Each week, the website WisOpinion.com asks two veterans of Wisconsin policy and politics, Scot Ross of One Wisconsin Now and our own Brian Fraley (a Director here at the John K. MacIver Institute for Public Policy) to engage in exchanges on a topic of their choosing. The comments reflect the authors and do not necessarily reflect the views of their employers.

From Fraley’s entry, this week:

Um, when your basement is flooded with knee-deep raw sewage and all the beaches are closed because BILLIONS of gallons of raw sewage has been dumped into the Lake by Barrett’s MMSD, real people don’t give d–n which politician is posing for holy pictures on the news.

You can read the entire exchange here.

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Bauman’s memo offers advice to the two candidates to cynically campaign against high-speed rail but then become a high-speed rail supporter once in office. It’s meant in sarcasm but even the sarcasm is revealing.

The first piece of advice by Bauman is to continue campaigning against high speed rail. Apparently Bauman believes the Republican candidates are as cynical as he is.  Bauman says they should avoid any mention of people who are unable to get around by car because of “disability, age or economic circumstances.”

Perhaps Bauman should avoid mentioning them, too. The high-speed rail line isn’t targeted for those people. As Bauman explained in a previous press release, “intercity rail passengers tend to be middle- and upper-middle class persons who vote, including campaign contributing business persons.” The expected $33 to $40 one-way fare will put it beyond those who are hampered from travel because of economic circumstances. For those that can’t contribute to Bauman’s campaign fund, there is always Greyhound.

“Never mention that gasoline prices may increase significantly in the near future.

“Avoid any mention of the fact that the $823 million federal investment in high-speed rail cannot be redirected to freeway expansion or highway projects.”

If gas prices increase dramatically in the future, so will the price of operating the train. What does he think it runs on, solar power? Does he think there will be giant windmills on the trains?

As for the $823 million in federal money, there is no such thing as free money. The cost of operating the high-speed rail train ($15.6 million the first year including the leg to Chicago) will be borne by Wisconsin taxpayers. While the federal money cannot be redirected, the high-speed rail project will be re-directing funds from the state’s transportation fund to pay for the train, if the money does not come from the taxpayers directly.

The Milwaukee alderman then has a suggestion the Republican governor include in his inauguration address.

Lead off inaugural speech with solemn pledge to stop Milwaukee-Madison high speed rail construction. Repeat evils of rail and emphasize that you will save civilization from the scourge of rail travel and the big government it represents. Repeat pledges to cut taxes and slash public services including corrections, aid to public schools, the University of Wisconsin system and shared revenue to all those cities incapable of living within their means. Make sure everyone understands that none of this cutting will include freeway expansion or highway building since cheap gas and free roads are a fundamental right of every true American.

It’s good that Bauman understands high-speed rail is representative of the problems of big government. As for cutting corrections, perhaps the alderman was referring to the last budget that included an early release program to cut costs, releasing criminals onto the streets of Milwaukee. Meanwhile, because the state legislature and the governor were unable to prioritize, the state transportation fund was raided to fill the gap in education spending.
One month in for the next administration, Bauman suggests that it would be okay then for the new governor to forget the promise to abandon the high-speed rail project.

With a very serious and somber tone report that over the last month you have asked the best legal minds in the state to find a way to stop Milwaukee-to-Madison high speed rail construction and cancel all contracts let to date — but that the legal experts have informed you that it cannot be done unless the state agrees to reimburse the federal government for all funds expended to date and to reimburse the contractors for all the lost profits and cancellation penalties contained in their contracts. You report with great reluctance that construction must therefore proceed because the state cannot afford to stop construction. Be sure to emphasize over and over that this is the legacy of Jim Doyle who has saddled the citizens of Wisconsin with a multi-million dollar federal investment in new infrastructure.

Perhaps that is the way government works in the City of Milwaukee. However, Bauman might remember when Milwaukee County Executive Scott Walker was confronted with the “Blue Shirt” art project at the airport. Everyone told him it couldn’t be cancelled. The “Blue Shirt” was never built.

