Budget Woes

     The solons on Capitol Hill, with their fellow travelers in the White House, are again predicting the direst consequences if a new federal budget is not approved later this week and the government is thereby “shut down.” This movie (tragedy/comedy) has been shown before, and it always seems as if at the very last moment, somehow all parties reach agreement to fund their respective pet projects in the hopes of spending their way to re-election. I am actually hoping that no budget is passed, and curious to see what a government “shutdown” looks like. The truth is that the government will never shut down, and here’s why.

    The main problem is the $1.5 trillion deficit that is only escalating, but more on that in a moment. The budget proposed by the feds (supported by the White House) envisions spending $3.9 trillion, with government revenues only $2.4 trillion. (There was a time when “trillion” was an unimaginable figure.) However you slice the budget –whatever fantasy spending is contemplated by the politicians – the reality is that the government is taking in $2.4 trillion in the present fiscal year. The government need not “shut down” because it still has $2.4 trillion to spend. It can spend that $2.4 trillion wisely by doing what financially strapped people do – real people, that is – what is known as prioritizing. But prioritizing is a novel concept for politicians, because their metric for success – re-election – is theoretically based on their capacity to spend someone else’s money on programs and boondoggles that will endear them to their constituents.

    For Democrats and Republicans to be haggling over whether to cut $16 billion or $73 billion from the current multi-trillion dollar budget shows that neither party has a surfeit of serious people. They may wear finely-tailored suits, and be neatly coiffed, and speak in a poised and presentable way – but Congress and the White House contain too many unserious people, and the contemporary political system is steering the United States towards collapse.

   President Bush is rightly criticized for his budgetary mismanagement. His last “normal” year budget – 2008 – had a deficit of almost a half-trillion dollars – but that embarrassing number pales before this year’s mess. In the collapse years of 2008-2009 (fiscal year 2009), Bush ran a deficit of $1.4 trillion, artificially inflated by the bailouts, the TARP, and other consequences of the financial sector woes. (And before we blame the Bush tax cuts, let us recall that from 2004 to 2007, federal tax revenues increased by $785 billion, the largest four-year increase in American history, all in the wake of the Bush tax cuts.) But that number – the $1.4 trillion deficit – was unique in that it allegedly required spending in order to “save the financial system from collapse.” Let the economists argue that one for the next few decades, but that President Obama has continued – and increased – that same profligacy, without the same exigency, is absolutely disgraceful. His spending has little to do with the economy itself, and much to do with payoffs to those who feed him votes – especially government employees and unionized workers. Keep Other People’s Money flowing into their hands, and the votes flow right back. It is a system that is primed for the downfall of the American Empire.

     And for those pols in both parties who cannot see any way to spend what the government takes in, a simple question presents: so why have any fiscal discipline at all ? If running $1.5 trillion annual deficits is not a problem worth addressing seriously, then why not run a $3 trillion annual deficit ? Or maybe $10 trillion deficits annually ? It is clear that the government will never be able to pay off the total deficit of $15 trillion – so why try ? What can the Chinese, who lend us the money, do ? Nothing. They live in fear of the Federal Reserve devaluing the dollar to make repayments easier, thereby undercutting the value of their investment. So why not run the table and satisfy the needs of every single interest group ? Let there be no limits ! Every American run to the government trough for your feeding !

   Obama comes in for special criticism, because he is no longer dealing with a fiscal crisis, has zero interest in reducing the deficit at all, and instead begins this week his re-election campaign fund-raising. One recalls that Obama fired the CEO of General Motors when that company saw its product become unpopular, its revenues decline and its losses pile up. So why doesn’t the same standard apply to Obama himself ? Obama is CEO of a business – the United States Government – that is so far in the red it will never emerge, and with absolutely no plans to make it solvent. How can he even run for re-election ? Because politics is not at all about governance but rather about money, power, and winning. A serious person – Paul Ryan of Wisconsin, for one – struggles even to be heard, because he is speaking a different language than his fellow pols.

