Posted tagged ‘economy’

320,000 New Jobs, I Still Don’t Like Him

December 5, 2014

The Bureau of Labor Statistics announced today that last month the US added 320,000 new jobs. This figure was considerably higher than expected and about 100,000 greater than the previous month. Experience has shown that this figure could be adjusted slightly upward or downward in future months as overall national figures are analyzed. Never the less, the 320,000 figure is an extremely positive statement about the economy.

Also announced today was a poll measuring President Obama’s approval rating. It was his lowest ever. Hmmm.

How is it possible that the President is being rated so poorly when things are going so well in America? Is it that the strong economy is an uneven phenomena and some people are just not feeling that love? Or, are people pretty much done with President Obama and ready for someone new to sit in the White House?

The jobs figures, regardless, represent an important development. When President Obama took office, the Country (along with most of the rest of the world) stood at the edge of a 1929 era depression. The President pushed through a $800 billion stimulus package like first responders might use fresh blood and a tourniquet. Many States, however, offset lower State tax revenues with public sector layoffs. So, while the Federal Government was trying to stimulate employment, State and local governments were stoking the unemployment fires by cutting public service employment.

Most progressives argued for another stimulus package while most conservatives argued that there never should have been a stimulus plan in the first place. Gridlock settled the argument and no further stimulus was enacted.

Oh, how fortunate the US was.

Slowly and out of the way from well intended government intervention (stimulus or tax reductions), the silent hand of capitalism began to reallocate the nation’s resources. This method has prevented the more frequently used economic policy methods where the party in power tends to stimulate the overall economy by either increasing government spending or by reducing taxes (or both).

Except in emergencies such as in 2009, politically driven stimulus policies almost always over stimulate the economy. Over stimulations leads to over production, over consumption, and over borrowing (too much debt). Sooner or later, the free lunch ends and the head ache of readjusting to a more sustainable economy is before us.

The beauty of 320,000 new jobs is that the overall economy can sustain this magnitude of growth much longer than much higher numbers. Also, when there is inevitably a “correction” and the economy contracts, history says the contraction will be less severe that when a “bubble” bursts.

And let us not overlook that the US economy is performing better than any other free economy. Someone must be doing something right, one would think.

Ebola, ISIS, and Feguson have just happened.  These events have been downers for the population in general and they would have happened no matter who was President.

If Americans feel that President Obama has not provided leadership during these events, so be it. If Americans think someone else could lead the Country in a better direction, so be it. IfAmericans think poorly of the President, so be it.

What Americans cannot make true is that the economy is not strong, that American soldiers are not being committed to unnecessary wars, and that healthcare is not more available and at a more affordable prices.

While Americans can use whatever scale they wish when deciding whether they approve of the President, they cannot change the facts.

2016 – What Will The GOP Run Against?

December 3, 2014

A NBC poll released today showed former GOP Presidential candidate Mitt Romney leading all perspective 2016 nominees. Romney logged in with 20% preference by those polled. In second place was Ben Carson with 10%. All the other Sunday talk show guests lined up as little ducks with descending percentages. Hmmm.

Romney’s preference can certainly be assigned to the fact that there has been little money spent to date for the 2016 race. The boat load Romney spent in 2012 makes him the most recognizable GOP candidate even though Romney has consistently said he is not a candidate for a third try.

Here’s some ideas for the eventual GOP candidate.