Unlike the “Blue Shirt” a high-speed rail line would have continued operation and maintenance costs, costs that the taxpayers will understand as an unnecessary drain on the state budget. Yes, it will be the legacy of Governor Jim Doyle if this project proceeds when it is highly likely his successor will be forced to cancel the project to prevent it from becoming another long-term obligation on the state budget that can’t afford to add any more obligations. It is also entirely possible that, given the state of the federal budget, the next Congress will be forced to reduce its commitment to these kinds of boondoggle projects.

Do not mention the phone calls from the CEOs of the Wisconsin consulting firms and contractors who were awarded rail contracts and do not mention the fact that they urged you to keep construction moving forward because this project will employ thousands of their employees. Deflect any media questions about campaign contributions from employees of these consultants and contractors. After all, you know that these contributors are only interested in good government.

Again, perhaps in the cynical world of Milwaukee aldermanic politics an alderman could sell out so cheaply. Is that what the alderman is doing, deflecting questions about contributors to him?

After the news conference, call your former campaign operatives, Charlie and Mark, to conduct phone interviews on their radio shows. Again, emphasize how angry you are in being unable to undo the high speed rail project. Be sure to lay all the blame on Jim Doyle and President Obama. Don’t worry, Mark and Charlie won’t be too hard on you, for you know you are “their guy” and you can do no wrong.

Assuming Bauman is referring to Milwaukee radio talk show hosts Charlie Sykes and Mark Belling, would that be before or after they lead their listeners in a recall petition drive? If they do not, surely the Tea Party will. We are in a new political atmosphere where politicians are being held accountable for what they say and do. Perhaps the alderman is bit insulated by the contributors, the consultants and the contractors.

Still, predicting a ribbon cutting on the trains two years from now, Bauman offers his advice what a Republican should say when the Obama economy puts “gasoline prices at $6 per gallon and the Wisconsin unemployment rate at 12%.”

Make a surprise announcement, to wit: that you have just signed a full funding agreement with the federal government to begin construction of the high speed rail line from Madison to the Twin Cities. Emphasize the thousands of construction jobs that will be created and the economic development that will occur in Wisconsin communities along the line. Mention that this new line will make the Chicago-Milwaukee-Madison-Twin Cities corridor the economic engine of the Midwest and the five hour travel time between Chicago and the Twin Cities will revolutionize travel within the state.

Of course this was never about one set of trains. We’ll have another round of shared construction costs ($2 local tax money for every $10 federal) and even more operational expenses. When those trains aren’t enough, there will be more construction to build a train to Green Bay. Then more tracks will be laid to cross the northern part of the state. Because what the train advocates forget to tell everyone is that the trains only go where the tracks are laid. To get to where you want to go you have to build more tracks. Where the state will end up is the poorhouse but that will be okay for Bauman’s contributors, contractors and consultants who will be providing transportation welfare aimed at people who don’t need it.

As for an unemployment rate of 12%, that is going to mean there will be a lot less taxpayers paying for the trains. Good thing running the trains will create 55 permanent jobs. At $6 per gallon for fuel, those trains are going to be expensive to run, too. Baumann doesn’t say who will be paying the tab.

You might want to reference the blizzard that the train has encountered in Waukesha County just as lunch is being served (add humorous comments about Wisconsin winters). Point out how rail travel is a great all-weather mode of transportation (do not mention the cars in the ditch along Highway 16 that you see from the train window).

Upon arrival in Milwaukee (on time despite blizzard) repeat program.

What Bauman should have said is don’t pity the cars stuck in the snow because the train might be stuck in the snow, too. Unlike the SUVs that Bauman does not want you to drive, you may be stuck a long time on that immobile train, like the riders on Amtrak’s California Zephyr to Chicago. The alternative, a high-speed derailment, might ruin a politician’s whole day.

Don’t worry though; no one remembers campaign promises or inaugural speeches anyway.

Especially when they’re given with Bauman’s acute wisdom and level of cynicism.

By James Wigderson
Special Guest Perspective for the MacIver Institute

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I knew the Midwest High Speed Rail Association’s ‘brown bag lunch’ at the Milwaukee Public Market last Thursday was going to be interesting when the first announcement was about how to get your automobile parking vouchers validated.

