MOVE ON TO THE MAIN EVENT / BARRON´S MAGAZINE EDITORIAL COMMENTARY ( A MUST READ )

Editorial Commentary


SATURDAY, APRIL 2, 2011

Move on to the Main Event

By THOMAS G. DONLAN

Congress argues over $55 billion, instead of $1.5 trillion


What's the difference between $61 billion and $6 billion? It's $55 billion, which is either a lot of money or a tiny slice of federal spending.


In fact, it's both: The most recent compromise on spending for domestic, nonsecurity discretionary spending in the remaining six months of the 2011 fiscal year is $6 billion less than the federal government spent in fiscal 2010. It calls for $55 billion more spending than the House Republican spending plan, which was rejected by the Democratic Senate. But the federal government is spending at an annual rate of $3,708 billion, or $3,647 billion, if the Republicans somehow get their way. The $55 billion at issue is a 1.5% cut.


Suppose they did get their way: Anyone with a strong stomach and strong eyeglasses can read a 21-page report on the $61 billion of cuts at: http://appropriations.house.gov/_files/ProgramCutsFY2011ContinuingResolution.pdf.

They may seem trivial, but not to the beneficiaries. They wouldn't have gotten into the budget in the first place unless they did someone some good.


The $6 billion compromise expires April 8. Congress was on vacation the week before last, which may indicate its sense of urgency. Last week, the leaders of both parties were meeting privately and holding public denunciations, each claiming that the other side was about to force a government shutdown in the style of Newt Gingrich and Bill Clinton.


The warring parties should move on to the main event. They are still fighting about a spending plan for a fiscal year that's half over. They should split the difference -- preferably by throwing darts at the list of cuts.


Next year's budget is already on the table, and the ceiling on the national debt looms over the current debate. Working on these important items would be more useful than a symbolic shutdown of "nonessential" government offices.


Who's Immature and Irresponsible?


Effectively speaking for one wing of the Republicans, Republican Senator Marco Rubio of Florida last week declared he wouldn't vote to raise the ceiling on the national debt: "They say it is the mature, responsible thing to do. In fact, it's nothing more than putting off the tough decisions until after the next election."


Under most circumstances, a divided Congress can't make tough decisions. It's hard enough, nearly impossible, for a united Congress with hefty majorities for the same party in both houses to make tough decisions. Whether you like last year's health-care law or not, you must appreciate how hard it was to enact.


Rubio, a freshman senator who is a GOP heart-throb found on most lists of possible vice-presidential candidates, is not likely to decide the debt-ceiling issue with his vote. His party will give him a hall pass. Republican senators without national aspirations can and eventually will provide the needed votes on the debt-ceiling bill.


Leading from the Back


A few years ago, another senator took much the same position for much the same reason. He said: "The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. Leadership means that 'the buck stops here.' Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better. I therefore intend to oppose the effort to increase America's debt limit."


The junior senator from Illinois, a Democrat with ambition for higher office, said that in 2006. His party let him off the vote, while other Democrats took the heat. Rubio is following the precedent set by Barack Obama.


Rubio left himself -- and the whole Congress -- an exit strategy: "I will vote to defeat an increase in the debt limit, unless it is the last one we ever authorize and is accompanied by a plan for fundamental tax reform, an overhaul of our regulatory structure, a cut to discretionary spending, a balanced-budget amendment, and reforms to save Social Security, Medicare and Medicaid," he said.

That's a plan we can support enthusiastically, but still, it's only a plan. A plan that will put off the tough decisions until after the next election, when the people may at last elect enough senators and representatives who will enact it. Or, as Rubio said in his manifesto, "Demagoguery is the last refuge of the spineless politician."


One useful definition of a demagogue is "a leader who makes use of popular prejudices and false claims and promises in order to gain power." Knowing that Americans are prejudiced against indebtedness, politicians have long made false claims about their opposition to debt. Knowing also that Americans don't want to give up their places at the trough of federal spending, politicians have also promised to rein in the federal debt with words, not deeds.

Ineffectual Limits


The first ceiling on the national debt was legislated in 1917 as part of a law that ended a requirement that Congress approve every debt issue. The lawmakers knew they were making borrowing easier -- there was a war on. The first limit was $8 billion over the prewar level of about $3 billion. By the end of World War I, the limit had been raised to $43 billion. In 1939, Congress applied the limit to nearly all federal debt; by the end of World War II, the limit had risen to $300 billion.


In the 1960s and 1970s, inflation and deficits grew hand-in-hand. In 1981, President Reagan signed the first debt ceiling that exceeded $1 trillion. Since then, the debt has grown faster than inflation. The most recent debt limit, enacted in February 2010, is $14.29 trillion.


Perhaps it's time to get rid of the debt ceiling entirely. In an era when the debt is rising by more than a trillion a year, it seems needlessly cruel to show citizens their leaders doing what they said they would never do.


The other respectable alternative, frightening as it may be, is to live within our means. In that case, Congress would have to stop arguing about the difference between $61 billion and $6 billion. It would have to eliminate as much as $1.5 trillion in spending -- more than a third of all federal spending -- or raise taxes to pay for the spending it wants to keep.


Copyright 2011 Dow Jones & Company, Inc. All Rights Reserved