  • The Economy. Candidate “A” can claim he/she will get the economy going again. Hmmm. Considering the mess President Bush left, and the steady climb back, the current US economy is second to none in the world. And, the return to a strong economy was accomplished without any tax give away programs for corporations or the very wealthy. What can the GOP claim? Maybe they might point to the many Americans who do not feel they are participating in the recovery because their jobs do not pay enough. Hold your breath and lets see what this daring GOP candidate offers as the path to fairer income distribution.
  • Good Jobs. This would be a worthy goal for either party. The difficulty both will have is where would “good jobs” come from and how would the government play a role in enabling? Chances are no GOP candidate will offer anything substantive in reference to type of jobs or how to enable their creation (conflicts with small government goals). Simply saying, Candidate “B” stands for more good jobs will probably be the extent. For example, being specific like wanting to complete the XL pipeline because it will create good paying jobs, while partially true will also help depress the price of oil and refined products (good for most consumers). The lower oil prices will simultaneously create unemployment as current oil producers find their sunk costs exceeding the new lower price of crude. Hmmm.
  • The Affordable Care Act. It will be practically irresistible for GOP candidates to not cry for repeal of ACA. Candidate “C” will pronounce it a “train wreck”. Unfortunately for Candidate “C”, the facts do not support the train wreck description. No longer are Americans denied coverage due to a pre-existing condition or have their coverage canceled due to catastrophic illness. Uninsured Americans can obtain affordable coverage when in the past only the healthiest could. And, while it is still early, estimates are being made that the ACA’s emphasis upon reducing hospital errors is actually reducing health care costs. Hmmm. The wise GOP candidate, however, will move from repeal to “repair” ACA and point out certain aspects which should be fixed based upon experience.
  • Foreign Affairs. Most GOP candidates will puff up and say they favor a strong national security posture. More spending by the Defense Department will be their call. These demagogues will point to Russia, the Ukraine, China, and the Middle East as proof that the Obama Administration has botched foreign affairs. Oh, really? The Russian ruble is in free fall due to non-military sanctions put in place to counter Russia’s Crimean and Eastern Ukrainian policies. The Middle East mess, which began with President Bush’s ill-advised invasion and occupation of Iraq and his Administrations frequent calls for “democratic elections” in middle east countries, can only be resolved by the Middle East countries themselves. Any GOP candidate who proposes another invasion will be in for a rude surprise.
  • Immigration. Potentially the hottest potato of all. What can an honest GOP candidate say? Studies by even the most GOP minded business groups all point out the economic advantages of immigration reform. Common sense compels one to see the foolishness of any attempt to deport over 11 million undocumented. Probably the best advice would be to try the “Dick Nixon Vietnam approach”. Candidate “D” could say he has a secret immigration reform plan but can’t reveal it during the campaign because if he did, some could game the system… and Candidate “D” would want the reform to be fair to all.

President Obama will not be running this time. The presumptive Democrat candidate, Hillary Clinton, can both defend and modify the Obama track record based upon the passage of time… things change.

Should the Democrats infact nominate Hillary, the GOP will have the real red meat they seek. Run against Hillary (and Bill).

So maybe the Affordable Care Act, and the Economy, or Jobs, or Foreign Affairs will not be the issues, just Hillary. Hmmm.

Two Required Lessons

March 18, 2014

From time to time, most people get the blues.  Maybe the weather has been lousy, or maybe someone has not been feeling well.  What ever the cause, everything else happening takes on a dark tone.  The daily chores seem too burdensome.  Hurry sundown.

For most people, well before the chemical arsenal of anti-depressants or mood elevators are prescribed, suddenly and for unknown reasons, life becomes manageable again.  For the nation, a similar phenomena appears also to take place periodically too.

For example, there has been a run of bad news for what seems like the last several years with foreign affairs.  The Israeli-Palestinian issue is stalemated with one senseless provocation by each side after another.  Egypt in the name of democracy disappeared as a tourist destination as the Muslim Brotherhood won a narrow victory and then tried to govern as if they were a 100% majority.  Tunisia, Libya, and now Syria went through uprisings.  Syria’s troubles are headed to the record category for senseless killings.  Now there seems to be a return to the cold war behavior of Russia and a divided and seemingly indecisive Western coalition.  Nothing seems to be working as reasonable and enlightened humans would expect.

On the domestic scene, partisan politics have reached the point of dysfunction.  Both sides talk past each other and miss all opportunities to find common ground.  Personal greed has pervaded Congress (as well as most State and Local officials).  The new motto seems “not I can do for government, but what government can do for me”.  Today’s domestic scene will not be confused with Camelot.

Something, however, is feeling different.

