Golden opportunity for either bipartisanship or more partisanship

Yesterday, House Minority Leader John Boehner went on the Sunday shows and said that he would vote for extending the current tax rates for Americans making less than $250,000 a year “if [that is] the only option.” [1] Doesn’t sound like the party of no to me, at least not this time. However, Robert Gibbs went on the morning shows this morning. His response to Boehner’s concession was as follows:

–Gibbs to Harry Smith on “This Morning”: “We ought not use the middle class as a political football.”

–Gibbs to George Stephanopoulos on “Good Morning America”: “We’re going to have to see what Congressman Boehner does and says today. … But I think Congressman Boehner was fairly clear yesterday in outlining a position that the president outlined last week.”

–Gibbs to Meredith Vieira on “Today”: “Your poll showed that the second most potent idea against somebody running for Congress would be returning to the Bush policies. We’re going to take the next 50-some days to convince people that that’s exactly what the Republicans are going to do.” [2]

Now, I think that the only thing Boehner could’ve done was agreed to any extension of the tax cuts. If they had said no to anything, it would’ve been easy to paint them A) as the party of no and B) as the party of the rich. Now the ball is back in the Democrats’ court. If they really want to run on trying for bipartisanship, they aren’t going to have any better opportunity to prove it than now. This is a time that the administration could be reconciliatory on the surface while shoring up strength for themselves, take back control of this situation and prevent massive losses in November. The only way they can mess this up is if they come back with more demands, which I wouldn’t be surprised if they do because, whether we like it or not, it’s not just Republicans who, in Gibbs’s words, “use the middle class as a political football.” I’m afraid they’re going to do as Mr. Gibbs did this morning and, instead of at least making appearances of working together, using this to try to stab at Boehner and the Republicans, which is exactly what Republicans are hoping for. It would make them stronger going into November for them to be able to point and say, “See? They’re as partisan as they say we are, and they’re hypocrites to boot.” If this deal falls apart and the extension isn’t pushed through, at least for some, our economy’s going to take yet another hit. If either side is truly concerned about the middle class, they won’t let an opportunity to help pass by, election or no election. Now’s the time to do the right thing. We’ll see what happens…

Update: 1:20 PM EST

Now Senate Minority Leader McConnell’s spokesman has come out and said that Senate Republicans are joined in opposing any extension of the tax cuts that doesn’t include the cuts for $250K+ earners. [3] I have my doubts as to how long they’ll be able to hold to that position, especially if the economy gets any worse between now and November (as it seems to be doing). Let’s see what the next move on the Washington chess board brings.

The American Parasite, or What 21st Century America Should Be

Alexander Hamilton, in his essay “The Examination,” written for the New York Evening Post and published on December 24, 1801, wrote, “In matters of industry, human enterprise ought doubtless to be left free in the main, not fettered by too much regulation, but practical politicians know that it may be beneficially stimulated by prudent aids and encouragements on the part of the government.” [1] Hamilton, in his “Report on Manufacturers,” which was submitted to Congress in the latter days of 1791 but not acted upon at the time, advocated a broad strategy in which the government could aid and influence the development of various industries in the young republic that was, at that stage, so far behind England in manufacturing output. Due in part of England’s protectionist policies, the colonies had remained primarily the suppliers of agricultural goods and raw materials, not finished manufactured products. With their independence and a strong centralizing force in the federal government, the United States were able to bounce ahead to become the world’s leader in many respects, including the world of manufacture and industry.

Today, we are in danger of losing our status as the world’s largest manufacturing nation by output. HIS Global Insight has projected that we will end our 110-year dominance of manufacturing capacity in 2011 with China taking over our spot. [2] When George Washington took over as President, we were primarily an agricultural nation. Thanks to policy concepts began by Alexander Hamilton and taken on by successive administrations, we became a manufacturing nation by the end of the 19^th century going into the 20^th century. Now, as we enter the second decade of the 21^st century, we seem to be fully entrenched as a consumer nation, but is that truly a sustainable model? Can we subsist as a nation that imports goods and exports money? Even if it was sustainable, the question remains of whether we should want to choose that for ourselves. America has prided itself as a nation of thinkers, doers, be-ers. Where are we left if all that we are known for is consuming? In the natural world, there is a creature that fits that description. It’s called a parasite.

