The whole debt-limit crisis debate in Washington off target. Clearly the debt-limit needs to be raised. Going to a balanced budget cold-turkey without defaulting on our debts would require massive and immediate termination of tens of thousands of government jobs and/or reduction of payments to retirees and others currently receiving benefits. Direct and indirect job losses would reduce tax receipts. Reduced revenues would require further immediate reductions in government spending, and the economy would spiral downward at exactly the same time that the safety net disappeared.
A significant portion of our economy is based on government spending. I'm not saying this is a good thing. But it is a fact. Government spending directly supports large numbers of jobs. Government benefit payments indirectly support an even larger number of jobs, because the money retirees receive gets spent, one way or another, and some of this spending supports jobs.
Republicans leaders know this. They're not saying they won't raise the debt ceiling; they are only using the debt ceiling as leverage in their fight against government spending. Even the balanced-budget amendment they propose would not go into effect until the fifth fiscal year after it is ratified.
There is no question that the Democrats also want to raise the debt ceiling.
So neither major party is saying the debt-ceiling shouldn't be raised. But the country is facing a very real crisis because the debt-ceiling hasn't been raised. The two parties are playing a game of chicken; each wants the other to back down in order to avoid a tragedy that would be far worse than either's plan. And the public is being asked to choose sides. After all, the obvious way to avoid catastrophe is for one side or the other to win. And if neither side can win, the next best thing for the nation, supposedly, is a compromise.
The press is racheting up the pressure on government leaders with stories warning the public about how the debt-ceiling impass could negatively affect citizens through higher interest rates and delayed or reduced benefits payments.
But the real story is how all this affects our nation's credit rating. If our credit rating goes down we'll have a harder time borrowing money to fund our deficit and a harder time refinancing the $14 Trillion debt we've already incurred. This 'harder time' will be reflected in higher interest rates for the government, which will increase the deficit even more. And that's exactly what we don't need.
The Republicans are correct that we can't afford to keep spending at the same rate as we've been spending. The Democrats are correct that we need to increase the debt-ceiling enough to get past the current crisis and not have the threat of the crisis returning in just a few months. We've got to do something about the deficit, but risking the negative effects of not paying our bills is shooting ourselves in the foot.
But the Republican idea that low taxes are part of the solution to our deficit problem is ridiculous. And yet the Democrats seem to have ceded this issue. President Obama caved to this unreasonable position back in January when he agreed to extend the Bush tax cuts to everyone. And neither the Democrats or the Republicans include any tax increases in their plans.
Neither side has a reasonable position. And the public is being encouraged to think selfishly about themselves, rather than our nation, when they consider the issue.
I can't support any of these positions. We need to raise the debt ceiling now. We need to cut spending as soon as possible. And we need to raise taxes so we can start down the road back to a budget surplus so we can get our debt down to a reasonable level.
Saturday, July 30, 2011
Friday, July 29, 2011
Nation in distress
My wife and I are flying the U.S. flag in our yard upside down. As you may know, flying the flag upside down is a distress signal. We feel our country is in deep trouble, and the deadlock in Washington has brought everything to a crisis stage. The interest rate we pay on our $14 Trillion debt is based on our government's high credit rating. If that credit rating drops (due to failure to pay its bills, defaulting on some of its debt, and/or failing to deal with the huge deficit) the interest on the debt will shoot up and cause the deficit to increase even more. But we've got gridlock in Washington that puts our credit rating in jeopardy.
The nation's motto is E Pluribus Unum (Out of Many, One) But we don't see many prominent people working for unity now.
Megan and I love our country, and we're worried about her. Thus the 'distress' signal in yard. We hope others will join us in this symbolic gesture showing frustration with our elected representatives (in both the Legislative and Executive branches of goverment) inability to work together to resolve this looming fiscal crisis.
The nation's motto is E Pluribus Unum (Out of Many, One) But we don't see many prominent people working for unity now.
Megan and I love our country, and we're worried about her. Thus the 'distress' signal in yard. We hope others will join us in this symbolic gesture showing frustration with our elected representatives (in both the Legislative and Executive branches of goverment) inability to work together to resolve this looming fiscal crisis.