It was the first incongruous clash between the theory behind rail and the realities of life in the Midwestern United States, but it wouldn’t be the last.

For a little over an hour the crowd of thirty saw a presentation filled with hyperbole and poetry and devoid of any factual discussion over the complexities of establishing a significant rail network in the United States. Noticeably absent from the entire discussion: any mention of the prohibitive costs and subsidies required. Save, that is, for a few claims that the return on the investment makes the expansion of rail beyond debate.

No spreadsheets or projections to back up this assertion. No data comparing the subsidies per passenger-mile of rail to that of other forms of transportation. No acknowledgment that the State of Wisconsin is facing a $2.7 billion deficit.

Instead, the crowd was treated to a PowerPoint pitch depicting rail transit as the solution to our oil crisis and lauding the success of train travel in Europe and China. Finally, we were encouraged at the end to contact members of “your General Assembly” (I assume the speaker meant the state legislature) and the candidates for governor to express their support for the Milwaukee to Madison High Speed Rail Line.

“It is a much more civilized way to travel,” we learned after viewing some pictures of beautiful people on a French train.

Oh, if only we were as civilized as those progressive French. They zoom to the Mediterranean for their long weekends on Bullet trains. (Seriously, this was an example used when addressing the crowd on Water Street in Milwaukee).

Then again, with its multiple stops and the speed topping out at 79 miles per hour, the Milwaukee to Madison line is not high speed. More like half-fast, critics argue.

Oh, if only we could move as quickly as those expeditious Chinese. “China in cleaning our clock with rail,” we were warned. In only two years they’ve finished several lines and are in the process of building several more.

Darn those pesky human rights, property rights, independent local governments and that low-brow representative Democracy that actually has as its goal the exertion of the will of all the people, not just those of us who know best.

A few actually interesting news items were presented at the meeting, although I haven’t seen any coverage of these points.

1)      Richard Harnish, the Executive Director of the Midwest High Speed Rail Association asserted that the state owns all the land necessary to construct the Milwaukee-Madison line, including the land needed to extend the line to a new train station on Madison’s Isthmus, just walking distance from the Capitol.

2)      Because of its deterioration, all of the existing track between Watertown and Madison will need to be removed, regraded and replaced in order for the trains to operate on that stretch.

3)      Advocates are gearing up for the next fight, bringing an Amtrak line (requiring state construction and operational subsidies) north from Milwaukee to Green Bay.

Lobbying

It is ironic that one of the main stated purposes of the meeting was to rev up the troops to lobby the candidates for governor. Milwaukee Alderman Bob Bauman sponsored the meeting and he’s fresh off his sophomoric belittling of the two Republican candidates who have expressed varying levels of opposition to the plan. That’s an interesting way to win over skeptics, Alderman.

Moreover, when asked about Milwaukee County Executive Scott Walker’s pledge to scrap the rail line if elected, Harnish stated he didn’t know if halting the project was even possible.

Really? If it wasn’t a concern, why the meeting in the first place? If this line is a done deal, why the lobbying effort?

Perhaps because they know darn well there is a strong and growing effort to stop the train.

About that Madison Station

The Madison-Milwaukee rail project’s use of more than $800 million in federal stimulus dollars was approved on a 12-4 party line vote by the legislature’s Joint Finance Committee in February.

In addition, the Madison-to-Milwaukee line would initially require an estimated annual state subsidy of $7.5 million, beginning in 2013.

Did I mention the state has a $2.7 billion deficit?

The February stimulus fund approval included $9 million for a station in Madison, although questions were raised as to whether it would be located adjacent to the airport, or in Downtown Madison.

After little public debate over where to locate the station, Governor Doyle made the unilateral decision that it would be located within the Department of Administration building on Wilson Street.

Harnish asserts the land needed for the Madison to Milwaukee route has been bought and there are no eminent domain issues at play in Madison or anywhere else along the proposed route.

Really? We’ll see how that plays out.

Return on Investment, a look at real numbers

As Randall O’Toole of the Cato Institute noted earlier this year:

“The bottom line is anything you can do with trains in Wisconsin, you can do faster, safer, cheaper, safer with busses,” O’Toole told the MacIver Institute this spring.

