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March 2010
Big Hurt or Little Hurt?
By John Paul Galles

     While our nation sinks further into huge financial debt and we try to recover from our Great Recession, Democrats and Republicans are engaged in a seemingly endless blame game that stymies any chance of reducing the deficit and eliminates any hope of balancing the federal budget. Most of the debate over these incredibly important issues has been counter-productive. As a result, the American public is frustrated and angry at the inaction and gridlock that stands in the way of making any progress.

     G. William Hoagland, a fiscal policy strategist to Senate Republicans, was reported as saying, “I used to think it would take a global fiscal crisis to get both parties to the (negotiating) table, but we just had one. These days I wonder if this country is even governable.”

     One good piece of recent news was that President Obama has appointed former Sen. Alan Simpson from Wyoming and retiring president of UNC Erskine Bowles to an 18-member National Commission on Fiscal Responsibility and Reform. Bowles helped to broker the 1997 balanced budget agreement with congressional Republicans as President Clinton’s Chief of Staff. That was the first balanced budget in 30 years for the federal government.

     Recently, Mr. Simpson was quoted saying, “There isn’t a single sitting member of Congress—not one—that doesn’t know exactly where we’re headed. And to use the politics of fear and division and hate on each other—we are at a point where it doesn’t make a damn whether you’re a Democrat or a Republican if you’ve forgotten you’re an American.”

     Blue ribbon commissions come and go. They may make great recommendations, but if Congress does not pick them up and reach an agreement to move them forward, those great recommendations collect dust on the shelf of history.

     The debates will rage on through the elections next fall. In the meantime, many of the tax cuts that were implemented in the early years of Bush administration are sunsetting this year and the growth of our entitlement programs is nearly unstoppable.

     The United States is facing systemic financial problems with our tax structure that discourages employing people and a health care system that gobbles up premiums and subsidies beyond our imagination.

     As unpopular as they may seem, we will likely need a combination of tax increases and spending cuts that demonstrate to the world that we are determined to keep our fiscal house in order. We simply cannot sustain the course of spending on which we find ourselves without a significant collapse of the faith and credit of the United States. Interest alone on our debt will actually exceed annual appropriations on domestic programs. Even China, who buys much of our debt, is fretting about the fiscal direction of the United States.

     Public pressure will certainly demonstrate the disdain that people feel about our critical circumstances, but even that may not bring the outcome of bipartisanship agreement on budgetary pressures. The last commission that had a significantly positive impact was the Commission on Reform of Social Security that was led by Alan   Greenspan in 1983. Its reforms have saved billions over many years.

     What we may need is the “big hurt.” When my mother would take out the rubber band around my sister’s ponytail at the end of the day, she would ask her, “Do you want the big hurt (a quick yank of the rubber band off the hair) or the little hurt (a slow pull of the rubber band that took longer)?” Neither choice was happy or easy. Our federal choices can be big hurts or little hurts.

     We need to confront our financial problems and identify the potential fixes so we can collectively encourage solutions for many years to come. Fortunately, historically, we seem to make more progress under governments that are divided with Republicans in charge of one branch and Democrats in charge of another. In order to make progress, they have no choice but to work together. Only time will tell whether our leaders will choose to act collectively. Waiting makes the hurt even bigger.

John Paul Galles is the publisher of Greater Charlotte Biz.
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