Posted tagged ‘budget’

A Little Man’s Job

October 17, 2013

The “Little Men (and Women)” on Capital Hill high fived last evening as Congress finally passed compromise legislation opening Government and avoiding a debt default.  You would have thought these elected officials had passed Immigration Reform, Gun Control, and Tax Reform all in the same day if you thought about their behavior.  Wow, indeed.

As in most matters, the majority were silent.  The loud mouths from the right declared victory, while both Parties’ leadership praised the bi-partisan effort.  “It was really, really tough,” said Harry Reid.  Hmmm.

In a town where there seems to be little consideration of the consequences of Congressional actions, moving beyond this crisis can only be viewed as very temporary relief.  What earthly good did shutting the Government down and putting thousands of government employees in a cash flow emergency (not to mention the enormous inconveniencing of millions of Americans) do?  And even worse, what purpose did threatening default on the US borrowing power serve?  The GOP strategy was greedy, self serving, and suicidal.

Looking beyond the stupidity (not going anywhere) of trying to hold President Obama hostage by attacking the Affordable Care Act, Republicans did have other issues and concerns they though legitimate.

For example, there still exists no clear bi-partisan path to a balanced budget.  There exists no consensus on just how large a national debt is safe, not in good times like now, but in bad times which could come in the future.  Entitlements and health care in general elicit quite different views from Democrats and Republicans.  What would a reasoned, fact based debate look like?

And what about every politicians’ friend, Defense Spending?  If we can’t afford current deficits, then how can we afford the current levels of Defense Spending?  Would the GOP forego spending on infrastructure, entitlements, and other social safety net policies in order to afford a robust Defense budget?  And would Democrats just say, put it on the charge card?

Sadly, today in Washington we do not have locusts.  Instead we have elected officials acting as if they were little men and women.  The job seems too big for them.

 

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Hard Knuckles Civic Lessons

October 14, 2013

Harry Reid, Senate Majority Leader, was in his youth a boxer.  From events unfolding in Washington now, it appears that Reid still thinks of himself as a fighter.  Will he go too far?

Republicans initiated what only can be described as a “bone-headed” tactic linking a continuing resolution on the budget to repeal or delay of the Affordable Care Act.  The need for the CR resulted in the Senate and House not being able to agree on a budget (not the ACA) even though they have had plenty of time.  The Senate bill (read Democrat’s view) was unacceptable to the House.  The House bill (read Republican proposals) was a non-started with the Senate.  Why Republicans did not go along with a “clean” CR and use the 2014 elections as a mandate for budget changes, is simply unfathomable.

Public opinion polls have registered Americans disgust with the GOP position.  At first, voters did not understand what was happening.  Soon, however, there were things citizens wanted to do… like visit a National Park, get a passport, or if you were a business person, continue to see the flow of greenbacks as government workers frequented your establishment… all this stopped.  When Americans asked the simple question, why was this necessary, commonsense could not support the shutdown.

Soon the GOP light bulb went on.  ACA demands was a loser.  Out the window went ACA demands.  But Republicans still wanted some face saving tidbit in return for passing a CR and increasing the debt limit.  The question was what concessions should Democrats grant?

Harry Reid had a different idea.  If Republicans sought concessions, he would raise his bet and demand a relaxation to the “sequestration” limits, in effect increasing the budget, to be part of any CR.

In the political world, this is what one should do as part of a negotiating process.

Knock, knock, Harry.  It is too late for this type of horse trading.  Knock, Knock Republicans, there’s no basis for any concessions.  The object for both Democrats and Republicans, now, must be to open government and avoid any default situation on the debt.

Once those hurdles are passed, then provisions of ACA (like the tax on medical equipment) or sequestration limit relief are again negotiable points.

The lesson Americans need to be seeing played out is not boxing but basic civics.  Americans need to see responsible governance.  Sadly this has been missing when it counts.

Teacher Seniority and The Budget Crisis

October 1, 2013

Philadelphia has a crisis.  It can’t fund it schools. Both State and City officials cannot agree on how to bridge the gap between how much money is available and how much money is said to be needed.  One answer offered by a “concerned citizens group” is to eliminate teacher seniority rules.  Hmmm.

Of course these are two unrelated issues.  It may be arguable that strict seniority is a practice that has outlived its usefulness.  It is simply part of another conversation.

Teacher seniority is center to any discussion about improving educational outputs and building a staff of good to great teachers.  That conversation also has many other associated dialogues.

What about the quality of supervision (like evaluating teachers to determine who is not meeting standards), or the continuing education training that could keep older teachers current?  Don’t overlook the possibility school districts might adopt industry practice of removing older and higher paid teachers in favor of the younger and less well paid.  Human nature is human nature.

