“I’m shocked, shocked to find that gambling is going on in here!” Captain Renault said as he was pocketing a bribe in Rick’s casino in the movie Casablanca.
Last week, the Wall Street Journal and this week, Congress have both reacted to recent budget news the same way: “We’re shocked, shocked that the federal budget deficit projections for 2012 have been revised upward from $1.1 trillion to $1.6 trillion.”
Well…what did Congress think that a $500 billion tax cut was going to do? Have no impact on the deficit? Collect less, but expect the bank account to not go down? Wait. That was two months ago—a lifetime in politics. More than enough time to be erased from the public and government memory.
Here’s the big picture: In the 2012 federal budget, taxes will bring in $2.1 trillion and spending will be $3.7 trillion, leaving a $1.6 trillion deficit. Compare that to 2000 when tax receipts were $2.1 trillion – unadjusted for inflation – and spending was $1.8 trillion.
The budget debate drove the election and promises were made to cut $100 billion, or about 6 percent of the amount needed to balance the budget. When it became too difficult to find that much to cut, the hurdle was reduced to $35 billion, but the Tea Party got mad that it wasn’t enough. Now the promise is to find $60 billion in thus far unspecified cuts.
But let’s give Congress credit anyway for finding that $60 billion. That’s about 4 percent of the annual deficit, leaving another 96 percent to cut to balance the budget.
Let’s look under the hood and find some ideas. Defense, Social Security, Medicare and Medicaid are sacred. Few Senators and Representatives can vote to cut those items and be re-elected, so even now, as we debate this, that can is being kicked down the road again until next year. Just like the past 30, 50, 80 years.
Let’s dig in and see what we can do. The Department of Education seems to be an easy target, always at the top of the list of federal departments to eliminate. Wipe it out. The states can do a better job taking care of education anyway. Students can get their loans from banks. If banks won’t make loans and young people can’t afford to go to college, they can get jobs, save, and then go to college later. That saves $70 billion. Good start.
Everyone knows that HUD is a snake pit of problems. If we’ve learned anything in the past decade, we know that Wall Street has all kinds of secret ways to make the housing market function. That’s another $40 billion. Now we’re getting somewhere. We’ve cut that first $100 billion. Only $1.5 trillion to go.
Maybe this piecemeal approach is too slow and painful. Like pulling off a Band-Aid slowly rather than jerking it off. Here’s a thought: With all this talk about smaller government, how about no government? Eliminate it all.
No one likes the IRS and the Treasury Department. Or the EPA. Those environmentalists are so pesky. Transportation could be turned over to the private sector like parking lots. Just make all the highways toll roads. Pay for it when you use it. Send Congress and the President home. Shut the Courts. Turn out the lights. The states can figure it out because they are required to have balanced budgets.
Drastic times require drastic action. So, if we eliminate the entire federal government as we know it, would that balance the budget? Not really. In fact, not even close. All federal government operations cost $400 billion, about 25% of the total deficit. That leaves another $1.2 trillion to cut.
Hmmm. This is going to be really tough. Especially since we’re scared to touch defense, Social Security, Medicare, and Medicaid.
And heaven help us if we raise taxes. President Reagan taught us an important lesson: Cut taxes and the budget will balance itself. Except that he raised taxes in seven of the eight years he was President and the annual budget deficits doubled on his watch. President George H.W. Bush taught us that a vote to raise taxes is a vote for your opponent in the next election.
Casablanca is the answer: We’re shocked, shocked! Maybe these problems don’t amount to a hill of beans in this crazy world. If we don’t figure this out, we’ll regret it. Maybe not today. Maybe not tomorrow, but soon and for the rest of our lives.
Good lines, huh? Even 70 years ago.
Remember how Casablanca ended? Renault threatened to have Rick arrested. Rick threatened to shoot Renault. They decided that was MAD, or Mutually Assured Destruction. So they promptly changed their minds, and as they walked away together, Rick said, “I think this is the beginning of a beautiful friendship.”
Congress and President Obama need a date night at Washington’s Casablanca, White House. They could watch that movie together.
