I use the term Austerian rather than Austrian on purpose because that's its economic premise...it embraces austerity. Austerity at the right time is a good strategy to employ. However, austerity is not a good economic strategy in times of recession, depression or deflation.
Do you starve your body of nutrition when you’re anemic?
If you believe in “austerian economics” (which a majority of Republicans, a smattering of Democrats, and almost all Teabaggers do) you are advocating consciously electing to go on an all out diet when your body is the weakest.
We have an anemic economy. Consumption is suffering. There is languishing demand for goods. We need strength. Our corporations have decided to sacrifice increasing their payrolls and hoard a mountain of cash they have on hand. Rather than use those cash assets to stimulate the economy creating a rash of new customers and tax payers they've decided to hoard that cash for outlandish salaries and bonuses for a fraction of a percent of their executive staffs...the very top executives in their companies. So the only game in town is the United State of America. Yes...we the people. We have the capability to create demand, which can get our workers re-employed and make taxpayers out of those currently needing the assistance of social safety nets.
If our corporations were really patriotic...they'd use all that liquidity they possess to hire new workers. They'd shave upper level executive salaries in favor of creating more workers from the middle class ranks. Remember...it's not the middle class making between $50,000 to $250,000 per year that are causing the problem...those workers are spending those wages because they have to. It's the executives earning $10 million to a billion dollars per year that are bottlenecking economic growth. Those earners save on average about 90% or MORE of their earnings. They’re not creating demand which would result in hiring workers, instead they’re pumping those earnings into equity stocks, and bonds...and in some very sad cases sending those resources oversees to help foreign competitors.
When you're sick and anemic is no time to start an austerity diet. That's the time you need to take in as much nutrition as you can no matter what the source...borrowed or otherwise. When you get well...that's the time to lose weight.
We should have been on austerity diet in 2001 when rather than use the accumulation of a budget surplus to get our fiscal house in good shape the Bush Administration chose another path. We squandered the surplus on tax cuts for top 2% of earners that neither needed nor wanted tax relief. We squandered the surplus on a Medicare Act that lavished un-needed subsidies on health insurance companies who added no value to the health system and have a 30% administration expense (compared to 2% for Medicare, Medicaid, and the VA). Then finally, we squandered the surplus on two wars, one justified (Afghanistan) and one not (Iraq). That's where we put on all that weight and made ourselves sick. Now is the time to get better. Take on the nutrition our economy needs that will get people back to work. Once we're well we need to look at that diet seriously once again.
When we get around to that diet we're going to need protein to burn the fat and we're going to need to cut back on the carbohydrates to lose the fat. That means that we're going to need to make cuts that make sense and consider taxes that are fair. It means that we'll probably need to compromise on social programs, entitlements, defense spending and tax increases to those who can afford them.
Sunday, October 31, 2010
Wednesday, October 13, 2010
WHAT IF THE POLLSTERS HAVE MISJUDGED THE VOTERS
What if the pollsters have misjudged the “enthusiasm” factor? It may be very possible. The polling firms interview thousands of voters. They discard more of the interviews than they actually use. They do so in order to try to compensate for who they think will show up to vote and who they think will not show up to vote. If they misjudge the “enthusiasm factor” their polling data will skew the results. There is evidence that this may be what is going on this year. Several races have swung wildly from one result to another from poll to poll. Because of this, an observer here and there has begun to wonder what might be going on.
I’m writing this now…because I think I might be right and better to predict before than after. If I’m wrong…then I’ll be the goat.
I suspect that more progressives may turn out than previously expected. There is also a possibility that some Republicans being counted on will not like their choice and consequently sit out this election. Republicans have expressed remorse in Nevada, Delaware and Kentucky. I think these creepy “extreme” rightwingers, identified with the “Tea Party,” are driving progressive numbers up and “establishment” Republican numbers down. I have heard from Republicans, within my own family, who have said these newly branded “Teabaggers” scare them. That’s good because they scare the rest of us too.
I have long suspected that some of the more moderate “establishment” Republicans, in order to save their party, have let these extreme elements of the right have enough rope to hang themselves. I think they have let them…even encouraged them, to invest all their money in what they hope will be a losing cause. If they do then I say congratulations to them. Because even though I have a clearly liberal bias I believe there is a legitimate roll for conservative thinking. And, I really believe when conservatives and liberals are talking to each other, and not past each other, we’re all the better for it.
Most people do not realize that Franklin Roosevelt was a budget hawk when he first came to office. He was opposed to the creation of federal deposit insurance because he thought weaker banks would take advantage of stronger ones. But, Roosevelt was convinced by learned men who convinced him with intellectual and reasonable arguments that the lack of demand would not be improved if the government withdrew from the commercial market. They convinced him that if he funneled money and resources into the hands of workers they would spend the money they got and create demand. The argument for deposit insurance convinced him that if depositors felt there deposits were safe they wouldn’t withdraw them from the banks, and that if the banks had the deposits they would loan the money out in the community creating additional demand.
Let’s hope the pollsters are in error. Let’s hope the progressives turn out in larger number than are expected. I think that’s what’s going to happen…let’s see if I’m right. We’ll all be better the sooner the “Tea Party” principles are put to rest…six feet under!
I’m writing this now…because I think I might be right and better to predict before than after. If I’m wrong…then I’ll be the goat.
I suspect that more progressives may turn out than previously expected. There is also a possibility that some Republicans being counted on will not like their choice and consequently sit out this election. Republicans have expressed remorse in Nevada, Delaware and Kentucky. I think these creepy “extreme” rightwingers, identified with the “Tea Party,” are driving progressive numbers up and “establishment” Republican numbers down. I have heard from Republicans, within my own family, who have said these newly branded “Teabaggers” scare them. That’s good because they scare the rest of us too.
I have long suspected that some of the more moderate “establishment” Republicans, in order to save their party, have let these extreme elements of the right have enough rope to hang themselves. I think they have let them…even encouraged them, to invest all their money in what they hope will be a losing cause. If they do then I say congratulations to them. Because even though I have a clearly liberal bias I believe there is a legitimate roll for conservative thinking. And, I really believe when conservatives and liberals are talking to each other, and not past each other, we’re all the better for it.
Most people do not realize that Franklin Roosevelt was a budget hawk when he first came to office. He was opposed to the creation of federal deposit insurance because he thought weaker banks would take advantage of stronger ones. But, Roosevelt was convinced by learned men who convinced him with intellectual and reasonable arguments that the lack of demand would not be improved if the government withdrew from the commercial market. They convinced him that if he funneled money and resources into the hands of workers they would spend the money they got and create demand. The argument for deposit insurance convinced him that if depositors felt there deposits were safe they wouldn’t withdraw them from the banks, and that if the banks had the deposits they would loan the money out in the community creating additional demand.
Let’s hope the pollsters are in error. Let’s hope the progressives turn out in larger number than are expected. I think that’s what’s going to happen…let’s see if I’m right. We’ll all be better the sooner the “Tea Party” principles are put to rest…six feet under!
Tuesday, September 28, 2010
TAKE THE COMEDIANS SERIOUSLY
Nothing clears the mind and encourages ideas like a good vacation. Consequently, as I spend my vacation in Maui, Hawaii my mind is clear and new ideas are emerging. The brouhaha over the testimony of Stephen Colbert from Comedy Central in the United States Congress is worth reflecting on. Over the course of history comedians have offered some of the most enduring commentary on politics and culture that probably exists. Although, they many time took the form of playwrights they none the less drove home the thoughts and many times the truth that lay out there out of the reach of the self-righteous pontificators. Shakespeare was one to make a point from time to time. But, in my opinion, none make it better than Mark Twain, and Will Rogers. Who can ever forget the commentary of Will Rogers that “he didn’t belong to an organized political party…he was a democrat.” In recent times the comedy TV series Laugh-in, The Smothers Brothers Comedy Hour, George Carlin, then today, Saturday Night Live, John Stewart and Stephen Colbert.
In my day job I do teaching and corporate training. I have a teaching partner who is what I would describe as a “moderate” Republican. He is a bit of comedian himself. He made this comment to me about John Stewart. “You know…a lot of these serious politicians think they’re going onto the “Daily Show” to be interviewed by a comedian. That is a big mistake.” His point was although John Stewart uses humor…he is a serious journalist, even if he himself won’t admit it. If you go back and read the entire transcript of the Colbert testimony including questions and you don’t get the impression of a serious debate…you may need to retake an IQ test if you previously scored above a single digit.
These two excerpts (one given in character, one given out of character) are as serious as one can get…with or without humor.
Colbert: “This brief experience gave me some small understanding of why so few Americans are clamoring to begin an exciting career as seasonal migrant field workers. So what’s the answer? I’m a free-market guy. Normally, I would leave this to the invisible hand of the market, but the invisible hand of the market has already moved over 84,000 acres of production and over 22,000 farm jobs to Mexico, and shut down over a million acres of U.S. farm land due to lack of available labor. Because apparently even the invisible hand doesn’t want to pick beans.
Now, I’m not a fan of the government doing anything. But I’ve gotta ask, why isn’t the government doing anything? Maybe this Ag Jobs bill would help, I don’t know. Like most members of Congress, I haven’t read it. But maybe we could offer more visas to the immigrants who, let’s face it, will probably be doing these jobs anyway. And this improved legal status might allow immigrants recourse if they are abused. And it just stands to reason, to me, that if your coworker can’t be exploited, then you’re less likely to be exploited yourself. And that, itself, might improve pay and working conditions on these farms, and eventually, Americans may consider taking these jobs again. Or maybe that’s crazy. Maybe the easier answer is just to have scientists develop vegetables that pick themselves. The genetic engineers over at Fruit of the Loom have made great strides in human-fruit hybrids.”
Then later on when questioned;
REP. CHU: “Mr. Colbert, you could work on so many issues. Why are you interested in this issue?”
COLBERT: [Takes a pause of two or three beats to think before answering, dropping character] “I like talking about people who don’t have any power, and it seems like one of the least powerful people in the United States are migrant workers who come in and do our work, but don’t have any rights as a result. And yet, we still ask them to come here, and at the same time, ask them to leave. And that’s an interesting contradiction to me, and um… You know, “whatsoever you did for the least of my brothers,” and these seemed like the least of my brothers, right now. A lot of people are “least brothers” right now, with the economy so hard, and I don’t want to take anyone’s hardship away from them or diminish it or anything like that. But migrant workers suffer, and have no rights.”
The interesting issues came up after the hearing when the Democratic Speaker of the House, Nancy Pelosi, approved of Mr. Colbert’s testimony while the Democratic Leader of the House, Steny Hoyer, was not. I have met Mr. Hoyer on a couple of occasions and have a high degree of respect for him. However, the Majority Leader had better realize that the Congress is not the sanctimonious paragon with the public that it may be in the Majority Leader’s mind. His attitude will not help the party he represents with the voters age 18-40. For one who is trying hold on to the majority in the mid-term elections his position is extremely dense. This demographic of voter gets the joke…even if the Democratic Leader and his Republican opposition do not. He and the evangelical fundamentalist right-wing Republicans might really take notice of the reference from the Book of Matthew concerning, “whatsoever you did for the least of my brothers.” As Mr. Colbert states…these really are the least of these. You’d do well, if you professed the Christian faith, to treat them better.
In my day job I do teaching and corporate training. I have a teaching partner who is what I would describe as a “moderate” Republican. He is a bit of comedian himself. He made this comment to me about John Stewart. “You know…a lot of these serious politicians think they’re going onto the “Daily Show” to be interviewed by a comedian. That is a big mistake.” His point was although John Stewart uses humor…he is a serious journalist, even if he himself won’t admit it. If you go back and read the entire transcript of the Colbert testimony including questions and you don’t get the impression of a serious debate…you may need to retake an IQ test if you previously scored above a single digit.
These two excerpts (one given in character, one given out of character) are as serious as one can get…with or without humor.
Colbert: “This brief experience gave me some small understanding of why so few Americans are clamoring to begin an exciting career as seasonal migrant field workers. So what’s the answer? I’m a free-market guy. Normally, I would leave this to the invisible hand of the market, but the invisible hand of the market has already moved over 84,000 acres of production and over 22,000 farm jobs to Mexico, and shut down over a million acres of U.S. farm land due to lack of available labor. Because apparently even the invisible hand doesn’t want to pick beans.
Now, I’m not a fan of the government doing anything. But I’ve gotta ask, why isn’t the government doing anything? Maybe this Ag Jobs bill would help, I don’t know. Like most members of Congress, I haven’t read it. But maybe we could offer more visas to the immigrants who, let’s face it, will probably be doing these jobs anyway. And this improved legal status might allow immigrants recourse if they are abused. And it just stands to reason, to me, that if your coworker can’t be exploited, then you’re less likely to be exploited yourself. And that, itself, might improve pay and working conditions on these farms, and eventually, Americans may consider taking these jobs again. Or maybe that’s crazy. Maybe the easier answer is just to have scientists develop vegetables that pick themselves. The genetic engineers over at Fruit of the Loom have made great strides in human-fruit hybrids.”
Then later on when questioned;
REP. CHU: “Mr. Colbert, you could work on so many issues. Why are you interested in this issue?”
COLBERT: [Takes a pause of two or three beats to think before answering, dropping character] “I like talking about people who don’t have any power, and it seems like one of the least powerful people in the United States are migrant workers who come in and do our work, but don’t have any rights as a result. And yet, we still ask them to come here, and at the same time, ask them to leave. And that’s an interesting contradiction to me, and um… You know, “whatsoever you did for the least of my brothers,” and these seemed like the least of my brothers, right now. A lot of people are “least brothers” right now, with the economy so hard, and I don’t want to take anyone’s hardship away from them or diminish it or anything like that. But migrant workers suffer, and have no rights.”
The interesting issues came up after the hearing when the Democratic Speaker of the House, Nancy Pelosi, approved of Mr. Colbert’s testimony while the Democratic Leader of the House, Steny Hoyer, was not. I have met Mr. Hoyer on a couple of occasions and have a high degree of respect for him. However, the Majority Leader had better realize that the Congress is not the sanctimonious paragon with the public that it may be in the Majority Leader’s mind. His attitude will not help the party he represents with the voters age 18-40. For one who is trying hold on to the majority in the mid-term elections his position is extremely dense. This demographic of voter gets the joke…even if the Democratic Leader and his Republican opposition do not. He and the evangelical fundamentalist right-wing Republicans might really take notice of the reference from the Book of Matthew concerning, “whatsoever you did for the least of my brothers.” As Mr. Colbert states…these really are the least of these. You’d do well, if you professed the Christian faith, to treat them better.
Monday, August 16, 2010
FREEDOM OF RELIGION FOR CHRISTIAN’S ONLY
“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof” (from the First Amendment of the Constitution of the United States of America). It is really pretty simple! It’s the basis for the separation of church and state. Recently, though, it’s become clearer that evangelical fundamentalist Christianity believes the words “for Christians” should have followed the word “thereof.” Of course, these are the same “know it alls” who for the most part would rather ignore the scripture “"Do unto others as you would have them do unto you." These words were emphasized no less than three times in the New Testament alone, (Matthew 7:12 “So in everything, do to others what you would have them do to you, for this sums up the Law and the Prophets”, Matthew 22:39 “Love your neighbor as yourself”, Luke 6:31 “Do to others as you would have them do to you”). Other religions have a similar admonition. Given this rather pointed direction of the literary basis of Christianity wouldn’t you think that evangelical Christians would want to allow all people to worship the same way they would like to worship?
It is simply outrageous to me as a Christian that the whole Christian community is not rising up to defend the Muslim community in New York City who wants to build a “community center” which includes a couple of floors for interfaith worship two blocks from the former twin towers of the World Trade Center (the center can neither be seen from Ground Zero, nor can Ground Zero be seen from the Community Center to be named Park 51 Center). Because we demand freedom of religion, freedom to worship as we see fit, we should be the first in line to say everyone deserves this right. Religious Freedom is not just for Christianity, or Christians. It’s religious freedom for all. That’s what makes us different from countries that limit the exercise of religion.
All Muslim’s should no more be blamed for the September 11 attack than should all Southerners be blamed for the actions of the Ku Klux Klan. However, if we carried out this very non-Christian attitude that Muslims should be denied the courtesy of building a place of worship two blocks, mind you, from the ground zero shell, then we should forbid white Christians from building churches in the South. The notion is absurd and the Christian Right should recognize this and come to the assistance of these Muslims who have every right to build this Community Center (that’s right it’s not even a Mosque…just a gym, swimming pool, culinary school, with a couple of floors for interfaith worship).
Most religious zealots no matter which religion they are followers of are guilty of taking positions that leave no room for error. They all think they are right and those who don’t believe as they do are wrong. I cannot speak authoritatively for Muslims, or Judaism, or Buddhists, or any other religion since my whole religious experience is that of a Christian. Basic belief of Christianity is founded on the individual having a free choice as to his or her acceptance of God and the principle tenets of the Christian faith. The existence of God is founded totally on believing “in faith.” Thus, it is neither provable nor improvable. Christians are not forced to believe at the point of a sword nor do they openly expound this position. The “Christian power base” is one of intolerance against all who would question them…even their own (that would be me). The power base not only ignores the “golden rule” (do unto other as you would have them do unto you), but, they also ignore admonishment against arrogance and hubris. All Christians should not be held to the un-Christian, radical attitudes of James Dobson, Franklin Graham, Jerry Falwell, Sarah Palin, Tom DeLay, Tony Perkins, Rick Warren, or any other arrogant hate merchants who fill the television screens or airwaves, nor should all Muslims be held to the un-Muslim radical attitudes of Osama bin Laden or al Qaeda.
