Fiscal Responsibility Follies

Whoever said irony died after 9/11 clearly didn’t anticipate this.

“Now that President Obama has signed a $787 stimulus package [sic] into law and weighed tens of billions more to aid homeowners and banks,” deadpans a hastily-written New York Times political blogpost, “he will take a break next Monday to consider just how the government can get a grip on its increasingly ugly balance sheet.”

Yes folks, it’s the “fiscal responsibility summit,” not to be confused with the “fiscal wakeup tour” chronicled in I.O.U.S.A.

90 invitees will wring their hands over the prospect of a $2 trillion dollar deficit this year.  No word yet who exactly is on the guest list, but we know the rough makeup of this august panel — 30 House members, 30 senators, and “30 scholars and representatives of advocacy groups such as AARP.”

Well, I guess the irony of inviting habitual big spenders isn’t too thick if George W. Bush isn’t among the invitees.

“After Mr. Obama opens the summit,” the Times continues, “the assemblage will break into six groups. Each will discuss separate topics that encompass the range of fiscal challenges that would exist even without the current recession and will endure once the economy recovers. The topics include health-care costs, Social Security, tax reform, defense procurement and the federal budget process.”

I can give you a rough outline of what these guys are going to come up with right now, before the summit takes place, without even knowing who’s taking part.

  • Health care costs: No big solutions will be proposed, but whatever short-term fixes are floated will will further intrude on privacy, further restrict patient choice, and further line the pockets of the insurance companies.  (Memo to everyone who fears “socialized medicine”: Never gonna happen.  What will happen is a further cementing of a system that, if I may borrow from James Grant’s terminology for the financial sector, privatizes profit and socializes cost.  Free-market fee-for-service solutions?  That’s not something Serious People talk about.)
  • Social Security: Again, don’t expect any big pronouncements here, but we will get some sort of trial balloon for raising taxes and/or lowering benefits.  The president’s budget chief is on record supporting benefit cuts for everyone under age 55.
  • Tax reform: Oh, let me guess.  Maybe a recommendation to fix the alternative minimum tax once and for all.  And said proposal will go nowhere.  Fundamental rethinking of the system will not be open for discussion.
  • Defense procurement: Much noise about reining in costs, maybe even lip service to rethinking whether we need Cold War-era ships and aircraft to fight guys in caves.  But as with the health insurance industry, the special interests are simply too well-entrenched.
  • The federal budget process: Lip service to fighting “waste, fraud, and abuse.”

There, that was easy.  There’s your “fiscal responsibility summit.”  Everyone can slap each other on the back when it’s over and feel really good about themselves when they go home.  And we’ll fall even further into a multi-trillion-dollar hole.

The Daily Reckoning