POLITICO Breaking News
WASHINGTON — President Obama, House Speaker John Boehner and Senate Majority Leader Harry Reid didn't reach a deal on the budget after a Thursday afternoon meeting. Outside the White House, Reid told reporters that they would reconvene at 7 p.m. "We're going to continue to work to get this done," he said – or else face "the bad day tomorrow, which is the government shutdown."
While the national deficit continues to rise — it is $14.268 trillion as of this morning — Congress remains deadlocked over about $7 billion in cuts — an amount equivalent to what the federal government spends in 17 hours.
This is tantamount to arguing over a bar tab on the Titanic, says David Walker, a leading fiscal responsibility hawk who believes that our national deficit and debt crisis are much worse than advertised. You may remember him as the former Comptroller of the U.S. Public Accounts under President George W. Bush who appeared in 2007 on 60 Minutes to decry reckless government spending. Four years later, Democrats and Republicans are nearly paralyzed by factions in their respective parties and an ongoing obsession with the next election cycle.
Meanwhile, Congressman Paul Ryan's long awaited budget proposal is now on the record. It is notable for what it includes — entitlement reform. Mr. Ryan's budget ideas will directly impact healthcare because his approach to reform assumes, in part, that we will markedly reduce our costs.
It is equally notable for what it does not address: revenue and military spending.
We enter this grave period in our history as a nation divided. The only cuts in spending that the majority of Americans agree on is foreign aid. Too bad that accounts for only one percent of federal spending.
A cynical reading of those recent public opinion polls suggests that Mr. Ryan's proposal — an honest effort worthy of public debate whether you agree with his ideas or not — will stir up the hornet's nest since America seems to be saying they want smaller government but do not touch Social Security, Medicare and defense spending.
In addition to opposing cuts to the aforementioned programs, the voters do not want any new taxes. In other words, Americans want government services, they just do not want to pay for them.
This will really make our creditors happy.
If this rather sad disconnect with reality continues, and the bond markets lose confidence in this nation's ability to meet its financial obligations because of continued unchecked deficits, there will be dire consequences. The bond markets who can, and will, impose their requirements for fiscal discipline, will not care what the voters want or do not want. They will not care what the healthcare industry says. Our borrowing costs will soar and the U.S. will be left with no option but to comply with the demands of our" bankers".
How does that strike you? The most powerful nation in the history of the world being bossed around by China, which owns $1 trillion in U.S. debt, and other domestic and international bond funds who do not care what we think or want. They will not care about the next election cycle — who wins and who loses.
This is not a consequence for our next generation. This is a crisis in the here and now. Mr. Walker and others are warning that our debt smackdown could happen at any time — when the people who hold U.S. debt give up on our government's abillity to solve this one very big, very threatening problem.
If you like what is happening in Ireland, Greece and now Portugal, you will love this epic calamity in the making. However, reaching a budget agreement before the government shutdown at midnight on Friday does nothing to solve our crushing debt problem. The larger debate will be game changing for the healthcare industry.
© 2011 John Gregory Self