The Congressional Budget Office (CBO) is the ‘umpire’ for Congress. This entity is the non-partisan bookkeeper for the nation. A report titled “The Budget and Economic Outlook: Fiscal Years 2002-2011” was released in January 2001 by the CBO. In that report the future of our country was bright. The nation was at peace and we had prosperity. President Clinton handed over the keys to the White House to President Bush and there was a $234 billion budget surplus.
The Congressional Budget Office’s outlook was terrific. The CBO projected the budget surplus to increase to $889 billion by 2011 and the country to have accumulated $5.6 trillion in budget surplus between 2002 and 2011. Our national debt would have been paid off.
President Bush handed over the keys to the White House to President Obama and there was a $1.2 trillion budget deficit.
What happened?
Not just one but two, huge, tax cuts were signed into law that benefited, to a great extent, rich Americans. Osama bin Laden, from refuge in Afghanistan, planned and executed a surprise attack on the United States that murdered nearly 3,000 innocent people. The United States went to war with Al Qaeda (Arabic for “the base”). Unfortunately the United States also chose to go to war in Iraq. We fought two wars but had no tax increase to pay for the wars. Our military and their families sacrificed, our nation did not. The Medicare program was also expanded to include prescriptions, known as Medicare Part D. This new entitlement had no revenue source.
The United States economy is incredibly diverse and inventive. We create and invent here in America. Inventions such as the telephone, auto assembly lines, transistors, nuclear power, solar power to the Internet, the United States has proven to be not just the ‘arsenal of democracy’ but also the engine of the world’s economy.
Unfortunately in our innate drive to succeed, for some, greed supplants responsible action.
The author Michael Lewis in his seminal work “The Big Short” lays bare the seeds of the Great Recession. People were able to secure loans or refinance homes based on the belief that the value of the home would continue to increase. Contributing to the ‘housing bubble’ were ‘Liar Loans’ or NINJA Loans (No income, no job, no assets loans). In the frenzy of new home loans and refinance loans the standards were ignored and cheap, easy money flooded the market.
The rating agencies, such as Standard and Poor’s, then accelerated the problem by mixing the questionable loans with properly vetted loans and slapping a triple A (AAA) rating on the whole mess. When housing prices declined the ‘house of cards’ collapsed, beginning with Lehman Brothers. The result was the Great Recession.
There are two ideas to restore fiscal sanity:
One is known as ‘The Romney-Ryan Budget’ named for the presumed Republican Presidential nominee and a member of the House Ways and Means Committee, Paul Ryan (R) Wisconsin. That budget plan ends Medicare, punishes the elderly, the poor, students and the disabled while giving tax breaks to the rich but not balancing the budget until the year 2040. Church leaders have labeled this budget as ‘immoral’. I do not support that budget plan.
The other is known as the Simpson-Bowles bi-partisan budget plan named for former Wyoming Republican Senator Alan Simpson and former Clinton Administration Chief of Staff, Erskine Bowles. That budget plan is meant to grow our economy, save Medicare and strengthen Social Security plus reduce our debt and deficit. I support that budget plan.
