United States House Minority Leader Nancy Pelosi (D-Calif.) made a rare visit to Fox News Sunday and made it clear that she does not believe the government has a spending problem. During her chat with Chris Wallace the former Speaker of the House said "It is almost a false argument to say we have a spending problem. We have a budget deficit problem that we have to address."
Pelosi is the latest Dem leader to argue that the best way to deal with the nations’ debt is to increase revenue through the closing of tax loopholes while not addressing over spending or entitlement reform in any serious manner. During an interview that aired prior to the Super Bowl last Sunday President Barack Obama said that he too believes the budget deficit can be reduced “by closing loopholes” and making “smart” reductions in spending.
The clear message from the Democratic push to convince us that revenue, not spending is the problem leaves no question as to the objective of this administration- increase revenue without addressing entitlement reform, the main driver of our nation’s debt. The failure to make changes to entitlement programs means that not only will the nation not be able to reduce what is now a nearly $17 trillion debt in any meaningful way, but the debt will continue to grow and consume an ever increasing percentage of GDP already hovering around 100 percent.
Despite advancing the position that the debt can be addressed by increasing revenues without taking on entitlement reform, Pelosi believes the debt and deficit are both at “immoral levels” and “must be reduced”-that is where the debate begins. While all seem to agree that this level of debt is unsustainable, the means of dealing with it are far apart.
Pelosi went on to say that "It isn't as much a spending problem as much as it is priorities," arguing that tax subsidies were a better target than cuts that would impact programs such as education. "Cuts in education, scientific research and the rest are harmful and they are what are affected by the sequestration."
Democrats and Republicans alike say they want to avoid the sequestration, across-the-board spending cuts to both military and non-defense programs that will kick in March 1 if no action is taken. Republicans believe the bill should be replaced solely by cuts to spending, while Democrats want to see limited cuts and more revenue.
Obama urged Congress to strike a compromise deal to avert the $85 billion in automatic cuts. On Friday, administrative aides warned the cuts would hurt law enforcement, education programs, mental health services and result in furloughs for thousands of government workers.
Republicans, though, counter that they allowed new tax revenues in January’s “fiscal cliff” deal and that they are done talking about additional revenue increases. They say it is now on the president to reveal targeted spending cuts and entitlement reforms.
Democrats refuse to acknowledge that major entitlement reform is needed, instead continuing this push for more revenue as the answer-it isn’t. This nation is spending $3.5 trillion a year (more than a trillion of it borrowed) and we are to believe that it is a lack of revenue that is causing the deficit spending.
Sequester would result in a cut of $85 billion from spending of $3.5 trillion. That is a 2.5 percent cut, yet our elected leaders cannot identify 2.5 percent in savings out of $3.5 trillion in spending. If Congress fails to act then a flat, across the board cut in spending may be best for the nation-otherwise known as sequester.
Recent polling showed 81 percent of those polled believed government spending is the main factor if increasing our nation’s debt- yet Obama, Pelosi and Senate Majority Lead Harry Reid continue to lead the Democratic sales campaign to convince us that we just need more revenue. If the majority accept the Democratic view that entitlements should not be reformed while revenue should be increased through additional taxation, the already sluggish jobs market will likely grind to a standstill.
Even many in the Democratic Party concede that the growth in entitlement spending needs to be checked. While additional taxes would generate more revenue, the revenue increase would not offset the cost that would come in the form of jobs as a result of businesses having to cut costs even further as a result of a higher tax burden.
We often hear that there are consequences to elections, that is because those elected are able to push their policies and there are direct consequences to policies. For example, some of the consequences from the passage of the Affordable Care Act are now being felt. The Medical Device Tax hike (2.3 percent) has been the direct reason for the loss of thousands of jobs as well as cancelled expansion plans that have shut down construction plans for new plants that were already set to begin construction.
Pelosi’s appearance on Fox News Sunday is a very rare event and, coming two days before Obama’s State of the Union address, should be seen as a preview of Obama’s speech tonight. Based on statements from the White House and Democratic leaders over the last few days the nation should expect to hear about the importance of reducing the debt in a “balanced” way while lifting the middle-class through increased government investments (spending), protecting entitlements from reform and increasing revenue by closing tax loophole to be sure that the “rich” are paying their “fair share”.
There will also be some time dedicated to health care costs and how they are the main cause of the deficit spending and that by cutting them we can reduce the debt without having to cut spending. Many believed Obamacare was supposed to cut healthcare costs because that is what they were told- now we know that is not the result. Now the same argument is going to be trotted out in an attempt to move the discussion away from spending. Placing the blame on healthcare cost (again) means nothing else needs to be cut-just reduce healthcare cost and raise revenue through higher taxes and all will be taken care of-so the story goes.
A review of Obama’s previous SOTU addresses includes much of the same- build the middle class through government spending, increase revenue through taxation, pledges to protect entitlements from reform, etc…, but results of these very same economic policies over the first Obama term include 12+ million people un/underemployed, an economy contracting for the first time since 2009, gas prices continuing to rise, workers feeling the pinch form the expiration of the payroll tax break and consumer confidence falling.
If Democrats are successful in convincing the majority that spending is not the problem and the grab for additional revenue through taxation continues, our nation can expect job creation to decline even more-which will only result in less revenue through payroll taxes. Any additional tax burden on individuals or corporations will result in less consumer spending and less job creation.
It would be nice to hear Obama put specifics about cuts in spending on the table tonight with less talk of increased revenue at the expense of higher income individuals and corporations, but that is not going to happen. Sadly, it is more likely that we will hear more of the same from President Obama-only presented in a more aggressive manner.