This is a great nonpartisan primer on the Fiscal Cliff. Of course my solution remains as it has been and is guaranteed to solve most of the USA’s financial problems – cuts to entitlements via means testing and a 5% annual DOD cut for the next 10 years which would allow us to keep soldiers *safer* than now, reduce global tensions, and balance the budget. I understand why “liberals” like public spending – it shifts money from rich to middle class (and to a minor extent the very poor), but I don’t understand why “conservatives” support so much overspending on DOD. It’s inconsistent with the founders vision of small government and inconsisten with any reasonable strategic vision of how the world works. As Ron Paul points out to deaf ears you can want a strong defense without wanting an exhorbitantly expensive defense.
The US Presidential elections are much more about marketing more governance, and it’s been interesting as an internet marketeer to watch the brilliancy of the Obama campaign with respect to online media and especially social media.
For example, right about NOW he’s on YouTube answering questions from voters: http://www.youtube.com/whitehouse?feature=inp-gh-SOU
Republican Mitt Romney’s pathetic twitter following is probably an indication of who will win in the coming online media battle for the White House. Clue – it’s not Mitt Romney.
S&P’s decision to downgrade the US debt rating from AAA to AA+ is very unwelcome news but it should not surprise anybody, especially in Washington where neither party has been willing to tackle the deficit or the debt in a responsible manner.
It’s time to cut the only two things in the budget that really matter – the bloated portions of Defense and Entitlements. Even estimating (and then cutting back) the bloat at 10% – absurdly low given how recklessly this money is spent – we could solve all deficit and debt problems in less than a decade. DO IT, DAMN IT!
The Tea Party’s was right that debt and deficit are major concerns, but their approach to solving the problem has been almost infantile, lacking in strategy as well as substance. They won’t cut defense – clearly required to solve this problem unless you raise taxes which as they correctly note brings a host of other problems into the mix. Defense spending is so high it’s become counterproductive, creating blowback and international tension which is mostly a function of our own reckless big spending in hostile territory.
One does not have to be an isolationist to see that it’s time for a much more strategic spending focus. Troops can be paid well and protected – these portions need no cuts, but operations and maintenance budgets in each of the services are where the big money lies, and where the big cuts won’t create trouble for policy or troops.
The solution is pretty obvious to many of us out here in the real world, where two things are crystal clear: 1. Entitlements are out of control. The prosperity the USA has enjoyed for over a century as the kingpin of the industrialized world is winding down in favor of spreading the wealth around the globe, especially to the developing countries of China and India. This prosperity allowed us (and by “us” I mean everybody – from poor to rich) to enjoy health, welfare, education, and retirement benefits the rest of the world could only dream about. Liberal middle class folks are whining too much about how they might lose benefits they never paid for – much of this in the form of “defined benefits” where their contributions won’t match their benefit so it’ll have to come from future taxpayers. Social Security has this problem, but it’s easy to solve by lifting retirement age a few years for those who can afford the wait OR doing a ” means test” OR taxing higher income beneficiaries. If we do nothing the Social Security trust fund will run out in under 20 years according to most estimates. The fund is actually growing now but demographics in the form of fewer workers and more recipients will soon overwhelm the system. Unlike a well managed system, Social Security has promised more benefits than incoming payments can support.
Summary: Simple solution is to cut bloat in the two big ticket items of defense and entitlements. Problem solved, AAA restored. DO IT.
In the interest of putting up good arguments *against* my general point of view (which I posted in “Shut up or Cut”, here’s the always-sharp-but- often-wrong Robert Reich. As with most tribal viewpoints, Reich makes several correct points and connects them in ways that are fairly rational. HOWEVER, what you miss with this type of analysis is the full and bigger picture that emerges when the many other factors in an economy are included. It’s a game super smart folks like Reich play super well, but for me it undermines their long term credibility since he’s more advocate and politico here than economist. Reich is a left wing economist and therefore focuses too narrowly on distribution issues as in this video. Compare with the CATO boys – the “right wing” economists who focus too narrowly on the *production* side of the equation. They largely ignore income distribution issues and mostly whine about how tax and government inhibit economic development (good points, but too narrow). On balance I line up more with the CATO views because I think they are far more representative of the forces and ideas that created our massive, vibrant, and mostly successfully economic powerhouse, but I’d like to see more from the right about the desirability of a more level income distribution. NOT so much because it would seem to be “fairer”, but simply because it is likely to create more stability both economically and culturally. So I’d agree with Reich about that part at least.
Another curious episode in the history of the democratic party comes to a close today as Barack Obama released a photograph of the long form official vault copy of his birth certificate. Signed by all the responsible parties needed in Hawaii to verify an official live birth of a US citizen, this should seal the presidential deal for all but the kookiest of the kooks who have pursued this silly angle for years. Although it is odd to me that it took so long to release this innocuous copy, I now assume the team was strategically holding back in the hopes of derailing some candidates, collecting foolish quotes about Obama’s legitimacy, etc. One would have expected them to wait a bit longer but the issue had gained so much traction perhaps they felt more harm was coming than they’d expected.
In any case, here it is:
Only the pathetically gullible and/or irrational will dispute this any longer. Unfortunately that includes …. more of us than anybody would like to admit. Tribal thinking rules now across the USA and across the globe. People believe what they are told to believe by fellow tribe members without bothering to think for themselves. Conclusions define the facts for them. It’s become unusual – even among many in the science commmunity – to apply the scientific and rational approach where facts define the conclusion. Advocacy and activism have almost completely replaced reason, and things are not going to change anytime soon.
I blame the 60s.
Over at Travel and History I have penned an article about the History of the Democratic Party of the United States called, not surprisingly, the ” History of the Democratic Party “. Based mostly on a very abbreviated version of Wikipedia material, we learn among other things that political cycles for both the Democrats and Republicans tend to last a long time, and that a major Democratic Dynasty ended with the election of Abraham Lincoln, ushering in a lengthy Republican era. More recently things seem to be switching a bit more dramatically as collectively we very foolish voters (yes, I mean YOU and ME) swing wildly from the right to the left, failing as always to find a smart balance of clear thinking in foreign policy, economics and social policy. Democrats and liberals continue to fret over policies in the USA that are far more progressive than the majority of countries, while conservatives call for budget cutting everywhere but where it’ll have the greatest positive effect – the defense budget.
It’s obvious and clear we need to trim the excesses of a society that has been drunk on prosperity since WWII but can no longer afford a massive, uninspired bureaucracy nor afford to coddle the self-absorbed and out of touch elite class. We need a new party based on the founding principles of individual freedoms, entrepreneurial innovation and efficiency, community involvement, and other good stuff.
The recipe is not complicated – it’s called the US Constitution and Bill of Rights, but it must be interpreted in modern terms and without the bizarre cognitive biases that infect the right (such as advocating for mixing church and state) or the left (such as higher taxes and bureaucratic problem solving).