Op-Ed Columnist - State of Paralysis - NYTimes.com

"California, it has long been claimed, is where the future happens first. But is that still true? If it is, God help America."

A fascinating look at California's self-imposed budget crisis and the potential ramifications for addressing major social challenges through the political system.

You can get more of this flavor from Minnesota, where the Republican governor is "unalloting" the state budget after he resolutely vetoed all budget measures from the state's DFL majority, all in the name of preserving his already soiled "no taxes" pledge.

Fiscal responsibility

If you want to see a balanced budget, here's a couple thoughts for you:

Federal budget game!

I capped carbon emissions, covered everyone with health insurance and ended the Iraq War and still had money in the bank. How about you? See the game intro below or go to the Budget Hero website to play.



See my budget here

A week in someone else's belly?

Having realized that Oregon has a relatively high rate of unemployment and "food insecurity," the governor of Oregon decided to get personal experience of his state's less fortunate. For one week, he took the "food stamp challenge," setting his food budget to no more than a food stamp recipient would receive. How much did he have to work with? Post a comment with your guess, Price is Right style, on your honor to not research the answer elsewhere. I'll post the amount tomorrow.

This story on the governor's challenge has a bit more on what he was able to eat on the budget:

The governor took it seriously, studying prices, forgoing organic fruit to get the price break and taking advice from Christina Sigman-Davenport, a state worker who went on food stamps to support her family of five after her husband lost his job. As the governor looked wistfully at a carton of half-and-half, Sigman-Davenport told him he'd just have to get used to 2 percent milk in his coffee...

...Tuesday's menu for the governor and first lady was simple but satisfying. Breakfast: yogurt, granola, half a banana each, coffee, honey. Lunch: peanut butter and jelly sandwich. Dinner: two-bean soup, toast. Meals planned for subsequent days include quiche, chicken pesto and, of course, leftovers.

David Walker talks $50 trillion with Colbert

I mentioned seeing David Walker, US Comptroller General, last week and that he'd be appearing on the Colbert Report to discuss America's $50 trillion problem.

Here's the video:

A 50 trillion debt? In dollars?

David Walker may have the un-sexy title of Comptroller General of the United States and head of the Government Accountability Office (GAO), but he knows budgets. I heard him speak on the fiscal fortunes of America this week and his 10-minute speech showed the power of high-content, compelling arguments. Walker argued that there are 4 deficits that government must address: budget, balance of trade, savings, and leadership (I'll discuss two).

Budget
The United States may have deficits of $400 billion and a debt of eight trillion, but right now it has unfunded liabilities of $50,000,000,000,000 - 50 trillion dollars. That's $440,000 for every household in the United States (and unlike your mortgage, there's no house to back it up).

What are unfunded liabilities? Money promised to Americans through Medicare, Medicaid and Social Security (entitlement programs) that the government has insufficient resources to pay for. That's $32 trillion in Medicare (parts A-C), $6.4 trillion in Social Security, and $8 trillion to the new Medicare prescription drug benefit.

Savings
For two years running, Americans have spent more money than they earned. The last time this happened was in 1933-34. As Walker noted, these were not good years for the U.S. economy.

Why is this a problem?

• It's a lack of stewardship. The baby boom generation is at risk of being the first generation to leave their children in worse shape than their predecessors.
• It's unsustainable. You simply cannot spend more than you earn every year. Eventually you run out of money.
  
• Increasing amounts of U.S. debt are held by foreign countries. If you don't understand how that could be a problem, see this excerpt from Wikipedia on the Suez Canal Crisis:

Part of the pressure that the United States used against Britain was financial, as President Eisenhower threatened to sell the United States reserves of the British pound and thereby precipitate a collapse of the British currency.

What can be done?

1. Reform the base Social Security program, preserving its use as basic social insurance (and probably raising the retirement age)
2. Add supplemental savings accounts on top, with an additional 2% payroll tax.
   
3. Adjust Medicare premiums so that recipients, particularly wealthier ones, have to put in more than the current 25% of expenses covered by premiums.
   

If you want to hear more on this topic, Walker will be appearing on the Colbert Report on Wednesday, April 25th.

Update 4/26: Here is the Colbert Report video

Congress: fiscal responsibility returns with the Democrats

With Democrats in control of both chambers of Congress, their Budget Committee chairman have both reinstated PAYGO rules, requiring any spending increases or tax cuts to be offset with increased revenue. The rules were originally enacted in the early 1990s but allowed to lapse by the Republican Congress in 2001.

There's a lot that can be said about the benefits of pay-as-you-go, but few words could be as valuable as this image:

Bush Budget: Less Health Care, More Wal-Mart

In keeping with tradition, President Bush's submitted budget proposes extensions of all his tax cuts, including a repeal of the estate tax (costly war, what?). Matt Taibbi of Rolling Stone excoriates the Bush plan, noting that the cuts to Medicaid - health care for the poor - are about the same as the bottom line boost to the Walton family, the Wal-Mart heirs.

That's right. Bush's budget would reduce funding to Medicare by $28 billion and guarantee a tax break worth $32 billion to the Waltons. Now that's what I call democracy!