The Debt Bomb: A Bold Plan to Stop Washington from Bankrupting America
by U. S. Senator Tom A. Coburn, M. D.
Review by John E. Wade II
In this powerful book Sen. Coburn does more than point out our nation’s enormous debt, deficit, entitlement and tax problems, but concludes by offering suggestions to solve these worrisome challenges in ways that should suit the poor and help everyone else.
A shocking quote at the start of Chapter One is from Admiral Mike Mullen, Chairman of the Joint Chiefs of Staff under President Obama, June 24, 2010: “Our national debtis our biggest national security threat.” Incidentally, on PBS’s Charlie Rose I saw Secretary James Baker say, “We’re broke.”(June, 2012) In his book, Sen. Coburn writes that “America is already bankrupt.” These statements may be and are unsettling, but the light at the end of the tunnel is the chance we have to elect Governor Romney and a host of Republicans at all levels.
But first, the bad news, which is that we are in a spending and entitlement crisis; our government debt and entitlement obligations are already slowing our economy by twenty-five to thirty-three percent. In my opinion, the Obama administration’s trillion-dollar-plus deficits over the last three and a half years have suppressed the economy rather than stimulated it. Perhaps if our country had been at a low or moderate debt level, his policies might have worked. This spending binge must stop. I realize that both Republicans and Democrats have lacked spending discipline.
To get the latest figures on our government obligations, do a Google search for the U. S. Debt Clock. Right now the U. S. National Debt is $15,801,265.5↑↑, and increasing as Gross Domestic Product (GDP) is $15,217,191, ↑↑↑. Unfunded liabilities (Social Security, prescription drugs and Medicare) total $119 trillion. I invite you to review that website from time to time to attempt to grasp the magnitude of our very precarious position.
Almost a third of our debt is held by foreigners. In April 2011 Standard and Poor’s (S&P), one of the larger rating agencies, downgraded the United States long-term credit outlook from “stable” to “negative,” and in August they reduced our rating from AAA to AA+.
The continuing crisis in Europe shows in real time the effects of high government debt and obligations. That can and will happen to us unless we take decisive actions, such as the author suggests.
The world will have a liquidity crisis soon—sometime in 2013—when the planet’s liquid assets ($9 trillion) won’t be enough to fund sovereign debt requirements (around $13 trillion), a situation that will push interest rates up. The government may try to inflate its way out by printing money as it has done already, but if such a course of action is tried, much of our life savings will be wiped out. In the final stage, “the bottom would fall out of the middle class. Unemployment would soar, while the cost of living would increase.”
Around the world Senator Coburn and I see the fall of the “International Welfare State,” including Greece, Italy, Spain, Portugal, Ireland and Japan—all in “serious risk of default.” There is a very real possibility of a worldwide depression.
My calculation from the U. S. Debt Clock of our national debt ($15.8 trillion) to our Gross Domestic Product ($15.2 trillion) is just over 100 percent. The book described a debt-to-GDP ratio of 90 percent as “dangerous.”
Careerism on the part of our elected officials is cited as the root cause of our present state. Republicans and Democrats have lavished the government’s money in ways that they figured would allow them to stay in office, practically at any cost. Why do they want to stay? They are surrounded and courted by staff, lobbyists, party leaders, and special interest groups. And there are all kinds of perks.
The Constitution has been largely ignored over the last few decades, as career politicians concentrated on the next election with “unsustainable debt” as the result. Earmarks such as the expensive “the bridge to nowhere” in Alaska demonstrate sadly the careerism and parochialism (obtaining federal spending for one’s own district or state, usually referred to as pork barrel spending).
To quell the myth that there is a continuing stalemate in Washington, Sen. Coburn writes, “Our economy is on the brink of collapse not because politicians can’t agree, but because they have agreed for decades.” Getting our country in fiscal shape will require that politicians learn to say “no.”
President Reagan in his first inaugural address, 1981, said, “In this present crisis government is not the solution to our problem; government is our problem.” I firmly believe that Governor Romney could step forward and lead a host of Republicans in 2013 in a manner like President Reagan. On the other hand, President Obama is part of the problems.
Our government itself is in dire need of kind, but firm and extensive innovation. The stimulus simply didn’t work. Part of the money, $535 million, went to Solyndra, a solar-power company that went bankrupt. “One of the administration’s key donors … had a financial stake in the company.”
Senator Coburn made two key statements: “We are on the edge of an abyss not because we had too little faith in government but because we had too much faith,” and “A government that works is a government that is limited.”
Part Two—The Solution
The Tea Party Republicans may be part of the solution. Over and over President Obama was given the chance to lead. One instance was evident at the time of the report by the National Commission on Fiscal Responsibility, known as Simpson-Bowles, on how to reduce the deficit, which was closer to President Reagan’s 1986 tax reform than President Obama’s tax increase proposals. President Obama didn’t embrace the recommendations. According to Senator Coburn, “His [President Obama] decision, I believe, will be remembered as one [of] the greatest failures of presidential leadership in American history.”
We must not take a chance of future failures. If we are to wait until after the 2012 elections, Republicans must “win the White House, maintain a solid majority in the House, and win about sixty-five seats in the Senate to control the national agenda.”
There are answers. What is needed is courage to do what is right. Senator Coburn and his staff identified $9 trillion in savings over ten years in a 624-page report which he called Back in Black.
We should watch and learn from the events unfolding in European countries, such as Spain, which has high and unsustainable yields on government debt, as well as unemployment at 25 percent.
