March 11, 2011

Budget, Deficits, Ideas, and Stuff

Posted in federal budget, role of government, taxes, U.S. Economy tagged , , , , , , at 12:48 pm by realitytax

The thing people are best at is exchanging stuff, including ideas; that’s what sets us apart from every animal on the face of the earth. Dogs don’t exchange bones with each other, chimpanzees and dolphins don’t ask for advice, and yet nobody reading this could build the simplest device we rely on every day in any reasonable amount of time without the active participation of many, many other people.

You doubt it? Name your example: Could you make a toothbrush? How will you get the petroleum to make the various plastics? OK, so you can whittle down a piece of wood to serve as the handle, sure, but are you going to use a knife you traded for or make your own? You can collect some stiff bristly stuff, but to trim it all to a nearly uniform length would you like a scissors? …and glue the bristles in place…how? Let’s not even consider transportation machines and mp3 players. So much more efficient to let somebody else mine and smelt the metals, while legions of people build and maintain the systems to distribute the stuff, and still others focus on food, wouldn’t you agree?

Another way to think of it is that while any of us can probably manage to be self-sufficient, it wouldn’t leave us much time for anything else at all. Complex trading makes it possible for specialists to efficiently do what they’re best at, and the whole society can enjoy the fruits of the labor of others.

Now what’s that got to do with the U.S. economy, government budget decisions, and the federal deficit?

Well, while we can all agree that while the government has a long-term fiscal management issue, (call it a problem if you like,) the key factor in the budget challenges is health care costs, and more to the point the rate at which those costs are growing. According to a recent article in the New York Times, “The Congressional Budget Office expects Social Security outlays as a percentage of G.D.P. to rise 30 percent over the next quarter-century, as the population ages, but it expects a near doubling of the share of G.D.P. spent on Medicare and Medicaid.

We don’t solve that by reducing what we spend on either education or job creation. Cutting the benefits for military veterans only shifts the costs of their health care, it doesn’t control it. Cutting taxes surely doesn’t provide any free-market incentive to rein in runaway health care costs, nor does reducing and/or eliminating the collective bargaining rights of public-sector employees (another way of shifting the costs without actually addressing the cause.)

There’s a time for catching the drips coming through the roof, but that’s a stop-gap until you can properly fix the roof. If you’re in charge of the building it’s not responsible to tell the people who live or work in it to just keep emptying their buckets – if you don’t know what to do yourself, you call somebody who can fix it, and if you have to raise the rent you do that, too. That’s the whole point of participating in society instead of being self-sufficient.

Bernie SandersIt’s time for Congress to do their job and stop asking the American people to keep emptying the buckets. They asked voters to trust them to solve problems – to keep the roof in good repair – not kick them down the road while we collect rainwater and listen to their complaints about how hard it is to fix. Lowering taxes to fight a budget deficit is like bringing gasoline to fight a fire.

Those elected officials that have no idea how to actually live up to that promise should get out of the business and let somebody with real solutions work on it before they ruin the building and bring down the value of the whole neighborhood even further. Stop talking about “partnering with business” and how regulations are a burden and go work on whatever stuff it is you’re actually good at doing (other than interviews with sound-bites and acting like absentee slumlords, that is,) and leave my government – for the people – alone.

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February 28, 2011

Progressives have a problem

Posted in 2012 Elections, federal budget, Obama administration, role of government, U.S. Economy tagged , , , at 11:20 am by realitytax

We all get that advertising makes an impact, and it follows that our military recruiting benefits from marketing expenditures.  Should voters tell our representatives in Congress to micro-manage ad campaigns for the Defense Department?  In a word, no, but that’s what this hullabaloo is all about.

“There is no argument from Democrats or Republicans that we must reduce our massive debt. But there is fierce discussion and passionate debate concerning how to reduce our deficit.”

The Pragmatic Progressive Forum
28 Feb 2011

If Congress chooses to set limits on what part of the Defense Department budget goes to advertising, including “none,” that’s possibly within their role in tackling the budget deficit. At what level do we want to spend time controlling the specific choices?

