Category Archives: Deficit

Conservatives Take Aim At Government Labor Unions.

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This year, conservatives are gathering lumps of coal for most Americans’ Christmas stockings. We can soon expect to see multi-million dollar assaults on many of the nation’s remaining social institutions and programs. At the federal level, conservatives in Congress are seeking to cut another $4 billion to 40 billion from the Supplemental Nutritional Assistance Program (SNAP), better known as food stamps. They are also targeting Social Security, Medicare, Medicaid, and unemployment insurance. And they are fighting attempts to increase the minimum wage despite the fact that large corporations have raked in record profits since the beginning of the Great Recession, and that wage growth is our main impediment to economic growth.

Conservatives are facing a severe time crunch in order to accomplish these goals. You see, the economy is finally showing signs of real growth. That means more Americans are working and paying taxes, thereby reducing the drain on social programs and lowering the deficit. As the deficit disappears so, too, does the conservatives’ primary argument for slashing social programs and cutting spending.

If conservatives are going to force more austerity and “personal responsibility” on poor Americans, squash labor unions, slash corporate taxes and head off a growing environmental movement, they have to do it now while the deficit is still inflated due to the effects of the Great Recession.

That’s why, as The Guardian reported, the State Policy Network funded by the Koch brothers is coordinating an all-out assault on government and social institutions in 34 states beginning early next year. The focus is on cutting pensions and wages for government workers, cutting budgets for public schools through voucher programs, and combatting attempts to reduce greenhouse gases. But, undoubtedly, the primary goal of the campaign is to rid the country of labor unions, particularly those in the public sector.

Of course, virtually none of their goals are actually good for our country. They are, however, great for large corporations, their executives and their investors.

None of this should come as a surprise to anyone. Conservatives have been fighting organized labor since the 1800’s. Labor unions grew in the 1930’s following the Great Depression when workers realized that the economic collapse was caused by the rich and their insatiable appetites for more wealth. But labor unions have been under attack ever since. The attacks accelerated during the Reagan administration leading to a decline in union membership, the elimination of more than 85,000 pension plans since 1980, and the export of hundreds of thousands of American jobs. As more high-paying labor jobs were sent offshore, union membership further declined. At the same time, large corporations like Walmart fought to block the unionization of their workers. As a result, union membership declined 11.3 percent in 2012 alone. Simultaneously, corporate profits have soared. But that largess has not been shared with workers.

There is, however, one sector of our economy in which labor unions are alive and well. The percentage of union membership among government workers is now 5 times higher than for workers in private companies. Given their contempt for unions and government, that figure makes public sector unions a tantalizing target for people like the Koch brothers. Their control of workers and the disassembling of government won’t be complete until labor unions no longer exist, corporate taxes are eliminated and the federal government is reduced to the Department of Defense. (After all, somebody has to defend them from those who would like to claim part of their wealth.)

Want to learn more about the attacks on American workers? I highly recommend The Betrayal of the American Dream by Barlett and Steele.

Why Do We Have A Debt Ceiling Anyway?

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Following the Tea Party-forced government shutdown and near default, it’s worth considering doing away with the debt ceiling. It serves absolutely no purpose other than providing recalcitrant congressional representatives the opportunity to hold our government hostage in order to “negotiate” their pet issues.

Since the debt ceiling is a measure of money already spent by Congress, it has no real impact on congressional budgeting and government spending.

If we really want to limit government spending, what we need is a spending ceiling based on a percentage of the Gross Domestic Product (GDP) and an absolute deadline for the House, the Senate and the White House to agree on a federal budget. Such a law would force Congress to negotiate the federal budget without threat of our government defaulting on its debts.

It would also be far more sensible than the Teapublican-sponsored balanced budget amendment that could lead to greater dysfunction than we’re already experiencing.

A spending ceiling would allow the budget to increase along with the GDP, and presumably the population, while maintaining fiscal discipline. Moreover, Congress and the White House could be given the flexibility to temporarily override the ceiling in special or extreme circumstances, such as the Great Depression or the Great Recession, as long as there was a commitment to offset the overrides within five years. This would allow the federal government to stimulate the economy for a year or two, or to increase spending in wartime. But, in most years, the political debate would be confined to how the money should be spent. Not the amount of money to be spent.

Such a system might allow citizens to more clearly track their representatives’ priorities. It might also make it difficult for representatives to speak in broad generalities about the budget and force them to address specific programs. And, if properly implemented, it might be easier to tell if a representative favored corporate welfare over human needs; or whether or not a representative was voting in support of special interests versus the interests of his, or her, constituents.