    If I had $2.4 trillion to spend, and sought to have a mature conversation with my fellow citizens, I would inform them (much like Chris Christie is doing here in New Jersey) that pols of years past made promises that were unrealistic and that cannot be kept without bankrupting the country. We have to focus first on the basic needs that a federal government should provide: security and defense, ensuring free access for all to a free trade system by enforcement of commercial norms, laws, standards and contracts, and guaranteeing the freedoms granted to individual citizens under the Bill of Rights.

   That should be government. But what is government is a behemoth that is in the charity business, the health care business, the foreign-state building business, the media business, the culture business, and a host of other businesses that it has no business being in – and without the money to underwrite it. Indeed, almost every other aspect of government life other than those outlined above are essentially the primary goal of liberal government today – the wealth-re-distribution industry, or seizing money from the productive in order to give it to the unproductive. Ideally, caring for the downtrodden should be the responsibility of local governments if they were properly managed, but under no circumstances should there be tolerance for multi-generational “downtroddens.”

     One government expenditure is always of great interest to Jews: foreign aid, especially to Israel. There are numerous politicians who pander to US Jews by robotically assuring the potentates who lead US-Jewish organizations that funds for Israel will always continue, never to be cut, and a small handful that cut their budgetary teeth on the elimination of foreign aid, including to Israel. In truth, I am of two minds about this, and people should be aware of the reality of American foreign aid to Israel. On one hand, Israel is not at all a poor country (it has pockets of self-inflicted poverty, mostly in the sector that eschews gainful employment) and I sat in Congress and applauded in July 1996 when PM Netanyahu ( in his first tenure) promised to wean Israel off American economic aid – and he did so.

    On the other hand, Israel “receives” today $3 billion in military assistance, but with the proviso that 70% of that money (or $2.1 billion) must be spent in the United States. It comes out that US military assistance to Israel subsidizes the American arms industry, as the grant compels Israel to spend that money here, and prevents Israel from developing its own weapons industry in those same areas and competing with American companies across the world. If the US, say, would cease its military assistance to Israel, Israel would undoubtedly suffer in the short term, but would have to begin manufacturing its own planes, helicopters, missiles, other ordnance, etc. and sell it globally – and that would gravely impact the US arms industry. Does government have a role in subsidizing the production of weapons ? Certainly, under the first category listed above. In effect, US military (foreign) aid to Israel is probably the most justifiable form of foreign aid for the benefits that accrue to American industry (for sure, those weapons that the US “sells” to Israel are manufactured in the districts of influential congressmen, and provide thousands of jobs to Americans), and notwithstanding the other benefits of the US-Israel alliance in combating first Communism and now radical Islam.

    I cite this example not only to justify this type of foreign aid, but also to make the case that such an analysis should be typical of every government expenditure but sadly is not. Or, at least, it hasn’t been in the past. That Medicare and Medicaid threatens to bankrupt the country is obvious to all, and that Social Security is the largest Ponzi/Madoff scheme in history was known even to FDR, who nonetheless endorsed it. But a government that cannot even seriously contemplate eliminating the funding of a public radio and television network in a marketplace where those should compete with others, and refuses to even stop its funding of arts and obscure and usually meaningless research, is like the welfare case who insists on spending money on movies and a new flat screen TV. In other words, it is a government led by immature, power-hungry profligates who are supported by hordes of parasitic freeloaders with permanently-outstretched hands (who use those hands also to provide the votes that keep the carousel spinning) and which as presently constituted could never address the most challenging aspects of the federal budget.

    And they would have us believe it is the Tea Party that is dangerous.

(P.S.  My deepest thanks to the Jewish Press and editor Jason Maoz who selected this site, among others, as one of the best Jewish blogs of 2010-2011. See the full list at http://www.jewishpress.com/pageroute.do/47678)