Sunday, July 24, 2011

Debt Ceilings

It would never occur to me to say to my wife, "Honey, let's raise our debt ceiling."

For one thing, I don't call my wife "honey."  For another, she would respond by demanding my credit cards and my checkbook and then letting the air out of my tires.

I know, I know -- there are no parallels between running a household and running a big, powerful, insolvent country like the USA.  Or Greece or Iceland or Spain or Ireland or Portugal, for that matter.

And you know why there aren't?  Because when it's time to take a good hard look at the debt ceiling, people in a household usually react by trying to get things under control.  Whereas the politicians who run countries take the issue and use it to frighten, cajole, and threaten voters.  They seem to want (in the US, anyway) one of two outcomes:

1.  The world does not come to an end and they can claim credit for the next election cycle.

2.  The world does come to an end and they can blame it all on the other party, in preparation for the next election cycle.

In other words, where my wife and I would look at expenses versus income and work together to set a path to recovery, professional politicians on both sides of the aisle use the issue to flummox the public into voting for them so they can hang onto power, prominence, fat pensions, total health care, and maybe--should the unthinkable happen and the voters see through them--a lifetime sinecure with a lobbying firm.

What don't they do?  They don't address the real problem, which is that our debt (here in the USA) now exceeds our gross national product and is four times the gross national product of Japan.  This is not healthy.  It cannot be sustained.

I'm not blaming one party over the other.  They both reek, as far as I'm concerned.  The Repuglicans want to slash social programs and little things like Planned Parenthood and the environment, but will allow no additional taxes on the rich or on corporations, and don't you dare touch defense.  The Damnocrats want to protect "entitlement programs" and raise taxes on (some) corporations and the wealthy and the almost wealthy and the almost-almost wealthy. They don't talk much about defense, either.

And both natter about, um, finding innovative solutions somewhere down the road.  "Down the road" means "after the next election."

So neither of them talks about slashing defense in spite of the fact that we've spent more than four trillion dollars in the past ten years fighting unwinnable wars in countries where we're hated.  And no one talks about the size and cost of government itself, which is completely out of control.  The fastest-growing sector of the American economy for the past 5-6 years has been government.

So here's what I'd do, and if I had 100 million Facebook followers, here's what I'd ask them to agitate for.

Cut defense spending immediately.  Bring home everyone, and that includes those "contractors," by next Tuesday.

Freeze government spending at all levels immediately.  Announce a 20% cut in the size of government through attrition and by firing deadwood.  Immediately reopen all government worker retirement and pension plans for re-evaluation.  Then reduce all government by another ten percent.

Tax the rich.  Tax corporations.  TAX RELIGIONS, through which hundreds of billions of dollars flow untaxed every year, some of it used for persecuting former Scientologists.

Make the House and Senate accept Social Security and Medicare as their retirement and health plans.  What we get, they get.  If they eliminate it for us, they eliminate it for themselves.

Get rid of everything that isn't essential: government dietitians and food Nazis, the Department of Alcohol Tobacco, and Firearms (which needs to be replaced immediately), all drug enforcement agencies, and hundreds of thousands of others who get overpaid to stick their noses into my life and force me to do things that common sense makes me do anyway.  (And the people who don't have common sense?  Let natural selection upgrade the American common-sense quotient.)  The Dept. of Education, since they've done nothing but screw up the schools.

And finally, vote against everyone.  Vote against Repugs and Damns.  Vote against incumbents.  Vote against politicians.  Elect hair stylists, street mimes, school teachers, ACCOUNTANTS, mothers and fathers, anyone you'd like to sit next to on a plane.  No clowns, please -- we're trying to get rid of them.

And encourage Arizona, which has put up a website to raise $50,000,000 through donations to fund a fence along the Mexican border.  I'm not talking about the fence--that's a whole different conversation--but the mechanism.  Let people who actively want a policy pony up money voluntarily to pay for it. Taxation by donation. If they don't, they don't.  If they do, well, that's $50,000,000 that can stay in taxpayers' pockets.

