Thursday, April 28, 2011

The Left wing budget fantasy counterproposal

Paul Ryan’s budget is a Republican fantasy that puts most of the deficit cutting actions into spending cuts.  Obama’s counter budget is little more than a political campaign position paper for his 2012 run.  So, where is the Democrat counter-fantasy budget proposal that puts most of the deficit cutting into actions tax increases?

It turns out, there is one, by the Congressional Progressive Caucus, labeled “The People’s Budget” (progressives endlessly recycle old leftist/socialist/communist labels like “The People’s Something-or-other”, they need some new branding)

It has no more chance of becoming law than Ryan’s cutting fantasy, but it’s not a bad left wing fantasy counterpoint to the Ryan fantasy.  They keep entitlements intact, close corporate loopholes, raise taxes on the rich, and get to a budget surplus in a decade (which is long before Ryan’s fantasy gets to a surplus).  Aggressive taxation of the rich (I think a top rate of 50% is what they are wanting), higher income tax brackets, rescind the Bush tax cuts passed in December, impose an estate tax, create a public option for health care, governmental negotiating power to reduce drug prices, spending on job creation, infrastructure, housing, reduce military involvements around the world, and gut defense spending. 

I would temper their predicted revenue increases with their tax increases because the left never takes into account how tax changes end up changing the behavior of the taxed – they find ways to delay, defer, and avoid the taxes.  But, still, increasing taxes will increase revenues, just not as much as they promise in their budgets.  My preference is restructuring taxes by eliminating all loopholes – corporate and personal – and lowering the rates.  I believe this can raise revenues for the government and still stimulate the economy.

So, there we have two bookends to the deficit reduction imperative – cut spending from the Republicans, and increase revenues form the Democrats.  Now, how to get Washington to actually start negotiations with these two ends of the spectrum on the table?

There is only one way for that to happen, and it has to be by the leadership the president of the United States.  If Obama doesn’t do it, the next president will.  And, that might be what gets the next president elected, a plan that combines elements of both the cutters and the taxers into a workable budget.

Wouldn’t it be nice if Obama would do that now?  Who knows, he might even get re-elected as a result.

Tuesday, April 26, 2011

Must be time for a nice speech

On Syria, Obama is doing nothing, again… must be time for a nice speech.  As Michael Gerson points out, Obama’s pattern in reaction to a crisis is to do nothing, give little sound bites about needed reforms from the sidelines as if he were powerless to do anything but scold the tyrants, do very little, and make a nice speech. 

How comforting that will be for the Syrians being hunted and killed.

Meanwhile, this administration seems befuddled by the ineluctable move in the Middle East against tyrannical police states supporting corrupt kleptocracies.  This is a movement as momentous as the overthrow of Communism and the Soviet empire in 1989.  The Islamic world is moving into the 21st Century, and good for them, and it’s not about the U.S. or the West.  They are creating an Islamic version of representative government, and I don’t think that movement will be able to be stolen by Islamist tyrants to supplant the previous venal tyrants.

But the absence of support from America for massive democratic movements like this is contrary to America’s purpose for being – freedom from tyranny. 

The United States didn’t have a revolution to be free of England, it had a revolution to be free of the tyranny of the unelected aristocracy.  That revolution has spread throughout the world, and is now in the Middle East.  In a deeply fundamental way, the revolution in the Arab world is an extension of the American revolution of 1776.  The rule of aristocracies continues to be overthrown by the people demanding freedom. 

It would be nice if the current American president did a little more than make speeches about it all - how about economic sanctions, freezing of assets of the tyrants, withdrawing of the U.S. ambassador, expelling the Syrian ambassador from America?  Just some suggestions.

Saturday, April 23, 2011

Home with a fever

Paying no attention to the outside world.  It's on its own for a while.

Tuesday, April 19, 2011

U S rating put on negative watch

The U.S. Government has been put on "Negative Watch" by Standard and Poors.  Their reasoning is that if the government can't come up with reasonable deficit reduction changes in two years, they will have to drop their AAA rating.

What this really means, it seems to me, is that the U.S. Government already should be rated less than AAA.  This is the same S&P that gave AAA ratings to toxic mortgage backed securities during the housing bubble, and to Bear Stearns and Lehman Brothers right up to the brink of their collapses.  

I may be overly concerned about the possibility that the big monies of China, the Middle East, Pension funds, etc. will start turning away from U.S. Treasuries and need higher interest rates on those bonds to attract investors.  In one sense, where else do they turn?  Japan, Europe, and other countries are probably in even worse shape than the U.S.  But, I find it of little comfort that if honest ratings were given out the U.S. would be mediocre and a little above worse ratings of the alternatives.