Before we’re flushed out of the world community, our government should take action to restore jobs. Provide tax incentives to companies that create jobs and tax companies that export jobs. Work with business – both on the side of the executives and on the side of the workers – to determine ways that government could assist in providing a good business environment within our borders. Stop handing out money with no preconditions – if money is given directly to any business, it should be given with a clear purpose and defined expectations. If our economy is to start growing again, it is going to take efforts, starting with citizens electing people who don’t view business as a ‘boogeyman’ but also don’t view the all-mighty dollar as a god. Capitalism is a system that is ultimately supposed to serve the needs of the society, not just a privileged few. Currency is a system of exchange, a pseudo-language if you will, for us to be able to communicate the value of goods and services to one another. It can and must serve these functions again, and our government must serve a temporary role in facilitating this transition, before the system goes beyond the point of no return and collapses under its imbalance. Let’s listen to the wisdom of the past and get America to making something again.

A stimulus or not a stimulus

I am reminded of the line from Shakespeare — “A rose by any other name would smell as sweet.” Apparently not according to Robert Gibbs. In the press briefing yesterday, Gibbs continued with the administration’s stern rebuke that their latest economic proposal was not a stimulus. To quote Mr. Gibbs, “I do not think that this is anywhere near the level of what was enacted at the beginning of the administration.” [1] My reply: “If it actually does something to help the economy, does it really matter what we call it?” It shouldn’t, but the Obama administration, just like the Bush administration before it, is hung up on the idea of terms and phrases. They’re the hooks with which they lure people in, and they’re the weights that drag them down to the ocean’s depths. Bush had his “Weapons of Mass Destruction,” “Axis of Evil,” and “Mission Accomplished.” Obama now has his “Change,” “Stimulus,” and “Recovery Summer.” Will we ever get real statesmen again who realize that words are a tool not a solution? Words should be used to explain a fully-developed plan that will address and tackle a problem head-on, not crafted and smithed into a bandage to keep a problem from becoming too big while it somehow magically is expected to solve itself. A note to the administration (this one, the last one, and any future ones to come): problems typically do not just magically become better without someone acting, and if we have to go through another, two more or ten more Presidents before we find someone who is truly ready to act, to develop plans, to explain to us what they intend to do and not to try to hoodwink us while they escape to a ranch in Crawford or a golf course, then we will keep on until we find that person. America will last far longer than any one person’s fifteen minutes of fame, and the clock is ticking on yet another administration more worried about what to call a proposal than actually crafting a well thought out plan of action.

The rest of the CBO story

While the President and Congressional Democratic leaders are touting new CBO (Congressional Budget Office) estimates as pointing out “that health care reform legislation would make deep cuts in the deficit over the next 20 years,” I thought I’d go and actually look at the CBO report. [1] In the summary letter to Speaker Pelosi, there are a few excerpts I’d like to share:

• Beginning of second paragraph — “Although CBO completed a preliminary review of legislative language prior to its release, the agency has not thoroughly examined the reconciliation proposal to verify its consistency with the previous draft. This estimate is therefore preliminary, pending a review of the language of the reconciliation proposal, as well as further review and refinement of the budgetary projections.”
• End of third paragraph — “CBO has not completed an estimate of the potential impact of the legislation on discretionary spending, which would be subject to future appropriation action.”
• Ninth paragraph — “Although CBO does not generally provide cost estimates beyond the 10-year budget projection period, certain Congressional rules require some information about the budgetary impact of legislation in subsequent decades, and many Members [of Congress] have requested CBO’s analyses of the long-term budgetary impact of broad changes in the nation’s health care and health insurance systems.”
• Eleventh paragraph — “CBO has not extrapolated estimates further into the future [than 2020] because the uncertainties surrounding them are magnified even more. However, in view of the projected net savings during the decade following the 10-year budget window, CBO anticipates that the reconciliation proposal would probably continue to reduce budget deficits relative to those under current law in subsequent decades, assuming that all of its provisions would continue to be fully implemented.”
• Thirteenth paragraph — “CBO has not yet completed an assessment of the impact for the longer term of enacting the reconciliation proposal by itself.”

