In about a week (the date is unsure - estimated at 17 October), the government will no longer be able to borrow money to keep operating at the current level of expenditure. I have read that we spend about $2 billion a day more than what comes in via revenue. So what we have is a cash flow issue, and we need to cut $2B per day (or about $750B per year) to remain solvent. Any business owner knows a negative cash flow is not sustainable long term, yet the government has been doing this for decades.
So, starting soon, the government will have to make tough choices that are solely within the authority of the Executive Branch. Some say the government will default on it's debt payment - that is only one choice the President has (and it would be a disastrous choice at that). Sure, the Congress has authorized many more programs than can be funded under the current cash flow, but the reality means its up to the President to make those tough choices of what continues since Congress can't in a timely manner. The situation has given the President the unprecedented opportunity to take bold action and provide some fiscal responsibility back into government.
To be fair, I am no fan of this President. In fact, I think it is brutally obvious he is the worst President in the last 100 years (there were some pretty bad Presidents in the reconstruction era, so it would be presumptuous to say "worst ever" at this point). However, this would be an opportunity to shine, and perhaps to regain some positive legacy. And Obama is in a unique political position to pull it off. I just don't think he will.
So what would Ron do? Here are my suggested priorities of funding, and suggested approaches.
1) Service the Debt - We need to do this as multiple administrations and both parties have signed our future away.
2) Maintain the National Defense - Keep the DoD and Intelligence services funded as needed to protect our borders and safety. However, this doesn't mean at current levels. Reduce our current deployment expenses. Don't start any new overseas initiatives and reduce the current ones. And eliminate some of the big ticket ships-planes-tanks-satellites we are building to save some big bucks.
3) Eliminate a Cabinet Department (not just rearrange the deck chairs). Education and Labor are the usual suspects, but think out of the box.
4) First blush, spread the remaining cuts evenly (percentage wise) across all the remaining Departments, including the so called "Entitlements". Perhaps limit Social Security to 5% cut, but this area is a big budget item and balancing cannot happen without cuts.
You do not solve a $750 Billion problem with small steps. Major programs and efforts need to be cut, like an Aircraft Carrier, a couple Army Divisions, a Cabinet office, etc. This is the only way to reach the cost target. And we need to realize we can no longer fund the world, so an easy one is to stop the foreign aid program till we get back on our own feet. I also don't believe that entitlements cannot be trimmed drastically. There are many subsidies which are non critical to food and shelter safety nets.
Yes, there will be pain in the country, for at least a year as the economy adjusts. And there will be stories of children being harmed by the loss of Head Start. On a personal level, as a civil servant, I may lose my job as well. However I believe the generosity of Americans will rise to the occasion in the private sector and through individual choice to support those in need, as has historically been done and as it should be done.
The fact is the country cannot sustain what is currently being funded. We are running a fiat economy now which is not infinitely sustainable. Just as it would have been better for Bush to have let Lehman Brothers fail, it is better to take the pain now while we can still recover.
Unlike the current Political leadership, I am willing to negotiate :)
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