And no one needs to raise the debt ceiling.


  1. Great post, Tim. We can quibble about the details, but in general I agree. However there is one point you make I don't agree with (at least in the US). You say "And you know why there aren't? Because when it's time to take a good hard look at the debt ceiling, people in a household usually react by trying to get things under control." I think that the majority of Americans dopn't and perhaps can't get their spending under control. When I last looked, probably 6 months ago, the average CREDIT CARD debt (only credit card) per family was just shy of $15000 at an average interest rate (how can this be justified?) of about 14%. It seems that appearance is so important in the US that families are willing to forget that there is a word called prudence. I think this imprudence just carries over to politicians, who spend money to impress their voters, who in turn don't hold them accountable for anything. The situation may be unsolvable because I don't see the resolve in anyone to give up what they have overspent on. Sigh.

  2. I love you, Tim, but do you realize what your plan would do to the unemployment rate?
    Three quotes:
    This week's "Onion" headline: Congress Continues to Debate Whether to Destroy The US Ecomony.
    Oliver Wendel Holmes: Taxes are the price we pay to live in a civilized society.
    Anonymous New Yorker, commenting on the weather this week: It's so hot the debt ceiling will rise on it's own.

  3. Tim,

    The beauty of living in Greece is that I can keep up to date with what's going on in the US by purchasing only a Greek newspaper. Not that the Greek papers give in depth coverage to events in the US--except in stories along the lines of 'See, we're not they only financially %$#$%$-up country in the world"--but because all I need do is change the names of the politicians, Americanize the vitriol flying between the parties, tinker with the masses' bannered curses and ,voila, I'm back home in the good ol' US of A!

    The more things change, the more they remain insane.


  4. In the 2012 elections, I'm writing in "Timothy Hallinan" as my choice for President. Not that you'd be able to DO anything, but I can't vote for you for Senator or Congresscrutch, and I don't want to vote for any of the other jerks that WANT the office. Maybe I'll start a "Hallinan for President" campaign. Can't do any worse than Pat Paulsen...


  5. For whatever reason, good, bad, indifferent, there are people who legitimately need the "entitlement" programs. There are people, senior citizens, whose only source of income is Social Security. There are people who never made enough money to establish that nest egg that would see them through to the grave.

    "Elect school teachers"??? Are these not the same people, the educators, who have destroyed the country? Teachers have been slammed because of the poor performance of students on standardized tests. Teaching is the least respected profession in the United States; "those who can, do; those who can't, teach." Only someone completely ill-equipped to do something "important", like make a big salary, would drift into a profession that is so underpaid. And, please, will somebody explain that teachers don't get paid for not working. Teachers, most of whom live from pay check to pay check, choose to divide their salaries into 26 payments rather than 22. Why doesn't someone check they statistics on the number of teachers who have second jobs?

    The reason that students do not do well in school is that their parents do not hold themselves, or their children, accountable. What they want is high grades without the effort necessary to earn them. Parents hate fighting with their kids about homework. Parents love getting their children involved in sports so that they can win sports' scholarships to college. Unrealistic? Absolutely, but so much more fun than algebra.

    As to the current disaster, John Boehner, the architect of the disaster, deserves a slap. The second of twelve children who grew up in a two bedroom house, he has completely buried who he is. What would his parents say about his politics? He claims to be a Catholic yet his voting record denies what the church teaches. He steadfastly claims to be pro-life but those lives don's extend beyond the delivery room. He is the epitome of what is destroying this country - selfishness.

    Boehner says he can't agree to increasing the debt ceiling because he promised those who voted for him that he would not vote to increase their taxes. It should be kept in mind that he is the leader of the party who stated, clearly, that it would do whatever necessary to ensure that Barak Obama fails. This is the party of the Christian right, the party of the true patriots. Better the country should fail than the duly elected president succeed.

  6. Wow, I feel like the current White House press secretary (I've stopped learning their names) -- all these ISSUES challenges. How flattering.

