Mike Walker and Mike Ramirez combine to warn us... are we listening? Mike Walker is a retired USMC Colonel and Superintendent of Business Services for a California school district.

What happened to the National Commission on Fiscal Responsibility and Reform report?

Why are we playing partisan games over the Obama and Ryan plans when a very good plan was already submitted?  It was not a creature of political bloodletting.  Is that why it was ignored in hyper-partisan Washington?

Gee, it was comprehensive, balanced, and bipartisan.  It was the product of a very talented group of Americans even for those jaded by Washington shenanigans.  More importantly, why are we waiting?  We need to act and we need to act now.  Here are two stories from the “trenches” of the governmental budget crisis in California. 

A Local Lesson

Our school district, like almost every district in California, has been hit with the largest budget cuts since the Great Depression and will likely surpass those cuts in the coming months.  Some of us learned that acting early to cut expenditures is everything in an on-going fiscal crisis like the one in California and one America is facing in Washington DC.  Yet amid this unprecedented crisis we are not laying off employees this year.  Many are asking why.  It is because we were amongst the school districts that acted early to reduce expenditures. 

When we eliminated around 25 positions for the 2009-10 school year it reduced expenditures by about $1.5M per year.  For the upcoming 2011-12 school year that yields a total expenditure reduction of $4.5 million. 

Comparable school districts that did not act in 2009 but put off the reductions until 2011 are still facing the same $4.5 million problem.  Ours is already fixed.  Their problem is not.  They now have to eliminate about 75 comparable positions to get the $4.5 million reduction for 2011-12. 

That is now gutting their educational program.  We will have the equivalent of fifty more professional educators serving the same number of students next year and we met the same $4.5 million goal.  The delay taken by our peers was a terrible miscalculation.  The lesson is that putting off painful cuts does not lessen the problem it exacerbates it.

A State Lesson. 

A few weeks ago the California State Legislature passed a little over $10 billion in cuts to expenditures in order to help address a $26 billion deficit for the 2011-12 fiscal year.  If they had made the exact same cuts starting with the 2009-10 budget, something many in and out of Sacramento had proposed, then the immediate crisis would be over and California would be looking at a $4 billion surplus on 30 June 2012.  Instead, Sacramento, like a lot of California school districts, resisted making timely cuts.  Instead of taking painful yet prudent cuts when first confronted with the crisis they dithered and delayed thereby creating a nightmare scenario in the here and now.

Learn from our mistakes.  If we want America to wait until the budget cutting is truly savage in its consequences then do what most did in California, keep playing politics and kicking the can down the road with accounting gimmicks. 

If we are serious about fiscal responsibility then we should start by pulling together simply as Americans and implement the Commission’s plan now.  There will be plenty of time to have a debate, politically driven or not, over the Obama and Ryan plans later.

Regards,

Mike

Paul Ryan's Growth Plan

Larry Kudlow ,   The Caller

Larry Kudlow is the host of CNBC’s “The Kudlow Report.”

Of all the discussion about Paul Ryan’s big-bang budget plan, the element I like best was caught in this Wall Street Journal op-ed title: “The GOP Path to Prosperity.” In other words, it’s a growth budget. It has plenty of spending cuts, but it also has significant pro-growth tax reform.

Obsessing over the debt is not by itself a policy. Advancing the economy and setting the stage for more job creation is a policy. Mr. Ryan kept an important dose of Ronald Reagan in both the spirit and reality of his plan. Limited government, lower tax rates, and deregulation (of energy) will all promote the path to prosperity.

The other big-picture thought is that the fiscal-policy ball is moving in the right direction. Most of what is being proposed faces a rocky political future. But the direction is unmistakable: less government, lower taxes.

This really started back in December with the extension of the Bush tax cuts and the withdrawal of the trillion-dollar omnibus continuing-resolution spending bill. It continues into the new year with new CRs. Whether Speaker Boehner gets $30 billion or $40 billion in cuts, the direction is clear: lower spending.

Just before the election, John Boehner told us he would stop the bad stuff. Looks like he has. And now Mr. Ryan keeps the drumbeat going with a 2012 budget that would cut $179 billion from the president’s budget baseline. In 2013, Ryan would take down over $220 billion. Over ten years, Ryan would lop off $6 trillion. The key point is not the actual numbers, but the direction of the numbers. Spending is coming down.

Ryan included the thinking of Dave Camp (the Ways and Means chair) on tax reform, which is a 25 percent top rate for individuals and businesses with a full-scale reduction in all the tax-credit, K Street, flotsam-and-jetsam loopholes. That’s very pro-growth.

Ryan also includes deregulation of energy for drill, drill, drill — another big growth and jobs measure.

The health care entitlement picture is going to be very muddled, and the outcome is impossible to figure. So I’ll leave that aside for a moment. The only thing Ryan neglected to do was highlight the need for stable money to stop the damaging Fed rollercoaster. But with so much on his plate, I can understand that omission for now.

Ryan basically stole the budget bacon from President Obama, who should have put this kind of plan in his State of the Union. He didn’t. And now he’s got to play catch-up. The Senate Democrats are utterly hopeless. But the public mood is still where it was last fall: less government spending and borrowing. Ryan delivers on that and then some with his tax-cut growth booster.

The cause of the debt bomb is too much spending and too little growth. Ryan attacks this with new spending rules and tough policy decisions. He also provides the new flat-tax reform incentives to grow the economy.

So if we look at the debt bomb as a share of GDP, what will happen — if Ryan prevails even modestly — is the numerator of debt will steady while the denominator of growth is unleashed.

We will be fine. I can almost hear Paul Ryan saying, “I will not allow America to become Greece.” Amen.

Larry Kudlow is the host of CNBC’s “The Kudlow Report.”