Religious freedom, or any freedom granted by the Bill of Rights is not up for revocation as long as we, as citizens of our country, obey the laws. This being the case…as long a law abiding citizens who happen to be Muslim want to build a community center or house of worship anywhere they shouldn’t be denied this request. Religious freedom is not only a Christian or Jewish right…it’s a right for any religion of any faith. We as Christians would want to be treated this way and we should be the outspoken advocates of any who wish to enjoy religious freedom.
Christians, Jews and Muslims all worship the same God. Yet, all seem to be aggressive to each other. Christians have had a sorted past with the Jewish faith, today many evangelical fundamentalist believe Muslims are out to destroy them and many of these fundamentalist think we should destroy Islam. Israel today is at constant war with Islam, and many have distrust of Christians. When will they all learn that making friends with each other is a lot less painful that being at constant war with each other. “Do unto others as you would have them do unto you.” Practicing Christianity is very easy if you start and hold fast to this simple principle.
It is simply outrageous to me as a Christian that the whole Christian community is not rising up to defend the Muslim community in New York City who wants to build a “community center” which includes a couple of floors for interfaith worship two blocks from the former twin towers of the World Trade Center (the center can neither be seen from Ground Zero, nor can Ground Zero be seen from the Community Center to be named Park 51 Center). Because we demand freedom of religion, freedom to worship as we see fit, we should be the first in line to say everyone deserves this right. Religious Freedom is not just for Christianity, or Christians. It’s religious freedom for all. That’s what makes us different from countries that limit the exercise of religion.
All Muslim’s should no more be blamed for the September 11 attack than should all Southerners be blamed for the actions of the Ku Klux Klan. However, if we carried out this very non-Christian attitude that Muslims should be denied the courtesy of building a place of worship two blocks, mind you, from the ground zero shell, then we should forbid white Christians from building churches in the South. The notion is absurd and the Christian Right should recognize this and come to the assistance of these Muslims who have every right to build this Community Center (that’s right it’s not even a Mosque…just a gym, swimming pool, culinary school, with a couple of floors for interfaith worship).
Most religious zealots no matter which religion they are followers of are guilty of taking positions that leave no room for error. They all think they are right and those who don’t believe as they do are wrong. I cannot speak authoritatively for Muslims, or Judaism, or Buddhists, or any other religion since my whole religious experience is that of a Christian. Basic belief of Christianity is founded on the individual having a free choice as to his or her acceptance of God and the principle tenets of the Christian faith. The existence of God is founded totally on believing “in faith.” Thus, it is neither provable nor improvable. Christians are not forced to believe at the point of a sword nor do they openly expound this position. The “Christian power base” is one of intolerance against all who would question them…even their own (that would be me). The power base not only ignores the “golden rule” (do unto other as you would have them do unto you), but, they also ignore admonishment against arrogance and hubris. All Christians should not be held to the un-Christian, radical attitudes of James Dobson, Franklin Graham, Jerry Falwell, Sarah Palin, Tom DeLay, Tony Perkins, Rick Warren, or any other arrogant hate merchants who fill the television screens or airwaves, nor should all Muslims be held to the un-Muslim radical attitudes of Osama bin Laden or al Qaeda.
Religious freedom, or any freedom granted by the Bill of Rights is not up for revocation as long as we, as citizens of our country, obey the laws. This being the case…as long a law abiding citizens who happen to be Muslim want to build a community center or house of worship anywhere they shouldn’t be denied this request. Religious freedom is not only a Christian or Jewish right…it’s a right for any religion of any faith. We as Christians would want to be treated this way and we should be the outspoken advocates of any who wish to enjoy religious freedom.
Christians, Jews and Muslims all worship the same God. Yet, all seem to be aggressive to each other. Christians have had a sorted past with the Jewish faith, today many evangelical fundamentalist believe Muslims are out to destroy them and many of these fundamentalist think we should destroy Islam. Israel today is at constant war with Islam, and many have distrust of Christians. When will they all learn that making friends with each other is a lot less painful that being at constant war with each other. “Do unto others as you would have them do unto you.” Practicing Christianity is very easy if you start and hold fast to this simple principle.
Monday, August 2, 2010
DO TAX CUTS CREATE JOBS?
Sunday, August 1, 2010 was a landmark day for the argument for tax cuts ARE NOT the answer to every economic question. First, David Stockman (former Ronald Reagan Office of Management and Budget Director and the brains behind “supply side economics”) wrote a lengthy Op-Ed in the New York Times arguing the Bush Administration Tax Cuts needed to expire. Then, in an appearance on NBC’s Meet the Press Alan Greenspan bluntly stated “tax cuts DO NOT pay for themselves.” Conservatives were dressed down by their own experts.
Let’s explore history and compare the tax increases enacted under the Clinton Administration in 1993 against the tax cuts enacted under the George W. Bush Administration in 2001. The score would be 23 million to 3 million. The Clinton Administration created 23 million jobs in 8 years after raising taxes while the Bush Administration created only 3 million jobs after cutting taxes in 8 years. So, never again should liberals give any credit to anyone who argues tax cuts are the engine of job growth while conceding that tax increases kill job growth.
The deficit growth we live with today is a direct result of the $4 trillion of tax cuts enacted under Dubya Bush’s ill conceived economic policy and, conclude those tax cuts for the wealthiest among us, the top 2% of wage earners, will expand that national debt by another $4 trillion. But, more to the point…the extension of the tax cuts to the wealthy will not increase job growth at all. The revenue from those tax cuts need to be used for reinvestment in our infrastructure, aid to the unemployed, training and retraining for a new workforce, and investment into cleaner energy, direct investments that will quickly work into the economy. Ezra Klein, of the Washington Post, states that the biggest bang for the buck for economic stimulus is food stamps. That’s right, food stamps creates $1.71 for every $1 invested…while tax cuts for the wealthy returns only $0.31 for every dollar invested. Why…because rich people don’t spend the tax cut benefits on goods and services…they invest them in the stock market and the trading of existing shares of stock doesn’t produce anything. While the purchase of a gallon of milk supports the grocer, the supplier and the producer. It’s difficult to explain to conservatives that the wealthy don’t spend as large a percentage of their income as do those at the bottom of the income ladder. If you’re rich…it cost you less of your income to eat than it does for those living under the poverty line. The same goes on housing expense, clothing expense, and even entertainment. Low wages earners have to spend 100% of their incomes to exist…while the wealthy have a far great income after expenses to save.
Conservative Republicans, if you really want to address the budget deficit get the unemployment rate back to 4% and the deficit goes away. So, HELLO stimulus! Stimulus for building roads, schools, public buildings of all sorts, high speed rail, and tax incentives for one thing and one thing only…for hiring new employees. Even if we spent another trillion dollars (which is what we should have done in the first place), it will be far less than the $4 trillion conservatives are more than willing to throw away on more tax cuts for the wealthy.
Let’s explore history and compare the tax increases enacted under the Clinton Administration in 1993 against the tax cuts enacted under the George W. Bush Administration in 2001. The score would be 23 million to 3 million. The Clinton Administration created 23 million jobs in 8 years after raising taxes while the Bush Administration created only 3 million jobs after cutting taxes in 8 years. So, never again should liberals give any credit to anyone who argues tax cuts are the engine of job growth while conceding that tax increases kill job growth.
The deficit growth we live with today is a direct result of the $4 trillion of tax cuts enacted under Dubya Bush’s ill conceived economic policy and, conclude those tax cuts for the wealthiest among us, the top 2% of wage earners, will expand that national debt by another $4 trillion. But, more to the point…the extension of the tax cuts to the wealthy will not increase job growth at all. The revenue from those tax cuts need to be used for reinvestment in our infrastructure, aid to the unemployed, training and retraining for a new workforce, and investment into cleaner energy, direct investments that will quickly work into the economy. Ezra Klein, of the Washington Post, states that the biggest bang for the buck for economic stimulus is food stamps. That’s right, food stamps creates $1.71 for every $1 invested…while tax cuts for the wealthy returns only $0.31 for every dollar invested. Why…because rich people don’t spend the tax cut benefits on goods and services…they invest them in the stock market and the trading of existing shares of stock doesn’t produce anything. While the purchase of a gallon of milk supports the grocer, the supplier and the producer. It’s difficult to explain to conservatives that the wealthy don’t spend as large a percentage of their income as do those at the bottom of the income ladder. If you’re rich…it cost you less of your income to eat than it does for those living under the poverty line. The same goes on housing expense, clothing expense, and even entertainment. Low wages earners have to spend 100% of their incomes to exist…while the wealthy have a far great income after expenses to save.
Conservative Republicans, if you really want to address the budget deficit get the unemployment rate back to 4% and the deficit goes away. So, HELLO stimulus! Stimulus for building roads, schools, public buildings of all sorts, high speed rail, and tax incentives for one thing and one thing only…for hiring new employees. Even if we spent another trillion dollars (which is what we should have done in the first place), it will be far less than the $4 trillion conservatives are more than willing to throw away on more tax cuts for the wealthy.
Monday, June 21, 2010
PRIORITIES
Let’s make a list of our priorities. We’re a family of four or five, and without a job with a debt of say 50% of our last years’ income. So, the two pressing items on our list are; 1) we have debt that we’re having a hard time paying and, 2) our family needs us to go to work. Which goes first on our list as our highest priority, the debt or our job? Of course, finding a job goes first on our list, and then reducing our debt. Without a job our efforts to reduce our debts are impossible unless bankruptcy is available to us and even then finding a job should still be the most important.
That’s the dilemma we find ourselves in as a country, except bankruptcy is not an option. Unless we put our unemployed back to work…we’re not going to be able to address our debt dilemma. Most economists agree that if you reduce the unemployment rate to 4% the annual deficit goes away. That’s right…it goes away. Because, those unemployed workers begin impacting the economy in two ways, they start paying taxes, and they cease needing government assistance to live. It really is win-win! So why do the minority in congress, who make up only 35% to 45% of the elected congressmen and senators have such a difficult time making the list of priorities.
As a country we need to get the unemployed employed with infrastructure projects, retrofitting public and private building with energy saving devices, and public grants to create new green jobs building wind mills, solar panels, new technology batteries, and new green public and private transportation vehicles…cars, busses, and trains. This was the real miracle of the 90’s. The unemployment rate was the lowest in the country’s history. When those employed men and women were earning incomes they were paying taxes and we saw our financial condition improve to the point of having an annual surplus rather than an annual debt. This is the point that President Clinton left office and President George W. Bush assumed office. Rather than address those austere expenditures, the right now screams about, Dubya and his Republican accomplices promptly reduced our income by cutting taxes for the uber rich, engaged in two wars, and promoted the idea that deficits don’t matter. That’s what Vice President Cheney actually said, “Deficits don’t matter.”
Now, that 10% of the country is unemployed and another 15% are underemployed these right wingers are again interested in deficit reduction without any regard as to what the effects of reducing the national budget would do to those unemployed and those left clinging to a job that in all likelihood may go away if the budget is reduced. I’ve said it before and I’ll say it again, “being a deficit hawk when the country is in financial peril is akin to being a water conservationist while your house is on fire.”
No…our national priority list needs to look like our personal priority list. First put the unemployed back to work and once we have full employment start looking for ways to repay debt. And, don’t just look at reductions in spending. We need to look at additional revenue where is makes sense. Here’s just one example. Hedge fund managers’ income is taxed in the same bracket as capital gains at about half of what ordinary income is taxed by a worker earning $60,000. Hedge fund managers should be taxed at least at the same rate as average workers. Why should their earnings be taxed at half the rate of the average worker? They don’t produce anything.
We also need to look at reducing expenditures where it makes sense. Patronage projects need to be reviewed project by project to see if we should continue. The Pentagon has cited several expenditures that aren’t justified. Several projects only exist because they are being preserved by some shameless congressman or senator. We can’t take an ax to the budget; however we surely can take some nail clippers. Remember the nineties didn’t require draconian cuts, just good management. But, the real engine to fiscal security is in full employment. That’s what our focus should be on. Once we have solid employment we can manage our spending without damaging our economy.
That’s the dilemma we find ourselves in as a country, except bankruptcy is not an option. Unless we put our unemployed back to work…we’re not going to be able to address our debt dilemma. Most economists agree that if you reduce the unemployment rate to 4% the annual deficit goes away. That’s right…it goes away. Because, those unemployed workers begin impacting the economy in two ways, they start paying taxes, and they cease needing government assistance to live. It really is win-win! So why do the minority in congress, who make up only 35% to 45% of the elected congressmen and senators have such a difficult time making the list of priorities.
As a country we need to get the unemployed employed with infrastructure projects, retrofitting public and private building with energy saving devices, and public grants to create new green jobs building wind mills, solar panels, new technology batteries, and new green public and private transportation vehicles…cars, busses, and trains. This was the real miracle of the 90’s. The unemployment rate was the lowest in the country’s history. When those employed men and women were earning incomes they were paying taxes and we saw our financial condition improve to the point of having an annual surplus rather than an annual debt. This is the point that President Clinton left office and President George W. Bush assumed office. Rather than address those austere expenditures, the right now screams about, Dubya and his Republican accomplices promptly reduced our income by cutting taxes for the uber rich, engaged in two wars, and promoted the idea that deficits don’t matter. That’s what Vice President Cheney actually said, “Deficits don’t matter.”
Now, that 10% of the country is unemployed and another 15% are underemployed these right wingers are again interested in deficit reduction without any regard as to what the effects of reducing the national budget would do to those unemployed and those left clinging to a job that in all likelihood may go away if the budget is reduced. I’ve said it before and I’ll say it again, “being a deficit hawk when the country is in financial peril is akin to being a water conservationist while your house is on fire.”
No…our national priority list needs to look like our personal priority list. First put the unemployed back to work and once we have full employment start looking for ways to repay debt. And, don’t just look at reductions in spending. We need to look at additional revenue where is makes sense. Here’s just one example. Hedge fund managers’ income is taxed in the same bracket as capital gains at about half of what ordinary income is taxed by a worker earning $60,000. Hedge fund managers should be taxed at least at the same rate as average workers. Why should their earnings be taxed at half the rate of the average worker? They don’t produce anything.
We also need to look at reducing expenditures where it makes sense. Patronage projects need to be reviewed project by project to see if we should continue. The Pentagon has cited several expenditures that aren’t justified. Several projects only exist because they are being preserved by some shameless congressman or senator. We can’t take an ax to the budget; however we surely can take some nail clippers. Remember the nineties didn’t require draconian cuts, just good management. But, the real engine to fiscal security is in full employment. That’s what our focus should be on. Once we have solid employment we can manage our spending without damaging our economy.
Sunday, May 23, 2010
UNDERSTANDING LAISSEZ-FAIRE
Those who are flirting with the Tea Party need to be aware of just what the Party is all about…because these are the folks that are complaining about government interference. The Tea Party’s candidate “de jour” is Dr. Rand Paul, the son of Congressman (and doctor) Ron Paul. The Paul’s both have developed a reputation, as Bill Maher describes it, of “speaking NON-SENSE to power.” Congressman Ron Paul I have personally heard say that the Civil War needn’t be fought because slavery would have eventually ended anyway. Yeah, in another three or four thousand years! The Paul’s argue a pure laissez-faire policy. The basis of the libertarian “movement” is laissez-faire, in philosophy. They do not want government to interfere in any way.
Those who want to embrace this policy need to understand just what no government interference means. I have always held to the principle that most people are conservative when if refers to others but, very liberal when it comes to themselves. They are against the government interfering when it comes to their business, however, if their neighbor starts dumping contaminants in their backyard they’re complaining because the EPA isn’t out there to protect them. People are against the federal government getting involved in healthcare until they can’t get insurance because of a pre-existing condition or their insurance company drops them when they get sick, then they expect the government to be all over the insurance companies. So, here is a little background on what Laissez-faire means in practice.
In economics, laissez-faire means allowing industry to be free from government intervention, especially restrictions in the form of tariffs and government monopolies, and more specifically today in terms of regulation. The phrase is French and literally means "let do", but it broadly implies "let it be", or "leave it alone."
According to historical myths, the phrase stems from a meeting in about 1680 between the powerful French finance minister Jean-Baptiste Colbert and a group of French businessmen led by a M. Le Gendre. When the eager mercantilist minister asked how the French state could be of service to the merchants, Le Gendre replied simply "Laissez-nous faire" ("Leave us be", literally "let us do"). This is sort of interesting to me because modern day conservative Americans (Tea Baggers) are quick to belittle European governments and ideas, and like to criticize the French in particular, yet France is where all this comes from.
The laissez faire slogan was popularized by Vincent de Gournay, a French intendant of commerce in the 1750s. Gournay was an ardent proponent of the removal of restrictions on trade and the deregulation of industry and economic prosperity in France. Gournay was delighted by the LeGendre anecdote, and forged it into a larger maxim all his own: "Let do and let pass.” His motto has also been identified as the longer "Let do and let pass, the world goes on by itself!" Although Gournay left no written tracts on his economic policy ideas, he had immense personal influence on the thinking of his contemporaries, notably the physiocrats, who credit both the laissez-faire slogan and doctrine to Gournay.
Before Gournay, P.S. de Boisguilbert had enunciated the phrase "let nature run its course.’ Laissez-faire was one of a number of French "free trade" and "non-interference" slogans coined in the 17th century. D'Argenson, during this time, was better known for the similar but less-celebrated motto "Govern not too much.”
