July 12, 2012

Erskine Bowles Over Obamunism

I was struck by this statement from liberal Democrat Erskine Bowles, Bill Clinton's chief of staff during an nterview on CNBC -- along with frequent Econ-101 crony (and former Republican senator from Wyoming) Alan Simpson, with Warren Buffett sitting in to kibbitz. The topic was the looming "fiscal cliff" at the end of this year; as the year dies, so too will the Bush across-the-board tax cuts... and at the same time, those horrid, mindless, automatic spending cuts will kick in. The combined effect can devastate the American economy:

The combination of the two occurring at the same time, known as "the fiscal cliff," could siphon $500 billion out of the economy next year alone and $7 trillion over a decade, according to some estimates.

Congress must act to adjust the timing or scope of the fiscal adjustments, but likely won't deal with tax and spending issues in an election year, says Bowles, co-chairman of the National Commission on Fiscal Responsibility and Reform with Alan K. Simpson, a former Republican senator from Wyoming.

"If I had to tell you the probability, I'd say the chances are we are going over the fiscal cliff. I hate to say it, but I think that's probably right," Bowles tells CNBC. [Emphasis added. -- DaH]

But here is the thought provoker that seized my attention:

Calling deficits "a cancer" Bowles says the country must work to improve its fiscal health.

"If you take last year 100 percent of the revenue that came into the country, every nickel, every single dollar that came into the country last year was spent on our mandatory spending and interest on the debt," Bowles says.

"Mandatory spending is principally the entitlement programs -- Medicare, Medicaid and Social Security. What that means is every single dollar that we spent last year on these two wars, national defense, homeland security, education, infrastructure, high value-added research, every single dollar was borrowed and half of it was borrowed from foreign countries," Bowles adds. [Emphasis added]

"That is crazy. It's a formula for failure in any organization."

Sometimes one looks and wonders; other times, one simply looks.

Bowles and Simpson say that we must cut at least $3 trillion in federal spending over the next ten years, which can only be done by tackling so-called "entitlement" spending head on, since that's where most of the money's spent; coupled with a trillion dollars in increased revenue, which of course requires a dramatic increase in the American gross domestic product -- since you can't squeeze blood out of a sow's ear.

And speaking of massive entitlement reform and economic growth, wasn't there some feller named Ryan who had some pertinent ideas for both requirements?

Hatched by Dafydd on this day, July 12, 2012, at the time of 4:41 PM

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