Take Two And Call Me In The Morning

We saw, supposedly, a budget cutting smack-down in the 2010 midterms. The talking heads and deficit hawks have said repeatedly that the heavy Democratic losses were a rejection of heavy spending, a repudiation of the Obama Administration’s “weak” job-creation, and a massive dose of humble pie. We were told that the biggest threats to our nation were government spending and government debt. The Tea Party, we were promised, had the solutions.

This song sounds strangely familiar. Without overindulging in policy debates previously covered in this space ad-nauseum, the initial legislative priorities of the Tea-publicans don’t seem to have much to do with the problems at large. In the Congress, and in state houses across the nation, these folks seem Hell-bent on addressing Roe v. Wade, gay marriage, and union-busting. Efforts at ending “reckless spending” have been exclusively (yes, exclusively) limited to cutting salaries and benefits for working Americans, attacking education, trimming indigent health care, bludgeoning Sesame Street, putting the cuffs on law enforcement, and of course, making the homes of the poor a little colder next winter.

President Obama has played a role in this production, preemptively proposing some of the cuts in the hopes he can defeat the most damaging ones. But, as Speaker Boehner has said, this is the Republican’s time. They are in charge (as Nancy Pelosi was in charge in 2007), and it is their agenda which will save the world for democracy (if you are wealthy enough to participate in it). But the math is, once again, not in their favor. While Republicans have made no steps towards job creation (having instead moved to kill jobs in state and local government), they have made a collection of transparently ridiculous attempts at “fiscal responsibility”. We have, as a nation, averaged an annual deficit over the last four years of around $1 trillion dollars. The Tea-publican dream this year, was to trim $100 billion from the budget.

According to this collection of overcooked Chicken Littles, the budget sky is falling, and their brave responsible solution is to trim 10% of the deficit (not 10% of the budget). If they had challenged the President on Afghanistan or even demanded that the President trim Medicare according to Representative Ryan’s plan, then they would at least have some logical leg to stand on. Instead, their ham-handed efforts reveal an agenda driven, not by fiscal responsibility, but by a much older political motive; pure ideology. The Tea Partiers have made no attempt to take on the problems they say are threatening our nation, but they have taken on projects that they have despised for decades.

Our budget issues, at the local, state, federal, and corporate levels, are driven by the explosion in health care costs over the last decade in acute terms, and projected accelerations into the future. This is not an ideological statement, it is an accounting identity. This market, which effects every person in the economy, has accelerated costs at a rate exceeding four times the base rate of inflation for more than a decade. It can’t simply be avoided without further eroding the basis of our market economy, but Republicans and the Tea Party would simply ignore the issue entirely, and prescribe “tax cuts”.

The Tea Party intellectuals (and I use that phrase with both caution and a deep sense of humor), have seen our torn aorta, and prescribed closure of the skin and a pair of aspirin. This is the definition of self-fulfilling prophesy; they predict the collapse of our nation, then do everything in the power to hasten its arrival. Our media is supposed to recognize and report on this type of garbage, but many have been taken in by the advertising. David Brooks has led the editorial staff of the New York Times into full-fledged deficit-hawkdom, and Rupert Murdoch has, with the backing of Peter Peterson, led a balance of other outlets down the same path. Nowhere, it appears, are there mainstream journalists with a calculator and access to a budget spreadsheet.

The Rational Middle has called before for its readers and friends to pay close attention to the reporting on these issues. The finances of our democracy often fall behind the more attractive areas of activicsm, but they are critical to everything else we the people do. There is no democracy without “one person, one vote”. There is no democracy without free and fully-attended public education. There is no democracy without individual rights that take precedence over corporate initiative. There is no democracy without a rationalized budget supporting all of the above.

The Rational Middle is listening.

9 thoughts on “Take Two And Call Me In The Morning

  1. Tommy; I will respond in detail to the focus of your comments in my next post (Thursday March 3), but here is a primer:

    “Oh, and another thing… Liberals have demonized the concept of “self-reliance” to the point where even someone as rational as you use the term with contempt and distrust.”

    I don’t have contempt or distrust for the notion of self-reliance, or those who embody the term. What I oppose is that someone can stand in the United States of America, a nation that has thrived and survived via the actions of teamwork, and claim that any business has truly “gone it alone”.

    “This fear manifests itself in the language and actions of liberalism. “People” is a commonly used term. “We” is another one. “Community” and “social justice” are others. “Personal responsibility” is rarely used by liberals, expect when they talk about personal sacrifices for the good of society.”

