Tuesday, July 26, 2011

It's Not Governance

Are you enjoying the show? Well, I hope someone is because the political theatre we've been witnessing over the last month or two has been very painful to watch. I'm talking about the debt ceiling negotiations that have occupied the media and the markets, while keeping our government from functioning for quite some time now.

I'm no economics or political science professor; but, I'm guessing most of you aren't either. So let's just take a look at the current situation from a practical and, hopefully, honest position. Maybe that way we can try to understand this mess. And a real mess it is. But in my estimation it's far more of a political mess than anything else.

First let's look at how we got here. Our nation has about a $14 trillion dollar debt. We have more bills coming due than we have money coming in right now to pay those bills. So, we have to borrow more money to pay our bills. The Treasury Department would like to borrow about two and half trillion more to make it through the next couple of years. Please note that this money is not for more spending- it is for money we already owe. If we don't allow the government to borrow that money the U.S. will default, meaning we can't pay all our bills. In that case The President and the Treasury will decide which bills they will pay and which they won't. Fact: some bills won't get paid (Social Security? Medicare? Military/VA benefits?Unemployment benefits?). Fact: financial markets will react worldwide-negatively. Fact: Interest rates for everyone of us will go up a lot. Fact: Consumer goods, durable goods, auto industry, and real estate, markets will completely dry up. (And, those markets are hurting pretty badly now.)

Let's look at where all that debt came from. A full three quarters of our national debt came from the following sources. It came from fighting two wars over the last ten years. We have been spending about $2 billion a week- That's well over $100,000,000,000.00 a year for ten years! It also came from a Medicare prescription drug program (Medicare Part D) that is estimated to cost over a trillion dollars over ten years. What's interesting is that when it was passed- it wasn't included in the federal budget. It was passed as a supplemental appropriation- just like those two wars. Then there were the Bush tax cuts that added $1.3 trillion in lost revenue, with most advantages going to the wealthiest 2%. The last major source of this debt is from reduced revenues caused by this Great Recession. Even though Republican are insisting on cutting Social Security now as a response to the debt ceiling crisis, Social Security has not added even a penny to the debt. The Social Security Trust Fund is solvent until 2037.

Let's look at the history of our economics over the last 30 years. I believe we've been fooled very badly into believing what politicians say instead of what economists say. Over those years politicians have promoted "trickle down economics" which means that when industry owners and capitalists get rich from tax breaks, tax loop holes, and deregulation they share the wealth on down the line. Politicians also promoted something called "supply-side economics", which means that capitalists and industrialists produce more goods (supply) than consumers demand, and the consumers will purchase those goods just because they are available, even if they use credit to buy them. In fact easy credit is part of the system. I'm sure we all remember credit cards just appearing daily in our mailboxes. The trouble with these economic theories is that they don't work. They never have over any more than short periods. That's why politicians promote that stuff instead of economists. Real economists know better. But I think even we (non-economists) know that demand creates economic growth- not supply.

A few other things happened over the last thirty years based on these political theories about our economy. The rich got appreciably richer while middle class income stagnated. Corporations and the wealthy, (i.e. Job Creators) have shipped millions of American jobs to other countries, while creating a trade deficit that is hurting this country very badly. In addition America has gone from being a creditor nation to the biggest debtor nation in the world today.

Let's look at the political landscape. President Bush's policies are directly responsible for creating this mess. He got us into these wars using dubious reasoning and facts. He instituted the Medicare Part D program that was unfunded and served as a major giveaway to the drug companies because it disallowed any price bargaining. He took a surplus and gave it away to the rich in tax breaks. His policies deregulating our banking system and promoting what he called "an ownership society" led directly to the real estate bubble and the financial markets' crash of 2008, and plunged us into this recession. But I don't let President Obama off the hook either. Mr. Obama has failed to generate any hope, by being aggressive about job creation and has allowed the Republicans to control the debate and the message. I'm not sure why anyone would hope for honest negotiations with people who have said publicly their main objective is to destroy you. Quite frankly the Republicans have been highly successful in giving this President nothing- no real comprehensive health care reform, no effective economic stimulus package, no Senate confirmations on key posts and judgeship's and no honest deals on the debt ceiling. So he clearly needs a new strategy- this one isn't working. But it was never intended to work. The other side is focused on making him "a one term President". They said it and they meant it. They are the party of NO!

