by Daniel Gardner

Pundits and politicians may know DC politics as usual, but they're clueless about the rest of us. Watching Sunday talk shows it's obvious those veteran DC observers know how things have worked in the past and are supposed to work today. It's equally obvious they don't get the American people who elected a whole new class of conservatives to the House.

Out here in real America we have people who are dependent on government programs like Social Security, Medicare, Medicaid, and pension checks for their livelihoods. Politicians in DC who use these folks as political footballs in their speeches and talking points are not only heartless, they're clueless about "regular" folks. Not that there's anything wrong with being "regular."

Memo to DC Insiders: First, do no harm. Second, stop scaring those among us with your extremist rhetoric threatening to cut off support from those who truly need it.

Essentially DC is wrestling with three huge problems: debt ceiling, entitlement spending, and tax reform.

Do we need to raise the debt ceiling? Yes. If we don't raise the debt ceiling will the U.S. default on our debt? No, not unless President Obama and Treasury Secretary Geithner decide otherwise. They make that decision.

Moody's and Standard & Poor's (S&P) have said they would consider lowering the U.S. credit rating if DC did not address the reasons why our debt is skyrocketing beyond our ability to repay it.

Will simply raising our debt ceiling prevent Moody's or S&P from lowering our credit rating? No. In fact, if DC simply raises the debt limit and doesn't make significant policy changes reducing deficits and lowering debt, both will probably downgrade our credit rating.

Economists say if Moody's or S&P downgrades our credit rating, interest rates will rise for everyone. Think credit cards and mortgages.

The second big problem is so-called entitlement spending, i.e. Social Security, Medicare, and Medicaid. Regular folks have been telling DC experts these are not entitlements because we have been paying for these programs for years.

DC set up these programs as Ponzi schemes. For example, data show Medicare recipients receive three or four times as much money from Medicare as they put in. Where in the world can one "invest" $50,000 in insurance and receive $200,000 worth of coverage? That's the problem.

Entitlements as they stand are unsustainable and must be reformed if those 50 years or younger expect to receive any benefits at all.

The third big problem is tax reform. Like the weather, everybody talks about it but nobody ever does anything. Raising taxes now probably won't raise revenue, but probably will stifle the "recovery" even more. Revenue is down because the economy is bad, not because tax rates are too low.

DC experts need to stop spending more than we take in, reform entitlement programs to make them sustainable for all of us, and for heaven's sake give us a simple and fair income tax without loopholes for special interests. That's how regular Americans believe DC should work.

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