More on: Our Federal Government & The Debt Ceiling
July 13, 2011
Some amazing stuff going on in Washington this week.
According to an article published in the Wall Street Journal today, “Senate Minority Leader Mitch McConnell (R., Ky.) unveiled a proposal that would allow President Barack Obama to raise on his own the federal borrowing limit by $2.4 trillion in three installments before the end of 2012, unless two-thirds of Congress votes to block it.
Mr. McConnell’s proposal to allow the president to raise the debt ceiling came after he said in a Senate speech that the country cannot solve its fiscal problems with Mr. Obama as president. “After years of discussions and months of negotiations, I have little question that as long as this president is in the Oval Office, a real solution is unattainable,” he said.
House Majority Leader Eric Cantor (R., Va.) suggested they consider temporarily lowering corporate tax rates as a way to offset revenue increases from closing tax loopholes, a Republican familiar with the discussion said.”
All of this rhetoric has the 21st century tingle of the Billie Holiday song, “Strange Fruit.”
Every time I turn on the radio, I seem to hear a Republican Senator or Congressman representing a state below the Mason-Dixon line denouncing our President as though he caused our economic dilemma.
Bear in mind: The last time our country had a balanced budget was in 2001.
Prior to Mr. Obama taking office, we experienced almost a decade of overspending, compounded by tax cuts.
Today, July 13, 2011, Senator Jim DeMint (R-S.C.), rejected the McConnell plan to give President Obama the authority to raise the debt ceiling.
So, we have various factions of the white male republicans from south of the Mason-Dixon line in dispute over exactly how to derail the Obama administration.
Should we lynch him? Shoot him? Starve him?
Stand by for more in the early morning news….
Spending Problem or Revenue Problem?
July 12, 2011
In April 2011, Speaker of the House John Boehner said, “Washington has a spending problem, not a revenue problem.”
Variations on this statement have been made by other Republicans, including House Majority Leader Eric Cantor, who said, “Most people understand that Washington doesn’t have a revenue problem, it has a spending problem” and added “We can’t raise taxes.”
President Obama has proposed that the Bush tax cuts should be allowed to expire for the wealthiest taxpayers, and Alan Greenspan proposed that these tax cuts should expire at all income levels.
Federal revenues come from taxes on individual and corporate income; payroll taxes for social insurance programs (such as Social Security and unemployment compensation); excise taxes; estate and gift taxes; remittances from the Federal Reserve System; customs duties; and miscellaneous fees and fines.
The two largest sources are individual income taxes and social insurance taxes, which together produce more than 80 percent of the government’s revenues.
Over the past 40 years, federal revenues have ranged from nearly 21 percent of gross domestic product (GDP) in fiscal year 2000 to less than 15 percent in fiscal years 2009 and 2010.
If we look back to 2001, we can see the last balanced Federal budget, when spending was about 18% of GDP, with revenues of about 20% of GDP.
In FY 2010, we have revenues of about 15% of GDP and spending of 24%.
I’m no rocket scientist, but I primarily see a revenue problem (in addition to a spending problem).
Clearly, the spending problem has been exacerbated by astronomic increases in defense spending relative to the wars in the Middle East, plus increased spending on homeland security.
Fact is: The Pentagon’s budget has increased dramatically since 2001.
The Pentagon’s base budget (excluding war and nuclear weapons funding), increased from $390 Billion in FY 2001 to $540 Billion in FY 2011, a real increase of 38 percent.
In inflation-adjusted dollars, the total defense budget has grown from $432 Billion in FY 2001 to $720 Billion in FY 2011, a real increase of approximately 67%.
No political commentary here. Merely a reality that you can’t spend more than you take in without incurring a budget deficit. It’s really that simple.
So, I’m patiently waiting for our Senators and Congresspeople to start telling us that they understand this simple reality.
The reason why we have a budget deficit? It has very little to do with the Obama Administration. It is mostly due to a decade of rampant spending balanced against tax preferences to the very wealthiest Americans.
It only seems reasonable to equalize income tax collections across economic lines.
Let’s allow our income tax code to become more progressive, and eliminate some of the archaic tax preference items that create tremendous inequity in our economy.
And, let’s work toward a system that tries to eliminate the “shadow economy” — in some estimates greater than $1 Trillion — where there are no taxes paid, all cash, completely “off the grid.”
We really don’t need or deserve any more political rhetoric from our elected officials in Washington.
What we do need – and truly deserve – is responsible action to put the U.S. back on track to leadership in the world economy.
We must expect nothing less from our elected officials. Let the partisan rhetoric stop, and let real leadership take center stage.