The Doctor Paul’s are on record criticizing the section of the Civil Right Act of 1964 when it comes to interference with private business. Meaning: They think service or goods should be able to be denied to individuals for any reason, including race, by businesses, on the basis that they are private. The Paul’s believe private business owes nothing to the public. Doesn’t this seem idiotic to you? The Paul’s apparently think that government has no business making rules for businesses. So what if they sell poison to children?
Private businesses whether they like it, or not, depend on our government. They use our streets, utilities, police protection, fire protection, and they use our currency. In my opinion, this should rightfully give us as a society adequate reason to impose restrictions on how they go about their business. If they want to sell their goods and services to our citizens they should have no objection to playing by our rules. Believe me, there are plenty of third world countries that will not restrict their business practices, and of course, this is why they are third world countries.
The misguided notion that everyone will do what is right if left to their own devices should have been resolved by the time each of us reaches kindergarten. As the new Kentucky Senate Candidate, Dr. Paul, has now gone further. He has stated that its “un-American” for the president to criticize British Petroleum for the oil spill in the Gulf of Mexico. Specifically, Dr. Paul said; “I think it's part of this sort of blame game society in the sense that it's always got to be someone's fault instead of the fact that sometimes accidents happen,” and then went on to say it was “un-American” for the president to be using language like placing the governments boot on the throat of BP to insure they paid for the damage. Forget that we have an ample supply of evidence to conclude that the accident was the direct cause of BP’s actions. I guess that Dr. Paul’s position is that since BP is a private business we should just let it go, trust them to correct the error they committed, and clean up the mess they created; believing that they will reimburse all the effected lives and businesses without any prodding from our government. They will make everyone whole for their mistake. That is what we’re supposed to believe!
Laissez-faire, stretched to its intended purpose, means “we the people” (remember that is who the government really is, us!) do not have the right to say that discrimination is wrong and we will not tolerate it if you want to participate and be a part of our society. Or, that “we the people” do not have the right to inspect the food we eat or deny businesses the right to sell tobacco and alcohol to minors. I guess we should abolish traffic rules. Just let us drive the way we want. The whole notion of “leave it alone” is not conducive to an organized society. Rather than measure government by a laissez-faire standard we should measure the government by efficiency standards. We should not care how big or small a government is. We should care about how efficient the government is. That would be a fair argument to have.
We will, and should, forever protect everyone’s right to speak out in support of any lunatic idea they choose, but it does not mean that free speech implies that we will let anybody do whatever they want. Organized societies have rules, and rules are the difference between order and chaos.
I cannot believe there is anyone, other than a greedy banker, who thinks “we the people” should not govern the banks in a much stricter sense in light of the financial crisis of 2007 and 2008. I have mentioned before in this blog that we as a country and culture have been sold a bill of goods based on capitalism as all good and socialism as all bad. There are good and bad points to each system and we are foolish not to take advantage of the best of both systems. The religious right, who seems to be behind much of the Tea Bag movement, needs to wake up and realize they could be worshiping the God of capitalism just as much as any other false god.
An editorial in the May 22, 2010 edition of the New York Times summed it up pretty well.
“It is a theory of liberty with roots in America’s creation, but the succeeding centuries have shown how ineffective it was in promoting a civil society. The freedom of a few people to discriminate meant generations of less freedom for large groups of others.
It was only government power that ended slavery and abolished Jim Crow, neither of which would have been eliminated by a purely free market. It was government that rescued the economy from the Depression and promoted safety and equality in the workplace.”
AAAAAAAmen, brotha!
Those who want to embrace this policy need to understand just what no government interference means. I have always held to the principle that most people are conservative when if refers to others but, very liberal when it comes to themselves. They are against the government interfering when it comes to their business, however, if their neighbor starts dumping contaminants in their backyard they’re complaining because the EPA isn’t out there to protect them. People are against the federal government getting involved in healthcare until they can’t get insurance because of a pre-existing condition or their insurance company drops them when they get sick, then they expect the government to be all over the insurance companies. So, here is a little background on what Laissez-faire means in practice.
In economics, laissez-faire means allowing industry to be free from government intervention, especially restrictions in the form of tariffs and government monopolies, and more specifically today in terms of regulation. The phrase is French and literally means "let do", but it broadly implies "let it be", or "leave it alone."
According to historical myths, the phrase stems from a meeting in about 1680 between the powerful French finance minister Jean-Baptiste Colbert and a group of French businessmen led by a M. Le Gendre. When the eager mercantilist minister asked how the French state could be of service to the merchants, Le Gendre replied simply "Laissez-nous faire" ("Leave us be", literally "let us do"). This is sort of interesting to me because modern day conservative Americans (Tea Baggers) are quick to belittle European governments and ideas, and like to criticize the French in particular, yet France is where all this comes from.
The laissez faire slogan was popularized by Vincent de Gournay, a French intendant of commerce in the 1750s. Gournay was an ardent proponent of the removal of restrictions on trade and the deregulation of industry and economic prosperity in France. Gournay was delighted by the LeGendre anecdote, and forged it into a larger maxim all his own: "Let do and let pass.” His motto has also been identified as the longer "Let do and let pass, the world goes on by itself!" Although Gournay left no written tracts on his economic policy ideas, he had immense personal influence on the thinking of his contemporaries, notably the physiocrats, who credit both the laissez-faire slogan and doctrine to Gournay.
Before Gournay, P.S. de Boisguilbert had enunciated the phrase "let nature run its course.’ Laissez-faire was one of a number of French "free trade" and "non-interference" slogans coined in the 17th century. D'Argenson, during this time, was better known for the similar but less-celebrated motto "Govern not too much.”
The Doctor Paul’s are on record criticizing the section of the Civil Right Act of 1964 when it comes to interference with private business. Meaning: They think service or goods should be able to be denied to individuals for any reason, including race, by businesses, on the basis that they are private. The Paul’s believe private business owes nothing to the public. Doesn’t this seem idiotic to you? The Paul’s apparently think that government has no business making rules for businesses. So what if they sell poison to children?
Private businesses whether they like it, or not, depend on our government. They use our streets, utilities, police protection, fire protection, and they use our currency. In my opinion, this should rightfully give us as a society adequate reason to impose restrictions on how they go about their business. If they want to sell their goods and services to our citizens they should have no objection to playing by our rules. Believe me, there are plenty of third world countries that will not restrict their business practices, and of course, this is why they are third world countries.
The misguided notion that everyone will do what is right if left to their own devices should have been resolved by the time each of us reaches kindergarten. As the new Kentucky Senate Candidate, Dr. Paul, has now gone further. He has stated that its “un-American” for the president to criticize British Petroleum for the oil spill in the Gulf of Mexico. Specifically, Dr. Paul said; “I think it's part of this sort of blame game society in the sense that it's always got to be someone's fault instead of the fact that sometimes accidents happen,” and then went on to say it was “un-American” for the president to be using language like placing the governments boot on the throat of BP to insure they paid for the damage. Forget that we have an ample supply of evidence to conclude that the accident was the direct cause of BP’s actions. I guess that Dr. Paul’s position is that since BP is a private business we should just let it go, trust them to correct the error they committed, and clean up the mess they created; believing that they will reimburse all the effected lives and businesses without any prodding from our government. They will make everyone whole for their mistake. That is what we’re supposed to believe!
Laissez-faire, stretched to its intended purpose, means “we the people” (remember that is who the government really is, us!) do not have the right to say that discrimination is wrong and we will not tolerate it if you want to participate and be a part of our society. Or, that “we the people” do not have the right to inspect the food we eat or deny businesses the right to sell tobacco and alcohol to minors. I guess we should abolish traffic rules. Just let us drive the way we want. The whole notion of “leave it alone” is not conducive to an organized society. Rather than measure government by a laissez-faire standard we should measure the government by efficiency standards. We should not care how big or small a government is. We should care about how efficient the government is. That would be a fair argument to have.
We will, and should, forever protect everyone’s right to speak out in support of any lunatic idea they choose, but it does not mean that free speech implies that we will let anybody do whatever they want. Organized societies have rules, and rules are the difference between order and chaos.
I cannot believe there is anyone, other than a greedy banker, who thinks “we the people” should not govern the banks in a much stricter sense in light of the financial crisis of 2007 and 2008. I have mentioned before in this blog that we as a country and culture have been sold a bill of goods based on capitalism as all good and socialism as all bad. There are good and bad points to each system and we are foolish not to take advantage of the best of both systems. The religious right, who seems to be behind much of the Tea Bag movement, needs to wake up and realize they could be worshiping the God of capitalism just as much as any other false god.
An editorial in the May 22, 2010 edition of the New York Times summed it up pretty well.
“It is a theory of liberty with roots in America’s creation, but the succeeding centuries have shown how ineffective it was in promoting a civil society. The freedom of a few people to discriminate meant generations of less freedom for large groups of others.
It was only government power that ended slavery and abolished Jim Crow, neither of which would have been eliminated by a purely free market. It was government that rescued the economy from the Depression and promoted safety and equality in the workplace.”
AAAAAAAmen, brotha!
Friday, May 21, 2010
THE INSINCERITY OF DEFICITS HAWKS
As all progressives must restate to begin with…I am in FAVOR of living within my means, both on a personal and public basis. However, today’s versions of “deficit hawks” are insincere to say the least. Hopefully their insincerity can provide a lesson for the future.
The lesson is really pretty simple. First, we took our foot off the gas as far as deficit reduction during the George W. Bush Administration in 2001. As Dubya took office we were running a $300 billion surplus. We were taking in $300 billion more dollars than we were spending. We were running a national debt ( we owed borrowed money from years past) even as we started accruing this annual surplus allowing us to pay down the national debt. But, the Bush Administration preferred to enact a tax cut policy for the wealthiest individuals in our country. This policy on its very own squandered the annual surplus. To be fair Dubya is not the only one to blame. He was encouraged to pursue this policy by Alan Greenspan, who has probably been the most overrated Fed Chairman in history. Alan Greenspan was good at one thing…giving bad advice, and that record becomes more clear every day.
Second, we engaged in two major wars without paying for them. This is completely counter to our record for other wars in our national history. We always understood there would be sacrifice when we engaged in war. We understood the sacrifice in lives lost, and we understood the cost in the treasury lost. War is expensive and we borrowed to pay for the wars in Iraq and Afghanistan.
These mistakes in tax policy and wars were made in fiscal terms. The mistakes are NOT being made now that we find ourselves in a fragile condition. The dollars are not being squandered today on stimulus and spending that we are pursuing domestically. Not to stimulate our economy as we did in 2009 would have meant a longer more protracted recovery period that would render us in peril of failure everyday it lasted. We are fortunate to have the size and economic system that allows us to use our government to stimulate and restore our economic well being.
The recovery will eventually bring us back to where we were…growing and strong. Hopefully will have learned our lesson and use budget surpluses properly in the future to control our overall national debt and prudently choose the expenses we pursue.
The lesson is really pretty simple. First, we took our foot off the gas as far as deficit reduction during the George W. Bush Administration in 2001. As Dubya took office we were running a $300 billion surplus. We were taking in $300 billion more dollars than we were spending. We were running a national debt ( we owed borrowed money from years past) even as we started accruing this annual surplus allowing us to pay down the national debt. But, the Bush Administration preferred to enact a tax cut policy for the wealthiest individuals in our country. This policy on its very own squandered the annual surplus. To be fair Dubya is not the only one to blame. He was encouraged to pursue this policy by Alan Greenspan, who has probably been the most overrated Fed Chairman in history. Alan Greenspan was good at one thing…giving bad advice, and that record becomes more clear every day.
Second, we engaged in two major wars without paying for them. This is completely counter to our record for other wars in our national history. We always understood there would be sacrifice when we engaged in war. We understood the sacrifice in lives lost, and we understood the cost in the treasury lost. War is expensive and we borrowed to pay for the wars in Iraq and Afghanistan.
These mistakes in tax policy and wars were made in fiscal terms. The mistakes are NOT being made now that we find ourselves in a fragile condition. The dollars are not being squandered today on stimulus and spending that we are pursuing domestically. Not to stimulate our economy as we did in 2009 would have meant a longer more protracted recovery period that would render us in peril of failure everyday it lasted. We are fortunate to have the size and economic system that allows us to use our government to stimulate and restore our economic well being.
The recovery will eventually bring us back to where we were…growing and strong. Hopefully will have learned our lesson and use budget surpluses properly in the future to control our overall national debt and prudently choose the expenses we pursue.
Sunday, April 25, 2010
SO YOU WANT TO BE KNOWN AS A CHRISTIAN NATION
The religious, evangelical right insists that the United States is a Christian nation. Well, if that’s what they want to be it looks like the Christian Right better get away from conservative ideology because, they’ve got to reconcile this from the New Testament in the book of Matthew (verses 35 trough 40).
35”For I was hungry and you gave me something to eat, I was thirsty and you gave me something to drink, I was a stranger and you invited me in, 36I needed clothes and you clothed me, I was sick and you looked after me, I was in prison and you came to visit me.'
37"Then the righteous will answer him, 'Lord, when did we see you hungry and feed you, or thirsty and give you something to drink? 38When did we see you a stranger and invite you in, or needing clothes and clothe you? 39When did we see you sick or in prison and go to visit you?'
40"The King will reply, 'I tell you the truth, whatever you did for one of the least of these brothers of mine, you did for me.'”
The Tea Party is one of the foremost voices for the Christian Nation concept. Keep in mind…there is no (really no) historical evidence that the founding fathers ever intended to create a government of any religion. Quite to the contrary, they wanted to have religious freedom. That would be a country beholden to no religion. But, these right wing extremist don’t like the responsibility for anyone other than themselves.
I was recently having dinner with my aunt to prides herself on her devout commitment to Christianity. However, she explained to the rest of the family how she didn’t like paying taxes that ended up paying other peoples debts (which by the way you don’t pay any tax money to pay anyone else’s debts, but, that’s another story). Well…if you’re a Christian nation you shouldn’t have any problem with that at all. You also shouldn’t have any objection to welfare for the poor, for children, for the unemployed, or for foreign nations who are drowning in poverty. And, I don’t know how they can be against health care for everyone. Not if you believe in the portion of Matthew I’ve referred to above.
“Whatever you did for the LEAST of these brothers of mine, you did for me!”
The Christian right needs to learn something before they decide they want to claim the United States as a Christian nation…they need to learn what actually is the RIGHT thing to do! (We’re talking to you Sarah Pallin).
35”For I was hungry and you gave me something to eat, I was thirsty and you gave me something to drink, I was a stranger and you invited me in, 36I needed clothes and you clothed me, I was sick and you looked after me, I was in prison and you came to visit me.'
37"Then the righteous will answer him, 'Lord, when did we see you hungry and feed you, or thirsty and give you something to drink? 38When did we see you a stranger and invite you in, or needing clothes and clothe you? 39When did we see you sick or in prison and go to visit you?'
40"The King will reply, 'I tell you the truth, whatever you did for one of the least of these brothers of mine, you did for me.'”
The Tea Party is one of the foremost voices for the Christian Nation concept. Keep in mind…there is no (really no) historical evidence that the founding fathers ever intended to create a government of any religion. Quite to the contrary, they wanted to have religious freedom. That would be a country beholden to no religion. But, these right wing extremist don’t like the responsibility for anyone other than themselves.
I was recently having dinner with my aunt to prides herself on her devout commitment to Christianity. However, she explained to the rest of the family how she didn’t like paying taxes that ended up paying other peoples debts (which by the way you don’t pay any tax money to pay anyone else’s debts, but, that’s another story). Well…if you’re a Christian nation you shouldn’t have any problem with that at all. You also shouldn’t have any objection to welfare for the poor, for children, for the unemployed, or for foreign nations who are drowning in poverty. And, I don’t know how they can be against health care for everyone. Not if you believe in the portion of Matthew I’ve referred to above.
“Whatever you did for the LEAST of these brothers of mine, you did for me!”
The Christian right needs to learn something before they decide they want to claim the United States as a Christian nation…they need to learn what actually is the RIGHT thing to do! (We’re talking to you Sarah Pallin).
Saturday, April 17, 2010
THE FIRE DEPARTMENT
Paul Krugman in his April 16, New York Times column wrote “On Tuesday, Mitch McConnell, the Senate minority leader, called for the abolition of municipal fire departments.
Firefighters, he declared, “won’t solve the problems that led to recent fires. They will make them worse.” The existence of fire departments, he went on, “not only allows for taxpayer-funded bailouts of burning buildings; it institutionalizes them.” He concluded, “The way to solve this problem is to let the people who make the mistakes that lead to fires pay for them. We won’t solve this problem until the biggest buildings are allowed to burn.”
O.K., I fibbed a bit. Mr. McConnell said almost everything I attributed to him, but he was talking about financial reform, not fire reform. In particular, he was objecting not to the existence of fire departments, but to legislation that would give the government the power to seize and restructure failing financial institutions. But it amounts to the same thing.
Now, Mr. McConnell surely isn’t sincere; while pretending to oppose bank bailouts, he’s actually doing the bankers’ bidding. But before I get to that, let’s talk about why he’s wrong on substance.
In his speech, Mr. McConnell seemed to be saying that in the future, the U.S. government should just let banks fail. We “must put an end to taxpayer funded bailouts for Wall Street banks.” What’s wrong with that?
The answer is that letting banks fail — as opposed to seizing and restructuring them — is a bad idea for the same reason that it’s a bad idea to stand aside while an urban office building burns. In both cases, the damage has a tendency to spread. In 1930, U.S. officials stood aside as banks failed; the result was the Great Depression. In 2008, they stood aside as Lehman Brothers imploded; within days, credit markets had frozen and we were staring into the economic abyss. So it’s crucial to avoid disorderly bank collapses, just as it’s crucial to avoid out-of-control urban fires.