    First, of course, I'm just me, not a policy wonk. I don't actually plan on running for office. Still, as a general statement, it seems like both political parties are putting their respective agendas ahead of the country's financial welfare, or even survival.

    Stan, you're right that a lot of American families are financially imprudent, but I think that's partly a result of the partnership between business and government to make debt so available and so ubiquitous. And then to allow banks to pay one percent on savings and charge 14% to 21% on the loans that credit card debt represents. (As they also repossess our houses, without a peep from the administration.) Much of the country's economy, sad to say, is based on consumer debt and the Mississippi River of interest income it produces. And there's a big movement among Americans right now to withdraw from the "debt economy," which my wife and I have effectively done for the past ten years.

    Annamaria, I know about the unemployment consequences of shutting down pretty much anything. Still, this has to take place eventually, and better to do it in a semi-organized fashion than through financial collapse. It costs us more to keep these people on the government payroll and to fund billion-dollar defense contracts with fat profit margins than it would to pay unemployment insurance and look for a way to transition into a smaller-government economy that's not so defense-based. There are hundreds of peacetime uses to which the skills of defense workers could be applied. And I like the Holmes quote, but I think we've perhaps come to the point of being over-civilized, with government metastasizing into every area of life, behaving, in short, like private business, which subscribes to the "grow or die" philosophy.

    (more to follow)

  7. Annamaria, I know about the unemployment consequences of shutting down pretty much anything. Still, this has to take place eventually, and better to do it in a semi-organized fashion than through financial collapse. It costs us more to keep these people on the government payroll and to fund billion-dollar defense contracts with fat profit margins than it would to pay unemployment insurance and look for a way to transition into a smaller-government economy that's not so defense-based. There are hundreds of peacetime uses to which the skills of defense workers could be applied. And I like the Holmes quote, but I think we've perhaps come to the point of being over-civilized, with government metastasizing into every area of life, behaving, in short, like private business, which subscribes to the "grow or die" philosophy.

    I know what you mean, Jeff. The situations are much the same. Just as Greece can't keep turning to Europe, we can't keep turning to China (and then criticizing their financial policies).

    Everett, I think you've put your finger on part of the problem -- we should be automatically suspicious of anyone who "wants" to hold high office. The Founding Fathers were, and this is something both of our sorry political parties conveniently forget. Americans are SUPPOSED to be suspicious of our leaders, especially when they begin to enlarge their powers.

    Beth, the big difference between you and me is that you see good guys and bad guys and I see bad guys and worse guys (and women, too). I believe that the United States has an overreaching agenda that's independent of which party is in power, and that Calvin Coolidge's "The business of America is business" has never been more true than is has been for the past 20 years or so. As an enthusiastic Obama supporter who is now deeply disappointed, I've seen virtually no change I can believe in, and a whole lot of more of the same, dolled up with different adjectives. I see the left and right today as hand puppets controlled by a single puppeteer, with "left" and "right" meaning little more than the hands the puppets are on. We need to break the cycle, we need universal term limits, we need to police lobbying aggressively, etc. etc.

    And as far as teachers are concerned, they're the most valuable members of society. Teachers' unions are another issue, but even then, the destruction of American public education has been a collaboration among the feds, state governments, administrators, political correctness as manifested in an ever-changing social studies and liberal arts curriculum and a reluctance to insist that immigrant children be taught in English (as they were for centuries of successful assimilation), the failure of all these expensive social programs to address the virtual nonexistence of a functioning African-American family structure below the poverty level, "self esteem," social promotion and the total abandonment of classroom discipline, and teachers' unions, among many others, certainly including educational theorists who have never taught actual children.

    Okay. I don't actually know how I got into this. But I'm getting out of it right now.

  8. Oh, and I should add in my endless answer to Beth that I DO think the Repuglicans are worse than the Damnocrats, although I'd cheerfully wave goodbye to both.

  9. I'm with Beth on this one. Some people are a little more humane in their pursuit of power.

  10. On behalf of the educational philosophy regarding immigrant children in my working class city, all kids new to the country, who have minimal fluency in English, are placed in English as a second language classes. The class in which they are placed is based on English skills and not on native language. The mantra in those classes is "English only"; the kids repeat it constantly to each other when anyone slips up.