So, maybe it is Spring.  The weather has been unusually awful this winter but now there are real signs of a break.  Baseball is around the corner.  Fishing season is almost here.  What ever the reason, the cloud of gloom seems to be lifting and although much of the world looks a mess, there is hope it can be fixed.

Lesson 1.  It could be that we are slowly realizing that democracy and capitalism may be the best institutions and all countries should adopt, but importantly, it is not going to happen.  The importance of that observation is that we can stop trying to convert the world with extraordinary means.  We may be beginning to realize these dysfunctional States will continue to be lessen economically competitive.  The up short is US will face less competition while trying to figure out how it will govern.

Managed economies and especially those run by authoritarians are generally inefficient.  With globalization, inefficient economies are on a steady downward path.  Damning with faint praise, the US, despite its weaknesses with debt, education, and high healthcare costs, can for the foreseeable future expect to remain the wealthiest and most productive economy.

Lesson 2.  History has taught that everything deteriorates, and that what is done today, becomes the basis for what have in the future.  Once we make out beds, then we must sleep in them.

Consequently, we should use this regained confidence (and time)  to sort through our social and infrastructure problems and put them in perspective with our overall economy.

Consider that nothing good can be expected if the current income distribution gap continues.  And if we simply transfer wealth from the rich and give it unconditionally to the poor, I am confident nothing good will come from that too.  Clearly we must find ways to shrink the income distribution gap magnitude while addressing the other social and infrastructure issues.

My guess is that if a path forward is found, a successful path will lie well between the extremes of conservatism and progressivism.   We need solutions that are pragmatic while being strategic, that rely upon data and analysis, and once implemented are continually tested for efficacy.

I just hope these dark clouds remain parted long enough for optimism to flourish again.  And I must remember that dark clouds form normally as well as from disappointment over failed policy.  Patience and willingness to consider all proposals which are fact based will eventually win out.

 

Fit To Govern?

February 8, 2014

The now all to familiar dance around raising the debt ceiling is playing again in Washington.  The drop dead date has come and gone.  Treasury Secretary Jack Lew has begun the machinations which move money hear and there, and technically avoid default.  Some say Lew can do this for weeks, so there is no urgency to resolve the ceiling limit.  Hmmm.

Just exactly what type of law is the debt ceiling law anyways?  Why would a country have such legislation?

In the wisdom of past Congresses, the notion that there needed to be some reigns put on the Federal Government.  Government was spending too much and borrowing to cover the gap between what it spent and what it received in tax revenues.  So Congress put a cap on what Government could borrow.  Unfortunately, Congress did little or nothing about what Government could spend even though it had put in place legislation which put a limit on borrowing.  What?

The term balanced budget appears to be a foreign language word for Congress.  Congress routinely passes unfunded legislation, each time emphasizing the urgency and need for a spending bill but remaining silent or vague on how the government will fund the measure.

The second category of abuse is labeled “entitlements”.  This class of legislation specifies government spending, in perpetuity, and unrelated to whether there are sufficient tax dollars to cover.  So for example, with Medicare and Medicaid, we have an aging population (more people collecting for longer periods than having paid in taxes) and increasing healthcare costs (rising faster than anticipated in original legislation)  are driving a year after year deficit regardless of whether Congress passes a balanced budget on discretionary spending.  Hmmm.

So for strong supporters of a truly balanced budget, one can understand their frustration.  What one cannot understand is the logic that says “we, Congress, have authorized the Government to spend all this money which even if we could stop today would continue as a matter of law, so we have decided not to pay our bills when they come due”.  Isn’t that what third world countries do?

One can agree to disagree on whether specific Government spending is wise, and one can also agree or disagree on whether the tax code is sufficient and fair to cover the money spent.  What seems to avoid comprehension is on what basis does Congress think it is not obligated to pay for what it has spent?

More simply said, if the Country is not to borrow, than why are not taxes being increased immediately to cover these deficits?   Why is Congress not acting to really eliminate deficits?