Read it for yourself. [2] While you’re at the CBO’s site, check out the analysis of the administration’s proposed budget which points out that the President’s proposed budget will result in a $9.7 trillion addition to the deficit between 2011 and 2020, bringing the public held debt up to 90% of projected GDP, or $20 trillion. [3] For a definition of ‘debt held by the public,’ let’s turn to the Treasury Department. Public held debt is “The Debt Held by the Public is all federal debt held by individuals, corporations, state or local governments, foreign governments, and other entities outside the United States Government less Federal Financing Bank securities.” [4]

So, let’s say that the budget projection doesn’t factor in the health care insurance reform legislation and that the proposed legislation does actually result in a $138 billion reduction in the deficit between now and 2020. $20 trillion minus $138 billion equals $19.8 trillion. And that’s if this estimate includes the funding for the wars, which has been separate from the rest of the budget for a while now. I haven’t been able to verify that it is included. It’s also dependent on the big if of nothing else drastic happening in the next ten years which will result in us spending extra funds or taking in less funds than projected — natural and manmade disasters, economic problems, getting into new wars, etc., etc. That’s a lot of ifs, and that’s a very modest best case scenario start to bringing down an exploding deficit.

Things More Important Than Health Care Insurance Reform

Nearly a year has been spent on health care insurance reform (I refuse to call the plans that have been put forward health care reform because all they do is focus on the insurance industry). This weekend, it was discovered that, even going into a reconciliation process where no Republican votes would be needed, the Democratic congressional leadership still does not have the votes needed to pass it through. Instead of doing the sane thing and moving on to something else, the leadership in Congress and the administration continues to focus on this ‘reform.’ The week has been spent scrambling for votes, even as the AP reported today that premiums are likely to continue going up even if this ‘reform is passed [1, 2] Meanwhile, in the real world, the rest of us have a great deal more on our minds than health care insurance reform.

Financial Reform:

Time has an article on why the Democrats need to hang tough on financial reform. [2] However, I have my doubts that they’ll ‘hang tough’ on anything with someone as compromised as Chris Dodd leading Democratic initiatives on financial reform. The way things stand right now, little progress has been made to ensure that the same problems that led to the “Great Recession” will not occur again. After the scathing report recently released on the Lehman Brothers collapse, the idea was presented on the Diane Rehm Show on Friday as to whether the banks might not be currently doing more ‘funny accounting ‘on their books and are not as strong now as they are presenting themselves to be. [3, 4] A quite valid question, one that is not on either the congressional or executive radar, even with Dodd’s efforts to push through his watered-down second bill proposal whose details really don’t contain convincing preventative measures. [5, 6]

Education:

Our educational system is one of the biggest running jokes of the day. The administration, over a year in, is finally laying out plans for education reform. However, their reform looks like more of the same — more competition for funds, more stress on performance measurements, more options to transfer students out of failing schools, and little innovation in actually helping failing schools. [7] If schools fail, the administration says that all the teachers should be fired or the school should be closed, an approach tried by current Education secretary Arne Duncan in Chicago with mixed results. [8] Could it be because that doesn’t address the problems with the students’ experience and simply shifts students who already need extra help to catch up to schools that are doing well, leading their progress to slow down or reverse due to the same problems moving with the kids and the new schools becoming overcrowded? This is by far one of the most disappointing and shameful approaches of the Obama administration, and even more shameful is that Congress has shown no interest at all in talking about education.

Gitmo:

Day 52 since Gitmo was supposed to close. Still no plan being carried out. Gitmo’s still open. No one in the administration or Congress seems to care. Instead, the Attorney General is focused on shooting-to-kill Osama bin Laden (which I’m pretty sure is at the very least unethical if not illegal). For the first time in history that I can remember, the military (in the form of Gen. McChrystal) is walking the Attorney General off the ledge and saying that the military’s goal remains to bring bin Laden “to justice,” something that he said is “understood by everyone.” [9] Everyone except our trigger happy AG, apparently.