Since the 1930s, we’ve had a standard procedure for dealing with failing banks: the Federal Deposit Insurance Corporation has the right to seize a bank that’s on the brink, protecting its depositors while cleaning out the stockholders. In the crisis of 2008, however, it became clear that this procedure wasn’t up to dealing with complex modern financial institutions like Lehman or Citigroup.
So proposed reform legislation gives regulators “resolution authority,” which basically means giving them the ability to deal with the likes of Lehman in much the same way that the F.D.I.C. deals with conventional banks.”
In 1993 William Seidman (former Chairman of the FDIC) in his book “Full Faith and Credit” discussed his FDIC experience and the condition he found the FDIC in when he was appointed to the position as Chairman. He noticed that the division devoted to closing banks was woefully understaffed with permanent employees. As a result he determined that the FDIC needed a thousand employees, permanent staff, devoted to being ready to address bank failures in tough economic times. What Mr. Seidman said in his book was that he thought the FDIC needed these employees, even if they didn’t have anything to do, because as Mr. Seidman put it; “you don’t disband the fire department just because the town arsonist is in jail.”
Unfortunately, the incoming appointees by the George W. Bush Administration to the financial regulatory agencies came to office with an agenda. The agenda was a dismantling of the regulatory agencies. The agencies were downsized and the bank examiners were instructed to cut back on their examination time. The division at the FDIC devoted to closing banks was reduced to the size Mr. Seidman had sought to rectify and which he wrote about in his book. The purpose was simply to get the cat out of the house so the mice…or more aptly described “rats:…could have unfettered reign within the financial world. And…the result was the catastrophe we experienced in 2007 and 2008.
These examples by Paul Krugman and Bill Seidman are interesting metaphoric examples of the work of banking regulators. THE FIRE DEPARTMENT. These are good illustrations of the need for financial regulatory reform, why there needs to be regulators of financial institutions and, in my opinion, why there needs to be a Consumer Protection Agency. These rules, these employees, and these agencies are needed for times of economic turmoil. Bankers left to their own devices will NOT act in the best interest of you or the economy as a whole. They will be driven by greed, and have no recollection of the last financial debacle. They will go for the easy profit, the big salary, and have no compunction to bending the rules to meet their own greedy desires.
The bankers at the top of the major institutions are not willing to do the hard work of the finance business. That business is making one small loan at a time. They are after the big kill. Their attitude is why make a lot of small loans when we can make one big one…the easy route.
They do not understand that long term economic expansion is built on loaning lots of people small amounts of money. They do not understand economic expansion is loaning small amounts of money to purchase washing machines, televisions, computers, cars and houses. It takes underwriting the loans to insure that the borrower is not overextending themselves.
So…we need a good, well equipped, well trained fire department. This department will be structured around a focused Federal Reserve, competent auditors at the Office of the Comptroller of the Currency, State Banking Commissions, Office of Thrift Supervision, Federal Deposit Insurance Corporation, and National Credit Union Administration. Finally, we’ll need a capable staff at the FDIC and a newly created Consumer Protection Agency to shut down banks or other large companies who comprise systemic risk to the country.
The FIRE DEPARTMENT is the perfect metaphor for our predicament.
Firefighters, he declared, “won’t solve the problems that led to recent fires. They will make them worse.” The existence of fire departments, he went on, “not only allows for taxpayer-funded bailouts of burning buildings; it institutionalizes them.” He concluded, “The way to solve this problem is to let the people who make the mistakes that lead to fires pay for them. We won’t solve this problem until the biggest buildings are allowed to burn.”
O.K., I fibbed a bit. Mr. McConnell said almost everything I attributed to him, but he was talking about financial reform, not fire reform. In particular, he was objecting not to the existence of fire departments, but to legislation that would give the government the power to seize and restructure failing financial institutions. But it amounts to the same thing.
Now, Mr. McConnell surely isn’t sincere; while pretending to oppose bank bailouts, he’s actually doing the bankers’ bidding. But before I get to that, let’s talk about why he’s wrong on substance.
In his speech, Mr. McConnell seemed to be saying that in the future, the U.S. government should just let banks fail. We “must put an end to taxpayer funded bailouts for Wall Street banks.” What’s wrong with that?
The answer is that letting banks fail — as opposed to seizing and restructuring them — is a bad idea for the same reason that it’s a bad idea to stand aside while an urban office building burns. In both cases, the damage has a tendency to spread. In 1930, U.S. officials stood aside as banks failed; the result was the Great Depression. In 2008, they stood aside as Lehman Brothers imploded; within days, credit markets had frozen and we were staring into the economic abyss. So it’s crucial to avoid disorderly bank collapses, just as it’s crucial to avoid out-of-control urban fires.
Since the 1930s, we’ve had a standard procedure for dealing with failing banks: the Federal Deposit Insurance Corporation has the right to seize a bank that’s on the brink, protecting its depositors while cleaning out the stockholders. In the crisis of 2008, however, it became clear that this procedure wasn’t up to dealing with complex modern financial institutions like Lehman or Citigroup.
So proposed reform legislation gives regulators “resolution authority,” which basically means giving them the ability to deal with the likes of Lehman in much the same way that the F.D.I.C. deals with conventional banks.”
In 1993 William Seidman (former Chairman of the FDIC) in his book “Full Faith and Credit” discussed his FDIC experience and the condition he found the FDIC in when he was appointed to the position as Chairman. He noticed that the division devoted to closing banks was woefully understaffed with permanent employees. As a result he determined that the FDIC needed a thousand employees, permanent staff, devoted to being ready to address bank failures in tough economic times. What Mr. Seidman said in his book was that he thought the FDIC needed these employees, even if they didn’t have anything to do, because as Mr. Seidman put it; “you don’t disband the fire department just because the town arsonist is in jail.”
Unfortunately, the incoming appointees by the George W. Bush Administration to the financial regulatory agencies came to office with an agenda. The agenda was a dismantling of the regulatory agencies. The agencies were downsized and the bank examiners were instructed to cut back on their examination time. The division at the FDIC devoted to closing banks was reduced to the size Mr. Seidman had sought to rectify and which he wrote about in his book. The purpose was simply to get the cat out of the house so the mice…or more aptly described “rats:…could have unfettered reign within the financial world. And…the result was the catastrophe we experienced in 2007 and 2008.
These examples by Paul Krugman and Bill Seidman are interesting metaphoric examples of the work of banking regulators. THE FIRE DEPARTMENT. These are good illustrations of the need for financial regulatory reform, why there needs to be regulators of financial institutions and, in my opinion, why there needs to be a Consumer Protection Agency. These rules, these employees, and these agencies are needed for times of economic turmoil. Bankers left to their own devices will NOT act in the best interest of you or the economy as a whole. They will be driven by greed, and have no recollection of the last financial debacle. They will go for the easy profit, the big salary, and have no compunction to bending the rules to meet their own greedy desires.
The bankers at the top of the major institutions are not willing to do the hard work of the finance business. That business is making one small loan at a time. They are after the big kill. Their attitude is why make a lot of small loans when we can make one big one…the easy route.
They do not understand that long term economic expansion is built on loaning lots of people small amounts of money. They do not understand economic expansion is loaning small amounts of money to purchase washing machines, televisions, computers, cars and houses. It takes underwriting the loans to insure that the borrower is not overextending themselves.
So…we need a good, well equipped, well trained fire department. This department will be structured around a focused Federal Reserve, competent auditors at the Office of the Comptroller of the Currency, State Banking Commissions, Office of Thrift Supervision, Federal Deposit Insurance Corporation, and National Credit Union Administration. Finally, we’ll need a capable staff at the FDIC and a newly created Consumer Protection Agency to shut down banks or other large companies who comprise systemic risk to the country.
The FIRE DEPARTMENT is the perfect metaphor for our predicament.
Sunday, April 11, 2010
WHICH IS IT, FAITH OR INDISPUTABLE EVIDENCE?
I just got back from church. One of the junior ministers at my Methodist Church was filling in for the senior pastor. The junior minister places great importance, apparently, on the need to KNOW the existence of God and Jesus. I find it interesting that many, if not most; Christians give so little necessity to FAITH, and so much to indisputable evidence. Modern day evangelical Christians insist that you must “know” God exists and Jesus defeated death and rose from his tomb, and you’re just dumb if you don’t profess this with absolute certainty. It is compelling to me that the foundation of Christianity is based on faith…and, really many modern day Christians place very little importance on it. What is faith if it’s indisputable evidence? It’s really not faith at all is it?
Many evangelical Christians do not have a clue that those outside our belief look at us as arrogant. Why? Because we go around insisting we KNOW this and that. The fact of the matter is we don’t know this or that. We BELIEVE this and that. “Believing” is what Christianity is all about. You have to take Christianity on faith. We want to treat those unbelievers as stupid, but they’re not stupid at all. In fact, they’re the ones taking the logical argument. As much as my Christian friends and family may demean this argument…it really isn’t logical that someone can come back to life after being dead three days and continue to live two thousand years later. It’s not illogical of those who say this can’t happen to come to that conclusion…they just don’t believe. Non-belief on its own is not stupid at all…it’s completely logical. That’s the way Christianity is supposed to work. You have to believe it without the facts to assure you.
We need to stop treating anyone who doesn’t believe like we do as though they were ignorant animals. From my perspective belief in God is a bit richer if I believe without proof as opposed to knowing as indisputable God’s existence. It’s the difference in doing “good” for goods sake rather than doing good because you’ll get a reward for doing good. I’ve often said I wouldn’t even go into work if they didn’t pay me…but, I’ll go play golf or play with my grandchildren even when I know I won’t get paid. Why…because I love my grandkids, and in a lesser sort of way love to play golf, or tennis or any of the things I like to do even though there’s nothing in it for me. My guess is a lot of Christians might not be interested in the faith at all if they didn’t think there was a reward at the end of their lives…heaven.
This junior minister noted that even the “demons” know. Probably true! That’s the difference, we mortals don’t know…we just have to believe. That’s exactly the way it’s supposed to be. If we had indisputable evidence it wouldn’t be faith…it would be empirical evidence. No faith is required for indisputable facts. You don’t need to believe in gravity…you only need to throw a rock up into the air.
All religions need to recognize that generally speaking they all serve the same God. So, why is it that they use their particular organized sect as a “team” that is supposed to defeat, even unto death, the other teams who…as I said before, worship the same God. Jews, Christians, and Muslims all worship the same God if you take the history of the Torah, Bible and Koran as historically accurate. The only difference in the organized religions is those who serve the monotheistic God, and those who are Polytheistic. So those who profess that there is only one God are basically on the same team…they just follow different prophets and place greater importance on the prophet they follow.
Unfortunately for reasons well beyond the tenets of their respective religions many of those followers think they have been instructed to destroy the followers of the competing prophets. However, isn’t it interesting that of each prophet’s teachings compassion for all God’s creation is at the core. Whether we’re Jew, Christian, or Muslim, we’re told to treat others like we want them to treat us. Every religions scripture has a similar instruction somewhere in its text. So, why do they choose to pursue destruction of the other’s religion…I’m going to go out on a limb with my thinking here and suggest “GREED.” It has nothing to do with the pursuit of their faith and everything to do with the pursuit of POWER.
Atrocious things have been done in the name of serving God. Every religion whether it be Judaism, Islam, and yes, Christianity (those crosses the KKK were burning didn’t connect them with the Hindus). Criminals on this earth have used God to excuse murder, prejudice, slavery and many other abuses of humanity. The perpetrators always want us to believe they are doing God’s will…that God told them to do whatever. Well…they aren’t doing God’s will…they’re serving their own purpose. Harboring child molesters in the name of saving a denominations perceived (or what’s left of it) good name is neither Christian or virtuous. And, how can a Christian with any conscience at all scoff at the idea of reducing nuclear weapons by 33%, and pledging not to attack a non-nuclear state with our nuclear weapons (the way Sarah Palin, the darling of the evangelical Christian right, did). Does she realize that a nuclear weapon will kill and maim children as well as any misfit government? Here again…it’s not about what God might be saying to anyone…it’s about the lust for power. God didn’t talk to George Bush anymore than he talks to me…and, God never lead me to believe that invading Iraq was his will. It was clearly George and Dick Cheney’s will.
There is not an explainable reason other than the lust for greed and ultimate power that prevents the world’s religions from getting along, and even working together. What religion wants to see a child suffer…whether it is by molestation of the clergy or nuclear holocaust?
We, in the Christian faith, have seen our religion hijacked by the commercialization of Christianity, mostly by conservative politics. It’s become the standard answer for why we go to war, why we shouldn’t pay taxes, why we shouldn’t provide healthcare to everyone, why we shouldn’t be good environmentalist, and why we need to believe totally in capitalism and nothing else. Modern evangelical Christianity and Roman Catholic churches are making plenty of money off commercial conservative Christianity. Why else would the Roman Catholic Church excuse child molestation in an effort to save face of the Roman Catholic Church…it’s about power, it’s about greed, and in Sarah Palin’s case of criticizing the reduction in nuclear weapons it’s about scoring what she thinks might be a political point. But it has nothing to do with anything God has or will say about anything to any particular person, religion, or denomination.
I am a believer! I’m a believer because I choose to be a believer. Those who choose not to believe are no worse or better than I am. I have no right to treat them indignantly. I may be wrong. They may be wrong. It’s to all of us who are Christians to give up our arrogance and realize that faith is absent fact. Because it’s absent fact we need to be at least willing to hear another point of view…in all humility. Who knows…God maybe talking to us!
Many evangelical Christians do not have a clue that those outside our belief look at us as arrogant. Why? Because we go around insisting we KNOW this and that. The fact of the matter is we don’t know this or that. We BELIEVE this and that. “Believing” is what Christianity is all about. You have to take Christianity on faith. We want to treat those unbelievers as stupid, but they’re not stupid at all. In fact, they’re the ones taking the logical argument. As much as my Christian friends and family may demean this argument…it really isn’t logical that someone can come back to life after being dead three days and continue to live two thousand years later. It’s not illogical of those who say this can’t happen to come to that conclusion…they just don’t believe. Non-belief on its own is not stupid at all…it’s completely logical. That’s the way Christianity is supposed to work. You have to believe it without the facts to assure you.
We need to stop treating anyone who doesn’t believe like we do as though they were ignorant animals. From my perspective belief in God is a bit richer if I believe without proof as opposed to knowing as indisputable God’s existence. It’s the difference in doing “good” for goods sake rather than doing good because you’ll get a reward for doing good. I’ve often said I wouldn’t even go into work if they didn’t pay me…but, I’ll go play golf or play with my grandchildren even when I know I won’t get paid. Why…because I love my grandkids, and in a lesser sort of way love to play golf, or tennis or any of the things I like to do even though there’s nothing in it for me. My guess is a lot of Christians might not be interested in the faith at all if they didn’t think there was a reward at the end of their lives…heaven.
This junior minister noted that even the “demons” know. Probably true! That’s the difference, we mortals don’t know…we just have to believe. That’s exactly the way it’s supposed to be. If we had indisputable evidence it wouldn’t be faith…it would be empirical evidence. No faith is required for indisputable facts. You don’t need to believe in gravity…you only need to throw a rock up into the air.
All religions need to recognize that generally speaking they all serve the same God. So, why is it that they use their particular organized sect as a “team” that is supposed to defeat, even unto death, the other teams who…as I said before, worship the same God. Jews, Christians, and Muslims all worship the same God if you take the history of the Torah, Bible and Koran as historically accurate. The only difference in the organized religions is those who serve the monotheistic God, and those who are Polytheistic. So those who profess that there is only one God are basically on the same team…they just follow different prophets and place greater importance on the prophet they follow.
Unfortunately for reasons well beyond the tenets of their respective religions many of those followers think they have been instructed to destroy the followers of the competing prophets. However, isn’t it interesting that of each prophet’s teachings compassion for all God’s creation is at the core. Whether we’re Jew, Christian, or Muslim, we’re told to treat others like we want them to treat us. Every religions scripture has a similar instruction somewhere in its text. So, why do they choose to pursue destruction of the other’s religion…I’m going to go out on a limb with my thinking here and suggest “GREED.” It has nothing to do with the pursuit of their faith and everything to do with the pursuit of POWER.
Atrocious things have been done in the name of serving God. Every religion whether it be Judaism, Islam, and yes, Christianity (those crosses the KKK were burning didn’t connect them with the Hindus). Criminals on this earth have used God to excuse murder, prejudice, slavery and many other abuses of humanity. The perpetrators always want us to believe they are doing God’s will…that God told them to do whatever. Well…they aren’t doing God’s will…they’re serving their own purpose. Harboring child molesters in the name of saving a denominations perceived (or what’s left of it) good name is neither Christian or virtuous. And, how can a Christian with any conscience at all scoff at the idea of reducing nuclear weapons by 33%, and pledging not to attack a non-nuclear state with our nuclear weapons (the way Sarah Palin, the darling of the evangelical Christian right, did). Does she realize that a nuclear weapon will kill and maim children as well as any misfit government? Here again…it’s not about what God might be saying to anyone…it’s about the lust for power. God didn’t talk to George Bush anymore than he talks to me…and, God never lead me to believe that invading Iraq was his will. It was clearly George and Dick Cheney’s will.
There is not an explainable reason other than the lust for greed and ultimate power that prevents the world’s religions from getting along, and even working together. What religion wants to see a child suffer…whether it is by molestation of the clergy or nuclear holocaust?
