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Time To Balance The Budget Process

July 11th, 2008
By PATRICK EDABURN

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Like many states around the country we in California are currently engaged in our annual budget battle. This process is always something of a mess and passage is invariably late by days, weeks or month. This year the process is being made more difficult by the fact that we have a $ 15 billion dollar deficit.

While my discussion focuses on California the fact is that this problem is being echoed all across the country in states, counties and cities (as well as at the federal level of course).

Under any circumstances this would be tough but it is made even harder by the fact that you have hard left Democrats on one side and hard right Republicans on the other. The Democrats are against any spending cuts and the Republicans oppose any tax increases.

Now I am no fan of tax increases nor do I want to see vital services cut. But the simple fact of the matter is when you have a deficit of 10-15% of the total budget you are not going to solve it with one solution. Between education, roads, prisons and other vital services you have only a small amount of discretionary spending and its not going to provide $ 15 billion in spending cuts.

At the same time, you cannot simply hike taxes by 10-15% and expect the economy to absorb that kind of a hit. Indeed if you restrict the hikes to ‘the rich’ then you would have to make the increases even larger and potentially very harmful to the economy.

The obvious solution is both sides need to accept the need to give in a little. Republicans must accept tax increases, even in areas they don’t normally accept. Democrats are going to have to accept spending cuts, even in some areas normally considered untouchable.

This isn’t simply rhetoric, it is reality. The problem is that neither side wants to give in so we end up with weeks of battles and harm to the state’s credit rating before we finally arrive at the solution we already know.

So how ’bout having the gang under the dome grow up a little bit and stop playing games with our lives.



This entry was posted on Friday, July 11th, 2008 at 1:14 pm and is filed under California, Budget, Economy, Politics. You can leave a response, or trackback from your own site.

Viewing 11 Comments

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    Is it really equally the fault of Democrats and Republicans?

    One party has gone out of its way to make tax increases toxic.

    It's the same party that cut taxes even though two wars were being fought. They also started the largest entitlement program since Medicare while cutting taxes.

    Maybe you know the name of the party I'm referring to?
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    GS,

    I think it’s a great point you make about the lack of equivalency of the two parties when it comes to placing blame for the budget problems. It makes me want to scream and rip my hair out when the Republicans do it and the MSM bobblehead there way to agreeing with them. Most problems are NOT equal when it comes to finding whose at fault and placing blame. One party is always proportionally more to blame (sometime egregiously so – i.e. cutting taxes while you’re in the middle of two wars) and determining who that is usually relatively easy to do.

    And to that old Republican “saw” of lets not look back at whose to blame, let look forward to solving the problem well as an engineer I can tell you most times when it comes to solving a problem knowing who caused the problem goes a loooong way to helping you determine a fix and more importantly not repeating that problem in the future (i.e. not extending tax cuts while you’re in the middle of two wars).

    So Patrick, please do not fall into the habit of doing this, it is wrong and is not something a “moderate” would do.


    Once again GS, thanks for pointing that out.
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    First and foremost the growth of government and government spending needs to be reduced and people need to take a new, grown-up attitude toward how they view all governments. They are not meant primarily or almost exclusively to be service agencies, or surrogate parents, rather than merely governments.

    As to the combination of tax increases and spending reductions, it will become inevitable with Social Security and Medicare in the next 10-20 years. The most likely situation will be politicians responding to which of the two groups (the beneficiaries and dependents, versus the taxpayers and producers) happen to be complaining or howling the loudest at any given time.
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    "One party has gone out of its way to make tax increases toxic."

    While substituting debt for the tax increases, to support spending increases, which is wrong.

    However, the other party has been guilty since the 1930s of creating a toxic growth of government, toxic not only in size but in scope, and that's much worse. And it is the big spender. (Social Security and Medicare are gargantuan already, even before the Baby Boomers retire and deficits begin with Social Security, the true point -- around 2016-2017 currently -- where the problem becomes crucial to solve, not decades later as dishonest people claim. If you think taxes and the size of the federal government are big now, just wait until then. The Trustees of the two programs have warned us about this for years but you know which group denies there is any problem at all, and it's not Republicans or conservatives.)