Explanations quickly drift to “politics”.  Blame it on politician A or B, or Party R or D, or ideology C or P.  There are plenty of excuses and explanations.  It must be a tough problem because not since Bill Clinton was President has there been a balanced budget.

Back to the Debt Ceiling Increase standoff.  The best explanation is the immense frustration felt by many “R’s” and “C’s” because they cannot get agreement on a balanced budget that meets their principles.  Apparently, they reason that if we can’t get our way, then we will scorch the earth.

Allowing the Country to default on its debt is truly playing with fire.  It is far worse than shutting down the government by refusing to authorize spending.  Those favoring default are simply not sufficiently competent to govern.

The Republican Party and especially its conservative wing must get a grip on itself.  Regardless of how unworkable their plan of no new taxes and deep entitlement cuts might be, Republicans will serve the Country far better trying to enact that plan than to block increasing the debt limit and pushing the Country into default.

Republicans ask,  “well why won’t the President negotiate with us to achieve reductions in entitlements in return for an increase in the debt ceiling”?

The simplest answer is double jeopardy.  Only a few weeks ago, Congress passed a budget for discretionary spending.  Why wasn’t taxes and entitlements tied into that budget?  For what ever the reasons it wasn’t.  Congress in essence said with its budget “we accept the consequences”.  Raising the debt ceiling is the first and most obvious consequence.

When Republicans shut down the Government last fall, the world didn’t end but a lot of Americans were inconvenienced.  The shut down was a poor negotiating strategy because the “inconveniences” were not related to the Republican negotiating goals.  Blocking the debt ceiling increase will have a similar blow back, only far worse.

What drives these conservatives screams that they are unfit to govern.  Hmmm, maybe that’s the silver lining.

 

Is Gridlock A Blessing?

January 29, 2014

The GOP has made its recent living on “just say no”.  Their adamant opposition to anything President Obama proposes (even if it was originally a Republican idea) has confounded Democrats and confused the American people.  Nobody and certainly no political party is either always correct or always wrong.  So why should always “just say no” be a blessing?

Hmmm.

What if neither political party knows where first base is?  What if the core policies of Republicans or Democrats, if implemented, will not restore America to its status in the 50’s, 60’s, and 70’s?  In other words, what if both parties despite their rhetoric have not a clue where to find the American dream?

In a nutshell both Parties have ideas which by themselves lead to further degradation of America’s economic and moral leadership.  Republicans talk of reducing the size of government.  Front and center in the GOP plan is a reduction in entitlements (Medicare and Medicaid).  This might be interesting if their plan involved a true reduction in healthcare costs rather than a reduction in access to healthcare.

On all other government spending, the GOP sees reductions for most any government program that regulates.  “Regulations get in our way”, they say.  “Get out of Americans’ way and just watch the economy boom”.  Hmmm.

Where’s the evidence?  Look at where economic growth is taking place.  The top 2% are doing well while the lower 98% are holding still or losing ground.

On the other hand, Democrats simply see spending as an immediate economic lever and a vote getter.  Regardless of what the Democrat proposals are, they are almost always without sufficient funding and do not represents a shared agreement on how to solve social or economic problems.  And Democrat proposals do not attack the underlying causes of poverty, lack of education, and the creation of good jobs.

Whoa, what a mess.

The gridlock, however, has by default kept the country on the same course since there have been no government interventions that both Parties could agree upon,

Republican politicians continual demagogue over creating more jobs.  Remember the “jobs creators”?  With gridlock, rather than government picking winners, the overall economy is slowly and silently reallocating resources (the silent hand).  The US economy is growing steadily, if unspectacularly.

What our politicians are either failing to grasp or are too timid to tell Americans is that the US economy is now a part of a larger world economy.  Our major businesses do not look within America for cheaper labor.  They can produce goods in southeast asian countries (including China) with dirt cheap labor, and at world class quality standards.  Why should American businesses waste time searching for US labor (often poorly educated and motivated) when outsourcing can solve the problem?

