Category Archives: Debt and deficits

Congress gets an “F” in finances

Uncle Sam hangs on for web
By Steve Brawner
© 2015 by Steve Brawner Communications, Inc.

This might only be early October, but for Congress, the fiscal year ended Sept. 30. If it were a school year, what kind of grade should Congress receive?

In math, probably an F.

In fiscal year 2015, the government spent $426 billion more than it collected, adding to a national debt that has now reached $18.2 trillion.

Congress should be looking for ways to improve those numbers. Instead, as pointed out by the Committee for a Responsible Federal Budget, this year it increased deficit spending over the next 10 years in a variety of ways.

Meanwhile, when it comes to its most important assignments, Congress gets an incomplete. The federal government is supposed to be funded through 12 appropriations bills dealing with various areas of spending. The 2016 fiscal year has started, and so far the House has passed six, and the Senate has passed zero.

Because the government has to be funded somehow, Congress this week passed a continuing resolution, which basically keeps things as they are. That’s a problem when the status quo is a $426 billion deficit. This latest one will keep the government functioning until December – just before an election year – when Congress probably will pass another last-minute deal that doesn’t solve much long term.

On some assignments, Congress didn’t score an incomplete, but it was tardy. It waited until Dec. 19, 2014, to extend a series of tax deductions that had expired at the end of 2013, which meant businesses and individuals spent the entire year uncertain if those deductions would continue. Waiting so late defeats the theoretical purpose of having deductions, which is to encourage behavior that is good for the economy.

Unfortunately, there is no way to hold back Congress a year until it learns the material. It must be promoted to the next grade, where it will face ever-growing challenges.

There are two ways of measuring the debt: the total debt; and the debt held by the public, which doesn’t include what the government owes itself as a result of activities such as raiding the Social Security Trust Fund. The total debt is $18.2 trillion. The debt held by the public is $13.1 trillion.

The second figure is 74 percent of the gross domestic product. That’s the highest it has been since World War II. Historically, since 1965 the average has been 38 percent.

How do we get back to just being average? The Committee for a Responsible Federal Budget says that, taking the long view and setting 2040 as a goal, lawmakers should reduce total deficits over the next 10 years by $5 trillion. That puts the country on a path to 38 percent. But remember, Congress actually made things worse this past year, not better. So it’s not headed in the right direction.

In the short term, Congress must make some tough decisions quickly. In December, the government reaches the debt limit, which by law sets a ceiling on how high the national debt can go. Ultimately, the limit will be raised. The government can’t just stop going into debt without changing its habits any more than you and I can. Over the next couple of months, Congress’ assigned project is to raise the debt limit responsibly by tying it to meaningful reforms. If it does that, it gets a passing grade. If it does what it usually does – bicker until the last second and then pass the buck – it flunks the test again.

It’s students’ fault when they fail to learn the material, but it’s also the schools’ and the parents’. Elected officials are failing to complete their assignments. However, the classroom where they operate makes success almost impossible. The two-party duopoly, campaign finance laws, the filibuster, political consultants, the media environment – they’re all conspiring to turn Congress into an unworkable institution. The Founding Fathers rightly designed a government that was not meant to run smoothly. In today’s political climate, it’s often not running at all.

Meanwhile, kids tend to do what their parents will allow, and certainly what their parents encourage. If voters demanded fiscal responsibility, then even the most ill-behaved members of Congress would oblige, and even this imperfect system could be made to work.

If that were to happen, there wouldn’t need to be a group called the Committee for a Responsible Federal Budget. We’d already have one, it would be composed of 535 members, and it would have a different name: Congress.

Who gets first dibs on Uncle Sam’s money? Its creditors, of course.

Uncle Sam hangs on for web
By Steve Brawner
© 2015 by Steve Brawner Communications, Inc.

Question: If the federal government were to reach the point where it couldn’t pay all its bills, who should be paid first?

A. Soldiers
B. Veterans
C. Investors, domestic and foreign, to whom the U.S. government owes money.

If you answered “C,” then you would agree with 24 Republicans on the House Ways and Means Committee. They voted last week to advance legislation that would allow the government to keep borrowing money to pay U.S. Treasury bond investors, even if the government reached its supposed debt limit. Payments to Social Security’s trust funds also would continue.

Unfortunately, all 25 of you would be right. The 15 Democrats who make up a minority of the committee voted no, but that’s politics. If the majority and minority roles were reversed, then the Democrats likely would have done what is necessary to keep the U.S. from defaulting on its obligations for the first time ever.

The topic has come up because Congress once again is approaching one of those entirely foreseeable and often manufactured financial crises that threaten the economy and cause the world to question if the United States still knows what it’s doing.