    "It's the same party that cut taxes even though two wars were being fought. They also started the largest entitlement program since Medicare while cutting taxes."

    They should have raised taxes or better, reduced spending elsewhere, not assumed more debt.

    The GOP has exploited the childlike state of people since the 1930s and especially since the 1960s in the same manner as the Democrats, simply not quite as badly or in the same exact way. Both parties are buying votes. The Dems give the children candy (and we're seeing all kinds of wild promises by Obama this year being made to all the childlike voters who are among his biggest fans), i.e., immediate gratification (entitlements, mainly, and other ways of buying votes). The unpleasant, in this case taxes, are largely handled by levying them mainly on others (who don't vote Democratic), where more of the money is, or on evil businesses, etc. The Republicans imitate the Dems but not so much with entitlements (though you see in Medicare a willingness to do something, albeit nothing that Dem voters feel is sufficient). They don't offer people immediate gratification. But they address something else, the unpleasant, taxes, by substituting debt. I.e., from many people, they "remove" or "hide" the unpleasant (actually just postponing it and making it worse eventually), and defer any normal hostile reaction to taxes which if raised to much higher levels would indeed be toxic.

    And they're scared to take away existing entitlements, especially the closer to universal the entitlements are. (The more votes, the more GOP reluctance. FDR and his vote-buying of the 1930s and follow-on vote-buying in the 1960s had a sound basis in baser human nature.)
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    Note that one "solution" that some in Blue Nation would do is simply to make their favorite entitlement programs fully "mandatory," that is, appropriations required for 100% of the funding for them by law. Of course this is no "solution" at all, despite what such people believe, and it is even more evasive (100%) of the real issue, the raising of revenue, than the Republicans ever have been with their financial games. (It's also a way to "enshrine" entitlements and secure priority in spending.)
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    Im all for cutting the budget by about 6 percent and if we pull out of Iraq and Afghanistan then we would illiminate about 4 percent spending there. Budget balanced. End of story.

    Then raise taxes by about 10 percent on those taxes Bush cut and then adopt a national sales tax of about 5 percent used to pay down the debt.

    works for me. No haggling. No lobbies. No special interests. WE ALL pay cause we all got ourselves in this mess by voting for stupid congressmen.
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    Just want to voice support for a balanced budget. Among other things, it should improve the dollar's value, which is one of the driving factors behind the recent oil price rise.
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    Because of the endless arguments, maybe across the board cuts are the only doable thing, but it's not the best way.
    Some spending cuts only incur expenditures in the long run.

    Reducing the size of government sounds good, but staffing reductions have also resulted in more waste and corruption in awarding and oversight of government contracts.

    I would prefer an item by item careful analysis to identify waste, non-performance items and the consideration of resultant long term costs,
    That's not going to happen, sad to say, and we'll cut some good along with the bad. Then there will be a clamor to reinstate whatever was cut. as a fix-up measure.
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    Yes, balanced budget. Hopefully many who are liberal who want it now will want it later when Obama is in charge. (Past record is, being aghast at balancing budgets; "debt to GDP" is the basis of defense of deficits not only by the GOP.)

    The problem comes when spending reduction or at least braking its growth is sought. Even more spending reduction than otherwise would be appropriate is in order in order to reduce our debt.

    If oil prices weren't so high, an oil tax to fund not only Iraq but Persian Gulf protection against the Iranian threat would be in order. (The issue there primarily is protection of oil supplies, which are owned by others, not seized by us; the defense of Israel has normally been a distant second and would not be the reason for such activities by us as we are involved in now.)

    For a sales tax I'd impose a VAT instead of a retail sales tax.
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