Duplication in government spending is an obvious starting point, and Governor Romney is ideal to direct such an endeavor, supported by a Republican Congress. We should shrink government, but with thought and planning to assist those who will lose their jobs. I believe optional occupational interest tests, ability tests and privately-administered outplacement services could allow workers to assume fruitful private sector jobs or self-employment.
The General Accounting Office said, “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 Coburn estimates we can save $3 trillion over ten years by ending duplication.”
U. S. Senator Joe Lieberman said, “We can’t save Medicare as we know it. We can only save Medicare if we change it.” Unsustainable demographics and benefits confront maintaining entitlements in their current state. “Medicare is already broke and running on empty.”
So, what is the Medicare solution? Senator Coburn gives two answers: “(1) adjust the eligibility and generosity of the Medicare benefit by relating benefits to income (i.e. forcing wealthier Americans to pay more) while raising the retirement age to reflect changing life spans, and (2) transitioning Medicare from a defined benefit to a defined contribution.”
Social Security is now cash-flow negative and, “Between 2012 and 2013, the program’s cash deficits are projected to total $630 billion.”
Senator Coburn tells it like it is: “It is not that hard to fix these problems. The truth is, we have a surplus of solutions, but a deficit of courage.” President Obama has graphically demonstrated a lack of courage and competence. I believe Governor Romney and a host of Republicans at all levels can and will provide solutions.
When writing about Obamacare Senator Coburn quotes P. J. O’Rourke, “If you think healthcare is expensive now, wait until you see what it costs when it’s free.” He points out that “… too many doctors are torn between serving their patients and protecting their practices from predatory trial attorneys trying to make a quick buck.” He estimates that “defense medicine costs patients between “$650 and $850 billion a year.” We must repeal Obamacare and put in place systems in which the doctor and patient work through a free market with competition, transparency and choice.
As to reforming taxes, the “rich simply don’t have enough money to pay all the bills.” As Margaret Thatcher said, “The problem with socialism is that you “… always run out of other people’s money.”
We must make our tax system simple, understandable and affordable. As Representative Paul Ryan said, “Every dollar that businesses spend lobbying for a better tax deal, is a dollar they’re not spending on making a better product.” There are twenty-seven countries in the world that now have simple, flat taxes and more nations are considering them.
A key point is, Tax simplicity would redirect money in and out of the government away from tax compliance toward more useful pursuits, increasing our nation’s productivity. The risk-takers, entrepreneurs and job creators would benefit rather than politicians, lobbyists, and such.
In 1986 President Reagan passed tax reform that closed many loopholes, lowered tax rates, simplified the tax code and started a twenty-five-year period of solid growth. Federal tax revenues soared. Tax reform was accomplished then with spectacular results. President Obama lacks the expertise, attitude and constituency to emulate President Reagan’s success. I believe Governor Romney and a host of Republicans could and would recognize and innovate in our tax system.
As to defense, the practice of spreading defense spending all over the country is very wasteful. Waste in defense is being funded by our deficits, so such costs must get the kind of scrutiny that we pay to all fiscal areas.
Robert Kennedy is quoted in the Conclusion: “Few men are willing to brave the disapproval of their fellows, the censure of their colleagues—the wrath of society. Moral courage is a rarer commodity than bravery in battle or great intelligence. Yet, it is the one essential and vital quality for those who seek to change a world which yields most painfully to change.”
Washington needs Governor Romney and a host of Republicans to try to live up to Senator Kennedy’s incisive words. We are in crisis. It’s not like 9/11 or Pearl Harbor, so easily viewed, but if there weren’t such crises in Europe right now, the truth would be upon us.
The media should be ashamed of themselves for not covering hard news such as these enormous fiscal problems. Too many cover the horse race in policies without any depth in these critical issues.
Governor Romney and President Reagan were superb professionals in the finest sense. I see in Governor Romney the deep intelligence and motivation that President Reagan possessed. In President Obama, however, I see a masterful politician who is drastically lacking in leadership and competence for the innovation that has been and is needed.
In Governor Romney I see a moral leader who will make his decisions, based on what’s right for the country and its future. He has a long track record of accomplishment.
Our country has many challenges and Governor Romney points out one—illegitimate birth; it was seven percent in the 1960s, but has skyrocketed to forty percent now. The “Great Society” destroyed many families by taking away their self-reliance.
Ann Romney volunteered at a school for at-risk girls. When she asked the class how many wanted to go to college almost every girl raised her hand. Then she asked the class, “How many of you want to have a baby before you graduate from high school?” Again, almost all raised their hands, indicating they had not made the vital disconnect between those goals.
Governor Romney points out that the American people are, in general, quite hard-working with more hours than the Germans and French. Americans are also risk-takers. He told the story of a young person he tried to hire. But the gentleman had an idea for a business and turned Mr. Romney down. Years later Governor Romney saw the gentleman, who was by then worth $25 billion, having earned his fortune through Microsoft. He had taken a chance.
The role of the electorate is to seek honest, capable, wise, visionary leaders. I believe that Governor Romney “fits the bill.” He’s honest and frank, and courageous; it takes a lot of courage to write about illegitimate births. I also see the wisdom of President Reagan in Governor Romney. He’s a moral, genuine person who can solve, with the help of other Republicans, the immense problems ahead.
We are in a frontier in terms of our nation’s financial, educational and family status. President Obama had his chance and he has not accomplished very much of substance. And his fiscal and financial actions have been dismal. I believe that Ronald Reagan was a decent gentleman with vision, and the same is true of Mitt Romney.
The elections in the United States will be scrutinized around the world, much, much, more than the elections in Greece. I hope and pray that the American people will see what I see.