This time, the federal government will exhaust its ability to borrow money in late October, which means it would reach its debt limit in the weeks that follow. Supposedly, that would mean the government couldn’t create more debt. In reality, it just would mean the government temporarily would stop paying its bills – which, of course, would have to be paid later.

That probably won’t happen. What will probably happen is what almost always happens: In Washington, they’ll posture and threaten and argue right up until the last minute, each side accusing the other of “kicking the can down the road,” the most overused cliche in politics these days. And then they’ll pass some measure that keeps the government running for a while – probably until after the November 2016 elections. And then we’ll be stuck wherever that can stopped rolling.

So why even consider that bill approved by the 24 Ways and Means Republicans? The United States government is considered a very safe investment, which is why taxpayers are paying very low interest rates on the $18.2 trillion national debt. Investors – everyone from middle class Americans to the Chinese government – reason that if anyone will pay their money back plus a little interest, it’s Uncle Sam.

What would happen if investors started to doubt that? A U.S. government default would rattle world markets. Meanwhile, interest rates on the debt would rise because investors would see Uncle Sam as more of a risk and would demand a higher return. More of your tax dollars would go into the pockets of investors, domestic and foreign, to pay for the debt the government has already incurred. Less would be available for soldiers and veterans.

Bad things happen when you don’t pay your bills.

At some point, this nonsense must stop. It’s time for the country to stop tiptoeing up to these fiscal cliffs like a teenager trying to scare his girlfriend, One of these days the rocks will be less steady than they seem, and then … well, let’s not be too dramatic. Let’s just say the kid slips several feet down the slope, sprains his ankle, and barely makes it back up the ledge where his soon-to-be ex-girlfriend is waiting.

There’s a simple reason why this keeps happening: Because the voters tolerate it. In fact, they reward it. Members of Congress know that playing these games probably won’t cost them an election. They can always blame the other party and say they did their best as part of a dysfunctional institution. Voters don’t really expect them to do differently. Meanwhile, if they were really to try to balance the budget – by some combination of spending cuts and tax reform that would increase revenues – they’d risk being voted out. Voters like their government programs, but they don’t want to pay for them.

Ultimately, the investors who are financing the national debt will get their money. So will soldiers and veterans, though not enough.

Also pretty certain is that the costs will be passed on to our children and grandchildren. Kids don’t vote, and they don’t donate money to campaigns. They depend on older generations to look out for their interests.

We’ve all apparently decided not to vote for that.

Squashing the wrong problems

By Steve Brawner
© 2015 by Steve Brawner Communications, Inc.

You know when you’re on your porch, and you notice a spider crawling by, but then you look closer and realize it’s not a black widow or a brown recluse, so it’s not poisonous, but then you wonder if maybe you could be wrong, so therefore it could be a threat, and plus it’s a nuisance? Those things multiply, and maybe they’ll get into the house, so you squash it just to be sure.

That’s kind of what the state’s establishment has done to independent candidates in Arkansas.

This past week, District Judge James Moody ruled in a case, Moore v. Martin, in favor of a 2013 law that requires independents to submit their required signatures – 3 percent of the voters in the last election, or 10,000 in statewide races – to the secretary of state by the end of the filing period. In a typical year, that’s the beginning of March.

Before the law was passed, independents could file at the same time as Democrats and Republicans and then collect their signatures while party candidates were campaigning for their May primaries.

The practical effect of the new law is that independents can’t survey the landscape like party candidates can do and then jump in the race. They must have already gathered their signatures to qualify for office by the same deadline that major party candidates sign up to run. They have to be walking the streets months in advance asking people to sign a petition. And instead of walking those streets in March and April as before, they now have to do it in January and February.

Except not this coming election. Because the Legislature moved next year’s primary elections to March 1, the filing deadline this year is Nov. 9. Independents have only 90 days to collect signatures, which means they would have to be beating the streets now for an election that won’t occur until November 2016.

The lead plaintiff in the case, Mark Moore of Pea Ridge, who ran for the state Legislature in 2012 as an independent, filed suit. Judge Moody agreed that the law creates a burden for independent candidates, but he accepted the state’s argument that it’s too difficult to verify those signatures in time, considering all the other things the state must do in an election cycle.

Which is a stretch. In 2014, there was one independent candidate for the Legislature, requiring the secretary of state’s office to verify only hundreds of signatures. In 2012, before the law was passed, there were seven. There’ve been a few other independent candidates run for other offices, but not many. Meanwhile, the secretary of state’s office will verify 67,887 signatures for each voter initiative and 85,859 signatures for any constitutional amendment that will be on the ballot in 2016.