So whether the core belief of almost all unions that seniority rules is the best approach or not has nothing to do with whether funding for the 2013/14 school year is sufficient.  The same can be said for the current crisis around the budget and most likely the debt limit increase.  It makes no sense to connect unrelated issues if anyone is serious about solving either problem.

Philadelphia Schools, like the overall US K-12 education system is among the most costly in the world.  There are simply more fundamental problems that will remain even if a fix for Philadelphia School Districts short fall is found.

Tying the Affordable Care Act to the overall US budget is just as misguided… unless the argument was to move the US to a Universal healthcare model.  Universal healthcare, as practiced by over two dozen other modern countries produces health outcomes as good or better than the US, covers all residents, and cost per capita half as much as what the US spends.  The argument to delay or defund is simply shameful.

While I believe it is time for changes to strict teacher seniority and also believe that Obamacare only represents a marginal (but morally important) improvement, these are both complicated subjects which need to be hashed out on their own merits.

 

School”s Out

August 3, 2013

Congress is out on its summer vacation.  The exodus began Friday as the weary lawmakers made their ways home.  They appear all to similar to school children beginning their summer vacations.

For some it was a time of pride.  They were part of a Congress which was on tract to be the least productive Congress of all time.  For others it was a time to recharge the batteries.

Low productivity just doesn’t happen.  It usually requires effort.   Mismanagement and/or misguidance will get these results.  The 113th Congress is about as dysfunctional as one can imagine, until of course, the 114th arrives.  What is happening?

The House of Representatives is controlled by a party which itself is in disarray.  Tea Party and ultra conservatives have chosen to remain within the Republican Party, but are only interested in their own agenda.  The bulk of the GOP, however, acts as if this minority were the majority.   The more moderate GOP members run around worried their seat may be up for grabs if they buck these conservatives.  So it is somewhat inevitable the House has voted to repeal Obamacare (over 40 times) when it knows the Senate will do nothing and the bill will die.  It seems normal that the House will decline to pass a “Transportation, Housing, and Urban Development bill” because it contains spending, and still feel quite free to complain about economic growth and joblessness.  This House clearly believes their electorate are brain dead and cannot understand the consequences of House action.

I wonder whether they are right?

The House members, of course, point to their greater objective of gaining control of the deficit.  Spending (unless on Defense or some project in “my” district) is off the table until a path to a balanced budget is found.  Principled to be sure, but very dangerous when not fully explained to the American people.

There can be no other outcome if budget balancing is to come rapidly and at the cost of reduced government spending, than increased unemployment.  In addition, reduced government spending will likely involve Medicare and Medicaid, and that will impact directly the elderly and the poor.

So, if this 113th Congress wants to be considered as serious public servants and truly believes extreme measures are needed, than these “balanced budget-shut down Washington” advocates should stand up and say so in full.

I will not hold my breath waiting for such utterances.  The 113th is not a Congress of brave men and women.  While many may want to do the “right thing”, what ever that may be, their financial supporters (or potential supporters of adversaries) seem to be calling the shots.  These special interests whose money flows to both Parties see the national good in even narrower terms than do these self absorbed politicians.

Common sense should bring most reasonable people to similar general conclusions.  The budget should be balanced at least most of the time.  The debt should be reduced to some much smaller amount (so that in a real emergency there is room to increase it through borrowing).  An abrupt change in our national defense spending can send unwanted messages to other Countries, especially those with bad intentions towards the US.  Medicare and Medicaid exist to provide protection for the elderly and the poor, a rapid deep change in funding will have wide spread impact upon millions.

So, we can see that balancing the budget and reducing the debt is likely to have negative impact short term on the economy, national security, and quality of life.  This does not mean we should not follow such a course.  Rather it argues about the pace of making these changes.

Balancing the budget and reducing the debt also beg the question of where the government spending should remain.  Again, people of reason know that there are certain services and projects that impact the economy, national security, and quality of life that only the government can undertake.  This type of spending needs to be viewed as an investment in the future.  Wise investments instead of costing the government money, ultimately produce “returns” which surpass the original expenditures.

None of these discussions seem compatible with the nature of the 113th.  None may be possible in the foreseeable future.

I am left wondering what the national crisis will have to be to get grown adults to begin acting that way?

Shut It Down, Shut It Up

August 2, 2013

Senator Ted Cruz wants to “shut the government down” and Senator Rand Paul wants Governor Chris Christie to “shut up”.  What a classy group of new conservative Senators Congress can now boast.  Hmmm.

Most likely Cruz does not really want to shut the government down.  For reasons that aren’t quite clear, he says he really wants instead to shut down “Obamacare”, the Affordable Care Act.  Paul probably really didn’t think Governor Christie was hoarding Federal funds that could instead have gone to national security.  Instead both Cruz and Paul are saying controversial things they hope will identify them as future leaders of a Republican Party.