    So Chinese, Russian, Spanish, Tagalog (and any other language you can think of) are all in the same class. Even if their English skills are low, it is the only language the students have in common. One of my favorite guys, from Thailand, had no grasp of English in the sixth grade but graduated from the twelfth grade on time and went right on to college. That was the rule, not the exception.

    I mentioned that we are a working class city because the kids and the parents understand the importance of mastering the new language quickly. They have to get their skills in school because their parents don't have the money to monkey around with private tutors and excuses. The rapidity with which these kids become fluent is breath-taking. They become employable, especially the Chinese, in their families' businesses as translators when the community patronizes their stores and restaurants.

    Grade inflation is endemic in private schools, be they feeders to the Ivy League or church run schools where parents pay more than they can afford in order that their children don't have to deal with anyone not exactly like themselves. Parents believe that the quid pro quo is tuition for grades; they see high grades as something they paid for.

    The United States sacrificed all respect and honor when the Supreme Court appointed the loser in the general election to the office of president.

  11. Lil, I agree with Beth (and probably you) that the Republicans are worse than the Democrats, but I think the Democrats are also a disgrace.

    Beth, that's a wonderful program and that's how it should be everywhere in the country. Grade inflation may be endemic in private schools but it's hardly limited to them, and organized test-cheating seems to be endemic to public schools, so neither side gets off Scot-free.

    And as much as I loathed Bush, Obama has disappointed me more than any other political figure in my lifetime. Bush couldn't disappoint me because only a nitwit would have expected anything. But I worked for and gave money to Obama, and I feel betrayed to my toenails.

  12. Well you are clearly not an economist. And your seem to be ignoring the human suffering of what you are proposing. And that does matter.

    Some of your long term suggestions are good ones, which I agree with. But at this moment, a retraction in spending will only throw more states into financial crisis and they will then cut off services to the poor and lay off countless public servants -- making the overall economy worse.

    Reputable economists (not armshair folk, or politicians) agree that in a time like this, with this deep recession, it is time for the government to be the spender of last resort to help stimulate the economy. We can (and will) deal with long-term debt issues in the future.

    Our debt has doubled recently do to the banking crisis bailout (which was brought on by the Republican policies of corporate greed and deregulation). Why then should cutting needed resources to the poor and seniors and veterans have to be the solution?

    Feel betrayed. Yes, I feel betrayed too. But don't advocate to cut off our nose despite our face. It's time for liberals/progressives/Democrats to double down and insist on Democratic solutions - and not buy into the lies of the Republican noise machine.

  13. Jim, I certainly am not an economist, and yet I can find you crowds of real economists who don't believe that increased government spending in a time of unparalleled debt is wise, sustainable, or effective. And I didn't actually suggest an end to entitlement programs or services to the poor and veterans. As for what progressives and liberals (and Republicans and conservatives, for that matter) should or do call for, I think those labels are just ways of classifying knee-jerk reactions in the direction of old solutions to what is essentially a new problem with bipartisan fathers and mothers: the greatest level of debt of any country in world history and NO leaders emerging to insist that solving the problem is more important than winning in Iowa.

    Four trillion dollars spent on unwinnable wars in the wrong countries, and God alone can guess how much more on the development of weapons systems, including some that were scrapped, like the two 300 million dollar ships that never sailed or the 475 million-dollar plane that was never actually assembled. Neither party talks about those issues, and they're bleeding money.

    And some day I'd like to see a real economist who heard, as I did, the thousand times Obama talked about "Main Street" versus "Wall Street" and who will take a piece of paper and draw a line down the middle. Write "Main Street" on one side and "Wall Street" on the other and then list in the appropriate columns the economic initiatives Obama actually undertook as president. When you're finished, he looks like Calvin Coolidge. Not to mention the extensions of the Patriot Act, the war against WikiLeaks (Nixon couldn't have done it better), the rejection of the entire notion of medical marijuana at the bidding of the Pharm companies, and a bunch of other "Animal Farm" policies.