What independents usually are is a nuisance for the establishment. In a given election, combined they represent a few thousand signatures that the secretary of state’s office has to verify. Meanwhile, for the major party candidates, they’re a variable they’d rather avoid dealing with. They’d rather just have one opponent, if it can’t be none.

I wish the halls of the Legislature and the Congress would become infested with independents scurrying around doing the people’s business without regard to party politics. But that’s not going to happen. Despite George Washington begging us to do otherwise, we’ve created a political system that almost guarantees that candidates will be a member of one of two parties. That’s the way it’s been for more than 200 years.

So why even bother with independents at all? Because there needs to be an option for candidates and voters who don’t agree with the two big parties or any of the smaller ones. The other reason is because the system needs an occasional nuisance – in fact, sometimes even a threat.

In the 1992 presidential campaign, Ross Perot won 19 percent of the vote campaigning as an outsider on one issue: the need to reduce the national debt, which at that point was $4 trillion. In the years following that election, President Clinton and Congress actually sort of balanced the budget. Was Perot the only reason? No, but he certainly helped. He changed the conversation, and 19 percent was a number even the major parties couldn’t ignore.

No candidate since then – Republican, Democrat or other – has been so effective at calling attention to the national debt. Few have even really tried. It’s now more than $18 trillion.

I think we’re trying to squash the wrong problems.

Divided States of America

By Steve Brawner
© 2015 by Steve Brawner Communications, Inc.

Last Monday, Gov. Asa Hutchinson decided to end Arkansas’ participation in the state’s current end-of-the-year Common Core PARCC exam, despite the fact that the State Board of Education had voted to do the opposite. It was only the fourth biggest story of the week.

That’s how much there was to talk about. The Supreme Court’s rulings on gay marriage and the Affordable Care Act, plus the Confederate flag issue, all were more newsworthy than Common Core, which usually gets people’s attention.

These issues run deep. For many Americans, gay marriage is either a fundamental human right, or it’s an attack on traditional marriage and a sin. Obamacare is an acceptable expansion of health insurance, or it’s a government takeover. Great-great-grandfather fought nobly for the South, or Great-great-grandfather was a slave.

There was an air of finality to last week’s developments. Gay marriage is now legal everywhere, and it’s also supported by a growing majority of Americans, particularly those under 30, so politicians calling for massive resistance won’t accomplish much if their goal is to make it illegal again. Obamacare is now firmly entrenched in the health care system, especially with this latest Supreme Court decision. To substantively change anything at the federal level, Republicans would have to win the White House, the House and a 60-vote majority in the Senate, an almost impossible task given the math in 2016. Then they would have to coalesce behind an alternative, which would be even harder. The Confederate flag has far fewer defenders than it did a couple of weeks ago. It’s been removed from Alabama’s Capitol, and even NASCAR’s chairman said he wants his sport “disassociated” from it.

But the arguments will continue, as they always do in a democracy. The debate over gay marriage now shifts to the extent that private individuals and businesses can be compelled by government force to accept it. Obamacare will be the focus of more litigation, and House Republicans will continue to stage votes to repeal it. Regardless of what happens to the Confederate symbol, far deeper substantive divisions will remain over race, justice, and the meaning of the past.

One of the things that’s most frustrating about American politics is that there are issues where we could agree, at least about the problem, if we gave it a shot. Most of us would say it’s wrong to keep adding to the national debt that we’re passing on to our kids, and because money doesn’t grow on trees, the government must over time collect as much money as it spends. We should agree that the country should maintain its highways, control its borders, and manage an orderly immigration system.

Unfortunately, we often can’t take meaningful action on these important areas where we could agree because the debate is so clouded by those important areas where we’ll never agree. Republicans and Democrats in Washington have become like a married couple that can’t stop fighting over the in-laws long enough to call 9-1-1 about their kitchen that’s on fire. Even a commonsense issue like the national debt, which must be addressed by a series of difficult but doable mathematical compromises, becomes enmeshed in the culture war. It’s hard to work with the other guy when you’ve told your supporters he’s a communist or a Nazi.

Increasingly, these United States are looking much more divided, much more tribal, and much more us versus them. Too many of our daily conversations, the media we consume, and our Facebook posts – my goodness, the Facebook posts – are marked by mocking, scornful attitudes towards entire groups of people, often based on beliefs.

And that’s a little scary. You can’t really believe in freedom unless you believe in freedom for those who are different than you, and that’s hard to do for someone you don’t respect. The next step after contempt is control, and control tends to spread like a virus that starts in one part of the body and then multiples until everything is infected.

We’re not all going to get along, but, like a lot of difficult marriages, we can meet in the middle as often as possible for the sake of our kids. No one ever said living in a free society would be easy, but Someone did once say, “Blessed are the peacemakers.” So peace be unto you, even when we don’t agree, and even when we can’t.