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Wednesday, April 6, 2011

Think of it as a Federal Holiday

Reason obeys itself; and ignorance submits to whatever is dictated to it." — Thomas Paine

There are 11 official federal holidays in the United States. On these federal holidays the government for all non-essential services is shut down. That means you cannot process a passport application, sign up for Social Security or contact your congresspersons’ office. On these days people are not dying in the street, planes are not falling from the skies, the FBI is still arresting bad guys and, sadly, you will still be screened at the airport

Today President Obama was in Philadelphia at a “town hall” event prior to his appearance at Al Sharpton’s Community Action event this evening (I guess he has plenty of time to travel about making campaign appearances rather that work on the budget). During his ramblings he talked about the horrors American families would encounter if he government was shut down — his big issue was that Yellowstone Park would be closed. How ghastly, the country is going bankrupt and Obama is worried that little Johnnie will not get into see Smokey the Bear. I would remind our esteemed president, who probably never took a road trip or visited a national park in his life, that April is not a big month for family vacations with the kids — they are still in school.

So what would happen if the federal government shut down for a few days? Kimberly Schwandt writes; “Here are two areas that guide who will stay working. Government activities will stay open that: 1) Have alternative funding — like user fees or appropriations that aren't renewed every year. 2) Are necessary for safety of life and protection of property.”

“Here's a snapshot of what else stays open and what closes during this potential shutdown:

The official said the president doesn't want government shutdown, but they think from a "good government" perspective and for "good housekeeping," they need contingency plan.

800,000 federal employees (the same as 1995) the official says is the "vicinity" of workers who would be affected. What's changed since 1995 though is that the Veterans Affairs Department was largely closed during the last shutdown, but will be open now because it has multi-year appropriation. Plus the Department of Homeland Security didn't exist then, and many of their operations are necessary for safety and protection of property.

Military members will continue get paid through April 8th, but after that are only earning and will get money when the government is funded again. Civilian members will be under same consideration about who stays and their pay situation will be largely the same. They expect a significant number of civilians to be furloughed.

What services will be suspended? IRS filings with paper claims won't be processed and audits will also be stopped. Electronic claims will continue. Small business loans and Federal House Administration mortgages will also be halted. (The official noted that FHA had 12 percent of housing market in 1995, and now it's up to 30 percent)

  • The National Institutes of Health will not be accepting new patients or starting new clinical trials
  • The Environmental Protection Agency will cease facilities for air, land and water pollution, but keep up ones necessary for protection of life.
  • The Cherry Blossom parade in D.C. this weekend wouldn't be happening. (Although officials running the parade discount that notion)
  • National parks will be closed, along with the Smithsonian (which includes things like the National Zoo).
  • Government websites essentially won't be running.
  • It's unclear what kind of impact a shutdown will have on border inspection.
  • On Social Security, compared to 1995, they are still finalizing their plans, current beneficiaries continue to get benefits as they did.
  • Although Medicare is funded, other activities at Health and Human Services are suspended.
  • On the impact of all three branches: legislative and judicial would be in accordance and go on with their own shutdown plans.
  • As for White House staff, the official said there would be significantly lower numbers of staff at White House and all federal agencies.

My God, how horrible all of this is. Just think there will be no Cherry Festival Parade, you won’t be able to visit the National Zoo and government web sites will be shut down.

House Budget Chairman Paul Ryan (R. Wis.) is treating Americans like grownups. That’s all too rare.

Washington’s big spenders have responded with their usual tired clichés.

"Pulling the rug out from under seniors,” says Sen. Debbie Stabenow (D.-Mich.).

“Waging war on American workers,” says Rep. Xavier Becerra (D.-Calif.).

“A path to poverty for America’s seniors and children,” claims House Minority Leader Nancy Pelosi (D.-Calif.). Pelosi also states (with absolutely no basis in fact) that 6 million seniors will starve because they will not receive their meals on wheels.

"The Tea Party has hijacked the Republican caucus," says House Budget Committee Ranking Member Chris Van Hollen (D.-Md.)

Pee Wee Herman could have delivered more creative comebacks. But treating the electorate like adults is uncommon in Washington, D.C. Ryan’s plan should be rated at least R for Realism, while the dismissive comments are PG for Politically Guided.

Just wait until the newly appointed chairman of the Democratic NationalWasserman Schultz 2_0 Committee, Debbie Wasserman-Schultz the woman with a constant bad hair day, gets into the fray. If you look up some of the lying, slanderous things she had to say about Alan West during his congressional campaign against the left wing loon Ron Klein you will get a preview of what the Democrats will have to say about the upcoming budget battles. You better fasten your seatbelts and set your bovine excrement meter on high.

Ryan’s plan is a big deal. A very big deal. Its proposed $6.2 trillion of savings over 10 years (measured against Obama’s budget) is literally 100 times larger than the $61 billion that the GOP hopes to cut this year—and is struggling against ferocious Democrat resistance.

Revising Medicare to a defined contribution plan is a good course to pursue, and of course a tough sell. But that change makes a huge difference in controlling spending and reducing deficits. The same with Ryan’s goal of giving states full flexibility over Medicaid, in exchange for limiting federal costs.