Meanwhile, 14 million Americans are out of work. Getting them back to work will create demand and help end this recession, but that's not where our government's head is now. It's on 2012. The President asked for a deal going past 2012 because he doesn't want this thing clouding the election, and the Republicans only offer a short term deal because they do want it clouding the election. Their political fate rests on the failure of the country and the President. I'm with the President on this point. Can you imagine the chaos of this thing happening during an election? Speaker Boehner always complains that companies aren't hiring because of "uncertainty" - but now he insists uncertainty be built in to any deal. Not very honest, sir. When it comes to honesty we have to ask where these deficit hawks were when President Bush added $5 trillion to the national debt. They just quietly raised the debt limit seven times and followed the dictates of Dick Cheney who famously said, "deficits don't matter".  We wouldn't even be talking about this if John McCain had been elected, even though we would still have the same debt issues. Politics- but not honesty, then or now.

So here we are watching this hapless bunch play out their game- only the stakes are very high. This is all great theatre- but it is not governance. Perhaps it is too much to expect statesmanship. But a fair degree of honesty and statesmanship would go along way toward restoring our national confidence. Let's demand governance.

Thanks for looking in.

Tuesday, July 19, 2011

Dear Unknown,

I decided I was going to write this Blog a few months ago; and even if no one read it, or reacted to it, it would be a good thing to do. I felt that way because, as I've said before, it's a way to give my brain a little exercise and just possibly entice people to think some different thoughts or at least do more thinking. Of course, I've wondered from time to time if anybody out there in the cyber-world of the Internet actually reads these small efforts of mine. It's not a make or break proposition for me, but you can understand how I might be curious.

It turns out that Blogger keeps track of that for me. I was surprised and delighted to see that I've had almost 600 "pageviews" on this Blog since I began this venture. I'll admit that some of the stuff I write can be a bit trying because of the political themes I gravitate towards, and because I don't do a brief paragraph or two. But I've made a few efforts to interject some thoughts about my personal life experiences too. The most recent of those (more personal) efforts was called "It Starts with Your Eyes" (June 28, 2011) In that article I was moved to write about the prospect of aging and how I am attempting to fashion a point of view that doesn't focus on what we lose, but how important it is to stay focused on the future. This particular article was in response to a cousin of mine who had just suffered a major heart problem. She's still recovering nicely, by the way. But I think we should use our experiences, and the experiences of others to give us pause to think, be forward leaning- and not just go through life looking in the rear-view mirror.

It is not often that I look back on the articles I've written, but I did last week. In doing so, I saw I had a very nice  response to the article I just mentioned. I don't know who wrote it. It was obvious to me, though, that it wasn't someone I know. It didn't come from the Facebook folks- it was just a response from someone who read what I wrote and shared a little bit of their life with me, in return. It came from "Unknown".

This was very touching for several reasons. First, it was just good to know that someone is reading what I write. This response let me know that people do care what goes on in the world and in each others lives, even if we don't know each other. I like that. That kind of connection is heartening and touched me personally. Secondly, the feedback caused me to look into the Blogger stats to see that I have had many more pageviews than I ever imagined, and they come from different parts of the country and two countries in Europe. I don't say this to boast- but to say I felt humbled by the notion that people will use this medium to share thoughts. And, I'm grateful to be a part of it.  I appreciated the encouragement in the  response, and it made me wish I knew more about "Unknown".

Our world is a busy place full of new ways to share our lives and our world with those around us. Some might say, too busy, with too much information (and noise) fired in our direction all the time. But I can tell you this, when I saw that response from "Unknown", it made my day! I realized we all need better connections to one another- connections that express a simple kindness, or just the idea that we are all here together, doing our best to navigate this fascinating life we have.

Thanks for looking in- and thank you Dear Unknown.