It really seems to me that our government is playing out the same script that Bear Sterns, Lehman, and AIG already played out.  Upper management had some notion that things weren't right with their finances but they diminished the problems, very publicly assured all of their investors that everything was under control, and then went over the cliff and collapsed totally.

Now we have the President and his administration reassuring us that we have nothing to worry about, everything is under control.  I say, look out below.

Our government has to come together and change.  I still believe we need both spending cuts and revenue increases.  If we don't, ratings go down, interest rates go up, and the economy spirals down, either dramatically or slowly, but down.  

I send positive energies and prayers that this is a wake up call for the management of this country, a country considered Too Big to Fail.

Friday, April 15, 2011

Going too far, as usual

Political parties always over-reach these days. 

The House Republicans just passed the draconian Paul Ryan budget plan.  Ryan’s plan was courageous but flawed, with no concessions to any moderate or liberal ideas.  Obviously the Republicans steamrollered this through without really considering amendments. 

This will, of course, be the spawning of a left wing Tea-Party-like  countermovement that will bring the Democrats back with a vengeance.

The Obama and Democrat victory in 2008 gave left wing Democrats the notion that they had a country wide mandate for left wing policy.  So they passed Keynesian stimulus spending and Obama Care, which inspired the right wing Tea Party movement, which cost the Democrats the House and their big majority in the Senate.

Now it will all happen again, only in reverse.

How often will these wild swings happen before the extremists of both parties stop misinterpreting election results and trying to govern from their ideologically pure perspectives?  Or, more to the point, since extremists are by definition unable to consider other points of view, when will the adults finally step forward and take charge of negotiating deals that find ways to bring the country together?

Thursday, April 14, 2011

Pretty speech...

As usual with an Obama speech, it was a grand elocution of broad principles and light on specifics. 

Nothing about how he would reform Social Security (how about raising the retirement age and means testing?).  Reduce Medicare and Medicaid waste and fraud - again?  Haven’t we been trying to cut waste and fraud for years?  Decades?  Raise taxes on the rich, but don’t touch the middle class (pandering for votes rather than raising much in the way of revenues).  Cut military spending, but no specifics.  Protect “investments” (spending on social programs). 

The issue is not so much that the politicians don’t have the courage to do this, which of course they don’t, but that the public is in denial about the scope of the problem.  Conservative voters think you can solve the problem by cutting entitlements and social programs, and liberal voters think you can solve the problem by raising taxes on the wealthy and cutting military spending.

The terrible truth is that both are right but insufficient.  We need both, not either/or. 

And there is only one person who can do both, the president of the United States.  He needs to lead, and do more than make pretty speeches that end up being little more than stump speeches for his next election campaign.

I reject the conservative notion that increasing taxes will do much to hurt the economy.   I reject the liberal notion that increased government spending will do much to boost the economy.  These ideological beliefs may hold some truth in normal times, but his is not a normal time. 

I think we are on a fast track to sudden and large interest rate increases that will be needed to sell U.S. Treasury bonds in order to finance government spending.  And when that happens, the interest on the debt wipes out everything else the government wants to spend money on.  Then we go into a death spiral toward bankruptcy and galloping inflation, and the lives of every American change dramatically for the worse. 

We need more than campaign speeches.  We need more than obsolete ideologies based on a world that is gone – that world disappeared with the advent of the Great Recession.  We need to cut spending and increase taxes.  We need to cut the deficit to very close to zero or the interest on the debt will devour the government.

Monday, April 11, 2011

It's up to the president

Obama has yet to come out with his budget cutting proposal, but I hope he is serious about it.  Ryan came out with a Republican wish list more than a serious proposal, but it is a politically risky start of the negotiation, so good for him.

I firmly believe that what is needed is both spending cuts and revenue increases.  Those who think they can get out of the impending bankruptcy of the nation with only one half of that formula are being childish – wanting to avoid looking at the problems and keep running up the debts.  They are spending their energies on attacking their political opponents rather than solving the problem, and with winning elections rather than solving this crisis.

This is an issue where both parties must move at the same time to do politically suicidal things.  It is suicide for Republicans to raise taxes, and it is suicide for Democrats to cut spending.  I had hoped they would each offer both cuts and increases, but it looks like the Reps will end up offering cuts and the Dems will end up offering tax increases, and the only one who can lead to come up with a real fiscal overhaul that combines the two is the president. 

Either Obama does it now, or his replacement will do it in 2013.

Wednesday, April 6, 2011

Another nutcase leaves TV

Just as I was delighted to see Keith Olbermann fired from MSNBC, I am even more delighted to see that Glen Beck is leaving Fox News.  Both Beck and Fox are saying nice things about each other, but I am sure they are both glad to get rid of each other. 

