Showing posts with label US Debt. Show all posts
Showing posts with label US Debt. Show all posts

Thursday, February 20, 2020

The Self Immolation of the Democratic Party


I am breaking my oath of not wanting to write more about politics, one originally made out of self preservation, the Trump Presidency being so egregiously offensive and yet so blindly praised by his obedient, ardent followers, that it was affecting my health.  It was also made out of extreme cynicism about the whole process, where Tweeting 240 characters can replace planning, thinking.  I’m stunned that our country has stumbled along this far under Trump’s monarchy, but I suppose it has been conditioned to respond well to reality TV material.

But as time went on, and we got through another day, my spirits were slowly being revived knowing that before we know it, we, the American People, will have a chance to cast him off to the garbage heap of dangerous politicians and demagogues.  This, in spite of the failures of Robert Mueller and the Impeachment process, both “hail Mary” passes into the end zone.  Yes, the upcoming election will right all.

Until last night. In full disclosure, my degree of cynicism made me ignore all previous debates.  What is the sense listening to a score of candidates blab their talking points.  Now that the “race” is down to a more manageable number, perhaps this was the moment when I hoped a moderate Democrat could gather some momentum.  Instead, we’re still left with Bernie Sanders, perhaps even more so.

Don’t get me wrong.  I “like” Bernie in many ways, but, as unrealistic as Trump’s tax cuts were, I think Sanders’ proposals will just further drive the national debt to unsustainable levels.  And he is as evangelistic in his demeanor about it as Trump has been about his border issue.  Just what we need facing off in November, two “true believers,” with one being able to call the other a “socialist” or a “communist,” terms as scary to the American electorate as “atheist.”

Bloomberg’s response under the attack by Elizabeth Warren regarding non-disclosure agreements his company may have because of sexual harassment or discrimination issues surprised me.  He should have immediately turned his ire on the legal system rather than trying to respond to her.  In an organization the size of Bloomberg’s, and the ease with which employees can bring suits, there will always be these. Actually, it's a perfect segue to arguing for tort reform.

In any case, it makes no sense for me to analyze the fine differences between the so called “moderate” Democrats (I think all have their hearts in the right place though), but my point is the Democrats are failing to set themselves up strategically.  If they think they can win with Bernie on the ticket, I anticipate a Trump reelection.  My ideal ticket would be along the lines of an Amy Klobuchar for President and someone such as Cory Booker as VP.  My thinking is strictly strategic and with the focus on beating DJT, nothing else.  I know this sounds heedless and cynical, but given how our futures have been compromised, and the Presidency devalued by Trump, that should be the singular goal of the Democratic Party.

Thursday, October 31, 2013

Boo!



Talk about a scary Halloween.  We're fearing little goblins with Ted Cruz masks, demanding all the Candy or else, the "trick" being they will stay at our doorstep forever, blocking our exit until we relent. Other non-Cruz goblins better watch out too, once the Cruz clan congregates. 

Until now, I've been silent on the subject of Ted Cruz.  He burst on the political scene as did Sarah Palin, but Palin was clearly a hopeless lightweight who was "hired" to play a role.  She is a reality TV star, and that's about it.  But Cruz is very different, and I've been trying to make some sense of him, his views, and where he might be going.

He is perhaps the most disturbing politician I've witnessed firsthand (only vaguely remembering Joseph McCarthy from my childhood).  I thought Barry Goldwater was dangerous, but unlike Ted Cruz I don't remember him threatening to hold the US Government hostage.  Cruz's intransigent political views, with no compromise possible, is menacing enough. He is clearly an exceedingly ambitious politician who has all the requisite American-as-apple-pie views and the mannerisms of a preacher, attributes that appeal to his Tea Party / Christian Right followers.  (His recent hunting outing was amusing, perhaps not as well staged as Sarah-got-her-gun trained from a helicopter for moose in Alaska; he was in Iowa, the first stop for the Primary.  And he looks oh so manly with a gun.  Check out the pix here.)  Furthermore, Cruz is well educated and one can only assume that his behavior is being carefully choreographed to achieve the objective of running for the Presidency of the United States. 