We, in the Christian faith, have seen our religion hijacked by the commercialization of Christianity, mostly by conservative politics. It’s become the standard answer for why we go to war, why we shouldn’t pay taxes, why we shouldn’t provide healthcare to everyone, why we shouldn’t be good environmentalist, and why we need to believe totally in capitalism and nothing else. Modern evangelical Christianity and Roman Catholic churches are making plenty of money off commercial conservative Christianity. Why else would the Roman Catholic Church excuse child molestation in an effort to save face of the Roman Catholic Church…it’s about power, it’s about greed, and in Sarah Palin’s case of criticizing the reduction in nuclear weapons it’s about scoring what she thinks might be a political point. But it has nothing to do with anything God has or will say about anything to any particular person, religion, or denomination.
I am a believer! I’m a believer because I choose to be a believer. Those who choose not to believe are no worse or better than I am. I have no right to treat them indignantly. I may be wrong. They may be wrong. It’s to all of us who are Christians to give up our arrogance and realize that faith is absent fact. Because it’s absent fact we need to be at least willing to hear another point of view…in all humility. Who knows…God maybe talking to us!
Friday, April 9, 2010
THE PARTY OF “HELL NO” AND WE DON’T APOLOGIZE!
Sarah Palin’s latest attempt to resurrect the Republican Party was sprinkled with the most unpatriotic advice one could find from someone who drapes themselves in the United States uniform and the flag.
First, the Party of “HELL, NO!” I’m assuming besides saying “hell no” to health care reform, which thank goodness is now law, that they will say “hell no” to financial regulatory reform, and “hell no” to attempting to stimulate the economy with more job creation legislation like tax cuts to same businesses for hiring out of work workers, and additional investments in our infrastructure ripe with withering roads, bridges, schools, libraries, state and local buildings. I’m assuming they will be saying “hell no” to retrofitting all government owned buildings with energy efficient devices that might lower our need for Middle East oil and create hundreds of thousands of new jobs. They will surely be saying “hell no” to tax incentives to develop solar, wind and new battery technology for additional sources of energy. They weren’t satisfied with being just the party of NO…Bobby Jindal, Sarah Palin, and John McCain (most surprising of all) want to be the party of “Hell No!” Their words…not mine!
Then the next little gem out of, the “half term” governor of Alaska, Sarah Pallin’s mouth was we’re American’s…we don’t apologize. All of you and any of your friends who happen to read this blog need to ask yourselves…is that what your families taught you…never apologize? Did your mother, father, grandmother, grandfather, aunts and uncles really tell you never to apologize? Probably not! Most of use grew up in families that when we misbehaved our mother’s marched us over to the offended party with our ear lobes in her hand while she waited and we told the person we wronged that we “APOLOGIZED” for what we’ve done. It’s an act of humility. And Sarah, the mental midget that she is, needs to explain to us why this is not an American value. It certainly makes me wonder exactly what kind of a “Christian” household Sarah grew up in and now lauds…refuses to apologize. Since when did arrogance become a virtue?
The Party of “Hell No” is not the country of “old fashioned” values they purport to be. When I was young my parents taught me that apologizing was the “right” thing to do. But, apparently today…it’s just the “left” thing to do!
A final dig at the Alaskan Governor who’s most well known characteristic is that she is a quitter…being a half term Governor as her crowning moment. She has described her most fond motto as “don’t retreat…RELOAD!” But, what really qualifies her as dumb is that she insists even as she expels this motto that it’s not a call to violence. YES IT IS! Words matter Sarah! You are certainly dumb enough to believe that “reload” is just innocuous…but, it’s not Sarah. There are people dumb enough to hang on your every word who believe it is just a demonstration of their second amendment rights to bring a loaded weapon to a political event attended by the President of the United States looking for a chance to fire that weapon. You’ve instructed them to reload. And, to think these people are the bastions of Christianity (at least as they see it). If you really want a biblical example you might try “turn the other cheek” rather that “reload.”
If you really want to see a totalitarian government, just elect the Tea Party to power. These people don’t believe in liberty or democracy…they want to tell you what you can and can’t do. And, speaking of death panels…if you can’t afford to pay for health benefits you will die under their heavy hand.
First, the Party of “HELL, NO!” I’m assuming besides saying “hell no” to health care reform, which thank goodness is now law, that they will say “hell no” to financial regulatory reform, and “hell no” to attempting to stimulate the economy with more job creation legislation like tax cuts to same businesses for hiring out of work workers, and additional investments in our infrastructure ripe with withering roads, bridges, schools, libraries, state and local buildings. I’m assuming they will be saying “hell no” to retrofitting all government owned buildings with energy efficient devices that might lower our need for Middle East oil and create hundreds of thousands of new jobs. They will surely be saying “hell no” to tax incentives to develop solar, wind and new battery technology for additional sources of energy. They weren’t satisfied with being just the party of NO…Bobby Jindal, Sarah Palin, and John McCain (most surprising of all) want to be the party of “Hell No!” Their words…not mine!
Then the next little gem out of, the “half term” governor of Alaska, Sarah Pallin’s mouth was we’re American’s…we don’t apologize. All of you and any of your friends who happen to read this blog need to ask yourselves…is that what your families taught you…never apologize? Did your mother, father, grandmother, grandfather, aunts and uncles really tell you never to apologize? Probably not! Most of use grew up in families that when we misbehaved our mother’s marched us over to the offended party with our ear lobes in her hand while she waited and we told the person we wronged that we “APOLOGIZED” for what we’ve done. It’s an act of humility. And Sarah, the mental midget that she is, needs to explain to us why this is not an American value. It certainly makes me wonder exactly what kind of a “Christian” household Sarah grew up in and now lauds…refuses to apologize. Since when did arrogance become a virtue?
The Party of “Hell No” is not the country of “old fashioned” values they purport to be. When I was young my parents taught me that apologizing was the “right” thing to do. But, apparently today…it’s just the “left” thing to do!
A final dig at the Alaskan Governor who’s most well known characteristic is that she is a quitter…being a half term Governor as her crowning moment. She has described her most fond motto as “don’t retreat…RELOAD!” But, what really qualifies her as dumb is that she insists even as she expels this motto that it’s not a call to violence. YES IT IS! Words matter Sarah! You are certainly dumb enough to believe that “reload” is just innocuous…but, it’s not Sarah. There are people dumb enough to hang on your every word who believe it is just a demonstration of their second amendment rights to bring a loaded weapon to a political event attended by the President of the United States looking for a chance to fire that weapon. You’ve instructed them to reload. And, to think these people are the bastions of Christianity (at least as they see it). If you really want a biblical example you might try “turn the other cheek” rather that “reload.”
If you really want to see a totalitarian government, just elect the Tea Party to power. These people don’t believe in liberty or democracy…they want to tell you what you can and can’t do. And, speaking of death panels…if you can’t afford to pay for health benefits you will die under their heavy hand.
Wednesday, March 24, 2010
EVERYTHING YOU NEVER WANTED TO KNOW ABOUT DEBTS AND DEFICITS
I’m not accustomed to promoting spending beyond your means. Like most Americans, I borrowed when I needed to and always considered my ability to repay my obligations. So, it’s naturally compelling when I hear the patriotic calls from conservatives for the United States Government to conduct their financial affairs similar to the way our citizens conduct their personal financial affairs. It all seems reasonable…right? Not really.
Make no mistake…there are times when the government should seek to go heavier on borrowing and other times when the government should go stronger on savings. One such opportunity was missed in the first decade of the 21st century. When the year two thousand rolled around the United States government was spending about $300 billion less than they were taking in. Republicans gained control of the White House, Senate, and House of Representatives. They promptly cut taxes to the richest two percent of the country reversing what could have been a $3 trillion dollar surplus over the next ten years reducing what was a $5 trillion debt, and turned it into an additional $1.2 trillion of debt. Then, they lurched into an unnecessary war against the weakest of adversaries creating an additional $1 trillion of debt and the loss of 4000 additional precious souls of our military and hundreds of thousands of Iraqi’s. Those are the years we should have been saving…but, we were spending frivolously.
Now…things are different. Twentieth-century British economist, John Maynard Keynes argued in 1930 that private sector decisions sometimes lead to inefficient macroeconomic outcomes and therefore, advocated active policy responses by the public sector, including monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the business cycle. The theories forming the basis of Keynesian economics were presented in The General Theory of Employment, Interest and Money, published in 1936. He advocated interventionist economic policy, by which governments would use fiscal and monetary measures to mitigate the adverse effects of business cycles, economic recessions, and depressions. His ideas are the basis for the school of thought known as Keynesian economics. Simply put, Keynes believed, and was proven right by means of the recovery from the Great Depression, when he advocated the government should spend money to stimulate the economy when the private sector doesn’t, or can’t.
Recently the New York Times in their editorial of February 7, 2010, the Nation magazine in their March 22, 2010 issue, and Time magazine in its March 15, 2010 edition has expounded on the debt and deficit. The Nation and Time articles were particularly interesting in that they were composed by James K Galbraith, economist and professor at the University of Texas, and Zachary Karabell, president of River Twice Research. Mr. Galbraith is the son of John Kenneth "Ken" Galbraith, who was a Canadian-American economist. He was a Keynesian and an institutionalist, a leading proponent of 20th-century American liberalism and progressivism. Yeah…and his son teaches at the University of Texas…fact is stranger than fiction.
The aggregation of these writings advocates the following conclusions. Mr Karabell writes that “the numbers are undoubtedly daunting, with projections of total gross debt reaching 100% of U.S. gross domestic product (GDP) this year or next and surging every year thereafter. But, the debt is probably not as much of a problem as the anxiety we have worked up about the debt.” The amount the country pays to service the national debt isn’t particularly onerous. Interest payments in 2010, (expected to be $500 billion), are not much different in inflation-adjusted terms from what servicing cost 20 years ago, especially to GDP. The same is true for household debt, which has shot up astronomically in dollars but consumes about the same percentage of household income to service as it did in the 1990’s. Said differently, we’re paying about the same percentage of our income to service debt as we did 20 years ago.
The reason we can afford such large debts is that interest rates are so low. At the beginning of 2000, it cost the U.S. government more than 6.5% to borrow money. It now cost less the 2.5%. Relative to the size of the economy, the debt isn’t particularly high by global standards. Of course, we have to be concerned that one day those rates could go up.
Many are concerned with the amount of borrowing from China. I, personally, think there is another argument to this worry. As, I’ve written before in this blog…when you owe the bank $100,000 they own you…when you owe the bank $100 million you own them. The same thing can be said for China. They are in the same boat with us, like it or not. Even with the U.S. economy weak, the dollar remains one of the few truly safe havens, and that means interest rates could stay low for a long time, which in turn means that our debts, however big, can be managed. And, for those of you who have heard the recent threats that the rating agencies might down-grade U.S. Treasuries from their current rate of Aaa…well, China can’t exactly stand for that either. Though eliminating deficits might seem wise, it could actually be fatal to future prosperity. We have to invest and spend to build a future, to help re-create a workforce, and for now debt is a means to that end, provided the Administration and Congress shows it can effectively channel that money.
Half of the debt of trillions of dollars is owed by the federal government to itself, and a quarter more is owed to the American public…a bit of a surprising fact. As incredible as this is…the debt the government owes itself can simply be rolled over endlessly. As long as the dollar remains central to the global system, and there is little chance of that changing in the next decade, the government will have the latitude to borrow more than most other countries.
America’s indebtedness would be sustainable and even healthy if the underlying economy were vibrant, innovative and strong and if federal and state governments could channel those moneys productively and quickly. The problem isn’t how much debt we’re carrying today; it’s whether the economy of tomorrow will be able to justify it. And, as I have previously written, it’s widely recognized that if we could reduce the unemployment rate to 4% the deficit would completely disappear. America isn’t investing enough in its future. We are failing to mobilize resources to improve our health care and infrastructure and stay competitive in global economy that is more clamorous than ever. Hopefully, with the signing of health care legislation on March 23, 2010 (now a very famous day in history and one we should all mark down) perhaps we’ve begun to address the healthcare solution.
James Galbraith goes further…he is concerned with what might happen if a deficit reduction attitude infects the recession’s recovery position we now find ourselves in. He believes a big deficit-reduction program would destroy the economy that remains after the Great Recession. To cut current deficits without rebuilding the private credit system is a sure path to stagnation and probably a second recession. This, Galbriath is surely correct about. Until financial regulatory reform takes place all the same factors remain in place for another crushing financial meltdown…the next one being worst than the last. As sure as the sun will come up tomorrow the financial titans who bought us down in 2007 and 2008 will bring us down again. I work with these people every day. They are as clueless today as they were in 2006. They do not get it!!!
We need to re-establish strong growth and high employment. There are two ways to get the increase in total spending that we call “economic growth.” One way is for government to spend. The other is for banks to lend. That’s basically all there is. Governments and banks are the two entities with the ability to create something from nothing. If total spending power is to grow, one or the other of these two great financial institutions has to be involved.
Here are the undisputable facts of Galbraith’s argument. DEFICITS PUT MONEY IN PRIVATE POCKETS. They own that cash free and clear and they can spend it however they see fit. But, bankers don’t like budget deficits because they compete with bank loans as a source of growth. When banks loan you money it’s not free and clear because you have an obligation to pay THEM first…principal and INTEREST. Wall Street labors hard to confuse the issues. They never thought to warn you about the financial crisis they were creating. These same financial geniuses are warning of the impending bankruptcy of Social Security, Medicare, even the United States itself. Remember, the rating agencies who were publically anointing sub-prime mortgage securities as Aaa securities are now warning that the United States might lose the same rating.
This is where Galbraith takes on a notion that is in contradiction to how we manage our personal debt. The notion that the burdens of public debts will impose burdens on our grandchildren. All of this forms part of one of the great misinformation campaigns of all time. It may seem like homely wisdom, especially, to say that “just like the family, the government can’t live beyond its means.” But, Galbraith insists, “it’s not.” In these matters the public and private sector differ on a very basic point. Your family needs income in order to pay its debts. Your government does not. With government, the risk of nonpayment does not exist. Government does not need to have cash on hand. It is possible that government may spend imprudently. Too much spending may lead to inflation, usually by depreciation of currency…but, with the world in recession there is not an immediate risk. No government can be forced to default on debts in a currency it controls. Public defaults happen only when governments don’t control the currency in which they owe debts.
Galbraith insists public debt is not a burden on future generations. Public debt does not ever have to be repaid. Governments do not die…except in war or revolution, and when that happens, their debts are moot. In the entire history of the United States public debt has increased on all but about six short occasions, with each surplus followed by a recession. These debts are the foundation of economic growth. Bonds owed by the government yield net income to the private sector, unlike all purely private debts which merely transfer income from one part of the private sector to another. Social Security and Medicare are government programs that cannot go bankrupt and cannot fail to meet their obligations unless Congress decides.
Public deficits and private lending are reciprocal. Increased private lending generates new tax revenue and smaller deficits, which is what happened in the 1990’s. A credit collapse kills the tax base and generates more spending, which is what’s happening now, and big deficits are the accounting counterpart of the massive decline, last year, in private bank loans. If we could revive lending we should do it up to a point. Decentralized and competitive banks have much more flexibility. A good banking system, run by capable people with good business judgment who know their clients is good for the economy. However, right now we don’t have functioning big banks. We have “too big to fail,” incompetently run banks. Galbraith believes that all the deficit hysteria is intended to divert attention from dysfunctions of private banking, and is helpful in distracting us from doing meaningful financial reform.
Finally, The New York Times brings a meaningful conclusion. The Times states, “the cold hard economic truth is this; at a time of high unemployment and fragile growth, the last thing which government should do is to slash spending. That will only drive the economy into deeper trouble.” “Spending without taxing is a recipe for huge deficits and running big deficits when the economy is expanding only sets the country up for bigger deficits when the economy contracts.” And, “once a deep recession takes hold, slashing government spending is not going to solve the problem. It only makes is worse.”
The Times offers the following as evidence of stimulus spending by the government having a position effect on a contracting economy. “The stimulus package slowed job losses and helped spur activity – in the third quarter of 2009, the economy grew at an annual rate of 2.2%, and the initial fourth-quarter reading was 5.7%, a rebound few thought possible.”
I’ve said this before but it is worth repeating. Being a deficit hawk in a time of severe economic contraction is like be a water conservationist while your house is on fire. There are times to manage your debt as an individual, and as a country. But, the characteristics are different for us as individuals as opposed to us as a government.
These collective writings from the editors of the New York Times, Zackary Karabell, and James Galbraith are a compelling argument against those conservatives who have seen the light since Barrack Obama was elected. The conservatives might have a point…but, they have it all backwards.
Make no mistake…there are times when the government should seek to go heavier on borrowing and other times when the government should go stronger on savings. One such opportunity was missed in the first decade of the 21st century. When the year two thousand rolled around the United States government was spending about $300 billion less than they were taking in. Republicans gained control of the White House, Senate, and House of Representatives. They promptly cut taxes to the richest two percent of the country reversing what could have been a $3 trillion dollar surplus over the next ten years reducing what was a $5 trillion debt, and turned it into an additional $1.2 trillion of debt. Then, they lurched into an unnecessary war against the weakest of adversaries creating an additional $1 trillion of debt and the loss of 4000 additional precious souls of our military and hundreds of thousands of Iraqi’s. Those are the years we should have been saving…but, we were spending frivolously.
Now…things are different. Twentieth-century British economist, John Maynard Keynes argued in 1930 that private sector decisions sometimes lead to inefficient macroeconomic outcomes and therefore, advocated active policy responses by the public sector, including monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the business cycle. The theories forming the basis of Keynesian economics were presented in The General Theory of Employment, Interest and Money, published in 1936. He advocated interventionist economic policy, by which governments would use fiscal and monetary measures to mitigate the adverse effects of business cycles, economic recessions, and depressions. His ideas are the basis for the school of thought known as Keynesian economics. Simply put, Keynes believed, and was proven right by means of the recovery from the Great Depression, when he advocated the government should spend money to stimulate the economy when the private sector doesn’t, or can’t.
