Category Archives: Deficit

Downgraded Expectations

Posted on by

I’m not just referring to the lowered credit rating for US Treasury notes. If Teapublicans are allowed to continue the same political obstructionism they’ve displayed in the first 2-1/2 years of the Obama administration, we should all become accustomed to expecting less. Less jobs. Less retirement benefits. Less access to health care. Less government services. Less civility in public discourse. And less honesty.

Just consider: Despite being elected by an overwhelming majority of the voting public, President Obama has, thus far, been stonewalled by Teapublicans who, the day after the election, stated that their main goal is to make Obama a one-term president. Many on the right immediately called for Obama to fail despite the obvious implication that that would mean the US would also fail.

No previous president has been subjected to such organized obstruction and nonsense. Teapublicans have questioned his legitimacy by saying he was born in Kenya. They have called him a socialist, a communist, a facist and a Nazi. And they have blamed him for the economic disaster created by his predecessor.

In Congress, Teapublicans have filibustered a record number of legislative initiatives. They have blocked a record number of cabinet and judicial nominations. They have blocked nearly every attempt to stimulate the economy and create jobs. And they created a debt ceiling “crisis” when their own tax cuts led to massive increases in the national debt.

It’s all part of their “starve the beast” philosophy of less government. So what has it gotten us? An economy that is still struggling more than three years after their less-government-no-regulation policies led to the worst economic crash since the Great Depression. And now that US Treasury bonds have been downgraded as a result of their brinksmanship, the economy is once again teetering on the edge of disaster.

Given that S&P clearly stated its reason for downgrading our bond rating is our dysfunctional Congress, one might assume that Teapublicans will come to their collective senses and begin to compromise in order to create jobs, generate more revenue and cut our deficit.

That is the lesson sane people might take away from S&P’s message. But, that’s not who we’re dealing with.  Instead, we have to rely on John Boehner, Mitch McConnell, Michelle Bachmann and Eric Cantor correctly reading their tea leaves.

World’s Greatest Nation? Really?

Posted on by

Although many Americans are fond of calling the US the greatest nation on Earth, that hasn’t been true for many years. Certainly we have the world’s most powerful military, but that’s no criteria for greatness. Neither is the fact that we are still the world’s richest nation, despite the downgrade in our credit rating by Standard & Poors.

But greatest?

Does a great nation tolerate an ever-widening gap between billionaires and the working poor? Does a great nation leave tens of millions of its citizens without access to health care? Does a great nation allow millions of its children to be homeless? Does a great nation allow its education system to become third-rate? Does a great nation allow its infrastructure to decay and collapse merely to give another tax cut to large corporations and the wealthy?

Does a great nation use its financial and military power to prop up brutal dictatorships around the world? Does a great nation bankrupt the small farmers of neighboring countries by subsidizing corporate farms then demonize those farmers when they cross the border looking for jobs? Does a great nation demean those who labor to build things with their hands, to put out fires, or to teach its youth? Does a great nation begrudge a comfortable retirement to its elderly? Does a great nation allow large corporations and the wealthy to elect its politicians?

How can a nation be called great when it rewards greed and corruption? When its judicial system rules that corporations have rights superior to those of its citizens? When its financial institutions are allowed to grow so large they are immune to failure from their own mistakes? When its corporate lawyers are tasked with seeking out financial and legal loopholes that allow their clients to game the system? When its politicians are more concerned with scoring political points than the welfare of its voters? When its citizens are more interested in the antics of its celebrities than those of its government? When it allows its previous leader to run up a huge debt, and then blames the leader who inherited it?

We didn’t need Standard & Poors to tell us that our nation is on the verge of bankruptcy. When it comes to fairness, ideas and ethics, the US has been on the verge of bankruptcy for many years.

The Tee Hee Party. Making Politics Laughable.

Posted on by

If the consequences weren’t so very serious, the nonsensical ramblings of the Tea Party would be great comic theater.  Certainly the Teapublicans have provided us with some of the best political comedy ever.  Witness Saturday Night Live’s repeated skewering of half-governor Sarah Palin.  The commercials for “I’m Not A Witch” Christine O’Donnell and for the chicken-bartering Sharron Angle.  The Google results for Rick Santorum.  Or the snickers whenever Michelle Bachmann exposes her utter lack of knowledge of anything.

But in between all of our belly laughs, we really should be crying.  Because the sad fact is that these lunatics are in control of the US House of Representatives for another year and a half.

These are people who don’t know the difference between a deficit and a debt.  People who believe that the only way to balance a budget is through draconian cuts.  People who believe that those cuts will not create higher unemployment.  People who have deluded themselves into believing that causing our President to fail will not cause harm to our nation!

They believe this because they’re either too rich or too stupid to worry. 

Yes, we truly are witnessing a tragic comedy.  And the most tragic thing of all is that we’re all responsible for electing these people, either through action or apathy. 

A Primer On The National Debt From Reagan’s Economic Advisers.

Posted on by

Teapublicans have elevated Ronald Reagan to God-like status. They have named a Washington D.C. airport after him. They worship at his presidential library. They even want to add his image to Mount Rushmore National Monument.

