Obama Gets It Do You?

From POTUS Obama April 14, 2009
"For too long, too many in Washington put off hard decisions for some other time on some other day. There's been a tendency to score political points instead of rolling up sleeves to solve real problems. There is also an impatience that characterizes this town – an attention span that has only grown shorter with the twenty-four hour news cycle, and insists on instant gratification in the form of immediate results or higher poll numbers. When a crisis hits, there's all too often a lurch from shock to trance, with everyone responding to the tempest of the moment until the furor has died away and the media coverage has moved on, instead of confronting the major challenges that will shape our future in a sustained and focused way. This can't be one of those times. The challenges are too great. The stakes are too high. I know how difficult it is for Members of Congress in both parties to grapple with some of the big decisions we face right now. It's more than most congresses and most presidents have to deal with in a lifetime."


TW: Easy to say difficult to execute. Certainly W. Bush was not capable of pushing this rock, but neither was Clinton. I get the feeling Obama is. Our fiscal future is very challenging, for the past thirty years the can has been kicked down the road in a bipartisan manner. Again I apply my very simple filter, if a politican proposes fiscal measures that deal with either:
1) reducing defense/homeland security spending
2) reducing social security
3) reducing medicare/medicaid
4) raising taxes

Then I take her seriously, if not he is posing and/or ignorant of reality.

Timing is everything, reducing spending or raising net taxes amidst a massive economic contraction is not the answer but defining policies that will do one or both once growth returns is. Below is the latest pro forma for the social security fund piece of the budget. The forecast is cratering because revenues are plunging due to the Great Contraction. Tax revenues are like business revenues, you can cut costs but at the end of the day a good business requires strong revenues, we must get the economy fixed before focusing on deficits.

In the longer run social security benefits will have to be reduced in one form or the other (as will health care spending and probably defense). The sooner we act the better. Social Security has been a third rail of politics not because no one knows what to do but because a clear majority of the populace does not want to face up to realities. It is time.