Warning signs

Let me be clear about this: Today's DC political events continue to be a diversion from the really important actions that must be done. This is hurting the country.

Ultimately, and despite whatever Congress decides to do on the budget and the debt ceiling, there is no hope for long-term reduction of the Federal debt without economic growth.

You saw my comments yesterday about our nation's economic growth. And perhaps you saw or heard this morning's GDP reports convey this message: The recent recession was worse than we thought it was, and the recovery from that recession--especially in the first half of this year--has been weaker than expected, and weaker than prior reports had indicated.

A friend took a look at yesterday's post and observed two things: (1) the national media is also at fault for not providing a useful forum; and (2) options for a prudent fiscal path for the Federal government were set forth in last year's National Commission on Fiscal Responsibility and Reform ("Simpson-Bowles") report (see the Commission's web site at http://www.fiscalcommission.gov/) but those options have been mostly ignored.

Good points. The media--whether physically printed or electronically transmitted--is largely geared towards an audience that can be satisfied by factoid absorption instead of creative and time-consuming analysis. There are exceptions. I hope this undertaking is one of them. As for the recommendations in the Commission's report--more on them later.

Another friend raised the issue that the Federal debt ceiling serves no practical operational purpose in the context of running the country; it is not caused by any Constitutional requirement, and the history of its use during the last half-century and more has shown it to be only a political whipping-post.

Also good points. Unfortunately, the debt ceiling exists, and it's not going away any time soon. But a look at the 14th Amendment to the US Constitution (see the entire Constitution and the Amendments at http://www.archives.gov/exhibits/charters/constitution.html) reveals language to the effect that the government's debts will be honored without question, and that it is up to Congress to make sure that happens instead of being an obstacle to making it happen. The big question is: What is there to force Congress to live up to its Constitutional obligations in a timely manner? An answer that has been recently bandied-about is that the President has--in some way--the ultimate authority for enforcement. Maybe. I don't know if that's so. But I don't know that it isn't so, either.

Finally, another friend said to me that all of the Congressional comings-and-goings is great for the country because it will ultimately lead to lower government spending and that's the most important thing of all.

Which brings me back to the first friend, and his observation that the Commission's recommendations have been largely ignored.

I agree. And it's unfortunate. It's also unnecessary, but it's mostly unwise.

It's unfortunate because the Commission was insightful, bipartisan, creative and comprehensive.

It's unnecessary because the Commission's report is readily available--see the Commission's web site at http://www.fiscalcommission.gov/ or go directly to the report at http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth12_1_2010.pdf and read it or skim over it for yourself.

It's unwise because the Commission's report contains fiscal recommendations which are either achievable or provide the basis for further informed analysis that could support bipartisan government actions.

But mostly it's unwise because it touches on some of the really important actions that are needed to support economic growth, such as education, infrastructure projects and research and development through government investments.

I believe that these investments are vital. They will help to increase our economy's growth and rate of job formation. That's the only way to ensure long-term fiscal soundness and prosperity for our nation.

You can see these possibilities for yourself; read on for a little while longer.

The Commission's report spawned a small industry of on-line calculators that empower the user with a certain amount of omniscience regarding the Federal government budget. I have tried out two of them and have discovered that they both enable me to create scenarios that achieve the goal of deficit reduction, while still supporting investment programs. Yes, that means some tax increases as well as spending cuts.

The two calculators that I have explored are:

• The Committee for a Responsible Federal Budget - budget simulator at http://crfb.org/stabilizethedebt/
• The New York Times - Budget Puzzle at http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html

All of these things--the Commission's report, the online calculators, and my analysis--are imperfect. But at least it's a start on doing the really important actions.