Moreover, unlike the Midwest High Speed Rail Association’s Harnish who said that the ‘few Shekles’ it would cost the state were worth it, O’Toole backed up his claims with actual data, as you can see here.

O’Toole also debunked the myth that Rail makes sense because of environmental reasons. Again, unlike the folks at the MHSRA, O’Toole provided facts, not merely emotional appeals, to back up his assertions.

If the economic and environmental case could be made, I would be open to supporting investment a real bullet train between Chicago and Minneapolis, providing that went through Milwaukee but didn’t stop every 15 miles. However, proponents of rail are looking far beyond that niche and are pushing for a ‘half-fast’ solution that brings us all the operational inefficiencies of commuter rail, with the construction time and costs of a true high speed line.

No slide show displaying happy Europeans or Chinese rail construction timetables can refute the fact that the Milwaukee to Madison rail line is a project few Wisconsin taxpayers support and none can afford.

For the most part the audience at the Public Market was simply naïve. They see rail as a beautiful, environmental and prudent alternative form of transportation. However, they only see what they want to see. They weren’t aware of or concerned with the costs associated with the Milwaukee to Madison rail line. Surely, the organizers of the event weren’t about to touch that subject.

Which makes them purposefully deceptive. You can’t have a discussion about such a vast public works project without a serious deliberation over the costs. If Alderman Bauman and State Representative Peter Barca (who showed up 50 minutes late, but just in time for his five minutes of mic time) truly believe this rail project is a smart investment, they shouldn’t fear a real presentation. Rather than pictures of jovial Parisians, show us actual data. Rather than generalizations such as, ‘It is clearly worth it,” show us some real calculations.

To add insult to injury, before that meeting began, I had already parked at a pre-pay meter, so I couldn’t even take advantage of the free parking validation.

See, there I go thinking ahead of time about paying for something.

I know. How uncivilized of me.

By Brian Fraley
A MacIver Institute Perspective

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Each week, the website WisOpinion.com asks two veterans of Wisconsin policy and politics, Scot Ross of One Wisconsin Now and our own Brian Fraley (a Director at the John K. MacIver Institute for Public Policy) to engage in exchanges on a topic of their choosing.

From Fraley’s entry, this week:

Quick everyone. Don’t look at the Supreme Court ruling that served as a denouncement of Governor Doyle’s fiscal mismanagement. Look at the fuzzy bunny over in the corner! Or that shiny object over there! Your debate tactics mirror the Doyle/Barrett campaign plan. And I don’t think it will work. To somehow spin this ruling into a negative for Walker? No one is buying it, Scot.

You can read the entire exchange here.

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Last October, demand for the state’s BadgerCare Core Plan, part of the state’s Medicaid plans, was so great that Wisconsin had to stop enrolling people. Since then about 50,000 people are on a waiting list for the Core plan.

When Governor Jim Doyle announced his BadgerCare Plus Basic program (with it’s double plus ungood name), it was hoped that the new health care program would provide poor adults with health insurance temporarily until the person could be transitioned to the Core plan. The BadgerCare Plus Basic program would be completely self-funded by the $130 monthly premium required for enrollment in the state-run health plan. In return, the program beneficiary would receive limited health insurance.

BadgerCare Plus Basic started coverage for individuals on July 1st. So far 1,681 people were enrolled for July, and 2,426 people were enrolled for August.  (By comparison, the first two months of Cover Florida had 952 total enrollees despite a much higher population to draw from and lower enrollment costs.)

We shouldn’t be surprised at the high number of applicants. The original BadgerCare Core Plan was only supposed to have 24,900 individuals in 2009-10 and 39,500 individuals in 2010-11. As of January there were 63,644 people enrolled in the Core Plan.

The continued high unemployment numbers are surely contributing to the high enrollment numbers. The June jobs report indicated another 1,000 private sector jobs lost. This is in addition to the 7,900 private sector jobs lost in May. Unemployment in the Doyle economy continues to be high at 7.9%. (If you follow the Doyle Administration’s lead from may and use numbers that are not seasonally adjusted, unemployment actually went up .4% in June.)

While some would consider the high number of enrollees a “successful program,” the reality is that every additional person is a reminder of the failures of Governor Jim Doyle and the Democratic-controlled state legislature.

