In my last article it was observed that the forthcoming presidential election would be crucial for our country and noted that the two paramount issues for voter consideration were the economy and the federal deficit. This article is to portray
In my last article it was observed that the forthcoming presidential election would be crucial for our country and noted that the two paramount issues for voter consideration were the economy and the federal deficit. This article is to portray the rationale for those conclusions.
The rhetoric from the two political party conventions is now receding and it is vital to take a hard look at the circumstances confronting us.
The national debt has now passed the $16 trillion mark. That is over $50,000 for every man, woman and child in this country.
The current annual revenue of our federal government is now about $2.5 trillion and the current annual expenses of the government are now about $3.8 trillion. We are, and have been for three years, incurring a deficit of over $1 trillion annually. Continuation of this deficit which necessitates our borrowing (or inflating) one-third of the costs of our government is a certain path to disaster.
There are factors that would be adversely affected if any immediate full balancing of the federal budget were attempted, but substantial steps for deficit reduction are indicated.
At present the annual deficit is about $1.3 trillion. Deficits can be eliminated only by some combination of revenue increase and spending reduction. Mr. Obama has limited his additional revenue proposals to seeking higher taxes on persons with over $250,000 income per year, but Mr. Romney does not want tax increases currently believing they would be disincentives for economic growth.
As the Presidential proposal would increase revenue by considerably less than $100 billion per year the gap to a balanced budget would remain huge. Neither candidate has yet offered specific proposals for spending reductions.
Federal entitlement programs such as Social Security, Medicare, Medicaid, Veterans benefits and food and other assistance programs involve over $2 trillion annually. If revenue increases are not made, it would be impossible to balance the budget without making significant reductions in one or more of the entitlement programs.
Apart from a Republican call to repeal national health care (Obamacare), to date neither candidate has wanted to touch the third rail of reducing entitlement benefits.
That may be good politics but it is fiscally irresponsible. Any candidate who says he is unwilling to try to restructure entitlements to reduce their costs is also implicitly saying he is unwilling to pursue a fiscally responsible course toward reduction of the deficit.
The troubled economy has had a more direct effect on the people. Putting aside partisan rhetoric it is generally recognized that the current recession was principally caused by the massive collapse of the American residential market. This bursting of the “real estate bubble” arose from over extension of credit and its reckless financing by the banking community.
Although the glut of foreclosures has at this point been somewhat reduced, the real estate market remains at deeply depressed levels and has wiped out the savings of millions.
It is estimated that at this time as many as 20 percent of home owners have mortgages at higher amounts than the value of their homes.
Related to the real estate debacle was a sharp slowdown in economic activity and a jump in unemployment. Job loss remains stubbornly high and reaches critical levels for certain population sectors.
Average income for American households has declined about 5 percent in the past four years. The stock market has been an exception to the broadly adverse economic picture and it is up over 50 percent from its 2008 lows, but these gains benefit only a limited number of our citizens.
The consequences of the Federal deficit and the economic malaise discussed have a major impact on the now imminent presidential election. It may be of some importance to study why we came to our present condition, but that is largely a distraction and the vital issue is what steps should we take to alleviate the situations we face.
Yes, there are some other matters of significance such as national security that should be considered in making our choice for the president, but our selection is likely best made based on who we believe has offered the most credible plan to deal with the deficit and the economy issues.
Neither candidate to date has given any comprehensive statement of the programs and purposes he will pursue to rectify these threats to our well being. Along with many fellow citizens I will await each candidate’s answer to questions like these:
1. The political makeup of the Congress that will be elected is not known and Congress has a role in any course of action to be taken. Is the candidate prepared to work in good faith with those of the other party and to respect and take into account their views?
2. Will the candidate pledge to use his best efforts to seek a substantial reduction in the federal annual deficit?
3. Will the candidate identify the programs he will employ to achieve deficit reduction and will they include significant steps to reduce future costs of entitlement programs?
4. Does the candidate believe that improvement in the national economy can be best achieved by government actions or by providing a conducive climate and allowing the private sector to pursue its objectives?
Thoughtful Americans will listen to the candidates campaign statements and will consider whether they have have addressed the issues entailed in these questions and will then make their choice.
• Walter Lewis is a resident of Princeville and writes a biweekly column for The Garden Island