According to Wikipedia (see citations below) for the 2010 fiscal year, “the president’s base budget of the Department of Defense rose to $533.8 billion. Adding spending on “overseas contingency operations” brings the sum to $663.8 billion.” Now I know the Pentagon pays more than seems reasonable for hardware, and consulting, and other services, and that a penny saved is a penny earned, but when it comes to advertising it’s also a question of return on investment — and while the roughly $16 million that we’re talking about is a lot of cash, relative to that $600+ billion, folks, it’s chump change: less than 1/100 of 1%

So tell me, how much time is it worth arguing over, relative to the other 99.9975% of the Defense Department budget? All progressives will accomplish, other than distracting from other spending decisions, of course, is alienating NASCAR fans: ultimately that mind-set drives them to think their values are more in line with the Republican party.

Image via Army.mil

With over 15 million viewers a week ago for NASCAR’s Daytona 500, the appeal is undeniable even to folks who can’t imagine why “just watching cars driving in a loop” is entertaining. The biggest companies in the U.S. wanted in; they know the value of having their logo seen by that many fan-eyeballs, associating their brands with the race and drivers tends to make influence purchasing. Would Target®, Burger King®, Sherwin-Williams®, and Budweiser® be there if advertising didn’t matter?

Progressive columnists and pundits need to learn two things, fast, if they want to take advantage of the attention that the struggle in Madison is finally generating in the media. First, diversity is good, even when it comes to what we do for entertainment. Second, avoid falling into traps that emphasize differences. It doesn’t help their causes to focus on stuff that makes middle-class Americans think liberal neighbors and/or Democrats in Congress are somehow less in touch with regular people than the elite GOP strategists and politicians.

Winning elections is about more than just getting people to vote. If the Democrats in Congress get drawn into this argument, and start arguing against an iconic pass-time, in a process where narrow margins determine who holds an office and makes budget choices they’ll be conceding electoral might to their opposition for years to come.

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Wikipedia citations: 

Updated Summary Tables, Budget of the United States Government Fiscal Year 2010 (Table S.12)
http://www.gpoaccess.gov/usbudget/fy09/pdf/budget/defense.pdf

July 15, 2010

Deficit truth and voodoo economics

Posted in economic recovery, federal budget, GOP, taxes, U.S. Economy tagged , , at 10:56 am by realitytax

If the GOP is really serious about deficit reduction why does Sentator McConnell (R-KY) say it’s a “uniform view in his caucus that tax cuts needn’t be offset by other changes in spending” — do none of them think tax cuts affect the budget? There’s ample evidence that the tax cuts enacted under the previous administration were, in fact, the largest factor in rapidly turning the Treasury’s surplus in 2000 into the deficit under a Republican administration which mostly enjoyed a Republican Congressional majority.

What kind of voodoo budgeting lets you ignore a revenue decrease?  We lost 3 million manufacturing jobs while Bush was President, but the GOP line is that tax cuts will help?  Tax cuts don’t put groceries on the table of an unemployed person, but they do add to the deficit – it’s not complex math.

We’ve got to get more rational in discussing the budget and the deficit. The economy can work – productivity has nearly doubled in this country in the past 30 years, and corporate profits are obviously robust even as CEO salaries and bonuses have sky-rocketed.

Leaders who will safeguard the interests of ordinary citizens are becoming an endangered species in the Congress. In late summer 2008 Congressional leaders and the Bush administration told the country that big business needed behemoth bailouts our our entire economic system would collapse, but that Wall Street bailout did nothing to save blue collar jobs, reverse the outsourcing trends, or stimulate job creation. The bailout didn’t even stimulate lending, it just gave banks cash that went to year-end bonuses.

Bonuses – seriously. What other industry would award bonuses when they had to get billions to remain in business?

And now Senate Republicans want to balance the budget (and stir up fears about deficits) while they claim there’s no need to offset tax cuts with other revenue?  Think about that.  Tax cuts may or may not make be your cup of tea; they’re a tool in the economist’s arsenal. Yet to claim on the one hand deficits are bad and then turn around and advocate revenue reduction — in this case by providing tax cuts for the wealthiest citizens — without offsetting it in any way defies the reasoning powers we expect in our elected leaders.