Our politicians do not tell us that because it destroys their rosy image they claim their policies will produce as they stand there wrapping themselves in the flag and trying to sooth us with the words of how “exceptional” America is.  To be sure America may still be the most stable and potentially productive economy, but it is not the economy or the moral promise that the American dream is based upon.

Strangely, maybe it is still better that we do nothing rather than to follow the paths that Democrats or Republicans propose.  We can be sure that on either path, moneyed supporter of those parties will do well but the rest will still be standing on the sidelines.

I just do not know how long standing still will be the best options.   It’s just the best for now.

Wall Street Worries

January 25, 2014

The major stock markets have not, so far, enjoyed 2014.  Unless you sold short, this year has been a disappointment.  In fact, the big players have found themselves caught up with the herd and have followed the market averages down.  The Dow Jones has dropped over 1000 points in a little over three weeks.  While three weeks do not make a year, one still wonders whether the sky will fall next.

As usual the pundits’ explanations never deal with fundamentals, especially in a falling market.  Rather, experts are writing about “fear”.  The fear key investors are worrying about is reduced growth in the US and China.  Surprised?

You should be because there is no new information on 2014 growth for either country that was not known in December 2013 when the Market rose seemingly without limits.  Maybe this is just the “glass is half full or half empty” situation.  In December it seemed one way, now it seems the opposite.  Hmmm.

The Market has been often described as mostly a herd phenomena.  When one market maker gets a feeling or sees an opportunity, this player might buy or sell.  The rest wonder what that player knows.  In response, many of the other players “protect” their overall positions by doing the same.  Consequently when we look at market performance over time, we see a jagged line jerking up and then down, and then up again.  A logical and thoughtful study of market fundamentals when applied to buying and selling would be unlikely to yield this type of performance.

In December, when the world’s markets were rising most every day, the overall economy of Europe was anything but robust, China’s was struggling (and likely to decline further) even at a 7+% annual growth rate (down from over 10+% in the past), emerging economies were struggling, and the US was chugging along with 2% or so growth.  That is the same picture we see today.

You figure.

 

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.

Looking Ahead Economically Speaking

September 6, 2013

Today the Government will release its monthly “jobs” numbers.  Analysts will report regardless of whether the numbers exceeded or trailed their projections, that the 7+% unemployment rate is less than the nation is capable of producing.  Citing the “good old days” of 2006, experts will say the recovery is still in progress but well underachieving the nation’s potential.

These prognostications could (and maybe have) been written weeks ahead of any jobs data release.  They are general statements and almost unprovable.  They are safe statements which neither damn or glorify the economy.  But there is a question whether current conditions will ever return the overall jobless rate to 2006 levels?

One must remember that in 2006, the economy was on “housing industry” steroids.  The housing industry lives on jobs.  Excavators, framers, roofers, plumbers, electricians, siders, and landscapers all enjoy work when a house is build.  In addition there are all the people who make the concrete, the cider blocks, nails, staples, windows, roofing shingles, doors, flooring materials, and kitchen appliances.  And let’s not forget the decorators, bed makers, rug layers, wall painters, cabinet installers, and audio visual equipment servicers.  Lastly there are the real estate agents, the surveyors, the title searchers, transfer agents, tax assessors, and the local Starbucks or coffer shop that provides the sandwiches and coffees for all these workers.

Without a doubt this is a valuable part of any economy.  The first question is how and where did/do Americans get the money to buy houses in the first place and start this domino effect of job creation?  The second question is where is that money today?

The general answer is that American industrial productivity (that produced the money to fuel the drive for housing) has been so successful that it has reduced the number of legacy jobs needed, and we are currently in a period of economic reallocation.  People who made steel or clothing, for example, are suppose to be “retraining” to become computer makers or users.  (If only that were true.)  Regardless, free enterprise promises that capitalists, if left alone, will reallocate resources if an industry becomes uncompetitive.  But, how long will it take and what will emerge at the other end?

