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Political Gridlock Leaves Few Options for Economic Changes that Must Be Made

By: Steve Johnson

2/19/2010 - 42 Comments

Back-to-back record yearly budget deficits coupled with projections for future deficits are clearly unsustainable, even for the U.S.

The budget needs to change directions, from red to green, and the sooner the better.

An angry populous with high unemployment and an entitlement mindset that Congress helped create are as odds with the political leadership.  

The changes that need to be made are going to be very, very difficult for the nation to face

So difficult are that challenges ahead of us that it will require very skilled leadership to lead the nation into directly confronting the recession, which they have done everything to avoid for the last two years.

For all the mistakes Obama has made, he is a very skilled and charismatic leader that is capable of convincing the public that the best thing for our nation is to drastically cut spending. 

But the political climate is so poisonous this election-year that even Obama is going to need help

Deficit Reduction Panel

To help Obama build his case and support for policy changes he has created a ‘deficit reduction panel’.

The panel is likely to highlight solutions like raising the Social Security retirement age, creating new across the board tax increase and increasing the copays and deductibles for Medicare, and other ideas that are far too politically explosive for Obama or Congress to bring up.

The public knows that the problem is too much government spending, yet there is also great oppositions to spending cuts.

http://moneynews.com/Headline/US-Obama-Deficits/2010/02/19/id/350290
"The American people ... want us to get a handle on spending without raising taxes," said Senate Minority Leader Mitch McConnell, R-Ky.

"Americans know our problem is not that we tax too little, but that Washington spends too much."
And while there is increasing public concern about the deficit in opinion polls, there's also lots of opposition to spending cuts.

A CBS News/New York Times poll released last week, for instance found that respondents opposed cuts to education and health care by a 2-1 margin.

Among the few lawmakers willing to put out a comprehensive deficit-cutting plan is Rep. Paul Ryan of Wisconsin, the senior Republican on the House Budget Committee, whose "Roadmap for America's Future" is a free-market treatise that would sharply curb the explosive growth of Medicare, Medicaid and Social Security.”

The deficit reduction panel’s job is to bring up the politically sensitive solutions, far away from Congress or the President. 

But in the end, it will take Presidential leadership to win over the public and Congress to lead the nation back to financial sanity.  And if Obama cannot get it done, then the next President will get the job.

“Here are the kinds of steps the panel is likely to consider as it seeks to tackle deficits that never dip below $700 billion under Obama's budget:

• Raise the retirement age for full Social Security benefits to more than 67 years old and have benefits grow at a less generous inflation rate. Expose more income to Social Security and Medicare payroll taxes.

• Require seniors to pay more Medicare costs out of their own pockets and curb payments to health care providers.

• Raise taxes on people making less than $200,000 a year, requiring Obama to break a signature campaign pledge.

"You're going to have to do all of the above," said Conrad. "You're going to have to do all of the things that people don't want to do."”

Greece is in the process of making these type of changes to get their deficits under control.  Their far-left political leadership is having a lot of trouble with unrest and riots because they we elected to increase handouts – not reduce them.

Obama is in the same position.  It is going to be almost impossible for him to completely reverse his economic policies while maintaining his conviction that what he did in the last two years was the right thing to do.

Obama used up most of his political capital on his health care reform bill that was rejected by the public with the election of Scott Brown.

He lost a lot of momentum and energy with that bill that ended up to be more like quicksand then a feather in his hat.

Perhaps it is going to take the next President to lead the nation back to fiscal sanity.

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