Christie and other more moderate Republicans are saying “not so fast”.  These Republicans are pointing out that Cruz and Paul have not thought through the consequences of their proposals.  And in the opinion of these moderates, the consequences will be bad for the GOP.  (What about the country?)

Pause…  Let’s catch our collective breath.

The national economy is slowly but steadily recovering.  Most everyone wishes it was recovering faster and unemployment was lower.  The national debt is shrinking but not very quickly and with a balanced budget not in sight.  Most everyone intuitively believes the US should balance its budget.  While there is argument over the roll of tax increases, no one foresees balancing the budget with taxes increases alone or with 100% budget cuts.  Most economists, however, worry that a sharp increase in taxes and a proportionate reduction in government spending will bring our economic expansion to a halt.  Hmmm.

So what should our politicians be telling us we should do?

A slow but steady recovery has the advantage of lessening the chances for creating dangerous “bubbles” like we saw in 2007 with the housing industry and the derivative trades.  Small to moderate tax increases (like income tax code reform) and small to moderate reductions in government spending (like the size of the sequester) every one to two years might actual make progress.  But balancing the budget?  Not in the cards.

Why?

Medicare, Medicaid, and Defense Spending.

These three Federal expenditures are huge and growing.  Progress made with small to moderate increases in taxes and/or reductions in spending will be eroded with sucking sound of increased Medicare, Medicaid, and Defense spending.

Obamacare is a red herring.  It has nothing to do with the deficit by itself.  Shutting down the Government has nothing to do with the deficit (the money is already spent, the bills are already owed).

Healthcare and what is defined as “our national interests” has everything to do with the cost of Medicare, Medicaid, and Defense spending.  Any politician who cries out to repeal, roll back, or defund Obamacare (ACA) is disingenuous unless he/she offers a detailed alternative which offers the same coverage and does it at a lower cost.

Our national interest is a harder question to answer.  Since George W Bush (read Dick Cheney) lead America off its course and into endless wars in the Middle East, we have seen a world community only too happy to see America act as the world’s policeman.  Where is our national interest?

By the same token, an isolationist US would most likely produce a world where regional conflicts were numerous and international trade was severely restricted.  One can imagine a very dysfunctional world.  Hmmm.

I am getting the feeling that small to moderate change is actually a very prudent approach.  Whether some politicians like it or not, the current (and likely future) demographics, call for the US to work hard and cleverly towards an “inclusive” society.  What we might have thought was an inclusive society in the past, may not fill the bill in the future.  Senators Cruz and Paul (and all the others shouting to be heard) ought think about where the US is really headed and what internal changes will be necessary to meet the needs of that population.

Once the country pragmatically focuses on the future, then these spokesmen can more clearly see whre our national interests really are and what policies best serve them.

It won’t be “Shut Down” or “Shut Up”.

Making Sense of Chuck Hagel

February 15, 2013

A new word may be emerging from the Senate halls.  The word, a noun, is “Hagel-ling”.  It describes a process where a minority party recklessly exercises a historic Senate privilege and blocks a Presidential nomination with no job performance grounds.

“Hagel-ling” continues a practice which gained momentum beginning in 2009 called “No-ing”.  This practice calls for the President’s opposition to simply say “No” to anything and everything the President proposes.

Both practices gain character when the invokers wear an American Flag lapel pin.  Looking a television camera straight on, the “No” sayer says, “the American people don’t want this, they want …. whatever.”

Who said English was a dead language?

To put “Hagel-ling” and “No-ing” is a fuller context, one should try to answer the following four questions:

  • Which Country spends more (twice as much as most) other countries on health care, does not include everyone in health care coverage, and accepts a system that delivers mediocre health care outcomes?
  • Which Country spends more per student on K-12 education than any other country (except Switzerland), and produces students whose standardized test scores are mediocre?
  • Which Country spends more money on Defense than any other country, almost as much as all other countries combined?
  • Which Country imprisons more citizens than any other country with little or no impact upon crime rates?

The answer to all four question is the United States of America.

The US finds itself in a peculiar spot.

  • The Federal budget is chronically unbalanced.
  • Most experts point to a shortage of educated and skilled workers to fill current and future jobs.
  • Defense spending bares little resemblance to imminent threats and a lot more commonality to Congressional districts.
  • Prison populations keep rising as well as the budgets to house more prisoners per capita than any place in the world.  Why is the US so law un-abiding?

Frankly, I am not sure of why “No-ing” and “Hagel-ling” have come into existence.  Their practice solves nothing and does not advance greater understanding of any issues.

