Thursday, July 21, 2011

Why We Are Bound to be Disappointed

I was listening to Rush Limbaugh this morning and he made a great point about the debt ceiling negotiations. He said that any ten year deal can be undone by next year's Congress. That should be obvious to all of us following the debate. Examining the data in my previous post, it is obvious that we are not going to balance the budget this year. This is going to disappoint many tea partyers, but we have to face the facts about the situation.

On what basis should we judge any deal? I think only two criteria need be applied:

1. Does the plan cut current spending significantly? By which I mean cuts measured in hundreds of billions in discretionary spending.

2. Does the plan change the structure of an entitlement to reduce its cost. For example, if medicare is cut by proposing reductions in reimbursement rates to doctors, an Obamacare tactical lie, then the structure of the entitlement is not changed, because the benefit is unchanged. But if the age at which individuals become eligible for medicare is raised to 67 from 65, then that is real structural reform, because it reduces the entitlement itself.

It would be a side benefit to get tax code simplification out of the deal, but that is really icing, not the main goal of cutting the size of government.

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