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The Day the Debt Stood Still

Posted on September 3 2010 7:00 pm
Jon N. Hall is a programmer/analyst from Kansas City.

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If a spacecraft alit on the Washington Mall and out popped an alien named Klaatu who proceeded to demonstrate unearthly powers and who then informed America that we have one day to balance the federal budget or else the Galactic Federation will bomb us back to the Stone Age, what would we do?

Congress is responsible for the budget, so it would be left up to Congress to balance it. And since any deficit, however small, would result in our destruction, Congress should endeavor to produce a surplus, just to be safe.

But how would Congress balance the budget in just one day?

Congress couldn’t meet Klaatu’s demands by raising revenue, as tax hikes take time to work and America wouldn’t have any time. Neither could Congress trot out their old solution to all things fiscal: economic growth. Economic growth also takes time. Oh, and one more thing: Klaatu also stipulated that the feds cannot get out of this jam by printing more money: Congress will have to balance spending with current revenue.

What Congress would have to do to avoid incineration at the hands of extraterrestrials is radically cut spending. Question: What would Congress cut?

Because Congress would be facing the direst of emergencies, there wouldn’t be any time for debate on how to finesse the spending cuts. Congress wouldn’t be able to use a scalpel to surgically make the cuts; they would have to use a meat cleaver.

Since total federal revenue is about equal to total mandatory spending, Congress could balance the budget by eliminating all discretionary spending. In which case, the only thing remaining would be the mandatory programs: entitlements, welfare, unemployment, and interest on the debt. Everything else would go: Defense, CDC, the Supreme Court, you name it. Congress would not take this course for the simple reason that cutting all discretionary spending would eliminate the salaries and perks of Congress.

Well, we can’t have that. Besides, we don’t want to reduce the federal government to nothing but a check writing system for the welfare state. Congress would therefore be forced to cut their beloved entitlements. But that’s the easiest, quickest way to meet Klaatu’s ultimatum: If Congress simply eliminated Social Security, Medicare, Medicaid and SCHIP, they’d be right at balance. But Congress isn’t about to do that; retirees would vote them out of office.

If right up against Klaatu’s deadline, Congress would be forced to balance the budget with across-the-board decrements of 41 percent in every check the feds write. Faced with this sobering prospect, Congress would consider having Klaatu arrested. Not for being an illegal alien (or as Democrats would say, “an undocumented space visitor”), but for not having health insurance. Remembering Klaatu’s considerable powers, Congress would soon scrub that plan and send an august delegation to parley with Klaatu, and plea for an extension to the deadline — say a year, or, better yet, a decade.

December 1, 2010 is the deadline for the National Commission on Fiscal Responsibility and Reform to vote on its recommendations on how to deal with our federal deficit crisis. Unfortunately, the Commission is only “charged with identifying policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run.” What the Commission will produce is a set of spending cuts and tax rate hikes, and they will not balance the budget, neither in “the medium term” nor in “the long run.”

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