We all have that relative, the one that buys you a terrible Christmas gift every year.  Maybe your idea of a terrible gift is the stupid singing fish (Big Mouth Billy Bass), or maybe it is a blouse or necktie that is heinous.  Perhaps you have a relative that is determined to give your family things that need to be cared for, like puppies and hamsters.  But have you ever had a relative that, every Christmas, gave you debt? What kind of present would that be?  Well, for three years running we have gotten the worst sort of presents out of Washington.

 

In 2009, on Christmas Eve, we got the news that the US government would provide an unlimited backstop to Fannie Mae and Freddie Mac…unlimited!  These two institutions have now cost taxpayers over $130 billion. 

 

In 2010, on December 17^th, Congress passed and the White House signed a bill that extended the current tax rates (Bush tax cuts that were set to expire), lowered the funding of Social Security by cutting payroll taxes, increased the deficit spending on Medicare by continuing an annual “fix” to what doctors are paid, and various other items.  The cost of the bill was estimated at $900 billion.

 

Now, just in time for Christmas 2011, we have the continuation of the payroll tax cut, which will put Social Security even further underwater, as well as yet another “fix” of the Medicare payment rate to doctors, and various other items.  The cost of the bill is “only” $33 billion, because it only goes for two months.  Don’t worry about paying for it, we are going to charge an extra fee to home buyers that use Fannie Mae and Freddie Mac.  How does that make sense?

 

I just can’t take any more presents like this.

 

There are two problems here competing for attention.  The first is timing.  Why is Congress acting on such items as if they are surprises?  It was no surprise that the Bush era tax cuts were going to expire.  It was no surprise that the one-year payroll tax cut passed in 2010 was going to expire in 2011.  Why the high drama of passing bills that have to be acted on by unanimous consent during holidays?  The answer is a stunning lack of leadership in the House of Representatives, the Senate, and the White House.  I am not calling out Democrats or Republicans.  I am calling out supposed leaders.  If these leaders cannot have their committees appropriately prioritize and address issues of this magnitude during regular sessions, then they have failed.  There is no alternative answer.

 

The second issue is fiscal responsibility.  What part of the last 3 years have many of the members of Congress and the current administration missed?  Americans are clearly interested in the development of sound fiscal policy and economic programs that address our current situation.  The US is not growing in a meaningful way.  Our tax situation, both in terms of tax rates and tax structure, is unsettled and overly complicated.  There is no path that leads to the repayment of our debt, as far as we can tell, and certainly no credible plan for our entitlement programs.  In the face of these issues, the best we get are proclamations of success because Congress was able to pass a stop-gap measure that lasts 60 days, and did so during a Congressional recess.  Perfect.

 

And to put a bow on these presents….every time there is an “automatic cut,” or an “expiration,” or a “sunset provision,” then the Congressional Budget Office is required to include the upcoming change in its assessment of the long-term fiscal health of the country.  The “automatic” reductions in what Medicare pays to doctors have been in place for a decade, but the cuts never happen.  Every year Congress votes to “fix” the issue.  The same is true with the alternative minimum tax.  Every year Congress votes to put off the AMT as written so that it doesn’t hit tens of millions of Americans.  Yet both of these programs as written – lower payments to doctors and higher tax receipts from everyday Americans – are included in CBO budget projections.  Such is the life in fiscal fantasyland.  

 

 

 

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Comments

The lack of leadership out of both parties is simply amazing. I agree, please, no more presents from Washington.
Posted by s_van_engen@hotmail.com | December 24,2011 04:08 PM

amen
Posted by marybottorff1937@yahoo.com | January 15,2012 04:50 AM

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