Typing the above title made me laugh. The idea of me saying anything useful about the “big picture” in the space of an itty bitty post makes no sense at all. On the other hand, it doesn’t feel worthwhile to keep tracking a congress which struggles to just keep the government funded on an almost month by month basis.
Common sense would suggest the issues of the sequester and whether to continue funding the federal government past March 27 shouldn’t be issues at all. Solving those are the bare minimum while the real issues, the REALLY BIG fiscal issues are not being touched upon. It’s as if we are busy trying to agree on shoring up some levees while a tsunami is coming at us a few miles away, or in years, 10 or so.
Doug Elmendorf is the Director of the Congressional Budget (CBO) which acts as a kind of referee examining budget proposals developed by congress and the president and “scoring” them as to their actual cost. I have come to realize this is a sophisticated guestimate at best since there are so many variables involved, but a good faith guestimate is better than nothing, I guess.
According to Elmendorf we are headed towards very rough waters in our fiscal future. Last year the CBO chief said that even if congress could come together on various tax hikes and spending cuts offered by both sides – A REALLY BIG IF since they barely can agree to keep the government operating for a few months – they might cut around $250 billion annually from our growing yearly deficit (not touch the overall debt, mind you, but just stanch our full speed towards the iceberg field of insolvency dead ahead).
While that would be a plus, Elmendorf envisions the need for $750 billion annually in tax hikes and/or spending cuts by 2022 to prevent out national debt from climbing to the point of being equal to about 90% of our GDP, a level which scares most economists. To reiterate: Under what seems a best case scenario, we still fall $500 billion short annually of swinging this big ship of state away from a treacherous ice flow in the 2020s. (*1)
Of course, Elmendorf’s vision would be challenged by some on the left and the right, with economist Paul Krugman the poster boy on the left and, let’s say, Congressman Paul Ryan on the right. (*2) However, if Elmendorf is close to being right, certainly those on the right who see a solution shaped by only cutting taxes and spending are particularly delusional.
Our ship of state seems to be heading directly towards a huge iceberg in 10 years, or so. And both parties have their hands on the wheel trying to pull it left or right, which keeps us going straight forward towards, if not disaster, to an America that is no fun to imagine.
Considering the complexity of all this reminds me of Rubik’s Cube, a puzzle I tried unsuccessfully to solve as a young man. This seems infinitely harder to solve, and so complex it is hard to know even where to begin. But I’m willing to put in much more time.
There is something about the impossible that has always attracted me.
(*1) I drew the Elmendorf material from Red Ink, a book by WSJ economics editor David Wessel. Short (162 pages) and easy to read, it provides a good ball park sense of our fiscal Rubik’s Cube.
(*2) In case you haven’t bumped into him, Paul Krugman is a liberal, Noble laureate economist who probably has more influence than most in his trade because in addition to knowing his stuff he’s everywhere, through his column at the New York Times, frequent political chat show appearances, several books and a blog which he updates sometimes three times a day, which can be found in my Blogroll to the upper left. He’s sharped tongued to say the least and argues that while the debt is important, we should forget about it right now and deal with unemployment and strengthening the economy first. A stronger economy would generate more federal income and begin to reduce our yearly deficits. Then we could work on cutting down spending.
Everyone knows Paul Ryan, who generally speaking, is the polar opposite of Paul Krugman. He is all about reducing our annual deficits and later our debt. He has just unveiled a 10 year plan to balance our budget which seems like a Tea Party fantasy. For one thing, it assumes Obamacare will be abolished, which is definitely not going to happen over the next four years and quite likely never (though I do think it will be altered over time). Krugman, though rough tongued to make an impression, seems to be arguing what he believes. I don’t know what Ryan is up to.