Economy & Budget

Waking up to economic realities

Last week the financial markets were roiled by Standard & Poor’s announcement that they will change their outlook on the fiscal health of the United States over the next two years from “stable” to “negative”.

The administration decried this decision as political. However, it seems the only political thing about this decision is the fact that it took so long. The Washington Post recently reported that the White House and the Treasury Department put tremendous pressure on S&P not to do this. 

However, if S&P made its ratings based on political pressures rather than economic reality, it would cease to have any relevance to the business community. Even if S&P delayed its announcement that U.S. government bond market would be downgraded, at some point it would become obvious that the finances of this country are out of control and our leadership is out of touch. All credibility would be lost if S&P simply continued to assign U.S. debt a AAA rating.


President Obama's economic deviancy

Obama is primarily responsible for the Tea Party movement, despite the fact that it is the nemesis of the President and the political establishment.

The movement is predominantly composed of a small number of Libertarians and a large number of Conservatives. The Tea Party Conservatives are formerly Conservative Republicans who have given up the notion of having a moral government and are tired of funding an immoral government. They are disconnecting from the Republican establishment, which today seems more comfortable managing big government than ultimately reducing it. Herein lies their commonality with Libertarians. The Tea Party is thus at the vertex of this confluence that emphasizes as its central theme the notion that the U.S. must return to a Constitutionally limited federal government.

The catalyst of this political migration is Obama’s stated goal of a “fundamental transformation of America.” Indeed, the Tea Party can most accurately be described as a popular revolt and instinctive response to such statements from this administration. Obama’s speech on the national debt reinforced the logic behind the movement; the President’s extremist economic goals further imperil our nation’s already dire fiscal situation.


Debt elimination is a national priority

Seeking to put our economy on the path to prosperity and fiscal responsibility, the House passed the Fiscal Year (FY) 2012 budget, which aims to cut $6.2 trillion in government spending over the next ten years. The Senate must still approve a budget, and we must demand one that is fiscally responsible because what’s at stake is the future of our economy.

Our nation’s current debt level is a risk to our national security. Just this week, Standard & Poor’s lowered its outlook on U.S. debt to “negative,” reflecting uncertainty about how Congress and the Administration will address long-term debt. Something drastic must be done to ensure our nation does not default on our debt.


Missing details in Obama's Medicare plan

Dear Mr. President,

We are encouraged that you agree with us that reforming the Medicare program is a critical component of tackling America’s debt crisis.

Medicare, if left on its current path, will see its Hospital Insurance Trust Fund go bankrupt in 2020 and will be unable to provide benefits for future generations of Americans – and outcome we will not accept. As such, we appreciate your willingness to put forth Medicare reform concepts in your speech earlier this week.

However, as our Committees seek to reform the Medicare program, we require much more information before we can properly consider the savings tarets you have proposed. You referenced $340 billion in Medicare and Medicaid savings by 2021, $480 billion by 2023, and “at least an additional $1 trillions in the subsequent decare” but it is unclear from where or how those rductions in spending are achieved.

With regard to the following policy areas, we have several questions for which we respectfully request you provide answers.


Consumer protection in trouble again

The seemingly endless battle over giving American consumers more product information and safety, and perhaps more bang for their buck in the marketplace, rages once again up on Capitol Hill. 

The House majority is continuing its relentless assault on the miniscule Consumer Product Safety Commission, in the name of protecting business, cutting manufacturing costs and reducing federal spending on safety regulation. What is this big hassle really about? 


Focus on comprehensive spending restraint

Uncertainty influences markets. And that influence – specifically, the unknown of how or even if we are going to deal with our national debt – is reflected in the latest Standard & Poor report, which warned that the United States is in danger of losing its pristine AAA credit rating if it cannot quickly and convincingly address its debt emergency.

If downgraded, global investors could pull out of American bonds and trigger a macroeconomic chain effect that would severely hinder America’s economic recovery, shatter the faith in U.S. government as the “lender of last resort,” and shatter the already-eroding faith in the U.S. Government as a center of financial stability. 


Why Congress should go for broke

Is there any issue that terrifies Congress more than the debt ceiling? There’s no spinning a number, after all. So Congress and the President are spinning a hurricane of irrelevance around it, mostly debating who will ultimately pay.

The answer is no one. The country is broke, taxpayers cannot hope to repay $21 trillion if they can’t even pay their mortgage and their credit cards—even at the artificially low interest rates that will soon reset much higher, just like those disastrous ARMs. America has become one giant bubble, and just like the housing bubble that nearly felled Wall Street, it will finally burst either because Americans cannot pay or Americans refuse to pay.

Don’t be fooled by the sermonizing of those who live off of the debt and warn us that it must be perpetually increased in order to maintain our moral standing in the world. Bankruptcy is as American as apple pie and more so than Starbucks.

The founding fathers contemplated bankruptcy before the Bill of Rights with good reason: a liberal bankruptcy code would allow Americans to take risks unthinkable in other countries. And so it’s been for nearly a quarter of a millennium.


Business will support those who reduce the deficit

As current and former CEOs and other senior corporate executives who have had the responsibility to formulate and implement thousands of budgets during our careers, the Committee on Economic Development (CED) knows from personal experience that the welcome first steps on the federal budget last week in Washington won’t solve the deficit and debt problems facing the United States today. We know from the budgeting we did in our own firms, partnerships, and companies that much more collaborative action is needed to make the difficult spending and revenue decisions our country needs.


Keeping the promise to America’s seniors

It’s only the second day of spring recess, but at AHCA/NCAL, we’re already thinking about Congress’ first day back. With the budget debate only beginning, we want to ensure that long term care for America’s seniors remains a top priority for lawmakers during the decision making process.

Today I held a media roundtable with reporters who cover Capitol Hill and the health care industry to discuss this very issue. It was a great opportunity for me to actually meet many of these reporters, since I only joined AHCA/NCAL a few months ago after serving as Governor of Kansas.


Stirring up trade policy thinking

What do American political and policy types do with sources of information that repeatedly have proved completely unreliable? Sometimes, it seems, they fetishize them. At least that’s what I saw last week at a House Auto Caucus briefing on the proposed Korea free trade agreement in which I was privileged to participate. 

More broadly, the session unexpectedly spotlighted the need for trade policy critics to stir up a much broader, more fundamental debate on trade policy than Congress and the nation at large have conducted so far.