In other words, Congress would be forced to do something unprecedented…create a budget and live with its consequences.

The $24 Billion Tantrum.

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Following the Teapublican-caused government shutdown and threatened US default, it’s fair to look at what this pointless exercise cost us. Not including the human costs, economists at Standard & Poors estimate the cost of the government shutdown at $24 billion.

That’s larger than the entire annual budget for NASA ($17.8 billion) or the Department of the Interior ($13.5 billion). Put another way, it’s larger than the budget for the Environmental Protection Agency ($8.9 billion), the National Science Foundation ($7.5 billion), the Small Business Administration ($1.4 billion), the Corporation for National and Community Service ($1.1 billion) and the Disaster Relief Fund ($2 billion) combined.

It’s nearly double the annual revenue collected through the Estate and Gift Tax ($13 billion). It’s nearly half of the entire budget for Homeland Security. And, in more human terms, it would feed 1.6 million American families of four for an entire year!

Now imagine what would happen if Democrats proposed spending $24 billion to help the working poor or to rebuild our crumbling infrastructure. Teapublicans would cry, scream and hold their breath. They would fill the airwaves and the newspapers with paranoia. They would say that Democrats were mortgaging our children’s future. Yet they were willing to spend $24 billion on nothing…absolutely nothing.

Worse yet, 144 Teapublican Congressional Representatives and 18 Senators voted no on the bill to reopen the government and to prevent default! That’s 162 Teapublican votes to pour even more money down a rat hole. 162 votes to send the US government into default…risking a worldwide economic calamity!

And what might that have accomplished? Most economists feared that a failure to increase the debt ceiling would not only downgrade the rating of US bonds, it would create a collapse worse than the Great Recession of 2008 and 2009…maybe worse than the Great Depression. To put that into perspective, in a research paper for the Federal Reserve Bank of Dallas, economists David Luttrell, Tyler Atkinson and Harvey Rosenblum calculated that the total cost of the Great Recession to the U.S. was on the order of $6 trillion to $14 trillion. The larger figure is roughly one full year of U.S. economic output and nearly equal to the entire federal debt!

Do you still think the Republican Party is the champion of fiscal responsibility?

Who’s Really Responsible For Our National Debt?

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It’s popular for the Republican Party to blame our $16.7 trillion debt on President Obama. Certainly, like all presidents, he has some responsibility for it. But a much larger share of the responsibility goes to President Reagan, President George H.W. Bush and, most especially, President George W. Bush.

You see, the increase in spending in 2009 following the economic collapse of 2008 should rightfully be attributed to the Bush administration. That’s because the 2009 deficit was the result of a spending bill, including the Troubled Asset Relief Program (TARP), authorized by Congress in October of 2008 and signed by President Bush months before Obama took office. In fact, spending in the first year of any administration is always the result of the previous administration. Properly credit 2009 spending to Republicans, and you’ll discover that President Obama has been responsible for the lowest spending increases since Eisenhower. Similarly, he is responsible for the most rapid cuts to our deficit in more than 50 years!

While it’s true that the debt has increased 18.5 percent since Obama became president, as discussed, he should not be held responsible for most of that increase. Even so, it’s still less than the 20.7 percent increase in national debt that accrued during George W. Bush’s second term. And it’s only marginally greater than the 13 percent increase during Bush Sr’s term, and the 11.3 percent increase during Reagan’s first term.

A better measure of Obama’s spending comes courtesy of Rick Ungar, a contributor to Forbes Magazine (hardly a bastion of liberalism). According to Ungar, in President Obama’s first term, overall government spending grew just 1.4 percent as compared to 7.3 percent in George W. Bush’s first term and 8.1 percent in Bush’s second term!

So why do Republicans continue to place the blame on Obama? First, it’s a matter of political convenience to portray Obama as a “tax and spend” liberal. Second, the narrative is relatively believable since government spending skyrocketed during the first year of the Obama administration. Third, the media has done a very poor job of countering Republican misinformation.

In order to truly understand the federal debt, you have to look at the history of US borrowing.

Following the Revolutionary War, the US debt stood at roughly 35 percent of Gross Domestic Product (GDP). It again reached that level following the Civil War. In both instances, the debt was brought down by a combination of increased revenues and spending restraint. During WW I, the US debt again rose to approximately 35 percent of GDP. Before it could be paid down, our economy collapsed leading to the Great Depression. That was quickly followed by WWII. The two events caused the debt to soar to more than 117 percent of GDP. But, through a combination of post-war prosperity and income tax rates of up to 91 percent during the Eisenhower administration, the debt was again brought under control.

By the end of the Carter administration, the national debt had been reduced to 32.5 percent of GDP.