    I am not ashamed to use the phrase “We the people”, and find it intriguing that you, as a libertarian, would oppose (unilaterally) the use of “people” to describe our democracy. We live in communities Tommy, we are a communal species. You will not find, from the dawn of time until now, a society that lasted that was based on “rugged individualism”. Personal responsibility is something that is both vital and lacking, but is just as easily ignored by libertarians claiming their rights, conservatives claiming their God, or liberals claiming their entitlement.

    “No, they’re not. It takes someone with an idea and motivation to bring a product to market. Once they’ve implemented the idea and it’s in the market, it takes marketing and salesmanship to convince people to buy it. If there’s a shortage of people with money, the seller lowers the price until it starts to sell again. Nature’s law of supply and demand is not politically motivated.”

    I might now believe you are an advertiser Tommy, because (as an operations guy) I always believed that businesses were successful when they identified an opportunity/need that existed at a price profitable to its model. What happens when those sellers start losing operating margin Tommy (when there is a shortage of people with money)? They trim costs, beginning with labor, typically. The lowering of price and corresponding cost trimming becomes perpetual in an economy, and no amount of self-reliance will break the cycle…ever. The will to earn has never, ever, (by itself) broke a recession in the recorded economic history of the world.

    “People don’t just spend money automatically. They have to be convinced to spend it. It’s that fact that befuddles the Keynesian’s out there. They think consumer spending is automatic. As long as they have money, they spend. That’s why they teach that transferring money from wealthy people to lower income people, stimulates the economy.”

    An individual person does not automatically spend money Tommy, but “people” in an economy spend money at a reasonably well-defined percentage when some form of stimulus is introduced. Again, this is not an ideology, it is a mathematical identity that has been confirmed by well documented data going back nearly 100 years. The resonant value of tax cuts, infrastructure direct spend, infrastructure indirect spend, food stamps, unemployment insurance, asset-based wealth (bubble wealth from housing or stocks)…all have a well tracked value in the economy. The housing wealth effect, as an example, has been calculated at between 5 and 7 cents on the dollar; the initial loss of demand caused by the $8 trillion housing collapse was accurately predicted 5 years before it happened (and ignored by Fed forecasters)(Baker, 2002).

    Additionally, in recessionary situations, payments deferred due to job loss are not purely discretionary; the house, power, water, food, etc must be paid. But you and I agree at least that direct transfer from wealthy to poor is not efficient. I think such transfers necessary in some contexts as an investment in security and overall economic efficiency, but prefer infrastructure investments as an instrument of transfer (commercial and educational). I know that you disagree with all transfer, but that is as they say, that.

  2. Oh, and another thing… Liberals have demonized the concept of “self-reliance” to the point where even someone as rational as you use the term with contempt and distrust.

    Liberals, by their words and actions, seem to fear free-willed individuals. It looks like they’re afraid of someone doing something unexpected, which is why they want to control individuals (and yes, the religious right is guilty of this also).

    This fear manifests itself in the language and actions of liberalism. “People” is a commonly used term. “We” is another one. “Community” and “social justice” are others. “Personal responsibility” is rarely used by liberals, expect when they talk about personal sacrifices for the good of society. The actions include greatly increased government regulations at all levels of government, and forced forfeiture of wealth, both of which decrease an individual’s choices.

    Combined, the words and actions tend to paint a picture of people who are eager to subjugate the concept of the “individual”, to the concept of the “group”. Until both the left and right agree with the libertarian with regard to the concept of the individual’s supremacy over the group, there will be no solutions to today’s political bickerings.

  3. “Economies are defined by both in equal measure…”

    No, they’re not. It takes someone with an idea and motivation to bring a product to market. Once they’ve implemented the idea and it’s in the market, it takes marketing and salesmanship to convince people to buy it. If there’s a shortage of people with money, the seller lowers the price until it starts to sell again. Nature’s law of supply and demand is not politically motivated.

    People don’t just spend money automatically. They have to be convinced to spend it. It’s that fact that befuddles the Keynesian’s out there. They think consumer spending is automatic. As long as they have money, they spend. That’s why they teach that transferring money from wealthy people to lower income people, stimulates the economy.

    The economy starts with people who want to earn, and ends with people who want to spend. Not the other way around.