His call to shut down the government and have the US default on its debts is a form of economic terrorism, i.e. the "threatened use of force [in this case, legislative force]...by a person or an organized group against people or property with the intention of intimidating or coercing societies or governments, often for ideological or political reasons." (The Free Dictionary) Or at least the rubric of demagogue might apply -- "a political leader in a democracy who appeals to the emotions, fears, prejudices, and ignorance of the less-educated citizens in order to gain power and promote political motives. Demagogues usually oppose deliberation and advocate immediate, violent action to address a national crisis; they accuse moderate and thoughtful opponents of weakness." (Wikipedia)

I can't help but think of Sinclair Lewis' It Can't Happen Here, depicting the rise of a Senator "Buzz Windrip" to the Presidency, a campaign built on the back of patriotism and traditional "American values" promising economic reform, and after election appoints his own personal army ("The Minutemen" -- perhaps the NRA would apply for the job?), curtails minority rights, institutes kangaroo courts to do his dictatorial biding, while also limiting the power of the United States Congress. 

No, I don't believe that is what would happen if the unthinkable occurs, Ted Cruz being elected President, but he has mainly used his Senatorial seat as a bully pulpit for his Tea Party views, so his political ambition seems to know no bounds.  And I also can't help but think of this very loose paraphrase of a quote (sometimes attributed to Sinclair Lewis, but no one is sure)  -- if some form of dictatorship ever comes to America, it will be with a cross wrapped in an American flag. (Whatever happened to the concept of the separation of Church and State?) 

One would hope that moderates in the Republican Party can put down this radical, take-all-or-else faction.  John G. Taft, who rightly calls himself "a genetic Republican" made the brilliant case for reigning in the likes of Ted Cruz in his Op-Ed column in the October 22 NYT. He expresses my concerns exactly.

Here are some bullet point quotes from the article....

* If he [Senator Robert Alphonso Taft, his grandfather] were alive today, I can assure you he wouldn’t even recognize the modern Republican Party, which has repeatedly brought the United States of America to the edge of a fiscal cliff — seemingly with every intention of pushing us off the edge.

* Throughout my family’s more than 170-year legacy of public service, Republicans have represented the voice of fiscal conservatism. Republicans have been the adults in the room. Yet somehow the current generation of party activists has managed to do what no previous Republicans have been able to do — position the Democratic Party as the agents of fiscal responsibility.

* Speaking through the night, Senator Ted Cruz, with heavy-lidded, sleep-deprived eyes, conveyed not the libertarian element in Republican philosophy that advocates for smaller government and less intrusion into the personal lives of citizens, but a new, virulent strain of empty nihilism: “blow it up if we can’t get what we want.”

* This recent display of bomb-throwing obstructionism by Republicans in Congress evokes another painful, historically embarrassing chapter in the Republican Party — that of Senator Joseph McCarthy.....There is more than a passing similarity between Joseph McCarthy and Ted Cruz, between McCarthyism and the Tea Party movement.

* Watching the Republican Party use the full faith and credit of the United States to try to roll back Obamacare, watching its members threaten not to raise the debt limit — which Warren Buffett rightly called a “political weapon of mass destruction” — to repeal a tax on medical devices, I so wanted to ask a similar question: “Have you no sense of responsibility? At long last, have you left no sense of responsibility?” [A paraphrase of what was asked of Senator McCarthy.]

So, we now wait until February 7, the next "deadline" for the debt ceiling (it's becoming a Yo-Yo economy with all these kaleidoscopic, Armageddon-like cut-off dates).  It will be fascinating (or perhaps even more frightening) to watch Senator Cruz's machinations as that fateful day approaches.

Wednesday, November 7, 2012

The People Have Spoken: Compromise!



It is amazing how close the anecdotal survey mentioned at the end of my last post came to predicting the 2.2% popular vote plurality for Obama (only a tenth of a percent off).  I wonder how many professional polling pontificators were as accurate!  Assume Florida is finally called for Obama, and that seems most likely at this point, the final Electoral College tabulation will be 332 for Obama vs. Romney's 206.  Here the survey of 289 vs. 249 was too pessimistic, although calling the winner.

This was no mandate for Obama, nor should it be. His political campaign of 2008 underestimated the depths of the economic crisis and the ability of a mere President to affect meaningful economic change.  Too many promises were made, indeed. Perhaps he has a more sober view of reality with the onset of his second term. 

