Wednesday, November 17, 2010

Why the fiscal commission's report is a house of cards

A preliminary report released by President Obama's fiscal commission last week proposed spending cuts, tax reform and dramatic changes to Social Security. The report was approved by the panel's co-chairmen, former Republican Senator from Wyoming Alan Simpson and former Clinton Chief of Staff Erksine Bowles. (Pictured above with the President at the White House when he initially announced they would co-chair his commission).

This was just the first volley in what will prove to be one of the most important and contentious policy debates between now and the 2012 election cycle. Nothing should take the nation's attention away from solving the national debt crisis. Perhaps the stunning rise of the Tea Party and it's "mandate" to downsize federal spending will provide enough incentive for both parties to take this issue seriously and for policy wonks in the press to keep it on their agenda.

The report released on Nov. 10th, was merely the "chairmen's mark," a draft of the proposal that has not yet been approved by all 18 members of the panel. So much of what passes for politics is really a question of "how should we spend the nation's tax dollars?" Conservatives tend to want to spend it on defense. Liberals think social programs should be the priority. Forgive me if I have some doubts anything substantive will get done any time soon. Hear me out.

The chairmen's mark report proposes capping discretionary spending, raising retirement age from 65 to 67 and instituting tax rate reductions while broadening the tax base. It made five broad recommendations:

1) Enact tough discretionary spending caps and provide $200 billion in domestic spending and defense "savings" by 2015.

2) Pass tax reform that simplifies the tax code, dramatically reduces tax rates, broadens the base and reduces the deficit.

3) Addresses the Medicare "doc fix" by payment reforms, malpractice reforms and long term measure to control future health care costs.

4) Achieve mandatory cuts from farm subsidies and military and civil service retirement.

5) Ensure Social Security solvency for the next 75 years while reducing poverty among the elderly.

These are all worthy, but ultimately unachievable, goals because of the way politics is presently conducted in Washington and especially in light of the recent Supreme Court decision to allow large corporations to pour money into congressional campaigns.

We are a country with trillions of dollars of national debt, much of it owed to the Chinese because China has been the primary lender for our costly foreign wars in Iraq and Afghanistan.

Despite this, the United States is still the world's most bellicose policeman. U.S. defense spending is not just out of control, it is outrageously out of proportion to what other nations spend on defense. Yet it drives the U.S. economy in ways that make it hard to stem. What would happen to unemployment rates if we made substantial cuts to defense spending?

Here are the figures for 2009 defense spending among the world's top ten spending nations, from India (at number 10) down to the USA, by far the world's biggest spender on defense:

10) India, $36.6 billion
9) Italy, 37.4 billion
8) Saudi Arabia, $39.2 billion
7) Japan, $46.8 billion
6) Germany, $48 billion
5) The Russian Federation, $61 billion
4) France, $67.3 billion
3) The United Kingdom, $69.2 billion
2) China, $98.8 billion
1) The United States.......

.....$663.2 billion!!!!

You read that right.

We are a nation with two large oceans on our eastern and western borders and friendly nations to the north and south of us, yet we spend seven times more in defense spending than our closest rival. Did you know that? Are you upset by this figure? Do you wonder how this is possible? Did you know the United States spends even more on defense than is officially listed in the federal budget? The federal budget includes another $50 billion that is not counted among our defense expenditures and that has no Congressional oversight. This comes comes out of the so-called "black budget" and is controlled by the CIA and the Pentagon.

Yet you hear no member of the Tea Party, no Republican congressman and even very few Democrats -- aside from that "wacko Commie" Dennis Kuchinich -- talking about these staggering defense figures. Is there any wonder why?

In a nutshell, our Congress no longer represents we, the people, who vote. Congress now represents large corporations who control almost every facet of American life, from defense contractors to food production to the media. It is incomprehensible to believe these same politicians will willingly tackling federal spending and try to get the federal budget under control. They are the hired pawns of defense contractors, armament manufacturers and food production conglomerates. If they want to stay in office, you can bet they will do the right thing for their corporate masters.

Who will benefit from the upcoming fight over the federal budget? We can cross our fingers and hope the people get mad enough to make a difference and tell their elected representatives how to vote. Don't bet on that happening.

There will be very few "real winners." I'm putting my money on these folks: The CEOs and the stockholders of those very large corporations where so many of our precious tax dollars are being spent.

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