So why don’t they follow his economic example?

This has never been more puzzling than during the current debt ceiling debate. Under Reagan, Congress was forced to raise the debt ceiling 17 times. But under Obama, Teapublicans refuse to raise the debt limit even once. To save Social Security, Reagan raised the income cap on FICA deductions. But under Obama, Teapublicans want to destroy Social Security, Medicaid and Medicare. Reagan raised capital gains taxes to 28 percent. But under Obama, Teapublicans consider the current rate of 15 percent too high. Under Reagan, the highest income tax rate was 50 percent or more. But under Obama, the highest rate is 35 percent. And under Reagan, tax revenues averaged 18.2 percent of GDP. But under Obama, tax revenues are just 14.9 percent of GDP as reported by the conservative Heritage Foundation.

Indeed, former Reagan Policy Adviser, Bruce Bartlett, recently stated on MSNBC’s Hardball with Chris Matthews, “The dirty secret is that Obama’s a moderate conservative.“ Further, he noted that $7 trillion of the national debt is due to George W. Bush’s policies and tax cuts. $2 trillion is due to the Great Recession that President Obama inherited. And only $1.4 trillion of the debt is due to Obama’s policies, including the measures taken to keep our economy from sliding into the abyss.

And speaking about the Teapublican refusal to increase revenues as part of their plan to cut the deficit, the father of “Reaganomics” and former Reagan Budget Director, David Stockman, said, “When I look at the Republican plan, I have to say I think it’s half right on some things, and it’s half-baked on a lot of others… you’re telling the people of America that we can solve this issue – which is very dangerous, the deficit that we’re facing and the debt we’re building up – by not raising taxes on anyone. That, in my judgment, is a big lie.”

Bartlett was even stronger in response to a question about the Teapublican-dominated Congress. “A good chunk of the Republican caucus is either stupid, crazy, ignorant, or craven cowards who are desperately afraid of the Tea Party people. And rightly so,” he said.

Economic Terrorism

Posted on by

Remember when the Teapublicans were running for office last November? They hammered Democrats for not creating jobs fast enough and promised to have a laser-like focus on the economy. Well, I guess you could say they were telling the truth. But who knew they were actually referring to a laser site on an assault weapon aimed at killing the economy entirely?

Since the debt ceiling first became an issue in January, Teapublican antics have already had a disastrous effect. The lingering debate over the debt ceiling has caused many employers to question the outcome. As a result, they have delayed hiring and any new expenditures. In recent days, the stock markets are down dramatically. And new data has shown that the economy grew at a pitiful rate in the first quarter of this year. All of this is the result of uncertainty.

Now imagine what will happen if Teapublicans actually fail to raise the debt ceiling. Or if they succeed in making the draconian cuts they want.

How much will the stock markets crash if the US defaults on its debts? What will be the long term effects if US Treasury bonds are downgraded? What will happen when consumer interest rates skyrocket? What will be the economic effect of failing to make Social Security payments? How many people will die if doctors know they won’t be reimbursed by Medicare?

Truth is, the Teapublicans now controlling our debt ceiling debate may well have a greater negative impact on our nation than Timothy McVeigh, Al Qaeda and the Taliban combined.

An Economic Lesson For Teapublican Nincompoops

Posted on by

Upon discussing the debt crisis with some conservative friends, I realized that few of them know the difference between the national debt, the budget and the deficit. Like Michelle Bachmann and other Teapublicans, they wrongly believe that refusing to increase the debt ceiling will result in cutting spending and reducing taxes.

Faced with such stupidity, it’s difficult to know where to begin. But I’ll start with some definitions:

Budget – The annual spending plan authorized by Congress based on anticipated revenue and anticipated spending needs. (For Teapublicans, a budget is the money that Congress authorizes the President to spend.)

Deficit – The negative difference between actual spending and actual revenue.

Surplus – Thanks to Bush, we haven’t seen one of these since the Clinton era. But just for the sake of conversation, a surplus is the positive difference between actual revenue and actual spending.

National Debt – The accumulation of deficits from our nation’s history. It is money that has already been spent.

Debt Ceiling – This is an arbitrary number established by Congress based on paranoia. Since the 1970s, the debt ceiling has been raised more than 70 times; 17 times by Reagan and 7 times by George W. Bush.

Now here’s where it gets really difficult. Failing to raise the debt ceiling will cut spending. But only because there will not be enough money to pay our bills. It forces the Secretary of Treasury to decide which bills to pay; money that Congress already agreed to spend. Failing to raise the debt ceiling will effectively cause the US to default on its bills. (For Teapublicans like Bachmann, Cantor and Palin, it’s as if you went on a spending spree at Walmart and then decided not to pay your credit card company.)

In effect, failure to raise the debt ceiling turns the US into a bunch of deadbeats. Other nations and individuals will not want to invest in our country. Interest rates will rise dramatically. And world stock markets will crash. Indeed, most experts say default will make the Great Recession of 2008 seem like…well…like a tea party.

Republicans In Denial (As In Denial Of Any Democrat Proposal)

Posted on by

Today, Congressional Republicans pulled out of negotiations to resolve the deficit.  And (here’s a shocker) they blamed Democrats.  Their reasoning is that Democrats insist on tax increases rather than merely relying on more than $1 trillion in cuts to Medicare and other programs. 