Wednesday, July 13, 2011

Balanced Budget Myth

As our country is supposedly "dealing" with the debt crisis, and the debt ceiling, and the total national debt, we are being subjected to the usual brand of theatrical politicking that goes on in our, nearly paralyzed, capital all the time. Of course this year it is particularly concerning because both sides in this purely political debate seem unwilling to see country first, and political ambitions as secondary. Both parties seem to have more divisions within their own party, than between the parties. Added to all that mess, we are starting down the road toward another presidential election to complicate things even more. Or Perhaps that's why this is such a complicated mess.

So with all this happening, naturally some Republicans are resurrecting the old fall-back stance that the only way to resolve our money problems is through a Constitutional Amendment requiring a balanced budget. It's  not unexpected- this kind of silly rhetoric comes up from time to time. But this time I hearkened back to the typical media blitz we see when these things start swirling through the national debate.

Picture this (and I know you can- because we've all seen this one on TV), a typical middle class couple sitting at the kitchen table- a stack of bills in front of them. The couple speak in earnest tones and big sighs to each other about how hard it is to make ends meet. They say, "well, we"ll just have to tighten our belts and cut back till things get better. I sure wish those big-spenders in Washington would do what families have to do. Then they would understand what we're going through". Then you see some politician come on and say, "American families know how to balance their budget. Elect (or support, or contribute to, or believe) me, and I'll bring American common sense to government in Washington. If American Families can balance their budget, then Washington can too!"

Wow, very inspiring! But total crap. Using the typical American family as an analogy for the way government ought to function is a myth. It is a myth because Americans, in fact people in most developed nations, do not operate on a balanced budget- nor can we. Let's examine the truth behind this myth and dispel forever the lies we get fed on this issue and others like it.

First, we know that "Balanced Budget" means that we can spend only the money we take in. This applies to any entity; family, business, or government. Now imagine that an American family can only spend the money it takes in during any budget cycle- typically that is one month or one year, but we could make it two years just for fun. Very few people would be able to buy a new car-almost all new cars are purchased on credit. Very, very few would be able to buy a house. We have mortgages for that. (i.e. long-term debt)Very few would be able to purchase furniture, appliances, any other durable goods, or be able to travel. Imagine trying to enroll your child in college and the registrar stops you and says, "sorry, we only serve families with balanced budgets. If you don't have the $35 thousand for this year you can't come in". Student loans folks! (i.e. more long-term debt)

Sophisticated  budgets operate on credit. That includes most business and family budgets. Developed countries, and their people, absolutely require it to even out budget cycles and to purchase items over time. These activities actually stimulate economies and are a healthy part of commerce. Think about any small business owner, the folks Republicans tout so much, trying to stay in business without a line of credit (i.e. continuing debt). To prove the point, Americans are currently holding about 1.5 trillion dollars in consumer (non-mortgage) debt- and many trillions more in mortgage debt. This is what makes the current political foolishness so frustrating and nerve-racking. Everyone of normal (non-political) intelligence knows we must be allowed to barrow or the economy would grind to a halt in about a day. Think of the consequences of a true balanced budget for our federal government. We would never have the ability to respond to natural disasters or military aggression against us, or any other national emergency without sudden and precipitous tax increases every time some event occurred. Imagine the politics of that!

I'm not arguing in favor of senselessly stacking up crippling debt. But I am sickened by the hypocrisy of those who are holding things up now; when they were the very same people who ran up the debt for two wars, unfunded drug company giveaways and tax breaks for rich people- the same people who are absolutely intractable on the idea of raising even one more dollar in taxation while defending the richest people in their corporate jets. At the very least I want to be spared the indignity of using my family and the families of so many others to push lies about balanced budgets. The analogy just doesn't fit.

I would just hope those in Washington would stop the posturing and raise the debt ceiling like they did for President Reagan seventeen times and they did for President G.W. Bush seven times, without comment or conditions. They are really playing with economic fire and risking all of our livelihoods. If this country defaults- there will be a world-wide credit crisis that will effect every person you know and send us in to an even deeper economic trough.