President Reagan’s expansive military spending during the Cold War once again caused the debt to soar, reaching more than 66.1 percent GDP. Under Clinton, it was reduced to 56.4 percent of GDP. Then, under George W. Bush, two wars (one of which was a war of choice) and lax government oversight led to the Great Recession – the worst economic calamity in nearly 80 years. At the same time, a Republican-led Congress cut taxes (and, therefore, revenue), particularly for the wealthy.

President Obama inherited a debt of more than 84 percent of GDP, along with a worldwide economic collapse, double-digit unemployment, spiraling health care costs, two wars estimated to have cost more than $6 trillion, a Congress that refused to rescind the Bush tax cuts, and a uniquely obstructionist Republican Party.

All of this was roughly the equivalent of combining the costs of World War II and the Great Depression without the primary mechanism needed to reduce the debt – taxes!

President Obama was left with few choices. He had to stimulate the economy through loans and tax cuts in order to put people back to work. This led to reduced revenue. He had to wind down the war of choice in Iraq as quickly as possible. He needed to stabilize the war in Afghanistan that had been allowed to languish under Bush at a cost of $1 million per soldier per year. Moreover, since few Americans had been asked to sacrifice for the wars in Iraq and Afghanistan, unlike World War II, they felt no need to pay for the wars through increased taxes. Indeed, even though federal income taxes were at a 50-year low, extremists funded by billionaires created the TEA (Taxed Enough Already) Party.

All of this led to the growth of our debt, which now equals nearly 102 percent of GDP.

Certainly, this debt is of great concern. But it’s not the short-term crisis Teapublicans would have you believe. (It’s the equivalent of a family earning $100,000/year holding a $102,000 mortgage.) And, without modest tax increases, there are few ways to reduce the debt.

One is to grow the economy, and according to most economists, including Lloyd Blankfein of Goldman Sachs, the economy is on the verge of significant, sustained growth if the nitwits in Congress would just get out of the way and stop dragging us from one self-inflicted crisis to another.

Two is to make cuts without adding to unemployment. (For example, we squander tens of billions each year on weapons systems that our military doesn’t even want, but Congress refuses to defund them because doing so would cost jobs.) And, once the economy shows sustained growth, programs such as food stamps can be cut – especially if we raise the minimum wage to reduce the large number of working poor who have little choice but to rely on government assistance.

In summary, contrary to what Teapublicans would have you believe, our national debt is not Obama’s debt. It’s the result of decades of wars, tax cuts, regulatory indifference, a struggling worldwide economy, out-of-control health care costs, greedy corporations that off-shore both jobs and profits, and a dysfunctional Congress that not only fails to help the economy. It makes decisions that are actually preventing economic recovery!

As a matter of fact, the Tea Party seems determined to force our nation into default. And, like the debt, they would have you believe that it’s all Obama’s fault.

How To Shut Up Teapublicans.

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John Boehner, Ted Cruz, et al are fond of blaming President Obama and Sen. Harry Reid for the government shutdown. In doing so, they claim that the Democrats “refuse to negotiate.”

Negotiate what?

The only thing Teapublicans want to “negotiate” is the Affordable Care Act, a bill that was duly passed by both houses of Congress, signed into law by the President and found to be constitutional by the US Supreme Court. That simply cannot be negotiated. It can be repealed. But that would take an act of both houses of Congress and the signature of the President, and that’s simply not going to happen.

So how about this? What if Obama and Reid offer to delay some aspects of the Affordable Care Act for a year in exchange for Teapublican agreement to pass a strict gun control bill that will ban all semi-automatic weapons and a bill to provide federally-funded abortions for any woman who needs one? I’m sure a majority in the Senate would agree to that, as well as the President.

What’s that you say? That’s unreasonable? Really?

It’s no more unreasonable than what Teapublicans are asking. So tell you what. When Teapublicans finally decide that they want to negotiate the federal budget in good faith, they should pass a temporary funding bill to restart the government. Then they should sit down with Democrats to discuss the budget like adults. That means both sides need to compromise.

Until then, the President and Senator Reid should stand pat.

Why You Can’t Negotiate With Terrorists.

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Long ago, our law enforcement agencies learned that you can’t negotiate with terrorists, especially those who take hostages. The reason is that their demands are always unreasonable and they never live up to the negotiated agreement.

House Republicans are no different.