The crystal ball is still pretty fuzzy.  Renewable energy is often cited as a future growth area.  Maybe so but what will happen to all those delivering present forms of energy.  Health care is a growing field but the question of who can afford it is becoming a more urgent concern.  High tech, computer aided, manufacturing is touted too.  And in the same breath, a pause arises when we think about our schools and current inventory of Americans who can barely read or write and can’t balance a check book.. these are not likely candidates for high tech jobs.

So… the American economic engine keeps puttering along.   We are living to die another day.   We must remember there is no obvious other country that is about to overtake the economic strength of the US.  Never the less, unless our economy does shift to fuller employment, we will be stuck with some difficult budget and tax issues where we will constantly be debating what can the government afford and who will pay for it.   These are seeds for a declining USA.

Ironically, all economic periods are cyclical.  That is this slow and steady growth we are currently experiencing will eventually need an adjustment and contract.  In the best of circumstances, the contraction will be mild and growth will return soon.  The irony is that should this slow down occur in 2016, Republicans, despite there hugely dysfunctional behavior and absence of ideas, could look like the prettiest girl in town.

What a hoot.

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?

Will History Repeat?

July 24, 2013

Shutting down the Government is risky business.  When Republicans followed Speaker Newt Gingrich’s advice and refused to approve legislation funding daily Government operations in 1995/1996, President Bill Clinton called their bluff.  Unfortunately for the GOP, it was not a bluff and the Government was forced to suspend all but essential services for 28 days.  The GOP paid the price for this irresponsibility in the next election.

The tables are almost set for a repeat.  President Obama has proposed a budget which calls for modest increases in spending while the GOP is calling for significant cuts (except in Defense and State).  They know their proposals won’t pass in the Senate but that hasn’t reduced their bravado.  To the contrary, Senate Republicans are spewing their own “Armageddon” warnings.  And what would be a better target than the Affordable Care Act?

So why this threat to repeat history?

  • Bluffing.  President Obama has demonstrated that he is a poor negotiator preferring to show his best hand right away.   The President, however, has no history of yielding as much as the GOP is asking.  Is this a wise GOP strategy?   Hmmm.
  • Principle.  The GOP has been consistently calling for a balanced budget and that will require significant spending cuts.  How can the GOP suddenly change its message?
  • Appeasing their base.  Most GOP supporters do not favor Democrat spending priorities and believe cuts are necessary.  How could the GOP not respond to this grass roots appeal?
  • Emotional reasons.  The GOP seems to believe that spending cuts, especially to entitlements and healthcare programs are a fundamental truth of life.  America is an exceptional Country, they believe, and pulling oneself up by the boot straps is simply part of what makes America great.  Hmmm.
  • Clear and logical reasons.  The GOP is supported by a brain trust of conservative economic thinkers who believe lowering taxes, emasculating Government services, and basically throwing fate to the hands of private enterprise is the way to go.  These same thinkers dismiss the notion of global economic connections (the US can prosper alone) and the experience which all the European Union nations have endured when they instituted austerity economic packages over those which could stimulate growth.  Hmmm.

In the end, it makes little difference why the GOP is so directed.  The GOP is flirting with serious damage once the American people find an alternative.  While Democrats represent more sanity on this issue, Democrats fall far short of having any long term plan for producing growth and a sound economy.

The answer to this predicament is, of course, doing nothing.  A budget compromise where spending increase below the rate of inflation and the national debt is extended without incident are the sensible answers.  The world’s economies are connected.   There is no place for the US to grow other than within its boarders  But is Congress smart enough to recognize this?

The GOP’s consistent and persistent rage against the Affordable Care Act is shameful in the absence of specific and actionable alternatives.  The GOP claim that ACA is flawed is most likely correct.  The question is where is it flawed?  (Remember the ACA is originally a Republican think tank proposal and it is a near copy of Mitt Romeny’s Massachusetts healthcare legislation.)

There is still a lot of time for reason to prevail.  The danger is that with each day, GOP leaders are gaining headlines with messages that also march them closer and closer to the cliff.  One of these days, the GOP will wake up and find that Americans (maybe not the very rich) are feeling good about the economy and the steady hand the President has carried towards domestic policy.