Repeat after me: debt matters, debt matters

Note on the chart above how there was a dramatic increase in the National Debt during the Reagan/Bush I and II years and a dramatic decrease during the Clinton years. Is this some sort of bizarro land? I thought conservatives were supposed to shrink the size of government and liberals were to increase it. At least that’s what conservatives and their newfound loathing of deficits would have you believe. But when they were in charge they did the exact opposite. If Democrats are the party of tax and spend then Republicans are the party of borrow and spend. One party overcharges people now while the other would rather selfishly pass it on to future generations. Both ways stink.

Unfortunately what neither party wants to do is make the hard decisions and cut spending. They ignore the fact that if this country were a family or a business it would be essentially bankrupt. They forget that the ability to print money and borrow from the Chinese can not go on forever without severe consequences.

A family living beyond its means has to cut expenses. Here are a few modest solutions for the country to do the same thing:

1) Raise the retirement age for Social Security and Medicare. Are we really entitled to “entitlements” when the country is going broke? I believe we are but they will have to be scaled back.

2) Lower the Department of Defense budget. Relax, this will not make us any less safe. Do you really feel that the current DOD budget is 100% efficient and without fat? Of course it isn’t. To begin with we can reduce weapons programs that the military doesn’t want but Congress keeps anyway. The Department of Defense budget should be used to protect this country, not to protect jobs in districts of Congressmen with the longest tenure. In Obama’s spending freeze proposal he said that Defense would not be subject to the freeze. Why not? The military should have to make hard choices too.

3) Eliminate the Bureau of Indian Affairs. The proposed budget for 2011 is $2.7 billion and makes up 8,843 federal jobs. While this is not huge in the scheme of things isn’t it a little archaic at this point? The BIA’s Budget Justification document for the 2011 budget is 480 pages long. It seems that a reliance of the tribes on the federal government will continue in perpetuity. The BIA should be phased out over a 10-year period.

4) Get rid of agricultural subsidies. Iowa’s status as the first presidential caucus state makes it the second largest recipient of these handouts. Senators don’t want to vote against Iowa farmers in case they ever make a presidential run. Maybe if West Virginia made their primary first-in-the-nation they could get equivalent subsidies for coal miners.

5) Scale back NASA. I was excited as a child watching the Apollo flights. But that time is now past and space is used for more commercial reasons such as launching satellites. Much of that can be done by profit oriented private companies. Unless NASA can justify itself it needs to be cut back drastically.

6) Eliminate the payroll cap for Social Security taxes. That is the FICA part of your pay check. The current cap is $106,800. There is no cap for Medicare, why should there be for Social Security?

7) Phase out the mortgage interest deduction or cap it at a reasonable amount. Why should home mortgage interest be deductible? It just artificially drives up housing prices making home ownership even more expensive and difficult to attain. When I graduated from college the interest on my student loans was deductible. Under one of the Reagan era tax hikes the student loan deduction was eliminated. I lived with it and adjusted accordingly. Over time, home owners will do the same. Obama has proposed a partial lessening of the mortgage interest deduction for those in the top two tax brackets. That plan is a start but does not go far enough.

8) Eliminate the state and local income taxes deduction.  Currently the state and local income taxes you pay are deductible on your federal return. That makes no sense. If you live in a state with high income taxes that is your choice. Do something about it or move. It is not fair to make people in the rest of the country subsidize your state’s profligate spending.

9) Eliminate earmarks. Okay that may be fantasy talk but the amount spent on ridiculous projects is, well, ridiculous.

If we start paring back Defense, Social Security and Medicare we can help solve the long-term debt problem and keep the country solvent. It’s not fun but it needs to be done.

Please add any other cuts that you feel may help.

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About Michael

This blog has a mix of some of my main interests in life: travel, politics, food and generally being a curmudgeon. Enjoy.


2 thoughts on “Repeat after me: debt matters, debt matters

  1. Notice you forgot to mention that the Republicans were in control of the House and Senate while Clinton was President. Also, under Bush, the Democrats had control of the House and Senate since 2006. Facts are facts!

    Posted by Scotty Starnes | February 19, 2010, 3:11 pm
    • Scotty,

      Thanks for the comment. You’re right. Here’s another fact. The Republicans were also in charge for the first six years of Bush’s presidency. Since the President submits the budget to Congress it starts from the top. Unfortunately both parties spend like drunken sailors. By the way, I see we both like SRV.

      Posted by Thomas Paine | February 19, 2010, 5:17 pm

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