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Saturday, February 20, 2010

Stop the Pirates of Congress: "Disarmament by entitlement"

From Air Force Magazine: ObamaCare Vs. Defense:
By Robert S. Dudney
Editor in Chief

This nation is face-to-face with disarmament by entitlement.

On the morning of Jan. 19, the American national debt stood at $12,276,477,277,649.25, according to the US Treasury. Call it $12 trillion, close to a year’s worth of national economic output. Every US citizen—man, woman, and child—owed an average of $39,900 to the nation’s creditors.

By the time you read this, the figure will be higher, since the debt grows by $4 billion per day. In fact, US indebtedness, which was $5.7 trillion in 2000, is expected to hit a towering $21 trillion in this decade.

This can’t go on, yet it is against this grim background that Washington has been pushing to forge a massive new social welfare program that would make the fiscal mess worse. We manifestly can’t afford it, and all signs are it would pose a special threat to America’s military power.

We are speaking, of course, about “ObamaCare,” the new health entitlement sought by President Obama and this Congress. For our money, the danger does not lie in any specific provision. The danger would stem from the program’s huge future cost.

What is its cost? The truth is, no one really knows, because its publicly stated assumptions are so gimmicky. After the shocking Jan. 19 election of Republican Scott Brown in the Massachusetts Senate race, the White House began floating a scaled-down approach to try to salvage something of the original plan. Yet to be seen is whether that “something” would include all or most of its high-cost provisions.

Even fervent supporters, however, owned to a 10-year cost of $1 trillion, supposedly “paid for” with some $500 billion in new taxes (real) and more than $500 billion in offsetting Medicare cuts (fantasy).

That $1 trillion was surely a low-ball estimate. Government programs always overshoot predicted cost, as witness the examples of Medicare and Medicaid. According to the Wall Street Journal, Congress in 1965 pegged Medicare costs at $12 billion in 1990. Actual amount that year: $90 billion.

In the case of ObamaCare, future overruns are built in. No one disputes that, as time went on, its massive subsidies would become more and more widely available, driving costs much higher, even as planned budget “offsets” somehow always failed to materialize.

Harvard professor Martin Feldstein, a former chairman of the White House Council of Economic Advisors, predicted the actual 10-year net cost would approach $2 trillion. We believe him.

So, what does this have to do with defense? The answer is, lots.

Future Presidents and Congresses, confronted with an unplanned-for cost gusher, would have limited options. They would be forced to run larger deficits (adding to debt and interest payments), raise taxes, cut discretionary spending, or—more likely—go with some combination of these.

With respect to defense outlays, it is easy to see two depressive effects, one direct and one indirect.

- Direct. Spending on entitlements and debt service would crowd out other spending, particularly defense.

We have a precedent. In the 1990s, Washington deluded itself it could control a deficit, keep taxes low, and protect social programs by reaping a “peace dividend.” It was a strategy that touched all of the capital’s political erogenous zones, but it put the armed forces in a deep modernization hole. The next time would be worse.

- Indirect. A large and professional military is expensive. A strong US economy, and the tax revenues it generates, underwrites this force. The problem is that, if Americans are saddled with huge new ObamaCare taxes and debt service payments, the economy won’t grow enough.

For a case study, one need look no further than Western Europe, home of the modern welfare state. It is an arena of heavy spending on health care, pensions, and welfare payments—and stagnant economies. In all but a very few nations, military forces are small, weak, and poorly financed.

Either of these courses would put this nation face-to-face with disarmament by entitlement. Europeans could at least take shelter in US power. What is our fallback plan?

“This is how empires decline,” observes Harvard history professor Niall Ferguson. “It begins with a debt explosion. It ends with an inexorable reduction in the resources available for the Army, Navy, and Air Force.”

That defense will be squeezed is not in doubt. In recent remarks at the Naval War College in Newport, R.I., the Chairman of the Joint Chiefs of Staff, Adm. Michael G. Mullen, warned, “Money is [not] going to keep rolling in. ... It’s just not going to happen.”
It would be hard to find a more shortsighted approach to US security. However, unless Washington changes what is now an irresponsible course on ObamaCare, Americans will in a decade or two lack the military strength to pursue any other option.
See also Obama Declares Legislative War and here. The plan now seems to be to try to use the only 51-votes required reconciliation route since the Democrats no longer have the ability to overcome a filibuster (unless they choose to invoke the nuclear option). This amounts to a hijacking of the legislative process as it has developed. Ironically, the "filibuster" is derived from a Spanish term for pirate. It seems to avoid one form of piracy, another form is intended to be invoked.

How reconciliation got started here:
Created in a budget resolution in 1974 as part of the congressional budget process, the reconciliation process is utilized when Congress issues directives to legislate policy changes in mandatory spending (entitlements) or revenue programs (tax laws) to achieve the goals in spending and revenue contemplated by the budget resolution. First used in1980 this process was used at the end of a fiscal year to enact legislation to fine tune revenue and spending levels through legislation that could not be filibustered in the Senate. The policy changes brought about by this part of the budget process have served as constraints on the levels of mandatory spending and federal tax revenues which also has served since 1981 as a vehicle for deficit reduction.
In short, it was intended to deal with budgetary issues, not substantive legislation that will alter the structure of the government and entitlement programs. According to this,
Congress used reconciliation to enact President Bill Clinton's 1993 (fiscal year 1994) budget. (See Pub.L. 103-66, 107 Stat. 312.) Clinton wanted to use reconciliation to pass his 1993 health care plan, but Senator Robert Byrd (D-WV) insisted that the health care plan was out of bounds for a process that is theoretically about budgets.

Where will Byrd come down on the issue this time?

A warning to the Democrats here:
Some now argue that the administration should just ignore the ignorant masses and ram health care through using reconciliation, the legislative maneuver that would reduce the need for moderate votes.

This would be suicidal. You can’t pass the most important domestic reform in a generation when the majority of voters think you are on the wrong path. To do so would be a sign of unmitigated arrogance. If Obama agrees to use reconciliation, he will permanently affix himself to the liberal wing of his party and permanently alienate independents. He will be president of 35 percent of the country — and good luck getting anything done after that.
But you know they don't really care... they have that much arrogance.

Hijacking the processes of government to push through an ill-conceived program that will bankrupt the country is a form of piracy - and it's time to write your Congress members to tell them not to let this happen. For the good of the country.

UPDATE: You want to reduce entitlement budgets? As set out here - by an economist far more liberal than I -:
Substantial cuts in spending. Ensure that the commission is as much about shrinking government as raising revenue. My personal favorite would be to raise the age of eligibility for Social Security and Medicare. Do it gradually but substantially. Then index it to life expectancy, as it should have been from the beginning.
Military and other public service retirements should not kick in until age 55 or 60. Military careers should be extended to allow retention of personnel until age 55 or 60. (Update see here- military retirements now cost over $13 billion a year/7% of cost of active force)

Of course, the later kick in for Medicare assumes that there is not national universal health care plan.

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