A couple of facts have largely been missing from the reporting on last week's last-minute deal to keep the federal government operating through the end of the current fiscal year.
The president, Democrats in the Senate and Republicans in the House of Representatives reached an agreement to cut $38 billion from federal spending through the end of September. President Barack Obama and the Democrats have painted the cuts as draconian. House GOP leaders are touting the compromise, far short of the $100 billion promised in November's campaign, as a victory.
The projected deficit -- the difference between spending and revenues -- for the current fiscal year tops $1.5 trillion. The federal government borrows about $4.5 billion a day to pay for a third of its ongoing operating expenses. Last week's deal saves U.S. taxpayers about nine days of borrowing and its accumulated interest. That's a lot of money to most of us, but it trims the deficit by less than 4 cents on the dollar, and cuts total spending by less than 1 percent.
In the coming weeks, rounds two and three of this year's budget fight will play out in Washington, D.C., and each promises to be more fierce a battle than last week's engagement.
On May 16, the U.S. will reach the current limit on its borrowing authority: $14.3 trillion. By that date, Congress must either increase that limit or cut spending by $4.5 billion a day to keep the government from closing. By law -- although ignored last year by Democrats who controlled both houses -- Congress must pass a budget for fiscal 2012 by Oct. 1.
In each case, the real issue is spending. The federal government -- we the people, according to the Constitution -- spends better than a $1 trillion more than the $2 trillion it takes in each year. It is not sustainable.
The solutions are painfully simple: In some combination we must spend less or pay more.
Can we not just tax the rich more? It is attractive to force others to pay for benefits we demand. But unfortunately, the rich just aren't rich enough to carry the whole load.
The net worth of the 400 richest Americans in 2010 was $1.3 trillion, according to Forbes magazine. If we taxed their net worth, as opposed to their incomes, at 100 percent, the projected federal deficit for fiscal year 2012 would be covered. After that, those 400 would be wiped out and on the dole, and we would have to reach deep into the next group of the affluent each succeeding year to cover the projected shortfall.
Without large cuts in spending, the problem will continue to grow. To get large cuts, all federal spending programs, including defense and entitlements, have to be restructured.
With the exception of interest on its sizable debt, all spending by the federal government is discretionary. Entitlement programs were created by Congress, and can be altered by any Congress with the fortitude to do so.
It's time for every American to declare what they are willing to sacrifice and what they are willing to contribute. We can no longer expect others to pick up the tab as we escape the consequences.