As noted by The Heritage Foundation’s annual Index of Dependency, people’s unhealthy dependence on government is skyrocketing. Ryan would address that and more.

Spending limitations, rollbacks, and freezes. Repeal of ObamaCare. Cutting corporate welfare (including farm subsidies) as well as overly generous giveaways to individuals. Structural reform for federal health care programs, which are the biggest runaway spending items. Ryan’s plan gets serious in a way nobody else has.

But his “Path to Prosperity” is about economic growth, not just spending. Tax simplification is one aspect, and so is lowering corporate taxes so businesses are not pushed overseas by what is now the world’s highest rate. A Heritage Foundation analysis finds this would create a million jobs a year for starters, and double that rate in short order.

It’s not perfect. Our national defense needs are greater than Ryan's projects. Social Security’s problems are not addressed. And welfare reform should go beyond what he lays out.

But Ryan’s proposal is strong medicine that we need, not the pandering and politically correct placebos that his plan’s opponents are already peddling.

We live in a time when cute sound bites substitute for debate, and false claims are used to justify inaction, despite our fiscal crisis. While most of his critics carp without offering any alternative, Ryan has delivered a needed challenge before we fall totally over the fiscal cliff.

The federal government posted its largest monthly deficit in history in February at $223 billion, according to preliminary numbers the Congressional Budget Office.

Yet Democrat Senate Majority leader Harry Reid refuses to pass a budget that would include Republican proposals to cut the Federal budget by $61 billion a year.

The proposed cuts amount to less then two percent of the $3.8 trillion federal budget. This year’s deficit is $1.4 trillion (that’s $1,400,000,000,000), which means that this year’s tax revenue will cover only two thirds of federal government spending. And while it’s obvious that even the proposed cuts are much too small, President Obama and the Senate Democratic leadership seem prepared to shut down the government rather than pass a budget with these modest reductions.

Instead of a serious debate about a looming financial catastrophe, we see the Democratic leadership spreading fear about a government shutdown if an agreement to reduce government spending cannot be reached. Their aim seems to be: replay the political theater of 1995 and shift blame for a shutdown to Republicans even though Democrats would be the responsible party.

The state of our political debate has now deteriorated to the point that serious people in the Republican controlled House, who would attempt to deal responsibly with the Country’s fiscal train wreck, are threatened with blame for doing the right thing. Isn’t this madness?

I spent the last 22 years of my life running a business and if this scene were being played out the owners would fire management immediately and bring in a turnaround expert to get expenses in line with revenues, or else the next conversation would be about calling the lawyers to begin filing for bankruptcy.

Jack Welch, who delivered a 23 percent compounded annual shareholder return over his 20-year tenure as CEO of General Electric, articulated these six rules to guide his organization:

  1. Face reality as it is, not as it was or what you wish it to be.
  2. Be candid with everyone.
  3. Don’t manage — lead.
  4. Change before you have to.
  5. If you don’t have a competitive advantage, don’t compete.
  6. Control your own destiny or someone else will.

I believe these rules can be readily applied to today’s budget crisis.

“Facing reality as it is” means that we need to deal seriously with total federal debt that has reached $14 trillion and deficits projected to be $1.4 trillion. Some people wish we could go on spending without limit but we cannot. Even taxing every last dime from “the rich” would not make a dent in these numbers.

“Candor” would be an honest debate about real issues.

“Leading, not managing” is about providing meaningful solutions, not squabbling over legislative minutia. Outside of Washington, there are not many people who could tell you what a “continuing resolution” is, but there are a lot of people who do understand massive deficits and the consequences of failing to deal with them. Even the Republican proposals are a small fraction of what is needed.

Changing before you have to starts with remembering the message voters delivered in November 2010. Republicans won a massive victory because they promised serious action to address our fiscal problems. If Congress does not heed these voters concerns, look for a lot of incumbents to be voted out of office in 2012.

How hard is it to change? Cuts starting at the $100 billion level — still only seven percent of this year’s budget deficit — need not be that hard nor so politically challenging.

Last month the General Accounting Office, a non-partisan government watchdog, reported that “reducing or eliminating duplication, overlap, or fragmentation could potentially save billions of taxpayer dollars annually and help agencies provide more efficient and effective services.” Senator Tom Coburn (R-Okla.) has estimated that the GAO’s recommendations amount to over $100 billion a year. Moreover, the GAO looked at only a fraction of the federal budget and only a handful of missions of varying scope.

We have now reached the state where we have GAO bureaucrats telling us how and where to cut bureaucracy.

Competitive advantage no longer lies with politicians who know how to play the Washington budget games. Voters are on to them. The competitive edge is with courageous leaders who propose real solutions to our very real fiscal problems.

And we must take control of our own financial destiny now, or someone else will. If we want to get serious about cutting the deficit, the GAO has given us

Paul Ryan respects Americans—especially taxpayers. He speaks to us like adults. For the rest of Washington, it’s time to put away childish things.

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