For those who are interested, here is a link to a recent analysis from the Congressional Budget Office: http://www.cbo.gov/doc.cfm?index=12085
Thanks for listening. If each of us were to do a bit of digging and take an honest informed position, we could probably fix the problems.
Property Tax Caps?
June 27, 2011
Property tax caps! Starve the beast!
The current skirmish in New York is the latest round in the battle between revenue and expense.
Local governments – sometimes trying to hide behind the shield of “unfunded mandates” – raise local property taxes to balance the local budget.
Taxpayers – perhaps feeling victimized — become enraged, and start a local TEA Party chapter.
Things can quickly get mean, ugly and out of control…
Could there be a better way?
In Indiana, property tax caps imposed as an outcome from 2007 property tax spikes, ended up with layoffs of police officers and firefighters, and significant increases in business fees, all because the caps reduced local tax revenues.
Commercial taxpayers in Illinois were angry with the caps because legislators allowed property-tax rates for businesses to be three times the rate for homes.
Property tax caps tend to be very popular with voters who are homeowners.
If we could couple property tax caps with government spending reform, we might have a real solution!
In New York State, let’s start by consolidating our 700+ school districts into 70.
Let’s get rid of the practice of packing 200% overtime for police and firefighters into the final 2 years to generate six-figure pensions. Let’s eliminate defined benefit pension plans. Let’s eliminate free lifetime health benefits.
There are likely dozens of other ideas that could do more good than trying to cap property taxes at 2%, but they will all enrage union representatives.
That goes right back to the premise that progress is only possible if we work together in an honest and non-confrontational way.
We need to find people who can focus on the needs of their future grandchildren.
That really helps to separate the wheat from the chaff….
A Zero Sum Game
June 27, 2011
“The central problem in our economy now is not putting idle resources and unemployed workers back to work, but of ending slow productivity growth; of causing the nation to save and invest more and consume less of its income; of preventing inflation from sapping the vigor of the economy whenever it approaches high employment; and of wiping out the enormous budget deficits that are weakening the national economy and its ability to compete in world markets. And just as important, and even tougher to solve, are the problems of individual companies and industries stemming from inadequate research and innovation; poor labor-management relations; and myopic management that seems incapable of looking beyond the short-run bottom line.”
“Cutting Federal expenditures (military and/or civilian) is not a viable way to wipe out the deficits. Government at all levels has an important job to play if the nation’s economy – its educational system, its industrial base, its infrastructure, its power to innovate and forge ahead in world markets – is to be strengthened.
Higher taxes are the only way to eliminate budget deficits, and the optimum way to accomplish this is through a value-added tax (VAT), which would replace the corporate income tax and permit a sharp reduction in payroll taxes. A VAT is determined by subtracting a company’s purchases of materials from its gross selling revenue and levying a tax on the difference: it is really a national sales tax. With a 15 percent VAT, a $20,000 car would cost a consumer $23,000.
A VAT would be a good thing not just to wipe out the budget deficit, but also to help the nation to consume less and save and invest more, to collect taxes from participants in the underground economy and to encourage exports by rebating the VAT on them as foreign countries do.”
Does this sound like something from a recent economic analysis you may have overlooked? Not to worry — it is not!
It is an excerpt from THE ZERO-SUM SOLUTION: Building a World-Class American Economy, written by Lester C. Thurow, a professor of economics and management at the Massachusetts Institute of Technology. It was published in 1985 following up on an earlier book, ”The Zero-Sum Society” (1980).
Dr. Thurow argued that the United States was caught in a trap of sluggish growth from which it could not escape without making some politically powerful groups worse off in the short run, yet resulting in strengthening the U.S. by making the nation as a whole better off in the long run.
The term ”zero-sum” — apparently borrowed from John von Neumann’s and Oskar Morgenstern’s theory of games — refers to that class of games (such as football, poker and some wars), in which the total gains equal the total losses.
A negative-sum game—(a nuclear war, for example) — is one in which everybody loses.
A positive-sum game – i.e. a good trade or a happy marriage – is one in which both sides win.
The majority of challenges Thurow identified three decades ago persist today because an elite few with tremendous political influence and power refuse to step back and “bite the bullet” in the short-term to support real and sustainable long-term reform.
One clear difference between 1980 and today is the absence of rampant inflation. Fed Chairman Bernanke has consistently supported a policy of ‘quantitative easing’ which has ensured interest rates near zero and an almost endless availability of credit.
During the Reagan years, a combination of relaxed fiscal policy (resulting in huge budget deficits) was accompanied by tight-money policy (resulting in double-digit interest rates).
Thurow contended that turning big budget deficits into a moderate budget surplus would eliminate a big drain on national savings. That proved to be true during the Clinton years.