I am pretty sure, however, that the “why” answer lies close to the answer to why our nation is not up in arms over these four questions.  How can America sit by and waste so much money on health care, education, defense, and prisons, and then lament the nation’s Federal budget deficit?

Just maybe, if we try to make sense of the Chuck Hagel situation, we can stumble on the much larger set of problems, fully in our control, which continue to drift along with or without Chuck Hagel.  We elected the members of Congress!

The continued rejection of looking at data, comparing worldwide, and then making decisions in the nation’s best interest is hard to understand.  Maybe Chuck can help us find the way.

The Gaping Hole in the Line

September 16, 2012

It is fall and football season.  The best time of the year.  Baseball is still being played and for some teams the score really counts.  But it is football that makes the emotions flow.

This year, however, is even more special.  We will elect someone to be our President for the next 4 years, and politicians play this game for real.

Both parties have identified the same two major problems, getting the economy going and balancing the budget.  Both parties have failed to offer a convincing argument that they know what to do about either.  According to the polls, President Obama’s promises are slightly more acceptable than Mitt Romney’s.  End of story?

For this election cycle, I am afraid it is the end of the story.  Both parties have gone so far down their “version of the truth” path that course corrections don’t seem possible.  Romney’s “trust me, I’m a businessman” and Obama’s “we’re making progress, stay the course” may be appropriate in terms of the economy.  They are totally irrelevant versus the deficit.

A political judgement might be that Americans are not hurting enough to accept the necessary medicine to fix the deficit.  It also seems clear that neither candidate wants to disturb that public comatose state before November 6.  They have their play book and they are sticking with it.

There is all sorts of speculation about “what if”.  What if Romney loses?  What will happen to the Republican Party?  Will it go further right, or move more moderate?

Regardless of the outcome, a clear, fair, and pragmatic path to fixing the deficit is their now and will be there for the taking.  Who will step up and tell Americans the truth and then do the heavy lifting to see the changes through?  Would it be a shattered Republican Party or the fortunate to still be in power Democrats?

In my opinion, the winner will find that the path to restoring economic growth passes directly through fixing the deficit.  No sensible business or financier is going to risk their own money on an economy built upon sovereign debt.  Business and financial spending will only be on projects where a quick hit can be scored.  Get in and get out fast (before the house of cards collapses).

So back to football.

The first step is finding the gaping hole in the line.  The gaping hole in the line, the place where the star running back can run, is raising taxes and cutting Medicare/Medicaid spending.  Now hold on and don’t say, I’ve heard that before.

About half of the current deficit is attributable to Medicare/Medicaid expenditures exceeding what the government collects.  Fix that and the deficit is cut in half.  But how?

First, we must understand that both of these programs are suppose to fully funded.  That is, those able to work were suppose to have had a portion of their pay deducted while they were workers.  When they retired, there was suppose to be a continuing stream of taxes being withheld from others still working that their Medicare costs would be covered.  Medicaid is a similar process where workers pay into a government fund which should cover the medical expenses of those who are much less fortunate and do not have health insurance.  Today the amounts withheld are woefully inadequate and the Medicare/Medicaid service have risen too high in costs.

So straight up, we must pay more and we should demand that the services cost less.

Second, there are all sorts of reports that waste, graft, and corruption has crept into all of health care and in particular health care covered by Medicare and Medicaid.  Fee for service is one of the most obvious because it generates countless unnecessary tests and additional costs.  Graft and corruption pops up all the time and calls out for a thorough and persistent investigation.  Knock off 15-20% of the current expenditures and increase the amount withheld 30% and we could be looking at a 50% reduction in the annual deficit.

The remaining 50% of the deficit would melt away with a similar “cut and tax” approach.  The rest of the budget is dominated by defense spending.  Other programs like agriculture, energy, education, regulatory agencies, and infrastructure support should be constantly reviewed for continuing need.  But these programs are suppose to make the country as a whole function better.  This is a strong argument for higher taxes, particularly on those who earn more and benefit more from these expenditures.

So the winning play will be “tax and cut”.  It will divide its focus on healthcare (where everyone must pay more and the service providers must earn less), and everything else (where everyone must pay “progressively” more and we must ask the government to spend less).

The beauty of this approach is that the math will works.  On top, it is a program where everyone sacrifices. We ask the services we currently consume to be reduced in cost and made more efficient.

As always there is a leap of faith involved in this approach too.  I believe that when the Federal budget is clearly on a path towards balance, businesses and financial investors will see less risk in their investments.  Economic activity will pick up and growth will spawn more growth.  Government, instead of trying to push the economy forward will be concerned with how to keep the reigns under control.

The party that adopts this play book could hold power for decades.  I wonder which Party will see the gaping hole in the line?