While the plan is supposed to be completely self-funding we won’t know for a few months if the program is running at a deficit. This new program could be another fiscal lump of coal in the next governor’s Christmas stocking. It is likely Governor Jim Doyle has underestimated the costs of the plan just as he underestimated the projected enrollment in the Core plan.

By James Wigderson
Special Guest Perspective for the MacIver Institute

Note, this column reflects corrections made after the Department of Health Services provided the author with  enrollment information.

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Twenty jobs? That’s almost two dozen!

The Wisconsin Democrats’ record on job creation is so bad, their state chairman puts out a press release praising President Obama for creating jobs…in Michigan.

Now, to give Mike Tate some credit, in that same press release he did boast that the trillion dollar stimulus package did create 63 jobs in Wisconsin.

Sixty three?  Wow, that’s like, much more than two dozen.

Poor Mike Tate. Sixty three jobs for billions of stimulus dollars spent in Wisconsin? Nice return on investment. But as they say, when your party’s economic policies give you lemons…

Ah, but the troubles don’t stop there. On the same day Wisconsin State Senator Julie Lassa holds a press event to bash her opponent, the hand-picked candidate to be the Democratic nominee to replace Dave Obey in Congress has to stare down new jobless figures in Wisconsin.

Wisconsin lost 1,000 more private sector jobs last month.

Again.

That has to be particularly stinging for Lassa, the Chairwoman for the poorly-named State Senate Committee on Economic Development.

It would be only a slight overstatement to say the major economic development success stories in Wisconsin the last few years have been for the printers of over-sized checks. Governor Doyle’s Department of Workforce Development has handed out more of these babies than Publisher’s Clearinghouse and the PGA combined. Trouble is, they always seem to be for ‘worker retraining’ after yet another manufacturing plant shutters its doors in Wisconsin.

The fact of the matter is Americans in general, and Wisconsinites in particular, have not seen a return on their investment in the failed economic policies of the last several years.  That fact comes as no surprise to anyone who understands how a dynamic, free market economy works.

We are already seeing political literature of incumbents crowing about their job-creation initiatives, but the unemployment numbers discredit their glossy, four-color claims.

No matter if you title legislation “The Recovery Act” or the “Jobs Act” or the “Don’t Read the Papers, Everything is Fine Act,” if you squeeze capital out of the private sector, if you unduly punish risk, if you constantly ridicule and attack job providers, you will stifle any hopes of economic growth.

As I write this in July 2010, we’re about to enter year three of learning that lesson.

In Wisconsin and across the country, Democrats are now poised to reap the discontent they’ve sown with their pro-meddling, pro-spending, pro taxing, anti-producer policies.

So while, Republicans may indeed be ready to win races across the nation, recent history indicates their time in power could be short-lived too. Frankly, if the GOP had been better stewards of tax money in the early 2000s they never would have lost their legislative majorities, both in Madison and Washington, DC.

The party that embraces a pro-growth agenda will gain and maintain electoral success for one reason: these policies will lead to job creation.

1. Establish some certainty in the marketplace by unequivocally rejecting any proposed new tax increases.
2. Cut spending. Cut programs. Not just stem the growth in spending. Cut government spending.
3. Promote, encourage and reward risk by incentivizing investment (and not just in trendy feel-good amorphous ‘green jobs,’but ALL sectors of private employment).
4. Control the cost of government by curbing projected health and retirement benefits for public employees.
5. Permanently eliminate the double taxation of income. Tax a dollar earned, once; not again at time of the wage earners’ death.
6. Eliminate the tax on capital gains.
7. Enforce regulations that exist and you can quiet the calls for increased regulations.
8. Quit bad-mouthing employers, risk takers and job providers. Rather, celebrate and encourage them.
9. You don’t need 10 points because it’s a nice round number. Often, less government is better.

These are not radical or new proposals. But they beat what we’ve seen from our elected leaders recently.  If policy makers were to embrace a pro-jobs agenda similar to this, the economy would develop and return much more than 63 jobs per two billion dollar investment.