I believe that the most toxic thing in our country today is the polarization of this country by the extremists.  Their mutual paranoias get in the way of reasoned dialogue amongst the rest of us.  I am glad to see these two driven off of TV by their own volatile intemperate temperaments.

Beck will continue with his radio show, and continue to spew his odd paranoia, but at least his nuttiness will no longer tarnish the Fox News brand.  I have always thought that the liberal media unfairly attacked Fox News as being right wing, but there are two Fox News's - the editorial shows which give opinions, which are right wing, of course - and the news shows themselves, Bret Baier and Shep Smith, which are pretty good news shows.

Another wingnut down.  There is reason for hope.

Cut spending AND raise revenues

Dana Milbank of the the Washington Post does a good job of getting to the heart of the problems with Paul Ryan's budget proposal - it's not a budget proposal at all but is instead a tax cutting manifesto.

I pointed out in my blog yesterday that a serious proposal would include tax increases and military cuts as well as entitlement cuts.  I suppose that one could imagine that Ryan expects those moves to come from the left side of the isle and he was just staking out a negotiating position.  But, I think that the seriousness of this crisis is so great that I hate to see gamesmanship be part of the dialogue.  

The part of Ryan's proposal that I like the least is the notion of privatizing Medicare.  I think that would end up ending Medicare because it would put the elderly into the realm of the insurance companies, and the elderly, by definition, have "pre-existing conditions" - they are old and at risk of many illnesses.  I don't see that happening.

As to the endless and tiresome drumbeat of lowering taxes that comes from the Republicans, I think it is time for them to grow up and acknowledge the limits of their religious belief in Reaganomics theology.  The theory that lower taxes stimulate the economy is limited at best.  Reagan lowered taxes and the economy grew, that is true.  But, a couple of other things happened too.  Regulations were reduced and inflation was dramatically lowered by Volker's Federal Reserve.  The biggest cause of economic prosperity in the Reagan years, in my opinion, was getting inflation under control.  

As to the deregulation, it was totally discredited by the economic meltdown of 2008 when we all discovered that effective, powerful, punishing regulation was desperately needed in the financial sector, was missing, and millions of jobs were lost because of that lack of regulation.

Again, I praise Paul Ryan for seriously addressing the most pressing crisis in America: our impending bankruptcy as a nation.  But, without revenue increases, cuts in military spending, and preservation of the social safety net, it is a loser.  

The ball is in Obama's court.  I hope, again, that he advances the ball and comes back with a very serious budget proposal that incorporates Ryan's goals, but does it with liberal approaches.  That means cutting spending and raising revenues.  It is too important for demagoguing.  I have great hope that the president will rise to the occasion and provide much needed leadership.

Tuesday, April 5, 2011

It's Obama's move

Obama has refused to lead the country in its most important crisis - the gathering bankruptcy of the country.  Paul Ryan, Republican Chairman of the House Budge Committee, has courageously presented a specific budget that restructures the shape of the Federal government and sets the course for fiscal recovery.  

He avoided raising taxes, which I think is a big mistake.  The only way out of our financial catastrophe, in my mind, is to both cut spending and raise revenues.  Revenues can be raised by tax reform that eliminates all loopholes and still lowers tax rates for both individuals and corporations.  This would stimulate the economy by lowering rates, and provide funds for necessary government by increasing revenues.  The way for Republicans to be taken seriously on this is to propose revenue increases and military cuts, because it is obvious that Democrats will only sign on to a program that does these two things.

But, Ryan deserves much praise for putting his plan on the table.  Where is Obama's plan?  Indeed, where is Obama?  Why didn't he lead this effort to run the country in a fiscally responsible way?  The truth is that this effort has to be bipartisan, and it can only be led by one person - the president of the United States.  But, Mr. Obama doesn't seem to like to lead.  

If Obama demagogues this issue by attacking Ryan and the Republicans on partisan terms, or stands back and lets the Pelosis savage this effort to bring responsibility to the government, I will be profoundly disappointed in him.  This is an issue even more important than his beloved health care reforms, or even our military efforts in the Middle East.  

Without reform of this magnitude, eventually all of the Federal budget will be to pay off the interest on the debt, with nothing left over for much of anything else.  

I think Republicans and Democrats both are going to have to seriously reduce expenditures on entitlements and the military, and will have to raise revenues.  

The Republicans have made their move.  It is up to Obama to respond.  How he does will tell us if he is a statesman and a leader, or just another partisan hack of a politician.  

I have hope that he will rise to the occasion with a response that moves the ball forward, rather than one that just tries to win the next election.