The First Step to Recovery..

On the topic of GSE reform, Rep. Scott Garrett has proposed a change to the policy of leaving GSE costs out of the budget. The President's budget didn't include the cost of the GSEs even though the government has explicitly guaranteed their debt. This guarantee means that the costs are going to be paid by the taxpayers; they need to be included in the budget. It's a simple change, the CBO has advocated for this since before the guarantee was made explicit, and there isn't any reasonable justification for the current treatment. Somehow the Democrats aren't on board with this yet, which is just embarrassing. I see no reason for the existence of the GSEs, and the first step to getting rid of them is coming to terms with their real costs to taxpayers.

Over the course of the next few years, the US is going to have to come to terms with the true costs of the life it is living. The federal budget will shrink eventually; state and municipal budgets are already in disrepair. Unfunded liabilities like Social Security and Medicare as well as trillions in private pensions will be forced to reduce entitlements. It's not going to be easy, but the earlier we get off this unsustainable path the better off we will be in the long run.