The best way to create jobs is to allow individuals who earn money to keep more of it. Investors will invest. Inventors will invent. Job providers will provide jobs.

And the big-check printers can drum up business elsewhere.

By Brian Fraley
A MacIver Institute Perspective

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This does not come at a time when government in Wisconsin is taking too little from us in taxes. The Wisconsin Taxpayers Alliance recently reported Wisconsin property taxes are now 4.5% of the state’s personal income, the highest level since 1996. Wisconsin taxpayers are being squeezed like lemons.

It’s not like we did not have any warning about the structural deficit. The state increased spending in the last budget by $3.6 billion. Making matters worse, Wisconsin used $2 billion of federal stimulus money on existing programs. With that money gone, the next governor and state legislature will need to get pretty creative to bring the budget into balance.

Legislators and Governor Jim Doyle knew that the increased spending and the one-time federal funds would only make problems worse in the long-term, but they decided to spend the money anyway. Rather than deal with the long-term structural issues affecting Wisconsin’s finances, they decided to go for the quick fix year after year.

Case in point: the number of positions being held vacant year after year to make each state budget “work” without addressing whether the positions are actually needed. Most people would be shocked to learn the state currently has 4,700 jobs that are vacant, especially as they don’t seem to be especially missed. So long as those positions remain on the books, they contribute to the state’s structural deficit because they’re considered an expense that will need to be paid for eventually.

Unfortunately, rather than ask why these positions continue to exist when nobody is missing them now, the politicians in Madison just hope for the day when an improved economy will generate enough tax revenue to pay the salaries and benefits for these government jobs. Meanwhile, the money for those positions is just reallocated to cover other expenses in government rather than used to fill them.

All across Wisconsin, employers are figuring out how to do more work with fewer employees. When they do, they don’t say, “When the economy is better, we’ll just stick somebody in those cubicles and add more payroll.” However, that seems to be the attitude of state government.

Milwaukee County Executive Scott Walker has proposed completely eliminating 4,000 positions that are currently vacant. Walker estimates it would result in saving $284 million per year, or $568 million per biennia.

To be fair, Walker’s opponents, Milwaukee Mayor Tom Barrett and former Cong. Mark Neumann have also announced plans to shrink the size of government. For some strange reason, though  neither thought much of the idea to eliminate bureaucrat positions that have been vacant for so long. Maybe we should just chalk it up to the fact that we are in the middle of the dog days of summer, a statewide campaign summer no less. How else can you explain opposition to such a common sense idea?

Of course, it isn’t hard to imagine the state employees’ unions are unhappy with Walker’s proposal. Marty Beil, Executive Director of AFSCME, also criticized Walker’s plan as a gimmick. Then he criticized Walker’s proposal for putting people out of work. Beil should talk to Barrett who would remind them that, since the positions were never filled, nobody is being put out of work. Perhaps Beil didn’t understand why Barrett was calling Walker’s plan a “gimmick” when Beil decided to echo Barrett.

Beil also criticized the Walker plan for placing the usual victims in danger. “Since he plans to exempt certain classes of employees from his axe, doesn’t this mean everybody else is going to be hit all the harder? Does this mean there will be fewer people to care for the mentally ill and developmentally disabled?”

Again, this misses the point. The positions considered by Walker for elimination are already vacant. None of these open positions are doing anything to care for the mentally ill and developmentally disabled because there is nobody currently filling them.

So for all of the double talk about how it’s a gimmick that will somehow cause the sky to fall, nobody has given a sound reason why these positions could not be eliminated. Wisconsin has somehow managed to survive without them getting filled prior to now, but their continued presence on the books only threatens to grow government more and make Wisconsin’s fiscal future that much more difficult.

By James Wigderson

Special Guest Perspective for MacIver Institute

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“It is unclear how many more fiscal alarms need to go off before Washington takes action to avert our looming debt crisis.  Earlier in the month in testimony before the House Budget Committee, Federal Reserve Chairman Ben Bernanke emphasized the urgent need for a ‘fiscal exit strategy.’  Last week, Admiral Mike Mullen warned that our debt is ‘the biggest threat we have to our national security.’  Over the weekend, Europeans lectured us at the G-20 summit on the unsustainability of continued profligacy.  Today, the CBO reiterated what all but Washington Democrats understand: we are careening off a fiscal cliff.”