We have plenty of historical data which clearly shows that reducing taxes and increasing government spending (whether domestic or defense) is a recipe for economic disaster.
Stay tuned for more positive ideas on how we can restore the U.S. to the pinnacle of economic power, meanwhile, don’t believe what you might hear from Elected Officials along the lines that, “…enormous tax hikes on the wealthiest Americans will slow down economic growth because they will transfer resources from the productive hands of the private sector to the wasteful hands of Congress, raise energy prices, and reduce incentives to work, save, and invest. Tax hikes are not the right solution for Americans—nor are they needed to reduce the deficit. Congress should cut spending and reform the tax code so it inflicts less of a burden on businesses and families and is more conducive to job creation.”
It is great rhetoric, but as written, it’s just not true.
Real reform requires serious collaboration and involves a very carefully designed combination of spending reform; tax reform; and re-engineering of government, starting from the federal, then cascading to state, county and local levels.
Yes, there will be some pain and agony. It’s long overdue, and I predict will result in great long-term benefits across economic classes.
Isn’t that what the U.S. is all about?
Priorities, Bridges & Political Posturing
June 23, 2011
I am a resident, taxpayer and voter in Westchester County, NY.
I just learned that Westchester County Executive Rob Astorino has called on NY Governor Andrew Cuomo to make building a replacement bridge for the Tappan Zee a top priority.
The news release indicated that Astorino said, “The time has come to invest real political capital in getting the replacement bridge built. We can’t wait forever for a perfect solution.”
I find it very sad that our Westchester County Executive seems to be less than fully informed about highway and bridge issues.
Perhaps this is to be expected when there is no experience or knowledge requirement for elected officials. ‘Look pretty, speak eloquently, raise money, and the voters will vote you in!’
County Executive Astorino is a poster child for this.
My sense is, “The time has come to require a knowledge and experience test before anyone can run for elected office. We can no longer accept or tolerate elected officials who were put in office as puppets, or as the result of winning a ‘beauty contest’.”
Fact is, the Tappan Zee Bridge is part of I-87, the national highway system. While it is one of many connections between Westchester County and other parts of New York State, it hardly seems to be something that would be near the top of a priority list for the Westchester County Executive.
The Tappan Zee Bridge is operated and maintained by the New York State Thruway Authority —a Public Benefit Corporation created by the New York State Legislature to build, operate and maintain the Thruway System.
The Thruway Authority is responsible for a 570-mile system of highways crossing New York State, the longest toll highway system in the United States. Who can say with certainty that the Tappan Zee Bridge is more critical than the Grand Island Bridge, or the Champlain Bridge?
The Thruway Authority operates autonomously and if County Executive Astorino had done his homework, he would have been calling on the Chairman of the Thruway Authority to take action, not the Governor.
It seems that the County Executive of Westchester County could find dozens – maybe hundreds! – of more critical local issues to focus on.
If called upon, I am available to provide informed citizen input on critical local issues.
Please don’t be bashful, County Executive Astorino! I am one of your constituents. Use me! Challenge me!
Morbier Cheese — Worth a Try!
June 13, 2011
Morbier cheese— (“more-bee-AY”) — is a French cheese that is made from cow’s milk and is semi-soft. It has a distinctive appearance because it has two layers, separated by a layer that looks like a band of mold running through the middle of it.
The band was originally made from ash or charcoal — back in the day, Morbier was made on farms on the lower slopes of the Jura region during the winter months.
Today, the black layer is typically a harmless vegetable product and purely decorative.
Morbier was originally produced in small batches as a farmer’s cheese, generally made for personal consumption and as a way to achieve household economy.
Morbier is traditionally made in flattish cylinders with a grayish-brown rind that is somewhat sticky and bulging ivory paste. They have a ‘meadowsweet aroma of nuts and hay’.
The earliest versions of the cheese were made with leftover cheese curd, or leftover milk, but normally there wasn’t enough milk to fill a full round. In order to keep the first layer from forming a crust, morning milk in the round would be sprinkled with edible ash. The second layer would be added in the evening after the evening milking had taken place.
The name for Morbier cheese comes from the village to which its invention is credited: Morbier in the eastern French province of Franche-Comté.
Today, Morbier A.O.C. is a ‘lait cru’, raw milk cheese. It has a soft paste that has a distinct aroma and with a flavor that only lingers on your taste buds for a short while.
In color, Morbier cheese is a white to pale yellow, and it typically ages for only a short period of time, from about a month and a half to three months. Some will say that the cheese has an unpleasant smell, but true cheese connoisseurs tend not to mind strong smelling cheeses.
The flavor of the cheese may have a slightly bitter aftertaste, yet many praise Morbier cheese for its creamy texture.
