Thursday, May 20, 2010

The Party of Debt

Not that anyone should be particularly surprised by the moniker, but the Obama Administration and Congressional Democrats really should be called The Party of Debt.
Two seemingly unrelated news stories unfolded in Washington last week -- developments that could further stoke the flames of voter discontent across America. Taken together, these reports could also label the Democrats with an ugly and hard to erase moniker heading into the November elections: They are now the Party of Debt.

The first piece of news concerned Congressional Democrats' plan to forgo passing a budget blueprint this year – an unprecedented display of fiscal policy malpractice.


The Congressional Budget Office (CBO) provided a second piece of troubling money news last week, demonstrating the health care reform bill won’t reduce the federal deficit after all. According to the CBO, the health care law will cost $115 billion more than original projections. This new estimate means the overall price tag of the Democrats’ bill will top $1 trillion.
Now a budget resolution does not carry the weight of law, it is never signed into law by the President, but it does provide an important road map for Congress as they get ready to pass the 13 required appropriations bills that fund government operations.

If you have no map, you have no way for the American voters to hold Congress accountable for their spending decisions--which is precisely the point.
Even officials appointed by the Democrats in Congress to provide expert advice on these matters, such as CBO director Douglas W. Elmendorf, are sounding the alarm bells. In an April 23 presentation to the International Monetary Fund Fiscal Forum, Elmendorf issued a clear and stern warning: “Given current law and certain changes to that law that are broadly supported by the Administration and Congress, the budget deficit and debt are on a worrisome path – unsustainable in the long run and posing growing risks even during the next several years.”

Congressional Democrats’ response: Skip passing a budget blueprint this year and spend more than planned on the health care bill. It’s a legislative twist on the MasterCard commercial – running up more debt through self-indulgent spending? Priceless.

Campaign consultants, however, say this kind of process news rarely registers in the body politic. It’s too “inside baseball.” No one outside the beltway really cares whether Congress passes a budget resolution or about the contents of a CBO report. But this election cycle is different.
Indeed this cycle is different.

The massive, crushing debt load that has already been levied upon Americans, on top of the wasteful spending at the state and local levels in the past, which is likely to be addressed first by more taxes rather than less spending in many states, has added to the burden. The fact that Congress is more likely to raise taxes than cut spending in the absence of a budget is high on people's minds. Add to that, the fact that Americans can look overseas to Greece, Portugal, Spain and the rest of the European Union to see that massive government intervention and social spending has brought these countries to the brink of disaster and with them, the entire continent, does not give Americans great comfort in the Obama Administration's path. With states like California, New York, New Jersey and others facing crushing budget deficits--governmental finance is no longer an "inside baseball" game. Americans are worried and rightfully so.

If the Democrats spend like crazy to buy votes, I think many of them will find themselves without a job come November. At a time when the average American is trying like mad to divest themselves of debt, government adding on debt is not going to sit well.

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