Friday, July 22, 2011
'No more deficit!' more important than 'No new taxes'
I wrote the following to Eric Cantor and my (Republican) senators this evening. (John Boehner's website was down; Congressman Cantor was my second choice.) As you can see, I'm very concerned about the lack of progress on the debt-ceiling negotiations. The clock is ticking, and as far as I can tell, the major obstacle is that Republicans are standing fast on their 'no tax increases' position. Here's what I wrote:
"I'm a fiscal conservative, and I am upset that neither party is serious about eliminating the deficit. I had hopes for the Tea Party, but am disgusted when they proudly proclaim that the name of their party stands for Taxed Enough Already. We have a major, major debt problem which threatens to destroy our nation. We've had relatively low taxes for the past generation, and during that time out debt has soared from $1 Trillion to $14 Trillion. Why do you think that a 'no new taxes' pledge is more important than our nation's fiscal survival?
"Our nation had a huge debt after World War II, and our leaders addressed it by keeping the marginal tax rate for the highest income level at 90% for a generation. I'm not suggesting that rates should be raised that high again, but the fact that they were that high for much of my lifetime indicates that the claim that 'tax rates are already too high' is ridiculous.
"But I'm writing you from Texas because my concern is turning to anger at Republicans over the lack of a resolution to this debt-limit situation. Our nation cannot risk defaulting on its obligations. We owe $14 Triillion, as you know. Interest on this debt is immense and makes it very difficult to balance the budget, even with major spending cuts. It seems obvious to me that defaulting on our obligations is likely to raise the rates we have to pay on our debt, which will dramatically increase the deficit.
"We've dug ourselves a huge fiscal hole, and spending cuts alone will not get us out of it. The President doesn't have an 'obsession with raising taxes'; Republicans have a dangerous obsession with NOT raising taxes. End this budget stalement, and end it now! Compromise is in order."
"I'm a fiscal conservative, and I am upset that neither party is serious about eliminating the deficit. I had hopes for the Tea Party, but am disgusted when they proudly proclaim that the name of their party stands for Taxed Enough Already. We have a major, major debt problem which threatens to destroy our nation. We've had relatively low taxes for the past generation, and during that time out debt has soared from $1 Trillion to $14 Trillion. Why do you think that a 'no new taxes' pledge is more important than our nation's fiscal survival?
"Our nation had a huge debt after World War II, and our leaders addressed it by keeping the marginal tax rate for the highest income level at 90% for a generation. I'm not suggesting that rates should be raised that high again, but the fact that they were that high for much of my lifetime indicates that the claim that 'tax rates are already too high' is ridiculous.
"But I'm writing you from Texas because my concern is turning to anger at Republicans over the lack of a resolution to this debt-limit situation. Our nation cannot risk defaulting on its obligations. We owe $14 Triillion, as you know. Interest on this debt is immense and makes it very difficult to balance the budget, even with major spending cuts. It seems obvious to me that defaulting on our obligations is likely to raise the rates we have to pay on our debt, which will dramatically increase the deficit.
"We've dug ourselves a huge fiscal hole, and spending cuts alone will not get us out of it. The President doesn't have an 'obsession with raising taxes'; Republicans have a dangerous obsession with NOT raising taxes. End this budget stalement, and end it now! Compromise is in order."
Friday, July 15, 2011
Defending my previous post...
I had planned to send my previous post to my local newspaper as a letter to the editor. But I first shared it with an old friend whose opinion I value. He felt it contained 'vilifications and armegeddon scenarios', and suggested I present the problem more indepedently and objectively, with less partisanship.