Looking at the results vs. 2008 clearly shows that the American public is dissatisfied with the status quo.  Obama's popular plurality in 2008 was 52.93% or 2.63% more than 2012.  That doesn't sound like much except when you look at the absolute vote itself, with Obama getting 9.6 million less votes than in 2008.  Less people voted, showing the disenfranchisement of the country as a whole.  We are all sick of the shenanigans of both parties.

But if Obama is listening, hopefully they are across the aisle as well.  Senate's Minority Leader Mitch McConnell's gave an ominous post election speech saying, "They [the American public] gave President Obama a second chance to fix the problems that even he admits he failed to solve during his first four years in office, and they preserved Republican control of the House of Representatives...Now it's time for the president to propose solutions that actually have a chance of passing the Republican-controlled House of Representatives and a closely divided Senate, step up to the plate on the challenges of the moment, and deliver in a way that he did not in his first four years in office...To the extent he wants to move to the political center, which is where the work gets done in a divided government, we'll be there to meet him half way."

It sounds like more of the same.  Will Senator McConnell and Representative Boehner get the message as well?  Boehner said "The American people also made clear there's no mandate for raising tax rates." Doesn't sound encouraging that Boehner is still drawing a line in the sand that there can be no tax increases in any compromise. Another game of chicken with the fiscal cliff and the debt ceiling?  Any sane person knows this cannot be merely addressed with spending cuts.  There will have to be some tax increases, a more progressive tax scale such as in the Clinton era.  Our economy did fine then, why not now?  Ok, guys, time to compromise.  The election results seem to be shouting that message. 

Antidote du jour...


Friday, June 8, 2012

Some Good News?


To offset the abundant  "bad news" of the last entry, here is an interesting article from Marketwatch on the deleveraging progress: U.S. debt load falling at fastest pace since1950s; Despite surge in federal deficit, America is deleveraging

Some salient points:

* Little by little, our economy is reducing its debt burden, slowly repairing the damage caused by 10, 20 or 30 years of excess.

* Total domestic — public and private — debt as a share of the economy has declined for 12 quarters in a row after surging over the previous decade.

* The level of public debt is indeed worrisome, but it’s not as big a worry as the economy’s total level of debt — public and private.

* As much as we hear politicians, pundits, tea-party patriots and the Congressional Budget Office obsessing about government debt, it was excessive private debt — not public debt — that caused the 2008 financial meltdown. And it was private debt — some of it since transferred to the public — that lies behind the current European debt crisis. (

* The U.S. is actually doing much better than you’d think if you just listened to the conventional fears about how we’re rushing headlong into a debt Armageddon.

* In fact, since the recession ended in June 2009, total U.S. debt has risen at the slowest pace since they began keeping records in the early 1950s. While Washington has taken on a lot of debt since then, the private sector has paid off, written off or dumped on the government almost as much.

* Economists who have studied the impact of indebtedness have found that low levels of debt are essential to growth, but that high levels of total outstanding debt can hurt an economy. Beyond a tipping point, adding on more debt will reduce growth over the long run, even if it inflates a bubble in the short run.

*According to a study by McKinsey published earlier this year, U.S. households may have two more years of deleveraging left before their debts are sustainable again. If McKinsey is right, the U.S. economy may have to endure a couple more years of slow growth.

Another little mentioned factor is that while the public debt has surged during the past few years, maturing debt is being replaced by new debt with coupons (interest rate) of one half or even one fifth the maturing ones. For instance, the US Treasury 30 year bond issued in 1982 had coupons of some 15% while the most recently issued US Treasury 30 Year bond was issued at 3.06%.  Ten year yields are now less than two percent, replacing US Treasury Notes in the 4 - 5% range.  Servicing the debt is actually getting cheaper, although these savings are probably offset due to the expansion of borrowing that has been needed to fend off a depression.. The low rates also leave investors with a continuing dilemma.
   

Tuesday, October 4, 2011

Yuan to Wings

Two interesting and related stories in the Wall Street Journal today.

Item #1 The Senate voted Monday to move ahead with a bill that would punish China for keeping the value of its currency low, drawing a harsh response from Beijing, which said the measure would severely hurt trade ties.

Item #2 The biggest chunk of Yum's [owner of restaurant chains including KFC, Taco Bell and Pizza Hut] operating profit now comes from China.

