The 2011 federal government budget impasse could shut down the government, yet neither the Republicans nor Democrats want this to happen. But the two sides are way apart. The administration is offering $6.5 billion and the Republicans want $61 billion in budget cuts.
A lot of factors challenge a possible government shutdown, unless a spending cut compromise is reached shortly. Inflation is a real concern. America’s citizens are affected by increased oil prices due to the turmoil in the Mideast. Gas prices will grow to well over $4 a gallon. Food and consumer prices are up. Interest rates will increase. With all these added costs, people will have less money to spend. With only seven months remaining in this year’s budget, a budget battle could affect future job creation and economy growth.
Increased debt will lead to higher levels of taxation if excessive spending is not cut back. Over 100,000 government jobs have been added in the last two years during this economic recession. Government costs have increased without offsetting revenues to meet those costs. Our present government’s debt to gross income has reached a ratio of over 40 percent, in part due to two wars and excessive spending.
The government has added too much overhead and spending that exceeds its incoming revenue. For 2011, there is about a $1.6 trillion deficit, and a total debt of $15.5 trillion, according to the Kiplinger Letter. To stop this insane deficit from growing, we need to reduce spending. Curbs, reductions and changes are needed on Social Security, Medicare, Medicaid, the healthcare laws and most entitlement programs. These cuts are unpopular, but they are necessary. It is not a pleasant feeling for future retirees, seniors, the middle class or younger voters to have to face coping with these changes. But some cuts in all these areas will be required for the health and well being of our country.
We should reconsider our expensive Afghanistan war, and its high costs in American lives. The money we are spending in there, and in Iraq, is needed here, to help our own people, and to protect us in our own country. We need a defense strategy that is not a sinking money cesspool, in foreign corruption and costs to us. We need to revisit taxes and other recommendations in the non-partisan debt commission’s report, to correct our huge deficit. The Commission recommends a number of steps that are needed to put ourselves on a sustainable path to reduce spending and the deficit. Both sides of the political aisle have to offer some give and take, on spending and entitlement reforms, but right now each side is drawing the lines too tightly. Instead of considering any political advantages for the coming election year, the President and the Republicans should act now to compromise on spending cuts for 2011 and next year’s budget. The budget crisis in many states may create an historic movement for many states to follow in helping reduce budget shortfalls. By reining in excessive pension benefits and healthcare costs, state governments will be able to substantially reduce their operating budget shortfalls. These reductions in these costs will benefit both state and local government budgets. Wage increases by collective bargaining will continue, geared to inflation. Perhaps the federal government will get the idea to start implementing spending program cuts in a similar way.
We need straight talk from both political parties on how the government intends to reduce the national deficit. Without dramatic action, our heavy spending and the growing debt crisis by our federal government could turn the economic recovery into a downward- spiraling path, towards another recession and potential bankruptcy.
People will be more open to change if we can bring unemployment down to around 8 percent, by late fall. That will not happen without substantial spending cuts and program elimination by the government. Our economy appears to be growing again, but it needs to be revitalized, if the momentum is to be sustained.
Large enough spending cuts must be made to enable substantial deficit reductions, and this must happen quickly. The well-being of the people and our future generations are at stake. From the bottom up, the majority of American people are shouting out for spending cuts and debt reduction. That voice should come from the top down, too, under the president’s leadership, and with a supportive Congress. No other actions should be acceptable.
A compromise is needed fast. Nobody wants a government shutdown.
— Bernard Featherman can be reached by e-mail: bernard@featherman.com.
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