His view made sense. But (of course) I defended the letter as written. Here is part of my response:
I think my letter raises some important points:
a) The "Reagan Revolution" did take us from a fiscal crisis (double-digit inflation and a $1 Trillion debt) to a generation of prosperity. But the unspoken assumption was that the solution was a permanent one: we had gone from the 'wrong way' of doing things to the 'right way', or at least a 'better way'. But in retrospect, some of that prosperity was borrowed from the future. If we had adjusted taxes (or, more accurately, had not adjusted taxes during W's administration) we may have sacrificed some 'prosperity', but we would have less debt now.
b) The drug pusher analogy may be vilification, but I think it has some merit. Perhaps I could modify it be a bartender with an alcoholic. (Or perhaps, to give distance, a saloon-keeper with alcoholic cowboys.) In my mind, historically low taxes are like the alcohol: you get the shakes, you take a drink, and you feel better. Drinking is really the problem, but it seems to be the solution. And there are vested interests that benefit from continuing the problem.
c) There's an assumption that "what's good for the stock market is good for the country." But I recall hearing analysts a few years ago talking about how low unemployment was having a negative effect on the stock market. The idea was that if people felt free to shop for jobs, they could demand more money, and labor costs would rise. I was astonished that this view was presented as just a fact: the radio commentators (I think they were on NPR) didn't seem to notice the conflict of interest. They were just informing viewers of the reason the market was "soft". I guess all the investors were supposed to hope that unemployment would rise. If so, we got our wish.
d) The following wasn't in my original text, but it was on my mind, and is in the above revision: In our generation middle-class people have become partial capitalists through the shift from pensions to retirement accounts. (Workers have also become partial socialists through the shift from savings and family to Social Security.) So many people do have a vested interest in the stock market. But the amount of vested interest is a function of the size of the investments. But in much of the political discussion higher stock market prices are assumed to be an unalloyed 'good' (unless, of course, there's a bubble). I want people to be more aware that there is a potential conflict between benefit to investors and the best interest of workers. We who are investing for retirement are both. There's a danger in putting too much emphasis on the investor side, or assuming that what's good for investors automatically leads to proliferation of good-paying jobs. But tgetting back to my revised text: our IRAs benefit when the stock market rises, but they are 'little' compared with investments of those I call the 'moneyed interests'
[Note: my friend said was misquoting the Bible]
e) I'm not quoting the Bible, I clearly say I'm paraphrasing it. And my point follows the theme of Ecclesiates 3: Things go in cycles. I'm not saying low taxes don't have a place in the big scheme of things; I'm not saying low taxes are basically evil. I'm saying that there are appropriate times for contrasting activities. The Bible says "a time to plant, a time to pluck up that which is planted." You don't dig up your garden vegetables in mid-Spring; you don't plant your garden in the fall. (At least, not unless you're in Texas!) I want to point out that solutions aren't necessarily permanent. (And I also want to give an indication that I'm not Biblically ignorant.)
f) Long dissertations like this don't fly in letters to the editor. People's attention span when reading newpapers doesn't give me time to present the problem independently. My goal is to plant a seed, and hope it makes some people think about the problem from an alternative perspective.
g) In general, I don't think the piece demonstrates inflexibility. I see flexibility as something separate from viewpoint. Flexible people with various viewpoints can get together and chart out a course of action that is acceptable to all. But if a valid point of view is missing or ignored at the conference table, the resulting action may not be as good as it might otherwise be. I want to insert these ideas into the discussion.
I hear what you're saying about painting 'disagreers as criminals'. I'll modify the metaphor to saloon-keepers. But I think I will submit it...
[End of my response]
In case you missed it, the letter being discussed is posted on this blog. (see below).
His view made sense. But (of course) I defended the letter as written. Here is part of my response:
I think my letter raises some important points:
a) The "Reagan Revolution" did take us from a fiscal crisis (double-digit inflation and a $1 Trillion debt) to a generation of prosperity. But the unspoken assumption was that the solution was a permanent one: we had gone from the 'wrong way' of doing things to the 'right way', or at least a 'better way'. But in retrospect, some of that prosperity was borrowed from the future. If we had adjusted taxes (or, more accurately, had not adjusted taxes during W's administration) we may have sacrificed some 'prosperity', but we would have less debt now.
b) The drug pusher analogy may be vilification, but I think it has some merit. Perhaps I could modify it be a bartender with an alcoholic. (Or perhaps, to give distance, a saloon-keeper with alcoholic cowboys.) In my mind, historically low taxes are like the alcohol: you get the shakes, you take a drink, and you feel better. Drinking is really the problem, but it seems to be the solution. And there are vested interests that benefit from continuing the problem.