Are we sure we want a trade war with China, a country holding a sizable portion of US debt? Imagine putting a tariff on the Colonel's finger lickin' good wings? Perhaps there should just be a conversion rate of Yuan to wings and bypass the US dollar? Are the Chinese sure they really want to eat that stuff? Maybe a CIA plot?

Seems our major export now is "US Culture" -- our movies, our fast food and soft drinks, our way of life -- while the rest of the world manufactures everything else we need.

















Photo courtesy of Daily Times, Lahore Pakistan

Sunday, July 24, 2011

“A Glide Path to Zero Debt Post 2011”

This “glide path” was forecast in George W. Bush’s Feb. 28th, 2001 budget, A Blueprint for New Beginnings; A Responsible Budget for America’s Priorities.

The centerpiece of the legislation was a $1.35 trillion tax cut over 10 years which was signed into law on June 7, 2001. This cut was supposed to spur growth and thus increase federal revenues in spite of the tax cut (sound familiar?)

The exact wording from Blueprint for New Beginnings:

Over the next 10 years, the Federal Government is projected to collect $28 trillion in revenues from American taxpayers. The President’s Budget devotes roughly $22.4 trillion to extend the Government we have today, including the President’s new initiatives. This leaves a $5.6 trillion surplus. The President’s Budget takes a cautious approach to allocating this staggering sum, starting by saving the entire Social Security surplus—nearly 50 percent of the total surplus—for Social Security and debt retirement. None of the Social Security surplus will be used to fund other spending initiatives or tax relief.

By devoting these revenues to debt retirement, the Nation will be able to pay off all the debt that can be redeemed—an historic $2 trillion reduction in debt over the next 10 years. The only remaining debt will be those securities with maturity dates beyond 2011. In all likelihood, American taxpayers would have to spend an additional $50 to $150 billion in bonus payments to bondholders to accelerate the repayment of those notes, a wasteful and senseless transaction. It makes more sense to allow the securities to mature naturally, leaving the Nation on a glide path to zero debt post 2011.

By 2011, Federal debt will have fallen to only seven percent of GDP—its lowest level in more than 80 years. Net interest payments on this debt will be less than 0.5 percent of GDP, less than one quarter of today’s share and only three percent of the budget. This represents a great national achievement
.

Meanwhile, the threat of recession intervened, and the Federal Reserve ratcheted down interest rates. America went on a borrowing and speculation binge, focused on real estate and the building industry. Government, Wall Street and Main Street were all complicit, greedy investors buying up “investment property,” Wall Street packaging them as “risk-free” CMO’s, and homeowners indulging in the practice of using their homes as a piggy bank, with exotic no money down, no initial interest payment loans, the repayment of which was dependent on future appreciated real estate values. At the same time we continued to outsource our manufacturing capabilities to China and other emerging economies. Why work when Utopia could be achieved by merely borrowing?

So returning to the halcyon Blueprint for New Beginnings, another lesson to be learned from China: "Forecasting is difficult, especially about the future.” This is why the brinksmanship of raising the debt limit is such political grandstanding. Where was the outcry about the buildup of the national debt during the Bush years or holding Congress accountable for the failure of Blueprint for New Beginnings? While the stock market was climbing to new highs by 2007 and real estate prices were soaring, making homeowners and investors feel (not be) wealthy, not one peep about the national debt. We were borrowing against the future.

Depending on how one defines accountability to an administration (which takes control in late January every four years, but really does not have much impact until at least the end of the following Sept. 30 fiscal year), one could argue that Bush administrations were responsible for about a $6 trillion increase in National Debt (9/30/2001 - 9/30/2009) and the Obama administration for about $2.5 trillion thus far. (See this link for historical figures.)

Of course, debt growth has been more dramatic over the last few years (including the final year of the Bush administration) as Keynesian spending of “saving the world” from a depression soared. In spite of that spending, economic growth has been slow, unemployment persistently high, and real estate and associated industries remain in the doldrums.

These are the serious issues, as well as the national debt, which must be addressed. While I am the first to argue for fiscal responsibility, a balanced budget cannot be achieved overnight and cannot be achieved without some revenue increases via taxes. The best argument against pinning hopes that spending cuts, alone, will achieve a balanced budget is simply to reread Blueprint for New Beginnings. Allowing the US to default on its debt is a hopelessly reckless option.

PS: An interesting follow up to the above published by Bloomberg news two days later.