    "Republican" and "Democrat" are just flavors of the same tainted ice cream. They're all in the same big-business pockets, and they've led this nation to the edge of a cliff.

  14. Timothy – I do challenge you to produce the “crowds” of economists who think that contracting spending in a recession is a good idea. Please do. And offer their reasoning… This is not a tit-for-tat argument. This is about real economics. Put up. You may recall that the previous 8 years (prior to Obama) were a failure in terms of job growth – under the tax cut/contraction (except for military spending) strategy.

    But again – we agree overall. We are on the same side, I think.

    Also – to suggest that both Republicans and Democrats are essentially the same is ridiculous. I feel your frustration that Obama has not delivered on his promises, but to suggest that we would be in the same place under McCain – or any other Republican – is to deny objective reality. Would we have the repeal of Don’t Ask Don’t Tell? Increased student loans? Have Sonia Sotomayor on the Supreme Court? Increased stem cell research? Expand the SCHIP program? – To name a tiny fraction…

    I feel your pain, Timothy. Really I do. But to abandon progressive economic strategies for the so-called populist strategies is to stop being an activist for the most among us.
    Perhaps we just disagree…

  15. First, I'm not an economist, as you pointed out, so it would be parroting for me to present the arguments of those economists who believe it's a bad idea for a government to try to spend its way out of a recession -- ESPECIALLY under a set of circumstances that has never applied before, which is a national debt that exceeds our GDP and demands a really substantial chunk of our annual revenue for the unproductive activity of debt service. Having said that, here are the names of a few economists (out of a couple of hundred) who have signed onto campaigns calling reduction in federal spending a bad approach to recovering from the current recession: Nobel Laureates James Buchanan, Edward Prescott, and Vernon Smith; Jeffrey Miron, Harvard; John Cogan, Hoover Institute, Stanford; Rick Geddes, Cornell; Carlos Seglie, Rutgers; Allen Metzler, Carnegie Mellon; Seth Morton, Wheaton College. And on and on.

    But the real question at this juncture, I think, is not so much "can we spend our way out of recession?" as it is, "can we spend our way out of debt?" And how solid will our financial structure ever be when it rests upon trillions of dollars in debt?

    I know Bush was a disaster and created essentially no jobs. I know Clinton left the country with a balanced budget and a budget surplus. I also know that the unemployment rate right now is pretty close to where Obama predicted it would be if the stimulus package were not enacted.

    And I also know that a big fat slice of TARP funds went to the same banks that are foreclosing houses all up and down "Main Street" and that the announcement a few weeks back that a big chunk of those loans had been repaid -- at a profit to the government --somehow overlooked the fact that many banks repaid with funds borrowed from another Federal program. I lend you ten dollars at interest, and a week later I borrow ten dollars and eighteen cents from you and hand it back to you and you announce a profit on that part of the stimulus. Ummmmm.

    I think, in the end, we agree on many things and, God willing, you'll never get sufficiently disillusioned to agree with me completely.

  16. I'm sure we agree more than disagree. And I am trying to keep my nose above the total disillusionment surface...

    But either you missspoke or I'm just confused. You said: "here are the names of a few economists (out of a couple of hundred) who have signed onto campaigns calling reduction in federal spending a bad approach to recovering from the current recession" -- A BAD APPROACH... that is my point.

    Anyway - I would prefer that the Democrats apply Democratic values and principles to the problem, and not go along with the right's mythology that has infected the airways and minds of US Americans.

  17. We may be talking past each other. You asked for economists who "think that contracting spending in a recession is a good idea." I took "contracting" to mean "reducing" which would imply that I would be looking for economists who feel that "it's a BAD idea for a government to try to spend its way out of a recession." So they are, in fact, calling for a contraction of spending.

    All of this pales, however, in the wake of the Sunday night speeches and the total gridlock these overpaid and overprivileged prostitutes have gasbagged their way into.

    Vote 'em all out.