If Ryan sounds like a herald bringing news to Pharaoh of another plague upon Egypt, he has good cause.

According to the CBO, public debt will be larger than the entire U.S. economy by 2023. The CBO’s economic models show the standard of living beginning to decline by 2015, and the economic model completely breaks down by 2027.

Already by the end of this fiscal year the federal debt will be 62% of the Gross Domestic Product (GDP).  This is up from 40% of the GDP in 2008, and up from the forty-year average of 36%.

It’s not a projected shortage of revenue that is driving the long-term debt. The CBO estimates in an extended baseline scenario that federal revenues will reach 23% of GDP by 2035. This expected increase in taxes is the result of the federal health care reform, growth in the reach of the alternative minimum tax, and the expiration of most of the Bush tax cuts. Even under this scenario, debt would grow to 80% of GDP in 2035. And that’s the best scenario: 80% of GDP. Federal interest payments would grow from 1% of GDP to 4% of GDP in the same period.

Making matters even more difficult for policy makers, the CBO estimates are based upon no increases in discretionary spending. The projected increases in federal spending are in the mandatory programs, “particularly in spending for the government’s major health care programs: Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and insurance subsidies that will be provided through the exchanges created by the recently enacted health care legislation.”

Instead of “bending the cost curve,”  under both scenarios outlined by the CBO health care costs will roughly double as a share of GDP by 2035 to 11%. During the same period, Social Security is only expected to grow from 5% to 6% of GDP. Health programs are the cause of 80% of the growth in non-interest spending in the next 25 years.

As Ryan said in his statement, “…the CBO affirmed that the primary driver of the deteriorating budget outlook is Federal health care spending – a problem exacerbated by recent creation of two new health care entitlements and massive expansion of Washington’s reach into the health care sector.”

The debt has consequences. The CBO describes how a Greece-like situation could take the United States by surprise. “…higher debt could raise the probability of a fiscal crisis in which investors would lose confidence in the government’s willingness to fully honor its obligations, and thus, the government would be forced to pay much more for debt financing.20 Interest rates might rise only gradually to reflect growing uncertainty about whether government debt would be fully honored, but other countries’ experiences suggest that a loss of investor confidence could occur abruptly instead.”

The CBO even says they are underestimating the impact of the increased debt. Even in the absence of a crisis, large budget deficits will lead to higher interest rates, more foreign borrowing, and less domestic investment. This will mean lower long-term income growth in the United States. Under one scenario, the “crowding out effect”of the federal debt could result in a GDP per capita 17% lower than under a stable economic condition scenario.

Delay in taking on the national debt problem has consequences, too. The CBO estimates that if action on the debt is delayed for ten years, the debt-to-GDP-ratio would rise an additional 30%. This would result in output 2-4% lower in the long term and capital stock 6% to 10% lower. “In the long run, a 10-year delay would reduce the well-being of all future generations by amounts equivalent to a cut of roughly 1 percent to 2 percent of their lifetime consumption, again depending on the specific policies adopted.”

Ryan said in his statement, “Today’s report exposes the risk of delay, demonstrated by this year’s unprecedented budget failure.  We must heed this latest warning and chart a new course to get a grip on Washington’s explosive growth in government spending.”

But Ryan is also an optimist. On Independence Day, Ryan had an Op-Ed that appeared in the Chicago Tribune on America’s first debt crisis at the time our country’s constitution was written. Ryan notes that because of the austerity measures put into place by our founding fathers, the United States was able to pay off the national debt from the Revolutionary War in 45 years. We can do it again, Ryan believes.

“America’s looming debt crisis challenges this experiment in democracy. Political leaders should meet this crisis with the same seriousness and determination they would bring against an invading army. There are no Madisons, Hamiltons and Washingtons to save us from our folly, nor do we need a new Constitution. Yet the courage, imagination, wisdom and public spirit that provided the founders with the plan to end America’s first debt crisis can also supply our needs. We only need leaders who will rise above narrow partisanship to confront our debt challenge and save our exceptional country.”

