last week with a debt ceiling idea that would entail budget cuts and no revenues but would leave the Big Three alone. No one paid attention then but I'm beginning to see this emerge as Harry Reid's Plan--which would cut about $2.5-3 trillion and would require no new revenues. The beauty of his plan is that we don't have to go over this again until after the Presidential election. And by then the Bush tax cuts are due to expire and the debt would be very manageable.

Progressive blogs continue to go haywire over the mere suggestion that there would be cuts to Medicare or the so-called entitlement programs. I think they have a point in maintaining pressure but think they overdraw the issue. Look at the plans now on the table. The Ryan Plan had called for the radical elimination of Medicare and some $6 trillion of program cuts, while neglecting a serious discussion of revenues. Progressives seem not to listen to President Obama either. He proposed in this year's budget $4 trillion in spending cuts over 10+ years. Harry's Plan gives him most of that, leaving the entitlement issue for a time when serious people are in Congress.

If Hapless Harry suceeds in the Senate, then watch for Nancy Pelosi to emerge in the House to try and get Boehner to agree when his plan fails. This would then leave about 1 trillion to debate in the future.

The tremendous if here is the inherent insanity of the Republican caucus in the House. It's too bad the Grand Bargain could not have been reached, in my opinion, because we would have put a chronic source of acrimony behind us. I think that's what President Obama thought. Even still if Hapless Harry's plan comes close to reality, we actually can move on.

Teresa Tritch did a nice summary today in the New York Times of the national debt problem. In 2001, George W inherited a surplus with the CBO projecting surpluses from there out if President Clinton's policies remained in place. But every year starting in 2002, the budget fell into deficit. In January 2009 just before President Obama took office, the CBO projected a $1.2 trillion deficit that year and in subsequent years, based on Bush's policies and the recession. President Obama added to the deficit in 2009 and 2010 with policies such as the stimulus package but these were largely temporary.

The main drivers of the deficits during W's years were the tax cuts and war spending with recessions in 2001, in 2008 and 2009.

The list is as follows:
Bush FY 2002-2009
Iraq,Afghanistan Wars--$1,469 trillion
Bush Tax Cuts --$1.812 trillion
Non-defense discretionary spending
--$ 608 billion
TAARP and bailouts --$ 224 billion
Medicare Pan D --$ 180 billion
2008 Stimulus and
other changes --$ 773 billion

Cost of Bush new policies--$5.07 billion

Obama FY 2009-2017 (with projections)
Stimulus spending --$711
Non-Defense discretionary--$278 billion
Stmulus tax cuts --$425 billion
Health reform and
entitlement changes --$152 billion

Cost of Obama's new policies--$1.44 trillion

Tritch argues that if the Bush tax cuts expire, then future deficits would be cut in half and become manageable. She also argues like every other person that spending cuts alone will not get us out of the jam but that taxces have to go up. So if you look at Hapless Harry's proposal, the cuts center around the wars ending and some savings in defense and about $1 trillion in other areas.

What's so amazing and frustrating is that the solutions to these problems have been clear for over the last two years and that our current political environment can't seem to solve them in the least harmful way.