Fiscal Future Daily: Ireland Shows What a Debt Crisis Looks Like, Warren Buffett Wants to Be Taxed, and a Sense of PrioritiesNov 23, 2010
Now we know one reason why Ireland’s government tried so hard to avoid asking for a bailout. There are protests in the streets of Dublin, and the Irish government will have to face new elections, all of which proves that it’s still easier to avoid a fiscal crisis than manage one once it arrives. Also in the news today: billionaire Warren Buffett volunteers to be taxed, and defenders of earmarks start making their case as Congress seriously considers an earmark ban.
We’re taking tomorrow off for Thanksgiving, so enjoy today’s Fiscal Future Daily and we’ll be back on Monday. Have a great holiday!
Dealing With Debt in Dublin
The Irish debt crisis is a pretty good example of what can go wrong when deficits and debt reach unsustainable levels. The $100 billion bailout arranged this weekend may keep Ireland from default, but it’s going to force a new election, and it’s not known what conditions the EU and the IMF will impose in exchange. Given that, and the furious reactions at home, some are already raising the question of whether defaulting on the debt would be a better option for the Irish. The Room for Debate feature in the New York Times pulls together a range of opinion, while the Wall Street Journal ponders what happens now that the bazooka theory of international finance hasn’t worked.
As we’ve said before, the United States is nowhere near a fiscal crisis, and has cards to play that Ireland and Greece don’t have (like the ability to devalue the currency, as a last resort). We’ve got lots of options and some time to put our budget on a sustainable track. But clearly it pays to get ahead of this challenge, rather than wait until a crisis arrives.
Any Volunteers?
We liked the pithy quality of the New York Daily News lead on the Warren Buffett Bush tax cuts story: “The third richest man in the world has a message for Congress: Tax me!” More seriously, Buffett has long led the charge for higher marginal rates for the super-rich. Buffett’s renewed call follows a letter from 45 millionaires, including pop artist Moby and Jerry Cohen of Ben & Jerry’s, urging President Obama to allow the Bush tax cuts to expire:
Warren Buffett says ‘tax me!’ as Congress debates extending Bush tax cuts
45 ‘Patriotic Millionaires’ Call for Bush-Era Tax Cuts to Expire
The latest Gallup poll, however, says most Americans say extending “some form” of the Bush tax cuts should be a top priority for Congress’ lame duck session:
In U.S., Tax Issues Rank as Top Priority for Lame-Duck Congress
The Committee for a Responsible Federal Budget (among other things, very active on Twitter @BudgetHawks) lists 10 themes they’re seeing emerge from all the budget plans being shopped around Washington. And they’re actually pretty optimistic:
“The next step will be for all actors – including policymakers and the public – to accept that compromises must be made. It would be far better for policymakers to adopt changes themselves, rather than waiting for the financial markets to force changes. Having others force changes would be more difficult and painful. It is encouraging to see the number of people who accept that notion. Progress on fiscal issues looks more possible than it has in years.”
Read the full posting here: Ten Themes Emerging From the New Deficit Plans
Controlling health costs is a key part of controlling the budget, and the health care industry is mobilizing against the so-called Simpson-Bowles plan, the proposal put forth by the co-chairmen of the presidential deficit commission. Their plan not only calls for greater efforts to cut costs than in the health care reform passed earlier this year, but also resurrects the “public option,” the idea of a government health plan that would compete with private insurance:
Deficit-Panel Chiefs Draw Resistance to Health-Spending Proposals
Earmarks strike back!
Earmarks, the practice of Congress funding specific projects outside the regular budget process, have been a key target of reformers who see it as a major source of pork-barrel spending (although in dollar terms, they’re a small part of the budget). With an earmark ban looking more likely in the new Congress, earmark supporters are making their case. Louisville officials argue that their downtown redevelopment wouldn’t have gotten far without the $64 million in earmarks pulled in by Sen. Mitch McConnell (a defender of the practice). And St. Louis officials weigh in as well, in the The New York Times’ piece Defenders of Earmarks Point to Urgent Needs That Would Not Be Met
Still Time to Find Out: Are the Debt Reduction Stars Aligned?
Is Washington really ready to act on our fiscal problems? On Nov. 30, The National Academy of Public Administration invites you to a panel discussion on the findings from Public Agenda’s latest update to its “The Buck Stops Where?” survey, which measures the attitudes of Washington policymakers and “beltway influencers” on the issue of the national debt.
Panelists include Bill Hoagland, vice president of public policy and government affairs at at CIGNA and former staff director of the U.S. Senate Budget Committee; Norm Ornstein, resident scholar at the American Enterprise Institute; Ruth Wooden, president of Public Agenda and a member of the Committee on the Fiscal Future of the United States; and moderator Martha Kumar, professor of the Department of Political Science, Towson University. It’s free and you can RSVP at this link.
Chart of the Day
We’ve got time to deal with our fiscal problems, but the long-term projections for the national debt aren’t good. Here’s a Fiscal Future report chart, which shows why so many budget experts call our budget “unsustainable:”
Join the discussion! Your voice is important. You can comment here on OurFiscalFuture.org, on Facebook, and on Twitter. And to learn more about the numbers that set the stage for some of our choices, check out our slideshow, iPhone and Android apps, and Our Fiscal Future’s Visual Budget Tool.
Fiscal Future Daily is produced by Public Agenda for Choosing Our Fiscal Future, in partnership with the National Academy of Public Administration and with support by the John D. and Catherine T. MacArthur Foundation. The editor in chief is Scott Bittle, with contributors Francie Grace, David White, Jen Vento, Hart Hooton and Tom Watson.