  4. Economies are defined by both in equal measure Tommy. Without buyers who are motivated and able, sellers can’t earn a dime. We can keep talking about trimming salaries all you want…the bill is already coming do. Without a steady supply of customers who earn a living wage, business dries up. The demand side is every bit as important as the supply side, and structures that benefit one more than the other are destined to fall. Millions of people who got up every day and went to work prior to 2007 lost their jobs…they didn’t give them up. This recession isn’t defined by laziness on the part of the working class, it is the product of the loss of $2 trillion in paper wealth that was the by-product of the housing asset bubble.

    And to be perfectly clear on something…people who make fortunes shuffling securities and betting on commodities aren’t “earning” any more wealth than a guy building combines for Deere or a gal teaching children under the auspices of county government. That we have put so much time and effort into ensuring Wall Street’s rights and securities whilst letting everyday workers struggle has nothing to do with individual responsibility, self-reliance, or the American Dream. Nobody in this country, to include you, earns anything on their own. If you are born, reared, and start a business in Sub-Saharan Africa, then we can talk about “pulling yourself up by the bootstraps”.

    To live in the United States means security paid for by the people, safe resources paid for by the people, roads and waterways paid for by the people, educated workers and consumers paid for by the people, and a thousand other commercial inputs. You have written about your business in the past; please explain to us how to cost all of the above services as line items on your income statement. Then please tell me how you can avoid paying more when the economies of scale provided by public investment are lost. Of course, we could all be individually self-reliant and end up as the feudal subjects of Wal-Mart in a democracy run of, by, and for the corporations.

    Libertarianism on the scale being proposed by some has no basis in reality…it is in fact every bit as fanciful and dangerous as anything cooked up by the Marxists.

  5. RM:

    Pardon the lack of argument on my side, but I’m still recovering from the worst bug I’ve ever had.

    I’d like to point out, I slightly remember the Republicans having this same argument a couple of years ago, when Madam Speaker took over and rammed a few things down the country’s throat. Isn’t this just a cyclical arguement with a different title that comes around every time a new party takes over.

    I wonder what arguement will be at the forefront in 2012, with an all woman Executive Branch (just a thought).

    MO

  6. Syk, thanks for your comment, and welcome to The RM. I am well-acquainted with Rep. Paul’s views, and am not generally a fan. The closing to your comment sums up much of his philosophy nicely, and is not well-supported by the facts.

    “Everything we’ve done for the past 40 years has been highly inflationary.
    Military Industrial Complex,
    Entitlement Programs,
    Borrowing w/o Taxing,
    Interest on Debt,
    Extended period of Low Interest Rates (post-Volcker Era), and
    Globalization (leading to trade deficits),

    are the main contributors to our current problems and go beyond party affiliation.”

    I would point out Syk, that inflation (on the whole) is not a component of any of our recent downturns. Inflation in the medical marketplace is the driving long-term cause in deficits, but is not caused by deficits.

    Please feel free to continue this discussion at any time, and on any post. I look forward to you sharing a more defined argument. MC

  7. I don’t entirely agree with the article you wrote. It has some valid points about the current state of the Tea Party or those claiming to represent the Tea Party. There is an intriguing intellectual statesman you NEED to learn about–Ron Paul. When I say “intriguing,” I don’t mean in a sneaky, sleeper, surprising meaning, but rather a highly educated, mild mannered, doctor.

    Without understanding him, you don’t really understand the story behind the Tea Party. He’s an enemy of Faux News. You have to realize something isn’t as it appears when Faux News fabricates stories to discredit Ron Paul. The type of Tea Party you know, pushed by Faux News, is now a corporation. Big money literally BOUGHT the label and co-opted the name… BY INCORPORATION!!

    The REAL problem with the U.S. now goes beyond this artificial smokescreen Democrat-Republican paradigm. This economic depression has been in the makings since the 70s. Yes. It goes back 40 years. Everything we’ve done for the past 40 years has been highly inflationary.
    Military Industrial Complex,
    Entitlement Programs,
    Borrowing w/o Taxing,
    Interest on Debt,
    Extended period of Low Interest Rates (post-Volcker Era), and
    Globalization (leading to trade deficits),

    are the main contributors to our current problems and go beyond party affiliation.

  8. “And understand this: If American workers are being denied their right to organize and collectively bargain when I’m in the White House, I will put on a comfortable pair of shoes myself, I’ll will walk on that picket line with you as President of the United States of America. Because workers deserve to know that somebody is standing in their corner.” Barack Obama 2007

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