Later this week, the White House budget office is due to produce its midyear report on the nation’s fiscal health.
If history is any guide, the administration will try to paint a rosy picture, but the truth is already obvious: Washington under President Barack Obama is not just broken — it’s broke.
When Obama entered office, he inherited a budget deficit that reflected the toxic combination of recession, bailouts and runaway entitlement programs. But rather than getting the government’s finances under control, Obama and his allies in Congress poured gasoline on the fire with trillion-dollar boondoggles.
To put the recent spending binge in context, consider this: At the end of 2008, just before Obama took office, the federal debt was about 40 percent of our nation’s total economy. Now, according to a recent Congressional Budget Office report, the debt will explode to 62 percent of our economy by the end of this year.
If we consider off-budget liabilities like Fannie Mae and Freddie Mac, underfunded entitlement promises and the budget effects embedded in the Democrats’ new health care bill, the fiscal picture gets even worse.
In a bizarre development, the Democratic-controlled House won’t even pass a budget for the first time in decades. Any family or business knows you can’t live within your means without a budget. Congressional Democrats have now announced they won’t even try.
As the governor of a state that, like most others, has been facing recession-driven budget shortfalls recently, I understand the challenges in front of the president. What I don’t understand is his refusal to do anything about it.
During my two terms in Minnesota, we balanced every biennial budget without raising taxes. We set priorities and cut spending. As the economy continues to struggle, more challenges lie ahead for both federal and state governments.
We should remember President Ronald Reagan’s advice that solutions may not be easy, but they are often simple. Obama and Congress should:
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1. Set clear priorities but cut almost everything else. Not everything government does is equally important. When faced with a budget shortfall in Minnesota, we considered the importance of programs. We decided to protect funding for the most important ones: the National Guard, veterans’ support programs, public safety and K-12 schools.
Nearly everything else has been cut. Last year, we cut overall spending in real terms for the first time in the state’s 150-year history.
2. Reform out-of-control entitlements. By far, the biggest long-term driver of the federal debt is entitlement spending, including Social Security and Medicare. These programs are going to have to be changed. And despite Beltway rhetoric, it can be done.
For example, in Minnesota, our bus drivers in the Twin Cities had benefits that were completely unsustainable. The premise of our reform was simple:
The status quo must change. We kept our commitment to current employees but changed the rules for new hires.
Reforming that entitlement program and others wasn’t easy. The reforms for our bus drivers led to one of the longest transit strikes in recent history. But we did it. So must Washington.
3. Sacrifice. Americans have sacrificed enough; it’s time for government to sacrifice for a change. When Washington Democrats talk about balancing the budget, they speak gravely about painful choices and sacrifice — but what they mean is tax increases. In other words, we sacrifice so they can spend.
Before we ask taxpayers to make “painful choices,” we need to ask the politicians and bureaucrats to make a few first. In Minnesota, we rejected tax increases every year I was governor, and even cut taxes overall, to make our state more competitive. Washington can — and should — do the same.
The White House’s midyear review will very likely try to present the case for tax hikes as inevitable. But they are not.
Washington politicians may say you can’t solve the problem by simply cutting spending, protecting crucial priorities and balancing the budget without raising taxes.
But in Minnesota, we’ve proven: Yes, you can.
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