Recently the New York Times in their editorial of February 7, 2010, the Nation magazine in their March 22, 2010 issue, and Time magazine in its March 15, 2010 edition has expounded on the debt and deficit. The Nation and Time articles were particularly interesting in that they were composed by James K Galbraith, economist and professor at the University of Texas, and Zachary Karabell, president of River Twice Research. Mr. Galbraith is the son of John Kenneth "Ken" Galbraith, who was a Canadian-American economist. He was a Keynesian and an institutionalist, a leading proponent of 20th-century American liberalism and progressivism. Yeah…and his son teaches at the University of Texas…fact is stranger than fiction.
The aggregation of these writings advocates the following conclusions. Mr Karabell writes that “the numbers are undoubtedly daunting, with projections of total gross debt reaching 100% of U.S. gross domestic product (GDP) this year or next and surging every year thereafter. But, the debt is probably not as much of a problem as the anxiety we have worked up about the debt.” The amount the country pays to service the national debt isn’t particularly onerous. Interest payments in 2010, (expected to be $500 billion), are not much different in inflation-adjusted terms from what servicing cost 20 years ago, especially to GDP. The same is true for household debt, which has shot up astronomically in dollars but consumes about the same percentage of household income to service as it did in the 1990’s. Said differently, we’re paying about the same percentage of our income to service debt as we did 20 years ago.
The reason we can afford such large debts is that interest rates are so low. At the beginning of 2000, it cost the U.S. government more than 6.5% to borrow money. It now cost less the 2.5%. Relative to the size of the economy, the debt isn’t particularly high by global standards. Of course, we have to be concerned that one day those rates could go up.
Many are concerned with the amount of borrowing from China. I, personally, think there is another argument to this worry. As, I’ve written before in this blog…when you owe the bank $100,000 they own you…when you owe the bank $100 million you own them. The same thing can be said for China. They are in the same boat with us, like it or not. Even with the U.S. economy weak, the dollar remains one of the few truly safe havens, and that means interest rates could stay low for a long time, which in turn means that our debts, however big, can be managed. And, for those of you who have heard the recent threats that the rating agencies might down-grade U.S. Treasuries from their current rate of Aaa…well, China can’t exactly stand for that either. Though eliminating deficits might seem wise, it could actually be fatal to future prosperity. We have to invest and spend to build a future, to help re-create a workforce, and for now debt is a means to that end, provided the Administration and Congress shows it can effectively channel that money.
Half of the debt of trillions of dollars is owed by the federal government to itself, and a quarter more is owed to the American public…a bit of a surprising fact. As incredible as this is…the debt the government owes itself can simply be rolled over endlessly. As long as the dollar remains central to the global system, and there is little chance of that changing in the next decade, the government will have the latitude to borrow more than most other countries.
America’s indebtedness would be sustainable and even healthy if the underlying economy were vibrant, innovative and strong and if federal and state governments could channel those moneys productively and quickly. The problem isn’t how much debt we’re carrying today; it’s whether the economy of tomorrow will be able to justify it. And, as I have previously written, it’s widely recognized that if we could reduce the unemployment rate to 4% the deficit would completely disappear. America isn’t investing enough in its future. We are failing to mobilize resources to improve our health care and infrastructure and stay competitive in global economy that is more clamorous than ever. Hopefully, with the signing of health care legislation on March 23, 2010 (now a very famous day in history and one we should all mark down) perhaps we’ve begun to address the healthcare solution.
James Galbraith goes further…he is concerned with what might happen if a deficit reduction attitude infects the recession’s recovery position we now find ourselves in. He believes a big deficit-reduction program would destroy the economy that remains after the Great Recession. To cut current deficits without rebuilding the private credit system is a sure path to stagnation and probably a second recession. This, Galbriath is surely correct about. Until financial regulatory reform takes place all the same factors remain in place for another crushing financial meltdown…the next one being worst than the last. As sure as the sun will come up tomorrow the financial titans who bought us down in 2007 and 2008 will bring us down again. I work with these people every day. They are as clueless today as they were in 2006. They do not get it!!!
We need to re-establish strong growth and high employment. There are two ways to get the increase in total spending that we call “economic growth.” One way is for government to spend. The other is for banks to lend. That’s basically all there is. Governments and banks are the two entities with the ability to create something from nothing. If total spending power is to grow, one or the other of these two great financial institutions has to be involved.
Here are the undisputable facts of Galbraith’s argument. DEFICITS PUT MONEY IN PRIVATE POCKETS. They own that cash free and clear and they can spend it however they see fit. But, bankers don’t like budget deficits because they compete with bank loans as a source of growth. When banks loan you money it’s not free and clear because you have an obligation to pay THEM first…principal and INTEREST. Wall Street labors hard to confuse the issues. They never thought to warn you about the financial crisis they were creating. These same financial geniuses are warning of the impending bankruptcy of Social Security, Medicare, even the United States itself. Remember, the rating agencies who were publically anointing sub-prime mortgage securities as Aaa securities are now warning that the United States might lose the same rating.
This is where Galbraith takes on a notion that is in contradiction to how we manage our personal debt. The notion that the burdens of public debts will impose burdens on our grandchildren. All of this forms part of one of the great misinformation campaigns of all time. It may seem like homely wisdom, especially, to say that “just like the family, the government can’t live beyond its means.” But, Galbraith insists, “it’s not.” In these matters the public and private sector differ on a very basic point. Your family needs income in order to pay its debts. Your government does not. With government, the risk of nonpayment does not exist. Government does not need to have cash on hand. It is possible that government may spend imprudently. Too much spending may lead to inflation, usually by depreciation of currency…but, with the world in recession there is not an immediate risk. No government can be forced to default on debts in a currency it controls. Public defaults happen only when governments don’t control the currency in which they owe debts.
Galbraith insists public debt is not a burden on future generations. Public debt does not ever have to be repaid. Governments do not die…except in war or revolution, and when that happens, their debts are moot. In the entire history of the United States public debt has increased on all but about six short occasions, with each surplus followed by a recession. These debts are the foundation of economic growth. Bonds owed by the government yield net income to the private sector, unlike all purely private debts which merely transfer income from one part of the private sector to another. Social Security and Medicare are government programs that cannot go bankrupt and cannot fail to meet their obligations unless Congress decides.
Public deficits and private lending are reciprocal. Increased private lending generates new tax revenue and smaller deficits, which is what happened in the 1990’s. A credit collapse kills the tax base and generates more spending, which is what’s happening now, and big deficits are the accounting counterpart of the massive decline, last year, in private bank loans. If we could revive lending we should do it up to a point. Decentralized and competitive banks have much more flexibility. A good banking system, run by capable people with good business judgment who know their clients is good for the economy. However, right now we don’t have functioning big banks. We have “too big to fail,” incompetently run banks. Galbraith believes that all the deficit hysteria is intended to divert attention from dysfunctions of private banking, and is helpful in distracting us from doing meaningful financial reform.
Finally, The New York Times brings a meaningful conclusion. The Times states, “the cold hard economic truth is this; at a time of high unemployment and fragile growth, the last thing which government should do is to slash spending. That will only drive the economy into deeper trouble.” “Spending without taxing is a recipe for huge deficits and running big deficits when the economy is expanding only sets the country up for bigger deficits when the economy contracts.” And, “once a deep recession takes hold, slashing government spending is not going to solve the problem. It only makes is worse.”
The Times offers the following as evidence of stimulus spending by the government having a position effect on a contracting economy. “The stimulus package slowed job losses and helped spur activity – in the third quarter of 2009, the economy grew at an annual rate of 2.2%, and the initial fourth-quarter reading was 5.7%, a rebound few thought possible.”
I’ve said this before but it is worth repeating. Being a deficit hawk in a time of severe economic contraction is like be a water conservationist while your house is on fire. There are times to manage your debt as an individual, and as a country. But, the characteristics are different for us as individuals as opposed to us as a government.
These collective writings from the editors of the New York Times, Zackary Karabell, and James Galbraith are a compelling argument against those conservatives who have seen the light since Barrack Obama was elected. The conservatives might have a point…but, they have it all backwards.
Sunday, March 7, 2010
WHY BIPARTISANSHIP WAS A GOOD IDEA
“No good deed goes unpunished!” This very appropriate “Murphy’s Law” is the perfect characterization of what the President has stepped in the middle of in his noble attempt to attempt working with the Republicans. The Left is sure it’s a waste of time…in fact; they thought it was a waste of time before the President ever mentioned it. As it turns out, they are probably correct. The Right…well, they never appreciated the effort. The Right demonstrated bad faith from the very beginning of the President’s effort. So, was it worth it?
Of course it was. First, the President looks all the better for attempting to work with the conservatives. Had the President simply used working with the right as a campaign stunt…he would have been excoriated by the right, and marginalized by the media. Even though his Republican counterparts never gave working together a chance, the President has never closed the door. By showing unending patience with the Right, the President has taken the high ground and shut off any possibility of the high ground ever being recaptured by the Right.
This President likes something we as the public really don’t understand. Some have described the President as being seduced by bipartisanship. But, it’s clear to me this President places a high value on both sides of every argument being heard. This is a good place to be in. Seduction is what occurs when we only listen to one side. Good ideas do not know political ideology. They come from people who have considered alternatives and chosen a particular path because of the advantages versus the disadvantages.
Have the President’s efforts been a wasted? No doubt they have. But, do we respect him all the more for trying? If we don’t…we should. And, the President should keep trying. It makes him look larger and his argument look better. As for those who turn their back on his never ending “olive branches”…well, they look small and ignorant.
For those of us on the left, we need to develop some patience.
Of course it was. First, the President looks all the better for attempting to work with the conservatives. Had the President simply used working with the right as a campaign stunt…he would have been excoriated by the right, and marginalized by the media. Even though his Republican counterparts never gave working together a chance, the President has never closed the door. By showing unending patience with the Right, the President has taken the high ground and shut off any possibility of the high ground ever being recaptured by the Right.
This President likes something we as the public really don’t understand. Some have described the President as being seduced by bipartisanship. But, it’s clear to me this President places a high value on both sides of every argument being heard. This is a good place to be in. Seduction is what occurs when we only listen to one side. Good ideas do not know political ideology. They come from people who have considered alternatives and chosen a particular path because of the advantages versus the disadvantages.
Have the President’s efforts been a wasted? No doubt they have. But, do we respect him all the more for trying? If we don’t…we should. And, the President should keep trying. It makes him look larger and his argument look better. As for those who turn their back on his never ending “olive branches”…well, they look small and ignorant.
For those of us on the left, we need to develop some patience.
SOLUTIONS COME FROM LEFT AND RIGHT
I have, for some time now, tried to convince my friends on the right that we shouldn’t glorify capitalism as ALL good, nor demonize socialism as ALL bad. That fact is that there are good points from both systems and, in fact, our “American Society” is a blend of the two. Athough, we have never come to recognize that. I grew up in the fifties and I loved Mickey Mantle. I still think he may have been the greatest baseball player…ever. One of my favorite things about Mickey was that he was a “switch hitter.” He could hit from the right or the left with great efficiency. He used this special ability to take advantage of his skills and opposing pitchers. You see, left handed hitters have a better vantage point for hitting against right handed pitchers, and right handed batters have a better vantage point for hitting against left handed pitchers. Left handed hitters aren’t all bad, and right handed hitters aren’t all good. To be able to take the most advantage switch hitters hit from the left and the right.
Just as a switch hitter has those advantages…governments can take the same advantage by using the most advantageous points of view from the left and right too. Robert Pollin is a professor of economics from the University of Massachusetts and recently wrote an article for the Nation magazine, in the March 8, 2010 issue, with come suggestions for creating 18 million jobs in the next three years. A rather ambitious goal, but one we need to reach for if we want to right our ship. I’m quite sure he didn’t include every good idea out there…but, he does emphasize the need for the solutions to come from the left and the right, from private industry and government. The truth is they both create jobs.
One solution, in my opinion, is a more socialized perspective for health care. One disadvantage our private industry experiences with foreign competition is that health care is provided by governments in Japan, Germany, France, and China. Here in the United States every private business is competing with competitors abroad that have this huge advantage on them. It allows our competitors to provide a better value for the goods they sell to us because the cost of health care is not added to the wholesale cost of the foreign products we compete against. So, streamlining the healthcare system in our country by moving to a government run system would reap huge benefits for our capitalistic businesses. Of course, this can’t be accomplished in one fell swoop. It will require a prolonged transition period. Beginning with a government run “public option” health care choice would be a good first step. It seems obvious during the transition period this will surely bring the cost of health care down. The argument from the conservatives is that we can’t afford universal health care. They say we’ve got to control our spending and the only way to bring the “Great Recession” to a close is to curtail spending and reduce the federal deficit.
However, Mr. Pollin points out in his article that if we can bring the unemployment rate down to 4% that our troublesome national annual deficit will be extinguished. Our deficit will be a problem for us going forward and one that will not go away until we get back to employing people…lots of them. Right now about 15 million people are unemployed, and if we include the underemployed there are about 25 million people out of a workforce of 153 million workers. The only way to cure this unemployment tragedy is to release both public and private resources.
Banking reform is another important ingredient to curing the recession. Banks are currently sitting on about $850 billion in reserves, this just at the Federal Reserve. That money needs to be at work in the economy. Banks should be able to reduce those reserves to $200 billion without any adverse impact in Mr. Pollins estimation. You seen as late as 2007 banks only had $21 billion in cash reserves. This clearly explains the overreaction banks have had to the current crisis. We need that $650 billion loaned out at a reasonable rate to support both large and small businesses. I recently had lunch with one of my friends in the banking business who was lamenting about their own bank’s loan management rather than working out reasonable rates with troubled borrowers. Instead the banks management had been increasing the commercial loan rate to 8% and more for troubled borrowers. This is totally unreasonable and will do more harm than good in the long run. This kind of banking practice just keeps borrowers in trouble rather than helps them get back on track. This activity will also harm the bank in the long run…because it will keep the loan from returning to a current payment status and the bank will eventually have to charge off more and more principal from the loans that they handle in this irresponsible manner. There is not a need in this environment for commercial loans to be beyond 5% to 6%. Mr Pollin believes the Fed should push the business borrowing rates down to 3% to 4%. Anything beyond those rates is simply price gouging.
As money is released into the economy from the public and private sectors more jobs will be created and each 1% drop in the unemployment rate will generate an additional $90 billion in government revenues or reduced spending obligation according to Mr. Pollin. When jobs are lost the government loses revenue and is subject to additional spending to support the unemployed. Because when people get jobs they begin to support themselves (reducing the need for unemployment pay and food stamps) and they begin paying taxes.
Another way we can really help ourselves is to get serious about energy conservation. If you go back and review the 1980 recession most of the cause was linked to inflation. During that past economic contraction OPEC and the oil companies doubled the price of oil in a time period of just two years (1979 & 1980). To release ourselves from the clutches of Middle East oil prices will not only help us reduce greenhouse gases, it will pay another benefit in making the need for military intervention less likely to be necessary. The end to Middle East military action would reduce our national spending by $300 billion. But the real benefit to energy conservation is at least two fold. First, it creates jobs…lots of them. Secondly, the energy saving puts more money in the pocket of consumers. The more customers you have and the more money they’re willing to spend the more money everyone makes. According to Mr. Pollin, there are about 24 billion square feet of public building (hospital, schools, & government offices). Retrofitting these offices with new energy conservation measures would cost about $150 billion. “If we assume this program is implemented over three years, at $50 billion per year, this would generate about 800,000 jobs PER YEAR over three years. These actions are an efficient source of job creation, since all the work must be done within local communities, and a large proportion of the budgets go to hiring workers, as opposed to buying equipment, land and energy.” That’s just the public side of retrofitting. The private side could offer even more of a catalyst for energy efficient retrofitting. Mr. Pollin estimates “the potential market for private retrofits for commercial and residential buildings is in the range of $650 billion. If even 20% of these buildings were retrofitted by the end of 2012, it would create another 800,000 jobs PER YEAR.” Not to mention the potential for job creation in building wind turbines, newly designed batteries for the renewable energies, electric cars, solar panels for both industry and residential use. The growing market for conservation and new green energies should put construction workers, and new technology workers back to work in droves. And the creation of jobs has a compounding effect…more people working requires more jobs to support their ancillary needs. This means more grocery store jobs, more department store jobs, more realtors, insurance agents, and more constructions jobs.
The creation of additional jobs by infrastructure building will create even more jobs while improving our roads, bridges, schools, and parks. The federal government shouldn’t be shy about helping state governments either. State governments, county governments, and municipalities make up about $2 TRILLION in annual spending…14% of the GDP according to Mr. Pollin. This occurs through purchasing and generating jobs…approximately 30 million jobs are either directly or indirectly related the state and city governments.
As you can see…there is plenty that both public spending and private spending can do to help us return to more normal economic times. Certainly tax incentives could be helpful…but, there is a significant lag to creating jobs with tax initiatives. In the meantime, we won’t get better unless we help ourselves. Deficit hawks have their place. In fact, it would have been nice to have them at the turn of the century. It would have been nice to have had a full throated debate about going to war in Iraq and imprudent tax cuts for the very rich. But, as I’ve mentioned before on this blog…being a deficit hawk during this time of deep recession is a bit like being a water conservationist while your house is on fire. Our first objective needs to be to get the unemployment down from the current rate of 9.7% to 4%. Once we achieved this we will be in an advantageous position to make spending corrections.