Of course, the national debt was only 40 percent of GDP when Washington, Hamilton, and Madison paid it off.

By James Wigderson
Special Guest Perspective for MacIver Institute

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Racine Town Hall with President Obama

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Even if at the time of the Thursday report Diamint was completely ignorant of the non-relationship between the required repairs and the accident, or if he was ignorant that the required repairs had been completed, when he did a follow-up report Friday he could no longer plead such ignorance.
  
The County Executive’s office issued a two-page statement detailing that the necessary repair work was done on Friday and stated that none of the required repairs had anything to do with the fallen façade.
  
However, Diamint’s follow-up report on Friday started with how the I-Team “broke the news” regarding nearly $600,000 in deferred maintenance, “specific structural and safety issues.” With that, the camera zoomed in on the scene of the accident implying deferred maintenance had something to do with the accident.
  
So despite knowing that the repairs had been made and that none of the issues mentioned in the I-Team report had anything to do with the accident, Diamint and the camera still tried to establish a visual relationship between the deferred maintenance and the accident. Apparently it was a storyline too good to let go.
  
Diamint continued, “The County only recently had them fixed. We don’t know what caused the collapse, but County Executive Scott Walker told me he knows what didn’t.”
  
At this point the report cut away, showing more footage from the accident and a picture of the victim, and then showing video of Walker saying, “Obviously our structural engineers are going to look and try to get to the bottom of it.”
  
The report then cut away before Walker could explain that none of what was reported by Diamint had anything to do with the accident. The video changed to more footage of the accident and repeated the I-Team report from the previous day regarding deferred maintenance without, again, making any connection between the maintenance report and the accident.
  
“The I-Team dug, too, and found a long list of deferred maintenance on the parking garage.” After going through the list again, finally Diamint said in the voice-over, “On Friday, Milwaukee County Executive Scott Walker reported that the parks department, which runs the garage, had recently made the repairs and is convinced that none of them caused the collapse.”
  
Diamint asked Walker, “How can you be so sure that none of these deferred maintenance items on that list didn’t play a role in it?”
  
“Right. Because the bottom line is that none of them have anything to do with the façade,” said Walker.  
  
Walker was allowed to explain that engineers would be focusing on how the façade was originally attached. “Right now, the point of focus is on how this was attached and if there was any question as to when it was attached originally, whether that was done properly or not.”
  
At this point Diamint finally mentioned that the original architect was fired from the project. Then the report cut to an interview with County Board Chairman Lee Holloway, a Walker critic with a history of a few building violations as a landlord himself.
  
“I want him to know that I’ll be a hound dog, checking every, uh, spot to make sure that this doesn’t happen again,” Holloway said.  
  
It was as if Holloway has no responsibility for what happens in the county as the County Board Chairman, especially considering that Holloway was elected to the County Board while the O’Donnell structure was still under construction.
  
So despite the lack of any connection between the deferred maintenance reported and the accident itself, WTMJ-TV aired not one but two reports attempting to connect the accident to cost-cutting measures by Milwaukee County. The first report failed to establish any connection. The second report repeated the mistakes of the first, using visual cues to imply a connection before finally revealing otherwise.
  
Whether Diamint was fooled by his source for the original document, or the story was just “too good to check,” Diamint had a responsibility to his viewers to find out if the repairs in the report were completed or if they had anything to do with the accident before going on the air waving papers around as “proof.”
  
Once it was clear that the first report was completely misleading, WTMJ-TV and Diamint had a responsibility in the second report to correct the false impressions they made. Instead, the second report again implied that the deferred maintenance had something to do with the accident and gave very little time to the actual focus of the investigation, the construction of the façade itself.
  
The second report by Diamint even gave Walker critic County Board Chairman Lee Holloway one more chance to connect the county executive to the accident even though the likely cause of the accident actually occurred before Walker was county executive and while Holloway was a member of the county board.

Despite raising issues that had nothing to do with the tragedy, don’t be surprised to see excerpts of the “I-Team” report in political campaign ads this fall.
  
When surveys show a declining trust in the mainstream news media, it’s reporting like this that shows why the decline in trust is deserved.

By James Wigderson
Special Guest Perspective for the MacIver Institute

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