The President and Senate have been negotiating the federal budget for more than four years, trying to strike a fine balance between keeping our fragile economic recovery going and bringing deficits under control. Under President Obama, the deficit has dropped faster than at any time in history. And Democrats reluctantly agreed to make permanent the $70 billion in cuts to the federal budget that were part of the sequester. But after agreeing to the cuts, Speaker of the House betrayed the Senate Majority Leader by allowing the defunding of the Patient Protection and Affordable Care Act to be included in the budget bill.

When the President and Senate refused to agree to the measure, the House offered a ”compromise” by attaching an amendment that would delay “Obamacare” for one year. Some compromise.

Since House Republicans have already voted to repeal or defund “Obamacare” more than 40 times, what assurance is there that they won’t vote to repeal the law another 40 times over the coming year?

After all, terrorists seldom live up to their word. And if they are willing to take our government and economy hostage once, they’re likely to do it again. Indeed, this is at least the third time in my lifetime that Republicans have shut down the government.

Republicans and their Tea Party parasites are always quoting the Constitution. It’s time they actually read it. Not just the 2nd and 10th Amendments…but the entire Constitution. If they would, they’d find that the House is only one part of the federal government, and it doesn’t have veto power. If they want to have a bill passed, they have to find agreement with the Senate and gain the signature of the President.

Only the President has veto power.  And the House doesn’t have the votes to override a presidential veto.

That means the House terrorists have only one option – to fund the government, at least temporarily, and then demonstrate that they can negotiate in good faith.

I, for one, don’t think they’re capable of that.

Another Debt Ceiling Debacle?

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Teapublicans are always fond of relating government budgets to your household budget. It’s a lousy analogy. But let’s use it for the purposes of the debt ceiling debate.

Imagine if your family, concerned about its spending and debt, had a meeting and decided that you no longer wanted to pay any debts above…let’s say, $10,000.  And let’s say that your family couldn’t agree on spending cuts. For example, the father just doesn’t want to stop collecting expensive guns and driving luxury cars, the mother doesn’t want to give up health insurance and the 401K, and the kids don’t want to give up school and food.  So your family agrees to stop paying the mortgage, the utilities and the credit card companies.

What do you think would happen?

The mortgage company would foreclose on your home, the utilities would cut off electricity, water and gas, and the credit card companies would cut off any new purchases in addition to adding large penalties and interest to your outstanding balance.  Moreover, your family would be unable to borrow money from anyone else. And, if someone else was willing to risk loaning your family money, it would be at exhorbitant interest rates.

Does that sound like something you want to intentionally do to your family? No? Then why would you want to do that to your country?

What we have is a Republican Party that doesn’t want to give up the world’s most lavish military budget or tax cuts and welfare for our largest corporations. The Democratic Party doesn’t want to give up Social Security, Medicare, and access to health care and food stamps for the working poor. And the Tea Party parasites don’t want to spend anything because they don’t like the government anyway.

During the 2012 presidential election, we had a national debate about the direction of our nation and its budget. On these issues, the voters overwhelmingly supported the Democratic Party.  The results of that election should direct the conversation about government spending. Most important, there should be a conversation with all parties sitting down together and having an adult conversation about our nation’s future.

Unfortunately, the Tea Party parasites don’t want to do that, and the gutless Republican leaders are kowtowing to them.

A Recipe For Failure.

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Since 2009, many conservatives have believed that Barack Obama is an anti-American socialist who was born in Kenya and, therefore, is an illegitimate president. Many in Congress refuse to recognize him as president, let alone negotiate with him. Even after he was re-elected in overwhelming fashion, they refuse to accept the results believing that he bought votes by offering “stuff” to the 47 percent they claim do not pay taxes.

On the other hand, Democrats in Congress believe that Tea Party conservatives were elected based on an avalance of misinformation and spending from billionaire ideologues. They also believe that many were the beneficiaries of conservative gerrymandering.

So where does this leave us?

It leaves us with a government that simply doesn’t function. If it were not for presidential orders, the government would be at a complete standstill. Congress and the president cannot agree on a budget, on foreign policy, on military action, on job creation…they cannot even agree on laws that have already been passed. The House continues to vote to repeal “Obamacare” without hope of actually doing so. Why? Merely because conservatives in Congress want everyone to know how much they dislike President Obama.

Conservatives in both the House and the Senate refuse to negotiate a budget deal. They merely want to dictate. In 2011, that led to an impasse over the debt ceiling that damaged the credit rating of government bonds, collapsed the stock market and brought economic recovery to a standstill. In 2012, it led to sequestration which created further problems.

Now conservatives in the House are threatening to pass a budget that will defund “Obamacare” and, unless they get their way, they not only threaten to refuse to raise the debt ceiling. They plan to shut down the government entirely.

In an attempt to reach some form of compromise, President Obama reached his hand across the aisle. In return, conservatives merely extended their collective middle finger.

