There's No Tooth Fairy and No Free Lunch

[beachFool]

There?s no free lunch and no tooth fairy

www.Waltonsun.com

It took a ?Kenyan-born, Karl Marx-loving, Allah-worshipper? in the White House for some Americans to wake up and realize our serious financial dilemma. Never mind that the previous occupant treated us to an all gain, no pain diet with tax cuts and a war of choice sandwiched between a huge entitlement increase, aka Medicare Part D.


Coupled with the spending to stimulate our moribund economy, ?Danger, Will Robinson, danger.?


There are 10 ways for a base runner to score from third (count ?em); likewise there are multiple means to fiscal sustainability. One path touted is by shrinking government spending, and the Walton County Tea Party Patriots are right: We could solve our fiscal dilemma by reducing expenditures. The National Research Council and the National Academy of Public Administration published a bipartisan analysis projecting that chopping spending by 20 percent over the next decade would be sufficient. (See ?Choosing the Nation?s Fiscal Future? at www.nap.edu? .)


Our local Tea Party is ignoring the harsh reality of how deep and brutal a 20-percent reduction in government spending will impact society. Instead, on their website, we see gimmicks like ?You Cut,? where online participants vote on specific spending cuts. The total amount equals .017 percent, according to the conservative Cato Institute. Multiply this by a thousand, and you are still shy of 20 percent. You Cut is a sham. It is like an alcoholic shunning AA, opting for light beer instead of vodka.


The necessary cuts would ?impose substantial pain on virtually all defense and other domestic programs,? according to the report. Many domestic programs would be eliminated or reduced, and we would have to redefine defense priorities.


Facing the ax would be Department of Education programs that provide money to school districts affected by land exempt from property taxes because of military bases like Eglin. School improvement programs, education for the disadvantaged, programs that improve teacher quality and charter school grants would also be on the chopping block. Programs that promote safe schools, abstinence education, Head Start, child welfare, Job Corps, special education and career, technical and adult education will face reductions. Local or state funds would be required for these programs to continue through higher local taxes.


Facing complete elimination are commercial subsidies and ?low-value? activities including but not limited to National Science Foundation education programs, applied research for fossil fuels, research on fuel-cell technology, research on energy efficiency and the Energy Star program.


Department of Agriculture conservation programs must be reduced along with agricultural crop subsidies. You can kiss four lanes of U.S. 331 goodbye because highway trust fund grants would be scaled back. Note to Dawn Moliterno: Federal funds for beach nourishment would be cut, too.


These are only the tip of the iceberg; there are dozens of other programs facing reduction or elimination. Worthless programs, some will say. But the next two areas are essential for this plan to work.

Redefining defense via a 20-percent drawdown means the military will have a lower percentage of GDP since before World War II. Employment at Eglin, Tyndall and the Navy school would be sliced. The study cites that ?the capacity to modernize or replace weapons systems will be virtually eliminated.? Our Armed Forces would be limited to small, shortterm deployments and could not face multiple engagements.


Probably a big deal in these parts, inflation adjustments for federal civil service, military retirement, veterans? disability benefits, railroad retirement and Social Security would be less generous.

These spending cuts are not a la carte. Either you accept the whole enchilada, or someone pays higher taxes ? unless there is a tooth fairy.

Buz Livingston is a certified financial planner. He operates Livingston Financial Planning Inc. focusing on hourly financial planning and investment management. Contact him directly at 850-267-1068 or at buz@LivingstonFinancial.net? .

BUZ LIVINGSTON
Just Plain Talk

 

[idlewind]

So the tea party is wrong to sound the alarm about the deficit issue? The truth is that ANY solution to this problem is going to be painful. Does this truth mean we should just play possum and pretend the deficit will go away on its own? That would not be wise either.
So what do we do? Since you reject the tea party's work then please tell us what we can do. Or is your purpose just to bash the tea party without proposing solutions of your own?

 

[LuciferSam]

So the tea party is wrong to sound the alarm about the deficit issue? The truth is that ANY solution to this problem is going to be painful. Does this truth mean we should just play possum and pretend the deficit will go away on its own? That would not be wise either.
So what do we do? Since you reject the tea party's work then please tell us what we can do. Or is your purpose just to bash the tea party without proposing solutions of your own?

The tea party offers nothing in the way of leadership. They've shown the ability to accumulate lots of followers, nothing more.

 

[AndrewG]

The tea party offers nothing in the way of leadership. They've shown the ability to accumulate lots of followers, nothing more.

You think Dems offer leadership? Their "leadership" has brought record poverty. The Democrat controlled House & Senate is so deplorable folks overwhelmingly want new blood. The fairy tale for dems is over.

 

[LuciferSam]

You think Dems offer leadership? Their "leadership" has brought record poverty. The Democrat controlled House & Senate is so deplorable folks overwhelmingly want new blood. The fairy tale for dems is over.

Sidestep the issue to your little heart's content.:roll:

 

[AndrewG]

Sidestep? The Dems have and have had control not the Tea Party.

 

[beachFool]

So the tea party is wrong to sound the alarm about the deficit issue? The truth is that ANY solution to this problem is going to be painful. Does this truth mean we should just play possum and pretend the deficit will go away on its own? That would not be wise either.
So what do we do? Since you reject the tea party's work then please tell us what we can do. Or is your purpose just to bash the tea party without proposing solutions of your own?

