Let’s not waste the upcoming debt-ceiling deadline!

“A democracy cannot exist as a permanent form of government. It can only exist until a majority of voters discover that they can vote themselves largess out of the public treasury.” – Alexander Tytler

Don’t raise the debt ceiling! A promise to cut our expenditures later by politicians is like a crack addict telling you that he will quit tomorrow if he gets just one more hit today. Our politicians including many Republicans will argue that this will shut down the federal government as if they are only creative in ways to spend more not spend less.

So let’s get to work today on cutting the budget and remember that this kind of dramatic change always gets finished at the last minute anyway. The necessary cuts will be hard work and everybody will hate at least one of them. But we won’t get there if we do it $35 million at a time, the sole cut that has been made by this Congress so far this year when they cut the House office budget by 5%.

“The national budget must be balanced. The public debt must be reduced; the arrogance of the authorities must be moderated and controlled. Payments to foreign governments must be reduced. If the nation doesn't want to go bankrupt, people must again learn to work, instead of living on public assistance.” – Marcus Tullius Cicero, 55 BC

Our politicians (because they take such heat from their voters, public employee unions, special interests, grandma and grandpa and the media) are incapable of making the tough choices (which means cutting expenses and entitlements) without a time limit. In Greece and Ireland no tough cuts were made until they had a deadline. So let’s not waste ours.

Look at what just happened in Illinois where the state legislature increased their state income tax from 3% to 5% this week without a single spending cut to public employee union compensation. Our politicians (including those from the Tea Party) don’t want to make the most important cuts (to Social Security) because once they make those entitlement cuts the outcry will make the recent Tea Party rallys look timid in comparison. And the protests will be from both the left and the right; everyone is OK with cutting the other guy’s entitlements – just don’t touch theirs. As Russell Long first said: “Don’t tax you; don’t tax me; tax that guy behind the tree!”

So here is my suggestion for how to start:
1) All Federal employees would have their pay cut by 5%. For earnings above $80,000 per year they would have an additional 5% cut and for earnings about $150,000 there would be yet another 5% (for a total 15% cut for earnings above $150,000).
2) All Federal pension programs are frozen at the benefit levels that have been earned for work already done and going forward there are no incremental pension benefits. Everyone gets what they have been promised but we stop promising what we know we can not deliver. Once we get the Federal Budget balanced, all federal pension programs are replaced with a 401k type program where a fixed percentage is paid as compensation and then managed by the individual.
3) Repeal Obamacare.
4) Social Security and Medicare benefits are immediately moved back by one year for those from age 61-65, by two years for those between the ages of (60-61), and so forth until those (57 and younger) have their benefits moved back by five years. It means everyone is going to have to work a few more years to compensate for the unfunded promises that we have made in the past. “The Social Security system did not begin as an attempt to sabotage people's ability to plan for retirement, but it has worked out that way. The politicians who originally planned the system probably had no idea how it would turn out. But today's politicians know the system is rotted, and yet they refuse to make the changes necessary to free the American people from it. Instead, they make it worse.” – Ed Clark 1980 Libertarian presidential candidate, A New Beginning
5) Reduce the salaries for all members of Congress by 50% effective immediately and cancel all their other pension and health care benefits going forward. “Politics ought to be the part-time profession of every citizen who would protect the rights and privileges of free people and who would preserve what is good and fruitful in our national heritage.” – Dwight D. Eisenhower
6) Remove our troops from Iraq, Afghanistan, Germany, Japan and South Korea immediately and bring them home. “We Americans have no commission from God to police the world.” – Benjamin Harrison
7) Stop all foreign aid. “Government-to-government foreign aid promotes statism, centralized planning, socialism, dependence, pauperization, inefficiency, and waste. It prolongs the poverty it is designed to cure. Voluntary private investment in private enterprise, on the other hand, promotes capitalism, production, independence, and self-reliance.” – Henry Hazlit
8) Stop 100% of our agricultural subsidies. “There are many farm handouts; but let's call them what they really are: a form of legalized theft. Essentially, a congressman tells his farm constituency, ‘Vote for me. I'll use my office to take another American's money and give it to you.’ – Walter Williams, economist and syndicated columnist
9) Close the Department of Energy.
10) Close the Department of Education.
11) Close down Fannie Mae and Freddie Mac.
12) Immediately outlaw all public employee union representation in our Federal, State and Local governments.
13) Provide for state bankruptcy or receivership to allow the states to make the fundamental changes they need to make. “Bankruptcies and losses concentrate the mind on prudent behavior.” – Allan H. Meltzer
14) And even as an advocate of fewer taxes I would suggest four additional revenue sources – a) $.50 a gallon tax on gasoline (to simply reduce our dependence on foreign oil) b) sell citizenship rights to the US to the top 10,000 bids c) phase out the homeowners tax deduction over 10 years d) phase out the tax deductions for donations to non-profits, charities and churches over five years.

And let’s do this by March 1, 2011. We can’t solve a multi-trillion dollar problem with an occasional $35 million cut. We need broad swaths of cuts of hundreds of billions and we need these cuts now. The Republican party has promised fundamental change and if they stick together and don’t agree to increasing the debt ceiling, the debt ceiling won’t change.

Even if we get a big part of this done in exchange for increasing the federal debt ceiling by for example $300 billion we can start to apply the pressure we need to get the “dirty” work done. I see little chance of actually witnessing these suggestions implemented, and guess what? The debt ceiling will be extended by at least one trillion dollars along with promises that we will cut spending “soon” and before we hit the next debt limit. We will then watch history repeat itself, because nothing will happen until at least the next time we bump up against the new and improved debt ceiling. And then the argument will be the same thing all over again that if we don’t then increase the national debt ceiling we will have a chaos. So why not fight it out now and make the cuts we need to make before burning through another trillion with nothing to show for it.

The debt ceiling could be increased by a much smaller number (say $100 billion) along with a set of smaller cuts. Then we will be right back at this next month rather than a year from now. But our government hates the kind of pressure and attention that comes from actually delivering what one promises. They figure that a year from now everyone will have forgotten who said what, and they are usually correct. So why take the heat again in just another month.

Does anyone really think that if we extend the debt ceiling now without cuts we will follow through with big cuts before we face the next debt ceiling? Get serious!

“Blessed are the young, for they shall inherit the national debt.” - Herbert Hoover