I'm in a bit of a cranky mood on this topic- but, thanks for looking in.

Tuesday, July 5, 2011

An FDR Moment

The following are excerpts from a speech delivered on October 31st 1936:

"...powerful influences are trying to restore that kind of government with its doctrine that government is best which is most indifferent to mankind. That, to me sums up Republican politics, the  kind of politics that count on the voters' lowest impulse, individual greed, to sell its idea of carrying on at the expense of all else, be it nature or the future of mankind.

For four years now you have had an administration, which instead of of twirling its thumbs, has rolled up its sleeves. And I assure you that we will keep our sleeves rolled up. We had to struggle with the old enemies of peace; business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering. They had begun to consider the government of the United States as a mere appendage to their own affairs; and we know that government by organized money is just as dangerous as government by organized mob.

Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me, and I welcome their hatred."

The excerpts quoted above were from a speech delivered by President Franklin Delano Roosevelt at Madison Square Garden just before the election of 1936, wherein he won his second term. The parallels to our situation today are striking.

In 1932 when FDR won the presidency the first time he inherited a Great Depression that had been raging for three years and only grown worse under the policies of the Hoover administration. Those policies featured budget cuts,  breaks for the wealthiest, and an outright rejection of the idea of government spending to stimulate the economy or create job growth. Indeed, rejection of the idea that government should serve its people in any way. In early 1933 when FDR took office with huge Democratic majorities in Congress he began an aggressive set of programs to reverse the policies of the previous Republican administration and Congress. He and the Congress set about creating major Government programs that built dams, bridges, hi-way systems, and major efforts like the Tennessee Valley Authority that brought the south into the modern world. Today we would call these Infra-structure projects. In addition he created the Civilian Conservation Corps and other jobs programs.

Please remember that all this happened at the darkest and most hopeless moments of the financial crisis. But he used the power of his office and his own personal strength of leadership to push these programs through. The list of accomplishments and change that came about in this period is staggering. These programs, including Social Security, transformed the country forever. FDR restored the people's faith that government could make a positive impact on its people-that government serves the people.

Today we face nearly identical issues, and predictably the same set of choices the country faced in dealing with the Great Depression. However, there is a major difference between that era and this one. The difference is leadership. Today, like 1932, a President is faced with creating bold new programs to correct the disaster left behind by the last set of leaders. Today, like 1932 the current Republican party blames the current President for the problems they caused only a few short years before- because he didn't fix them quickly enough, and (of course) without  an ounce of cooperation from them. Today's leadership in the White House and in the Democratic caucuses of the Congress, however, seem to lack the boldness and the courage of an FDR.

President Obama could deliver the same speech, word for word, FDR delivered in 1932 and be spot-on with the issues that FDR spoke of. But, unfortunately, President Obama doesn't say, "I welcome their hatred". In 1932 President Roosevelt defined the debate and framed the solutions his way. The people heard the message and stood with their President because, even though he was a man of privilege himself,  he challenged the money interests- and put people back to work. He knew you cannot "cut" your way back to prosperity.

We have the same opportunities today. We have a crumbling infra-structure, an antiquated power grid, an old 19th century rail system, with roads, bridges and school buildings falling apart. We also have a dying energy system based on withering amounts of fossil fuel that only guarantee two things- it will get more expensive and it will continue to ruin our planet. The opportunities are there for jobs and for a brighter future. We have an FDR moment! We need an FDR!

 President Obama has abilities to seize this moment, but he continually backs away, just when we need him most. I believe we cannot be short-sighted and forget our history. We must prime the pump of employment by using aggressive programs to create jobs the way FDR did. We must encourage our President to stand up, re-take the debate from those who package their ideas in thinly veiled hatred- "welcome their hatred" and be the bold president we expected. The times demand it and as involved citizens, we must demand it too. We live an age when it is so easy to communicate our wishes to our leaders. The Internet makes it an easy task. Take advantage and write to our President, write to your congress person and your Senators. Let them know the "old enemies of peace" should not prevail this time either.

Thanks for looking in.