Given the circumstances. it’s not at all clear which side will win. But I do know that we will all lose.

What Is Our Real Legacy For Future Generations?

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Much has been written about the national debt that is being left to future generations; how that debt is the greatest threat to the future of our nation.

I beg to differ.

Not that the debt isn’t a serious issue, but our nation faces many more daunting problems. For example, our infrastructure is crumbling.  Roads and bridges are in disrepair. Our electric grid is woefully inefficient and unreliable – approximately half of all the electricity generated is lost in the grid. Our rail system is antiquated. Ports and canals need to be expanded and remodeled. And our computer systems are increasingly vulnerable to hackers.

In addition, the vast majority of the world’s scientists – real scientists – are sounding alarms about global climate change. Their computer models show that our dependence on burning fossil fuels will raise sea levels by as much as three feet by 2100, drowning some of the world’s largest cities, many of them in the US.

These scientists aren’t politically-motivated. They aren’t beholding to corporations. And they aren’t making unsubstantiated claims. They say that human-caused climate change is as proven as gravity.

Making the investments to address these issues now makes infinite sense. Not only are interest rates at all-time lows. Making changes would create an enormous number of high-paying jobs. And when more people make more money they purchase more and pay more taxes. All of which will help reduce the deficit and debt.

In fact, Nobel laureate economists tell us that such investments will do more to reduce our debt than austerity measures.

So what are we waiting for? Why do we listen to Wall Street-financed politicians instead of economists? Why do we listen to oil-soaked politicians instead of climate scientists? We have been shown a road map to the long-term health of the United States and the globe. These are not Democratic issues or Republican issues. They are human issues.

Isn’t it as important to leave future generations with a safe, efficient infrastructure as with a surplus? Isn’t it as important to bequeath them a sustainable planet as with a reduced debt?

Here We Go Again. Another Debt Crisis!

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In 2011, Speaker John Boehner and his GOP cronies nearly sent the US economy into a death spiral by refusing to raise the debt ceiling unless President Obama agreed to severe budget cuts. When the president and other Democrats tried to negotiate a common sense agreement that would not lead to a double dip recession, there was a lengthy stand off. The markets were so shaken that US government bonds were downgraded for the first time in history and large parts of our economy came to a standstill.

The GOP tantrum and resulting hit to our economy was completely unnecessary. President Obama was already in the process of cutting the deficit at a faster rate than any previous president in US history! Indeed, in June, we had a monthly budget surplus for the first time in years. And for the fiscal year ending Sept. 30, the deficit will be the lowest since the financial calamity of 2008 – nearly half the previous year’s deficit.

If President Obama is allowed to continue his policies, we will almost certainly see a full recovery of the US economy and the growth will lead to even less spending and more tax revenue as Middle Americans’ get better jobs and their salaries grow.

But that would expose the fraudulent economic policies of Boehner and his fellow Guardians Of Privilege. And they simply can’t allow that. So, once again, they’re threatening to take our economy hostage. Boehner says that he plans to adhere to the so-called Boehner Rule, demanding one dollar in spending cuts for every dollar increase in the debt ceiling.

This is nothing less than economic suicide for the United States!

The debt ceiling is an arbitrary limit that has no affect on the deficit. It merely limits the Secretary of Treasury’s ability to pay outstanding debts. Failing to raise the debt ceiling in order to pay our debts would turn the US into a nation of deadbeats. It would damage our reputation internationally, and it might well lead to an exodus of investments in US bonds, making it more difficult and costly to fund our national debt; a debt largely created by Republicans.

Even dragging out negotiations over the debt ceiling, as in 2011, will lead to serious consequences. It will make employers and investors nervous enough to hold onto their money. That will lead to a market sell-off and increased unemployment. That, in turn, will lead to increased federal spending and decreased revenues. And that will lead to increased deficits and increased debt…exactly the opposite of what Boehner and his fellow nitwits claim to want!

Similarly, the effect of President Obama agreeing to significant budget cuts on top of those already imposed by sequestration will also severely harm our economy. If you doubt that, just look at what has happened as the result of Europe’s austerity measures.

According to the GAO (Government Accounting Office), the 2011 debt ceiling crisis raised the borrowing costs for the government by $1.3 billion in 2011 and an estimated $18.9 billion over 10 years. And, in case you’ve already forgotten the pain it caused, the debt crisis also caused the Dow Jones Industrial Average to fall 2,000 points in just two months. It damaged our economic recovery. Worse, it cost many people their jobs and negatively affected millions of lives.

By all means, Mr. Boehner, let’s do that again!