"You Cut" will lower the deficit by .017%-according to the Cato Institute.

I am sorry Senator, I know Paul Revere and that's no Paul Revere.

Our nation could be on a path to fiscal sustainability by spending cuts alone.

But put on your big boy pants because .017% is a sham.

Spending cuts will work but it will take a lot more than is being advertised.

It's simple arithmetic.

 

[idlewind]

"You Cut" will lower the deficit by .017%-according to the Cato Institute.

I am sorry Senator, I know Paul Revere and that's no Paul Revere.

Our nation could be on a path to fiscal sustainability by spending cuts alone.

But put on your big boy pants because .017% is a sham.

Spending cuts will work but it will take a lot more than is being advertised.

It's simple arithmetic.

You are making a big deal about a web site that allows citizens to propose cuts. No one thinks those are the only cuts needed. Most conservatives are proposing a 2-5% reduction in entitlement spending over a 10 year period. Discretionary spending will have to be cut as well. So will defense.
No one believes this will be painless. But it is necessary. Those who wring their hands and chant "Bad tea party" while offering no solutions of their own are simply part of the problem.

 

[beachFool]

You are making a big deal about a web site that allows citizens to propose cuts. No one thinks those are the only cuts needed. Most conservatives are proposing a 2-5% reduction in entitlement spending over a 10 year period. Discretionary spending will have to be cut as well. So will defense.
No one believes this will be painless. But it is necessary. Those who wring their hands and chant "Bad tea party" while offering no solutions of their own are simply part of the problem.[/QUOTE]

You obviously did not read the column.

2%-5% over a 10 year period is insufficient.

This solution was in the column: Cut Spending 20% over a ten year period will put our nation of a path of fiscal sustainability.

Power down your computer and read "Choosing the Nation's Fiscal Future" www.nap.edu

This is bi-partisan analysis that proposes a range of solutions:

• Low Tax-Cut Spending
• High Tax- Maintain Spending
• Two alternatives that are roughly 1/3 from the two extremes.

 

[30ashopper]

The Department of education's budget is on 46 billion. If I were president I'd avoid any cuts there, so Buz couldn't use it as a wedge issue :roll:.

Now that we have ObamaCare to regulate health costs, we should seriously look at phasing out Medicare (450 billion), privatise social security (660 billion), and (re)reform other entitlements (870 billion). These entitlement programs are the heart of our fiscal woes. We really do not have to look any further for areas to reform and save. I find it understandable that democrats want to criticize people (no matter how uninformed they might be on the numbers) who want to fix the fiscal issues the party created. ;-) But it's high time we realize we do not need to spend on these system. They can be cut back or completely cut off with the help of other reforms that insure people have ample opportunity to start taking care of themselves for once.

(Buz, FWIW, just a note, Cato is not a conservative organization, it's libertarian. There's a very big divide between the two on social issues. I'm sure the folks involved there would appreciate you getting that right in your articles.)

I read an interesting article in Reason this week on ObamaCare. Did you all know the state of Florida does not have to fund Medicaid? It's completely optional. If we don't fund it, the program will have to be funded and run by the federal government. Considering what this program costs the state (18 billion a year or so) we should seriously consider opting out. It would solve all of the state's fiscal woes -

A massive medical overhaul may have been an opportunity to address Medicaid?s structural problems. Yet rather than reform the struggling program, ObamaCare?s authors decided to double down on it. Starting in 2014, all states will have to expand Medicaid eligibility, allowing into the program any individual who makes less than 133 percent of the federal poverty line. That?s 16 million new enrollees, or half of the total number of newly insured, according to Congressional Budget Office estimates. The largest group will be nonelderly, nondisabled adults without dependent children.

To cajole state lawmakers into expanding a program that was already straining their budgets, ObamaCare?s authors offered them a classic salesman?s deal: no money down and no payments for the first three years. From 2014 through 2016, the federal government will pick up the full cost of the mandatory coverage expansion. For the four years afterward, states will pick up a rising share of the tab, leveling off at 10 percent in 2020. It?s essentially a federal-match teaser rate, designed to grease the wheels for political acceptance by delaying the pain.

Given the fact that even in the long term the federal government will still be covering 90 percent of the total bill, you might think the states would welcome an easy cash infusion. But the burden of Medicaid is already so high, and state budgets?most of which are constrained by balanced budget requirements and thus cannot rely on deficit spending?are in such dismal shape, that any additional expenses represent a significant fiscal burden. Florida, for example, is already spending $18 billion a year on Medicaid. ObamaCare will add another $1 billion to the tab by 2019. In Arizona the program is seen as fiscally toxic. Monica Coury, a senior staffer at the Arizona bureaucracy that oversees the state?s Medicaid program, told The Wall Street Journal in July: ?We have federal partners talking about expansion of this program. And at the state level, we?re looking at a program that we can?t sustain.? Overall, paying for the added benefits will cost states $21.5 billion by 2020.

Rogue States - Reason Magazine

The above article details all the ugly gotchas coming down the pipe with ObamaCare. I highly recommend reading it. To summarize - if you think our fiscal woes are bad today, just wait, it's going to get a whole heck of a lot worse in the very near future at the state and federal level, thanks to the new ObamaCare entitlement.