c) There's an assumption that "what's good for the stock market is good for the country." But I recall hearing analysts a few years ago talking about how low unemployment was having a negative effect on the stock market. The idea was that if people felt free to shop for jobs, they could demand more money, and labor costs would rise. I was astonished that this view was presented as just a fact: the radio commentators (I think they were on NPR) didn't seem to notice the conflict of interest. They were just informing viewers of the reason the market was "soft". I guess all the investors were supposed to hope that unemployment would rise. If so, we got our wish.
d) The following wasn't in my original text, but it was on my mind, and is in the above revision: In our generation middle-class people have become partial capitalists through the shift from pensions to retirement accounts. (Workers have also become partial socialists through the shift from savings and family to Social Security.) So many people do have a vested interest in the stock market. But the amount of vested interest is a function of the size of the investments. But in much of the political discussion higher stock market prices are assumed to be an unalloyed 'good' (unless, of course, there's a bubble). I want people to be more aware that there is a potential conflict between benefit to investors and the best interest of workers. We who are investing for retirement are both. There's a danger in putting too much emphasis on the investor side, or assuming that what's good for investors automatically leads to proliferation of good-paying jobs. But tgetting back to my revised text: our IRAs benefit when the stock market rises, but they are 'little' compared with investments of those I call the 'moneyed interests'
[Note: my friend said was misquoting the Bible]
e) I'm not quoting the Bible, I clearly say I'm paraphrasing it. And my point follows the theme of Ecclesiates 3: Things go in cycles. I'm not saying low taxes don't have a place in the big scheme of things; I'm not saying low taxes are basically evil. I'm saying that there are appropriate times for contrasting activities. The Bible says "a time to plant, a time to pluck up that which is planted." You don't dig up your garden vegetables in mid-Spring; you don't plant your garden in the fall. (At least, not unless you're in Texas!) I want to point out that solutions aren't necessarily permanent. (And I also want to give an indication that I'm not Biblically ignorant.)
f) Long dissertations like this don't fly in letters to the editor. People's attention span when reading newpapers doesn't give me time to present the problem independently. My goal is to plant a seed, and hope it makes some people think about the problem from an alternative perspective.
g) In general, I don't think the piece demonstrates inflexibility. I see flexibility as something separate from viewpoint. Flexible people with various viewpoints can get together and chart out a course of action that is acceptable to all. But if a valid point of view is missing or ignored at the conference table, the resulting action may not be as good as it might otherwise be. I want to insert these ideas into the discussion.
I hear what you're saying about painting 'disagreers as criminals'. I'll modify the metaphor to saloon-keepers. But I think I will submit it...
[End of my response]
In case you missed it, the letter being discussed is posted on this blog. (see below).
Monday, July 11, 2011
The Cost of Prosperity
Low taxes brought us prosperity, but also a huge debt. It's prosperity we can no longer afford.
But monied interests, like well-heeled corporate drug pushers, see change as bad for business. They tell us "Low taxes aren't the problem! Low taxes are the solution. Here, have another hit, ..er.., dose. It will make you feel better." Don't listen to them, or you'll be gently lulled back to sleep, only to be awakened when they eliminate your job to protect the stock market that you thought was your friend.
To paraphrase Ecclesiastes: "There is a season for every purpose under heaven...a time to borrow from future generations, and a time to start paying back the debt." We've reached the time to start paying back what we've borrowed. It will be tough, but we can do it. We have to. We owe it to our children.
But monied interests, like well-heeled corporate drug pushers, see change as bad for business. They tell us "Low taxes aren't the problem! Low taxes are the solution. Here, have another hit, ..er.., dose. It will make you feel better." Don't listen to them, or you'll be gently lulled back to sleep, only to be awakened when they eliminate your job to protect the stock market that you thought was your friend.
To paraphrase Ecclesiastes: "There is a season for every purpose under heaven...a time to borrow from future generations, and a time to start paying back the debt." We've reached the time to start paying back what we've borrowed. It will be tough, but we can do it. We have to. We owe it to our children.
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