Email to the President re: the Deficit Negotiations

The President and the leadership of the Democratic party have failed miserably in the current deficit debate by allowing the Republicans to define the problem as one of excessive government spending even though most of the current deficit (setting aside the part due to the recession) is the result of irresponsible tax cuts by George W. Bush and Ronald Reagan.  President Obama is trying to be a diplomat when he is dealing with the equivalent  of muggers in a dark alley.  Public confrontation with these pople cannot be avoided.  The failure to confront has allowed the Republican version of reality to go unchallenged so that it is gaining traction with increasing numbers of American voters. 

I am equally distressed by the President’s failure to confront Wall Street when he had a once-in-a-lifetime opportunity for real reform.  We now have banks that are bigger than ever, engaging in the same risky practices as before, and enjoying the protection of a now explicit Federal guarantee against failure.  I campaigned for and voted for the President in 2008.  Unless I see some leadership, I will be staying home in 2012.

Fact: Taxes are lower than during the Eisenhower administration despite the fact that we have added Medicare, Medicaid, and income supports for the disabled (SSI) since Ike was President. These three programs alone will cost $826 billion in 2011.  Throw in NASA, the EPA, Homeland Security, and added expenditures for monitoring food and drug safety and we are now spending a trillion ($1,000 billion) dollars for programs that did not exist in 1960. 

Fact: Federal taxes for on-budget expenditures were 15.8% of GDP when Eisenhower left office and 13.0% of GDP when George W. Bush left office on January 20, 2009.  With 2008 GDP at 14,394 billion, this 2.8% decline in tax revenues amounted to $403 billion dollars.  This represents 63% of the 2008 deficit of $643 billion.  Two thirds of our pre-recession deficit was the result of reductions in tax revenues.

Fact: Our overall tax burden is 25% lower than the average tax burden of OECD countries

Yes, we need to cut spending too, but the bigger problem is that we have refused to be honest with ourselves about the cost of the government services that we want and need and have been borrowing money instead of accepting responsibility to pay the real cost of what we want from government.

Tax increases must be deferred until the economy is on a stronger footing, but now is the time to start educating the American public about the realities of the deficit and the sacrifices that will be required to deal with it.

Future increases in the deficit will be driven primarily by health care costs.  (Social security is an easy fix with some modest increases in retirement age, taxation of benefits, and an increase in the income ceiling on FICA taxes.)    The US cannot control health care costs under our present health care system.  We have different programs for veterans, for the elderly, for millions of workers through employer-sponsored programs that rely on hundreds of for-profit private insurers, plus 50 different State Medicaid programs for the poor.  The only chance we have of controlling health care costs is to adopt a government-run system similar to the systems currently in place in France, Germany, and Switzerland.

The test true leadership in a crisis is a willingness to accept the responsibility of the politically difficult task of telling voters the truth about the underlying causes of the crisis and the sacrifices that will have to be made to deal with them - even when the truth is painful and distressing.  You are failing that test and you are failing our country.