Fast facts:
– The rind of Morbier cheese is natural and rubbed, and the paste is supple and sweet.
•- The shape is round, with building sides and horizontal black furrow through the middle.
– Appropriate wines: Muscat; Jura’s wines (primarily Pinot Noir and Chardonnay; and some red (light) Burgundy wines.
– Percentage of Fat: 45%
– 2 week shelf life in the refrigerator.
Almost Perfect Weather
June 1, 2011
We had cold and rain here just about all of May, and on the first of June, we now have 90 degree weather with humidity. The weather service posted a severe storm warning around 5 PM today, so I assume a cold front is coming in.
We pay major bucks in taxes here in the Lower Hudson Valley of NYS in exchange for promises of perfect weather.
I think our boys in Albany have recently begun to promise a bit more than they can deliver.
I guess with the climate change, they will have to be raising our taxes again in order to upgrade the tools needed to keep pace with technology so that they can go back to delivering perfect weather.
As a loyal New York State taxpayer, I can tell you, “It’s worth it!”
With the exception of a few NYS Senators who have had to go back to meteorological school (Guy Velella, Joe Bruno, Hiram Monserrate, Efrain Gonzalez, Pedro Espada and Vincent Leibell are now in school, or have recently graduated), our boys in Albany are among the finest Elected Officials in the U.S.
Mighty pleased to be a taxpayer in New York State, and looking forward to a return of Perfect Weather!
Property Taxes Westchester County
May 13, 2011
Gold over $1,500 an ounce?
April 20, 2011
Yikes!
Bloomberg L.P. tells us that gold reached $1,506.50 an ounce in New York as the dollar slipped as much as 1 percent against a basket of six major currencies to trade at a 16-month low.
Gold has risen 32 percent in the past year as the dollar fell 8.2 percent.
Silver topped $45 an ounce for the first time since 1980.
The U.S. Treasury Department has projected that the government will reach the $14.3 Trillion debt-ceiling limit no later than May 16 and run out of options for avoiding default by early July.
“As the numbers show, the debt cannot be repaid without dollar debasement, so people are warming up to the idea of hoarding gold.”
Gold? In 2011?
Something is seriously wrong here.
I must have somehow slipped and fallen into the 4th dimension.
Help!
U.S. Credit Rating in Danger!
April 18, 2011
Yikes!
Our friends at Standard & Poor’s reminded us today that posturing and bickering by our elected officials is not only juvenile and annoying, it also has the potential to cost us dearly!
Despite their affirmation of a ‘AAA/A-1+’ rating for U.S. sovereign debt, the major stock indices lost real value.
Although S&P had some pretty positive things to say about the U.S. in its press release, investors are nervous.
Analysts at Standard & Poor’s think that our “highly diversified, and flexible economy (is) backed by a strong track record of prudent and credible monetary policy, evidenced by its ability to support growth while containing inflationary pressures.” They also admire “the unique advantages stemming from the dollar’s preeminent place among world currencies.”
Their concerns seem to emanate from U.S. debt and deficit ratios that are equivalent (or perhaps even worse than!) those of Spain, Portugal and Greece, countries that have already been downgraded by the rating agencies.
Some of us have been sitting on the sidelines frustrated beyond belief that a small cadre of elected officials in Washington seem to be unable (or unwilling) to openly and civilly discuss, debate and/or negotiate policies that impact the present, and which potentially have significant long-term consequences.
Most recently, we sat on the edge of our seats while some fringe politicians followed their own personal agendas and attempted to derail a bi-partisan budget compromise with the demand that Planned Parenthood be defunded.
Apparently, we came within minutes of a total U.S. government shutdown while these self-important creatures followed their individual ideologies on the road to nowhere.
The Congress of the United States was created by the Constitution in 1789.
My recollection from history and civics classes I took in school leaves me thinking that these individuals – Senators and Congress people – are elected to represent the wishes and best interests of their constituents.
I don’t recall any language that implied an opportunity for individuals to be elected to represent their own individual agenda, at the expense of the rest of our nation.
Yet, the behavior of a few members of Congress appears to be at the very heart of Standard & Poor’s warning today.
We need to hold our elected officials accountable for getting to optimum solutions, based on facts and solid analysis, not based on emotion, anger or specious arguments.
Each and every of our elected officials ought to be entitled to their own opinions, but they should not be entitled to their own facts.
My friends, Standard & Poor’s has thrown down the gauntlet, and it’s time for all 311 Million of us to step up to the plate and tell our 536 elected officials in Washington to stop the nonsense and do the job we elected them to do: create sustainable, long term solutions that restore the U.S. to a leadership role economically and politically.
We can’t accept or tolerate anything less.
walrus51 