“Let me be clear.  Tax hikes are off the table,” said House Speaker John Boehner. 

So, according to Republicans, even though the major cause of the deficit is the Bush era tax cuts (primarily for the wealthy), the only way to cut the deficit is by cutting spending for Medicare, Medicaid, Social Security, Planned Parenthood, Public Broadcasting, the Environmental Protection Agency, the Consumer Protection Agency, the Department of Education, etc.  At the same time, Republicans refuse to consider cuts to subsidies for Big Oil and corporate agriculture which they say would be tax hikes.  Of course, they also want to repeal the Affordable Care Act and repeal regulations on the financial industry.

So according to Republicans, when it comes to deficit negotiations, everything is on the table.  Except anything that Democrats want.

I guess that’s what passes for “bipartisan negotiations” these days.

An Endorsement No One Should Welcome

Posted on by

The Houston Chronicle’s Fuel Fix blog reports that Richard “The Dick” Cheney is gaga over Congressman Paul Ryan.  “I worship the ground he walks on,” said Cheney.  “I hope he doesn’t run for president because that would ruin a good man who has a lot of work to do.”

If voters didn’t already have enough reason to be wary of Ryan following his attempt to gut the Medicare program, this should raise some even larger red flags. Whatever, or whomever, Cheney favors is almost certain to mean greater largess for corporations (especially big oil) and trouble for ordinary working people.

Republican Agenda Has Never Been More Clear.

Posted on by

Following the vote by House Republicans to cut Medicaid and turn Medicare into a certain-to-fail voucher system, Senate Republicans filibustered a bill that would end oil subsidies to the most profitable companies on Earth.  They followed that by doing the same to a bill that would end subsidies for Ethanol.

In doing so, Republicans have made it abundantly clear that they don’t care about cutting the deficit.  Not really.  If they did, they would gladly trim these subsidies from our budget resulting in savings of billions of dollars.

As evidenced by their assault on Medicare, Medicaid, Social Security, unemployment insurance, education, women’s health providers, the environment, labor unions, first responders and teachers, they certainly don’t care about ordinary citizens.

What Republicans do seem to care about is protecting the profits of their corporate masters. You know, the large corporations that were given all the rights of citizens by the conservative-dominated Supreme Court so they could anonymously spend millions to elect Republican candidates.

The connection couldn’t be more obvious.

Social Security Is Not An Entitlement. It’s A Safety Net.

Posted on by

Shamed by scenes of the elderly living in abject poverty following the Great Depression, Congress passed the Social Security Act which was signed into law by President Franklin Roosevelt on August 14, 1935.  At the time, poverty rates among senior citizens exceeded 50 percent.

Since that time, millions of Americans confronted by old age, poverty, disability and unemployment have benefited from the act. 

Although Republicans, and more recently, the media have labeled Social Security with the perjorative term “entitlement” it is simply a form of insurance defined by actuaries as a government-sponsored insurance program funded by premiums paid by or on behalf of participants.  Indeed, the FICA withholding you see on your paycheck stands for “Federal Insurance Contributions Act”.  These contributions represent less than six percent of an individual’s annual income up to $106,000 per year.  Any income above $106,000 is exempt from withdrawals. 

Fact is, Republicans have been opposed to Social Security from the beginning, claiming that it would cause a loss of jobs.  Obviously it didn’t.  And the new deficit “crisis” has provided Republicans with arguments to dramatically change or end the program now.  Many want to replace it with individual investment accounts, feeling that they could better ensure their retirement by investing their FICA withdrawals themselves.  First, the benefit payments from an insurance program like Social Security should never be compared to the returns on investment accounts.  Moreover, replacing Social Security with individual investment accounts could be disastrous for many seniors in the event of another economic depression or a repeat of the Great Recession of 2008.  If the stock markets plummeted, the retirement incomes of most seniors would crash with them. 

So how about the solvency of Social Security?  Currently, the program has a $2.5 trillion surplus.  Remarkably, administrative costs of the program account for less than one percent of its total.  However, due to the impending retirement of Baby Boomers, it is estimated that the program will not be able to make full benefit payments in 25 or 30 years.   But the program is not “broke.”  Indeed, it can be fixed with relatively minor tweaking.  One option is to raise the cap on income as the Reagan Administration did in the 1980s.  Removing the cap altogether would definitely solve the problem as would limiting benefits to only those who actually need them – those retirees with annual household incomes of less than $50,000, for example.

Contrary to those who want to “end the entitlements”, the facts show that dramatically changing Social Security or ending the program entirely could be devastating for our nation.  The majority of beneficiaries have little significant income from other sources since options such as employer-provided pension plans are virtually non-existant today.  Additionally, the benefits from our Social Security program already lag behind most other advanced countries.  The Organisation for Economic Cooperation and Development (OECD) ranks the U.S. 26th out of 30 OECD nations.  On average, OECD nations replace 61 percent of a retiree’s earnings with pension plans.  In the U.S., the number is roughly 40 percent.