All this said…health care cannot be separated from our financial fate. We have got to cover everyone, and hold cost down. If you haven’t noticed…insurance companies are the problem not the solution. They add absolutely no value to the healthcare of our country and its people. They take 30% of the dollars paid into the companies in the way of premiums and spend it on lavish salaries for their executives, wasted expense on thousands of staff to serve no purpose other than denying claims, and then ridiculous profits. For that 30% that they take off the top…we get nothing. Not one person is treated, nor life saved. Medicare and Medicaid both have operating expenses of less than 3%. Doctors will also tell you that they have to spend unfruitful time, energy, and money on their staffs as well…to fight the insurance companies. This issue cannot be separated from our fiscal well being and it’s foolish to claim we can’t afford to fix the problem. The fact is…we can’t afford NOT to fix the problem.
If we use the best of capitalism and socialism we can be the better for it. After all…this is America, the greatest country on the face of the earth, the sole remaining superpower and the richest of all countries. We can hit from the right and the left. It’s silly not to fully utilize our societal skills.
Just as a switch hitter has those advantages…governments can take the same advantage by using the most advantageous points of view from the left and right too. Robert Pollin is a professor of economics from the University of Massachusetts and recently wrote an article for the Nation magazine, in the March 8, 2010 issue, with come suggestions for creating 18 million jobs in the next three years. A rather ambitious goal, but one we need to reach for if we want to right our ship. I’m quite sure he didn’t include every good idea out there…but, he does emphasize the need for the solutions to come from the left and the right, from private industry and government. The truth is they both create jobs.
One solution, in my opinion, is a more socialized perspective for health care. One disadvantage our private industry experiences with foreign competition is that health care is provided by governments in Japan, Germany, France, and China. Here in the United States every private business is competing with competitors abroad that have this huge advantage on them. It allows our competitors to provide a better value for the goods they sell to us because the cost of health care is not added to the wholesale cost of the foreign products we compete against. So, streamlining the healthcare system in our country by moving to a government run system would reap huge benefits for our capitalistic businesses. Of course, this can’t be accomplished in one fell swoop. It will require a prolonged transition period. Beginning with a government run “public option” health care choice would be a good first step. It seems obvious during the transition period this will surely bring the cost of health care down. The argument from the conservatives is that we can’t afford universal health care. They say we’ve got to control our spending and the only way to bring the “Great Recession” to a close is to curtail spending and reduce the federal deficit.
However, Mr. Pollin points out in his article that if we can bring the unemployment rate down to 4% that our troublesome national annual deficit will be extinguished. Our deficit will be a problem for us going forward and one that will not go away until we get back to employing people…lots of them. Right now about 15 million people are unemployed, and if we include the underemployed there are about 25 million people out of a workforce of 153 million workers. The only way to cure this unemployment tragedy is to release both public and private resources.
Banking reform is another important ingredient to curing the recession. Banks are currently sitting on about $850 billion in reserves, this just at the Federal Reserve. That money needs to be at work in the economy. Banks should be able to reduce those reserves to $200 billion without any adverse impact in Mr. Pollins estimation. You seen as late as 2007 banks only had $21 billion in cash reserves. This clearly explains the overreaction banks have had to the current crisis. We need that $650 billion loaned out at a reasonable rate to support both large and small businesses. I recently had lunch with one of my friends in the banking business who was lamenting about their own bank’s loan management rather than working out reasonable rates with troubled borrowers. Instead the banks management had been increasing the commercial loan rate to 8% and more for troubled borrowers. This is totally unreasonable and will do more harm than good in the long run. This kind of banking practice just keeps borrowers in trouble rather than helps them get back on track. This activity will also harm the bank in the long run…because it will keep the loan from returning to a current payment status and the bank will eventually have to charge off more and more principal from the loans that they handle in this irresponsible manner. There is not a need in this environment for commercial loans to be beyond 5% to 6%. Mr Pollin believes the Fed should push the business borrowing rates down to 3% to 4%. Anything beyond those rates is simply price gouging.
As money is released into the economy from the public and private sectors more jobs will be created and each 1% drop in the unemployment rate will generate an additional $90 billion in government revenues or reduced spending obligation according to Mr. Pollin. When jobs are lost the government loses revenue and is subject to additional spending to support the unemployed. Because when people get jobs they begin to support themselves (reducing the need for unemployment pay and food stamps) and they begin paying taxes.
Another way we can really help ourselves is to get serious about energy conservation. If you go back and review the 1980 recession most of the cause was linked to inflation. During that past economic contraction OPEC and the oil companies doubled the price of oil in a time period of just two years (1979 & 1980). To release ourselves from the clutches of Middle East oil prices will not only help us reduce greenhouse gases, it will pay another benefit in making the need for military intervention less likely to be necessary. The end to Middle East military action would reduce our national spending by $300 billion. But the real benefit to energy conservation is at least two fold. First, it creates jobs…lots of them. Secondly, the energy saving puts more money in the pocket of consumers. The more customers you have and the more money they’re willing to spend the more money everyone makes. According to Mr. Pollin, there are about 24 billion square feet of public building (hospital, schools, & government offices). Retrofitting these offices with new energy conservation measures would cost about $150 billion. “If we assume this program is implemented over three years, at $50 billion per year, this would generate about 800,000 jobs PER YEAR over three years. These actions are an efficient source of job creation, since all the work must be done within local communities, and a large proportion of the budgets go to hiring workers, as opposed to buying equipment, land and energy.” That’s just the public side of retrofitting. The private side could offer even more of a catalyst for energy efficient retrofitting. Mr. Pollin estimates “the potential market for private retrofits for commercial and residential buildings is in the range of $650 billion. If even 20% of these buildings were retrofitted by the end of 2012, it would create another 800,000 jobs PER YEAR.” Not to mention the potential for job creation in building wind turbines, newly designed batteries for the renewable energies, electric cars, solar panels for both industry and residential use. The growing market for conservation and new green energies should put construction workers, and new technology workers back to work in droves. And the creation of jobs has a compounding effect…more people working requires more jobs to support their ancillary needs. This means more grocery store jobs, more department store jobs, more realtors, insurance agents, and more constructions jobs.
The creation of additional jobs by infrastructure building will create even more jobs while improving our roads, bridges, schools, and parks. The federal government shouldn’t be shy about helping state governments either. State governments, county governments, and municipalities make up about $2 TRILLION in annual spending…14% of the GDP according to Mr. Pollin. This occurs through purchasing and generating jobs…approximately 30 million jobs are either directly or indirectly related the state and city governments.
As you can see…there is plenty that both public spending and private spending can do to help us return to more normal economic times. Certainly tax incentives could be helpful…but, there is a significant lag to creating jobs with tax initiatives. In the meantime, we won’t get better unless we help ourselves. Deficit hawks have their place. In fact, it would have been nice to have them at the turn of the century. It would have been nice to have had a full throated debate about going to war in Iraq and imprudent tax cuts for the very rich. But, as I’ve mentioned before on this blog…being a deficit hawk during this time of deep recession is a bit like being a water conservationist while your house is on fire. Our first objective needs to be to get the unemployment down from the current rate of 9.7% to 4%. Once we achieved this we will be in an advantageous position to make spending corrections.
All this said…health care cannot be separated from our financial fate. We have got to cover everyone, and hold cost down. If you haven’t noticed…insurance companies are the problem not the solution. They add absolutely no value to the healthcare of our country and its people. They take 30% of the dollars paid into the companies in the way of premiums and spend it on lavish salaries for their executives, wasted expense on thousands of staff to serve no purpose other than denying claims, and then ridiculous profits. For that 30% that they take off the top…we get nothing. Not one person is treated, nor life saved. Medicare and Medicaid both have operating expenses of less than 3%. Doctors will also tell you that they have to spend unfruitful time, energy, and money on their staffs as well…to fight the insurance companies. This issue cannot be separated from our fiscal well being and it’s foolish to claim we can’t afford to fix the problem. The fact is…we can’t afford NOT to fix the problem.
If we use the best of capitalism and socialism we can be the better for it. After all…this is America, the greatest country on the face of the earth, the sole remaining superpower and the richest of all countries. We can hit from the right and the left. It’s silly not to fully utilize our societal skills.
Thursday, February 18, 2010
CLIMATE CHANGE
Since those of us with roots in Oklahoma and Texas must deal with the insanity of elected representatives who would have fit more aptly in the 15th Century rather than the 21st, we must deal with the notorious blathering of the notion of “climate change being a hoax” (by Senator James Inhofe) or the necessity of the Governor of Texas to sue the Environmental Protection Agency for regulating carbon emissions. Last November, the emails of several top climate scientists were hacked and published. Climate deniers seized upon a handful of quotes as evidence that man-made global warming is actually in doubt in the scientific community. However, several independent investigations have concluded that the emails in no way casts doubt on the overwhelming, decades-long scientific research and the reality of climate change.
In case your friends who have an allergy to intellect and scientific research, I provide the accumulation below for you to offer our friends in denial. And, one additional thing…let’s just say the deniers are correct…wouldn’t it still make sense to develop cleaner sources of energy because we have to breath the air we pollute. Maybe you should suggest to your friends who doubt the damage done by greenhouse emissions that you would be better convinced if they would just hook up a plastic tube to one of their carbon emitting cars and breathe that air directly into their lungs for a week or two. I’m just guessing none of them will be bending over to wrap their lips around the exhaust pipe of their car to prove the point to you. This said…wouldn’t that be great if all the talent of FOX (so called) News and Rush Limbaugh would prove this point to us. Just think…Fox and the Excellence in Broadcast Network (Rush’s broadcast flagship) could just pump car exhaust right into the studios for the next year. Shoot, if they’d do that I be really convinced they believed what they said.
Now…here’s the claims and the responses to those claims.
#1 CLAIM: Scientists have manipulated data.
Skeptics have been pointing to an email from scientist Phil Jones where he said he used a "trick" with his data. As climate expert Bob Ward writes, "Scientists say 'trick' not just to mean deception. They mean it as a clever way of doing something -- a short cut can be a trick." RealClimate also explained that "the 'trick' is just to plot the instrumental records along with reconstruction so that the context of the recent warming is clear. Scientists often use the term 'trick' to refer to ... 'a good way to deal with a problem', rather than something that is 'secret', and so there is nothing problematic in this at all."
#2 CLAIM: Scientists had private doubts about whether the world really is heating up.
TRUTH: Combing through over a decade of personal correspondence, which is then taken out of context can seem to prove just about anything. Skeptics have been pointing to one email from Kevin Trenberth, in which he said, "The fact is that we can't account for the lack of warming at the moment and it is a travesty that we can't." However, this is clear example of cherry picking quotes. Trenberth was referring to hat there was an "incomplete explanation" of the short-term variability of temperatures, but concludes that "global warming is unequivocally happening."
#3 CLAIM: These scientists worked to suppress evidence and deleted emails.
TRUTH: Thousands of emails from over 13 years were stolen, and edited, and have been taken out of context for those with a political agenda. As blogger Jeff Masters writes,
"Even if every bit of mud slung at these scientists were true, the body of scientific work supporting the theory of human-caused climate change—which spans hundreds of thousands of scientific papers written by tens of thousands of scientists in dozens of different scientific disciplines—is too vast to be budged by the flaws in the works of the three or four scientists being subject to the fiercest attacks."
As climate czar Carol Browner says, "I'm sticking with the 2,500 scientists [of the Intergovernmental Panel on Climate Change.] These people have been studying this issue for a very long time and agree this problem is real."
#4 CLAIM: Scientists have been working to remove skeptical peers from the climate discussion.
TRUTH: Organization politics, disagreement and strife are hardly foreign ideas in university, research and scientific communities. As the blog run by climate scientists Real Climate writes, "Since emails are normally intended to be private, people writing them are, shall we say, somewhat freer in expressing themselves than they would in a public statement." Again, this does not remotely prove any sort of cover-up, and the critiques of these papers were made and debated by scientists PUBLICLY, but perhaps less bluntly than they were stated in the emails. (Here's what the "infamous" line about keeping people out and peer review was ACCTUALLY about.)
#5 CLAIM: These emails are the final nail in the coffin for the idea that humans cause global warming.
TRUTH: If the denier's wildest claims were true that are bantered around throughout the Internet, wouldn't nearly 15 years of emails ACTUALLY SHOW some of these insipid rumors to be true?
More from Real Climate: "More interesting is what is not contained in the emails. There is no evidence of any worldwide conspiracy, no mention of George Soros nefariously funding climate research, no grand plan to ‘get rid of the MWP’, no admission that global warming is a hoax, no evidence of the falsifying of data, and no ‘marching orders’ from our socialist/communist/vegetarian overlords. The truly paranoid will put this down to the hackers also being in on the plot though."
#6 CLAIM: This reignites the debate about if global warming is real.
TRUTH: There is strong consensus in scientific community that global warming is real and is caused by humans. The top scientists in the world have just released a new report on the realities of global warming. Kevin Grandia summarizes some of the key points about emissions, melting ice sheets, and rising sea levels. The emails don't change any of this reality.
In case your friends who have an allergy to intellect and scientific research, I provide the accumulation below for you to offer our friends in denial. And, one additional thing…let’s just say the deniers are correct…wouldn’t it still make sense to develop cleaner sources of energy because we have to breath the air we pollute. Maybe you should suggest to your friends who doubt the damage done by greenhouse emissions that you would be better convinced if they would just hook up a plastic tube to one of their carbon emitting cars and breathe that air directly into their lungs for a week or two. I’m just guessing none of them will be bending over to wrap their lips around the exhaust pipe of their car to prove the point to you. This said…wouldn’t that be great if all the talent of FOX (so called) News and Rush Limbaugh would prove this point to us. Just think…Fox and the Excellence in Broadcast Network (Rush’s broadcast flagship) could just pump car exhaust right into the studios for the next year. Shoot, if they’d do that I be really convinced they believed what they said.
Now…here’s the claims and the responses to those claims.
#1 CLAIM: Scientists have manipulated data.
Skeptics have been pointing to an email from scientist Phil Jones where he said he used a "trick" with his data. As climate expert Bob Ward writes, "Scientists say 'trick' not just to mean deception. They mean it as a clever way of doing something -- a short cut can be a trick." RealClimate also explained that "the 'trick' is just to plot the instrumental records along with reconstruction so that the context of the recent warming is clear. Scientists often use the term 'trick' to refer to ... 'a good way to deal with a problem', rather than something that is 'secret', and so there is nothing problematic in this at all."
#2 CLAIM: Scientists had private doubts about whether the world really is heating up.
TRUTH: Combing through over a decade of personal correspondence, which is then taken out of context can seem to prove just about anything. Skeptics have been pointing to one email from Kevin Trenberth, in which he said, "The fact is that we can't account for the lack of warming at the moment and it is a travesty that we can't." However, this is clear example of cherry picking quotes. Trenberth was referring to hat there was an "incomplete explanation" of the short-term variability of temperatures, but concludes that "global warming is unequivocally happening."
#3 CLAIM: These scientists worked to suppress evidence and deleted emails.
TRUTH: Thousands of emails from over 13 years were stolen, and edited, and have been taken out of context for those with a political agenda. As blogger Jeff Masters writes,
"Even if every bit of mud slung at these scientists were true, the body of scientific work supporting the theory of human-caused climate change—which spans hundreds of thousands of scientific papers written by tens of thousands of scientists in dozens of different scientific disciplines—is too vast to be budged by the flaws in the works of the three or four scientists being subject to the fiercest attacks."
As climate czar Carol Browner says, "I'm sticking with the 2,500 scientists [of the Intergovernmental Panel on Climate Change.] These people have been studying this issue for a very long time and agree this problem is real."
#4 CLAIM: Scientists have been working to remove skeptical peers from the climate discussion.
TRUTH: Organization politics, disagreement and strife are hardly foreign ideas in university, research and scientific communities. As the blog run by climate scientists Real Climate writes, "Since emails are normally intended to be private, people writing them are, shall we say, somewhat freer in expressing themselves than they would in a public statement." Again, this does not remotely prove any sort of cover-up, and the critiques of these papers were made and debated by scientists PUBLICLY, but perhaps less bluntly than they were stated in the emails. (Here's what the "infamous" line about keeping people out and peer review was ACCTUALLY about.)
#5 CLAIM: These emails are the final nail in the coffin for the idea that humans cause global warming.
TRUTH: If the denier's wildest claims were true that are bantered around throughout the Internet, wouldn't nearly 15 years of emails ACTUALLY SHOW some of these insipid rumors to be true?
More from Real Climate: "More interesting is what is not contained in the emails. There is no evidence of any worldwide conspiracy, no mention of George Soros nefariously funding climate research, no grand plan to ‘get rid of the MWP’, no admission that global warming is a hoax, no evidence of the falsifying of data, and no ‘marching orders’ from our socialist/communist/vegetarian overlords. The truly paranoid will put this down to the hackers also being in on the plot though."
#6 CLAIM: This reignites the debate about if global warming is real.
TRUTH: There is strong consensus in scientific community that global warming is real and is caused by humans. The top scientists in the world have just released a new report on the realities of global warming. Kevin Grandia summarizes some of the key points about emissions, melting ice sheets, and rising sea levels. The emails don't change any of this reality.
Sunday, February 7, 2010
A MUST READ FROM THE NEW YORK TIMES
I wouldn’t normally reprint an entire editorial, or article of any kind on this blog. But, Sunday’s New York Times Editorial I think is a must read for anyone who really wants to understand the recession along with the political difficulty of addressing our economic destination going forward. I agree with everything in the article, save the suggestion at the end of the editorial.
This suggestion seems harsh to me to the most fragile among us…the very oldest beneficiaries of social security. I don’t think our society should tolerate a penalty for living long. However, other than that suggestion by the times I think this is a lengthy article…but, a short primer for economics.
February 7, 2010
Editorial
The Truth About the Deficit
When the White House released its new budget last week, including more spending to create desperately needed jobs, Republican leaders in Congress denounced President Obama for driving up the deficit and demanded that the Democrats halt their “reckless” ways.
The deficit numbers — a projected $1.3 trillion in fiscal 2011 alone — are breathtaking. What is even more breathtaking is the Republicans’ cynical refusal to acknowledge that the country would never have gotten into so deep a hole if President George W. Bush and the Republican-led Congress had not spent years slashing taxes — mainly on the wealthy — and spending with far too little restraint. Unfortunately, the problem does not stop there.
The Republican amnesia and posturing are playing well on the hustings, where Americans are deeply anxious about the economy and fearful of losing their jobs and homes. Far too many Democratic lawmakers are losing their nerve.
Americans should be anxious, for reasons including the huge deficit. But the cold economic truth is this: At a time of high unemployment and fragile growth, the last thing the government should do is to slash spending. That will only drive the economy into deeper trouble.
None of this means that the politicians — from either party — are off the hook. They will soon need to make hard decisions about how to reduce the deficit. But more posturing and sniping is not going to make the economy better or solve the deficit problem. President Obama has called on the Republicans to join a bipartisan commission to help make those tough decisions, but they have been resistant to the proposal.
•
We fear the demagoguing is not going to stop, especially with Congressional elections this November. As the budget debate plays out, here are some basic facts about the deficit that Americans need to consider:
HOW DID WE GET HERE? When President Bush took office in 2001, the federal budget had been in the black for three years, and continued surpluses were projected for a decade to come.
By the time Mr. Bush left office in early 2009, the government had run big deficits for seven straight years, and the economy was on the brink of another Great Depression. On Jan. 7, 2009 — two weeks before Mr. Obama was inaugurated — the Congressional Budget Office issued new budget estimates showing a fiscal year 2009 deficit of well over $1 trillion.
About half of today’s huge deficits can be chalked up to Bush-era profligacy: mainly cutting taxes deeply while borrowing to wage two wars and to enact the Medicare prescription drug benefit — all of which Republicans supported, virtually in lockstep.
The other half of recent deficits is due to the recession and the financial crisis.
To avoid a meltdown, the government — under President Bush and President Obama — rightly decided it had no choice but to spend hundreds of billions of dollars to bail out banks and car companies and to stimulate the economy. That prevented a very bad situation from becoming much worse, but as the recession dragged on, hundreds of billions in tax revenues have also dried up.
As for why the financial system and the economy imploded, President Bush and Congress deserve much of the blame for their devotion to debt-driven growth and blind deregulatory zeal — although on deregulation, President Clinton and his team (some of whom are back in the White House) were also complicit.
Were it not for those multiple calamities, budget deficits today would be negligible. That does not mean we would be off the hook. An aging population and relentlessly rising health care costs will hit the country with even deeper deficits as the baby boomers retire. Politicians need to pass health care reform now and start thinking seriously about Social Security and tax reform.
So what are the immediate fiscal lessons here? The first lesson is that spending without taxing is a recipe for huge deficits, and that running big deficits when the economy is expanding only sets the country up for bigger deficits when the economy contracts. The second lesson is that once a deep recession takes hold, slashing government spending is not going to solve the problem. It will only make it worse.
WHAT CAN BE DONE NOW? Here is an unpopular but undeniable fact of life: When private sector demand is weak, the federal government must serve as the spender of last resort. Otherwise, collapsing demand sets in motion a negative, self-reinforcing spiral in which lack of demand — for goods, services and new employees — leads to ever deepening economic weakness.
That is why when the banks and the economy began to crumble in 2008, President Bush responded with a $700 billion bank bailout and a $168 billion stimulus package. When Mr. Obama took office, the banks were still shaky and the economy was still plunging— as measured by real-life indicators like jobs, consumer spending, credit availability, home equity, retirement savings and business confidence. The new administration made the sound decision to continue the bailout and pushed a $787 billion stimulus through Congress, with very little Republican help.
The stimulus package slowed job losses and helped spur activity — in the third quarter of 2009, the economy grew at an annual rate of 2.2 percent, and the initial fourth-quarter reading was 5.7 percent, a rebound few thought possible a year ago.
Still, without a jobs revival to boost consumer spending and tax revenues — and with the states facing immense budget shortfalls — the economy is unlikely to do anything other than limp along, at best, once the effects of the stimulus fade this year.
In his recent budget, Mr. Obama proposed to spend $266 billion on tax credits for hiring and new job-creation investments, and on other short-term stimulus including extended unemployment compensation. That would improve on the House-passed $154 billion jobs bill. But in the Senate, Republicans are balking at the prospect of a big bill, saying they need to hold down the deficit. They have spooked the Democrats, who are now trying to negotiate what appears to be a far too modest bill in hopes of winning Republican support.
What they should be saying — and what the White House should be saying a lot louder — is that a prolonged downturn or a renewed recession would do far more damage to the budget than upfront deficit spending. In fact, a clear lesson from the Depression of the 1930s is that reducing deficits at a time of economic fragility undercuts recovery.
SO DO WE JUST LIVE WITH THE DEFICIT? The problem must be addressed. Persistently high deficits are harmful to the economy and the country’s long-run security.
If the government must keep borrowing to make up the difference, it could drive up interest rates and force private companies to compete with the government for investors. That, in turn, would reduce economic growth and, by extension, the potential earnings — and standard of living — of everyone.
The process is generally gradual. But it could be wrenching if creditors lose confidence that the government will ever put its fiscal house in order and suddenly decide to put their money elsewhere. That could lead to a fiscal crisis, with sharp spikes in interest rates and a rapidly depreciating currency.
There is no question that, over the next several decades, deficits and debt in the United States are headed for dangerously high levels. But today’s deficit fearmongers invariably fail to note that the impact of stimulus spending on the long-term fiscal problem is small, because the spending is temporary.
The real problem, which also goes unmentioned, is that dangerous deficits will accumulate over time if continuing trends and policies — especially in health care — persist unchanged.
SO HOW DO WE FIX IT? Mr. Obama’s budget makes a down payment on deficit reduction by freezing some nonsecurity discretionary spending for three years, and by letting the Bush tax cuts for the richest Americans expire at the end of this year.
To truly tame deficits will require serious health care reform, the sooner the better. Other aspects of the long-term fiscal problem — raising taxes and retooling Social Security — must take place in earnest as the economy recovers.
Contrary to popular belief, there are many well-thought-out ideas for such reforms. Where technical questions are difficult, particularly on health care costs, reformers have advocated demonstration projects that can be tested over time. Where the real difficulty lies is summoning the political will to do what must be done, even though it will be unpopular.
If these problems are not addressed, here is what we face: Under current policies, federal debt in the United States — the sum total of annual deficits — would grow from 53 percent of the size of the economy in 2009 to more than 300 percent by 2050, driven mainly by rapidly rising health care costs and, in part, by the aging of the population. Combined, those two factors exert enormous pressure on the government’s biggest spending programs, Medicare and Medicaid, and, to a lesser extent, Social Security.
Unless health care costs are controlled, there is no way to solve the country’s long-term deficit and debt problems.
But that will not be enough. Broad tax reform is also essential to ensure that revenues keep pace with expenditures. From 1978 to 2008, revenues averaged about 18.4 percent of the economy. But without policy changes, expenditures for everything other than interest on the national debt will increase from 19.2 percent of the size of the economy in 2008 to 24.5 percent in 2050.
On the need for more taxes, Mr. Obama has been less than candid, pledging never to raise taxes on anyone making less than $250,000. Republican lawmakers have been worse, calling for tax cuts at most every opportunity — and never acknowledging that a shortfall in revenue is one of the important causes of the deficit.
The deficit commission that Mr. Obama intends to establish could be helpful in breaking this logjam, by calling for necessary changes that politicians would be loath to broach without political cover.
We hope that health care reform will move ahead before that. If it does, the commission will still have to press for new taxes that both raise revenue and broaden the tax base, including a value added tax.
And then there is Social Security. What is needed is a combination of benefit cuts and tax increases that preserve the program’s essential nature — a contract under which the young support the old via taxes and the rich help the poor via a benefits formula that favors low- income beneficiaries. One sound approach would be to link benefit levels to life expectancy, so that as people live longer, future benefits would be modestly reduced while payroll taxes that support Social Security would be modestly increased.
•
There is no way to get deficits under control until our political leaders are willing to acknowledge difficult truths and make even more difficult political choices. We have heard and seen too little of that from the Democrats lately, and none at all from the Republicans. That is truly a recipe for disaster.
This suggestion seems harsh to me to the most fragile among us…the very oldest beneficiaries of social security. I don’t think our society should tolerate a penalty for living long. However, other than that suggestion by the times I think this is a lengthy article…but, a short primer for economics.
February 7, 2010
Editorial
The Truth About the Deficit
When the White House released its new budget last week, including more spending to create desperately needed jobs, Republican leaders in Congress denounced President Obama for driving up the deficit and demanded that the Democrats halt their “reckless” ways.
The deficit numbers — a projected $1.3 trillion in fiscal 2011 alone — are breathtaking. What is even more breathtaking is the Republicans’ cynical refusal to acknowledge that the country would never have gotten into so deep a hole if President George W. Bush and the Republican-led Congress had not spent years slashing taxes — mainly on the wealthy — and spending with far too little restraint. Unfortunately, the problem does not stop there.
The Republican amnesia and posturing are playing well on the hustings, where Americans are deeply anxious about the economy and fearful of losing their jobs and homes. Far too many Democratic lawmakers are losing their nerve.
Americans should be anxious, for reasons including the huge deficit. But the cold economic truth is this: At a time of high unemployment and fragile growth, the last thing the government should do is to slash spending. That will only drive the economy into deeper trouble.
None of this means that the politicians — from either party — are off the hook. They will soon need to make hard decisions about how to reduce the deficit. But more posturing and sniping is not going to make the economy better or solve the deficit problem. President Obama has called on the Republicans to join a bipartisan commission to help make those tough decisions, but they have been resistant to the proposal.
•
We fear the demagoguing is not going to stop, especially with Congressional elections this November. As the budget debate plays out, here are some basic facts about the deficit that Americans need to consider:
HOW DID WE GET HERE? When President Bush took office in 2001, the federal budget had been in the black for three years, and continued surpluses were projected for a decade to come.
By the time Mr. Bush left office in early 2009, the government had run big deficits for seven straight years, and the economy was on the brink of another Great Depression. On Jan. 7, 2009 — two weeks before Mr. Obama was inaugurated — the Congressional Budget Office issued new budget estimates showing a fiscal year 2009 deficit of well over $1 trillion.
About half of today’s huge deficits can be chalked up to Bush-era profligacy: mainly cutting taxes deeply while borrowing to wage two wars and to enact the Medicare prescription drug benefit — all of which Republicans supported, virtually in lockstep.
The other half of recent deficits is due to the recession and the financial crisis.
To avoid a meltdown, the government — under President Bush and President Obama — rightly decided it had no choice but to spend hundreds of billions of dollars to bail out banks and car companies and to stimulate the economy. That prevented a very bad situation from becoming much worse, but as the recession dragged on, hundreds of billions in tax revenues have also dried up.
As for why the financial system and the economy imploded, President Bush and Congress deserve much of the blame for their devotion to debt-driven growth and blind deregulatory zeal — although on deregulation, President Clinton and his team (some of whom are back in the White House) were also complicit.
Were it not for those multiple calamities, budget deficits today would be negligible. That does not mean we would be off the hook. An aging population and relentlessly rising health care costs will hit the country with even deeper deficits as the baby boomers retire. Politicians need to pass health care reform now and start thinking seriously about Social Security and tax reform.
So what are the immediate fiscal lessons here? The first lesson is that spending without taxing is a recipe for huge deficits, and that running big deficits when the economy is expanding only sets the country up for bigger deficits when the economy contracts. The second lesson is that once a deep recession takes hold, slashing government spending is not going to solve the problem. It will only make it worse.
WHAT CAN BE DONE NOW? Here is an unpopular but undeniable fact of life: When private sector demand is weak, the federal government must serve as the spender of last resort. Otherwise, collapsing demand sets in motion a negative, self-reinforcing spiral in which lack of demand — for goods, services and new employees — leads to ever deepening economic weakness.
That is why when the banks and the economy began to crumble in 2008, President Bush responded with a $700 billion bank bailout and a $168 billion stimulus package. When Mr. Obama took office, the banks were still shaky and the economy was still plunging— as measured by real-life indicators like jobs, consumer spending, credit availability, home equity, retirement savings and business confidence. The new administration made the sound decision to continue the bailout and pushed a $787 billion stimulus through Congress, with very little Republican help.
The stimulus package slowed job losses and helped spur activity — in the third quarter of 2009, the economy grew at an annual rate of 2.2 percent, and the initial fourth-quarter reading was 5.7 percent, a rebound few thought possible a year ago.
Still, without a jobs revival to boost consumer spending and tax revenues — and with the states facing immense budget shortfalls — the economy is unlikely to do anything other than limp along, at best, once the effects of the stimulus fade this year.
In his recent budget, Mr. Obama proposed to spend $266 billion on tax credits for hiring and new job-creation investments, and on other short-term stimulus including extended unemployment compensation. That would improve on the House-passed $154 billion jobs bill. But in the Senate, Republicans are balking at the prospect of a big bill, saying they need to hold down the deficit. They have spooked the Democrats, who are now trying to negotiate what appears to be a far too modest bill in hopes of winning Republican support.
What they should be saying — and what the White House should be saying a lot louder — is that a prolonged downturn or a renewed recession would do far more damage to the budget than upfront deficit spending. In fact, a clear lesson from the Depression of the 1930s is that reducing deficits at a time of economic fragility undercuts recovery.
SO DO WE JUST LIVE WITH THE DEFICIT? The problem must be addressed. Persistently high deficits are harmful to the economy and the country’s long-run security.
If the government must keep borrowing to make up the difference, it could drive up interest rates and force private companies to compete with the government for investors. That, in turn, would reduce economic growth and, by extension, the potential earnings — and standard of living — of everyone.
The process is generally gradual. But it could be wrenching if creditors lose confidence that the government will ever put its fiscal house in order and suddenly decide to put their money elsewhere. That could lead to a fiscal crisis, with sharp spikes in interest rates and a rapidly depreciating currency.
There is no question that, over the next several decades, deficits and debt in the United States are headed for dangerously high levels. But today’s deficit fearmongers invariably fail to note that the impact of stimulus spending on the long-term fiscal problem is small, because the spending is temporary.
The real problem, which also goes unmentioned, is that dangerous deficits will accumulate over time if continuing trends and policies — especially in health care — persist unchanged.
SO HOW DO WE FIX IT? Mr. Obama’s budget makes a down payment on deficit reduction by freezing some nonsecurity discretionary spending for three years, and by letting the Bush tax cuts for the richest Americans expire at the end of this year.
To truly tame deficits will require serious health care reform, the sooner the better. Other aspects of the long-term fiscal problem — raising taxes and retooling Social Security — must take place in earnest as the economy recovers.
Contrary to popular belief, there are many well-thought-out ideas for such reforms. Where technical questions are difficult, particularly on health care costs, reformers have advocated demonstration projects that can be tested over time. Where the real difficulty lies is summoning the political will to do what must be done, even though it will be unpopular.
If these problems are not addressed, here is what we face: Under current policies, federal debt in the United States — the sum total of annual deficits — would grow from 53 percent of the size of the economy in 2009 to more than 300 percent by 2050, driven mainly by rapidly rising health care costs and, in part, by the aging of the population. Combined, those two factors exert enormous pressure on the government’s biggest spending programs, Medicare and Medicaid, and, to a lesser extent, Social Security.
Unless health care costs are controlled, there is no way to solve the country’s long-term deficit and debt problems.
But that will not be enough. Broad tax reform is also essential to ensure that revenues keep pace with expenditures. From 1978 to 2008, revenues averaged about 18.4 percent of the economy. But without policy changes, expenditures for everything other than interest on the national debt will increase from 19.2 percent of the size of the economy in 2008 to 24.5 percent in 2050.
On the need for more taxes, Mr. Obama has been less than candid, pledging never to raise taxes on anyone making less than $250,000. Republican lawmakers have been worse, calling for tax cuts at most every opportunity — and never acknowledging that a shortfall in revenue is one of the important causes of the deficit.
The deficit commission that Mr. Obama intends to establish could be helpful in breaking this logjam, by calling for necessary changes that politicians would be loath to broach without political cover.
We hope that health care reform will move ahead before that. If it does, the commission will still have to press for new taxes that both raise revenue and broaden the tax base, including a value added tax.
And then there is Social Security. What is needed is a combination of benefit cuts and tax increases that preserve the program’s essential nature — a contract under which the young support the old via taxes and the rich help the poor via a benefits formula that favors low- income beneficiaries. One sound approach would be to link benefit levels to life expectancy, so that as people live longer, future benefits would be modestly reduced while payroll taxes that support Social Security would be modestly increased.
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There is no way to get deficits under control until our political leaders are willing to acknowledge difficult truths and make even more difficult political choices. We have heard and seen too little of that from the Democrats lately, and none at all from the Republicans. That is truly a recipe for disaster.
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