Economy:

We hear that the stimulus is working and that the US economy is back on track, but small businesses aren’t feeling that way. [10] Meanwhile, though the unemployment rate has stabilized for the moment, part of the reason for that is that the number of discouraged workers who are not seeking work “because they believe no jobs are available for them” has increased by 476,000 in the past year. [11] The one-year forecast for job growth seems to support that impression. [12] While a jobs bill seems to be making its way through, is it too little too late? [13] We’re a consumer economy. We depend on people spending money in order to keep business going. Even people with jobs have been tightening belts, retail sales remain weak and even the administration and the Federal Reserve say that consumer spending will not be the main driver in growing the economy again. [14] My question — what will get our economy going right again and becoming more stable? Oh right, health care. [15] Wait, huh, how? Not many specifics on that, but we have the White House’s guarantee, for what that’s worth today. While we’re on the money issue of health care ‘reform’…

Health Care Reform:

The bills that are moving through Congress now are all about health care insurance reform. However, there’s nothing in them about controlling costs of health care, just in how much insurance companies can charge for coverage and mandating insurance coverage for US citizens. [16] There is no reason that health care should cost as much as it does or that health care should be an ‘industry’ as it currently is. People’s lives should never be an ‘industry.’  As Michael Moore noted on The Diane Rehm Show today, no one is talking universal health care anymore. They’re talking about insurance coverage. Insurance companies will still be able to refuse to pay for certain procedures (for example, experimental procedures that could possibly save a life but isn’t recognized by the industry yet). [17] Prescription drugs will still be ungodly expensive. Procedures and visits will still be ungodly expensive. Someone will have to pay, whether that’s an insurance company, the government, or the patient. The system is broken, and insurance is only one part of the problem. To say that a few bandages can be used on the insurance sector and everything will miraculously fall into place is at the most generous naive and at the harshest completely ignorant. If our government doesn’t want to talk about real change, then I refer them to the various issues listed above to find something else to occupy their time more productively.

Are we there yet?

For months, we have heard that the economy is recovering, that the stimulus is working, that things are normalizing. There have been constant reassurances, and last week brought new proclamations that the growth of the GDP in the third quarter was a sign that the recession is over. [1] However, the official unemployment rate for October broke the 10 percent barrier, continuing a steady climb which now has the nation’s unemployment at 10.2 percent. [2] Also, there were 706,000 discouraged workers (workers who are “not currently looking for work because they believe no jobs are available for them”) in September, up from 239,000 the year before. [3] The consumer confidence index and the labor market index are both showing discouraging signs. [4] Meanwhile, the stimulus funds which were supposed to save jobs seem to be going more towards pay raises for existing employees instead of creating new jobs. [5] The third quarter GDP growth is hardly an encouraging sign as sales were inflated due to Cash for Clunkers and the first time homebuyers tax credit. What has been done thus far has done little to fix the fundamental problems of the US economy, namely that our economy is centered on consumer spending and artificially created bubbles.

In 2008, consumer spending accounted for roughly 72% of the US economy. [6] This consumer spending, which was encouraged by the Bush administration and is now continuing to be encouraged by the Obama administration, has resulted in a growth from 2000 to 2008 of consumer debt from less than 50 percent of the total US economy to in 2008 being equal to the national GDP of $13 trillion. [7] Not only have consumers gotten quite deep into debt. The government has followed the same trend. Our public debt has increased from $5 trillion at the end of September 2000 to $10 trillion at the end of September 2008 and continues to climb as we speak with no sign of abetting in its spiral upward. [8] Latest figures as of September 2009 have it at $11.9 trillion. [9] Even Alan Greenspan has chimed in and said last month that he considered the national debt “most worrisome aspect of the economic agenda in the United States.” [10] Meanwhile, we’re set to hit the debt ceiling. Again. And Congress is expected to raise it. Again. Our current debt ceiling is currently $12.104 trillion, or more than 80 percent of the 2008 US economic output. [11] How can the government expect the populace to spend responsibly when neither Democrats nor Republicans leaders have shown the ability to do so? Hopefully we are now seeing the seeds of change developing in the administraton. The President’s economic advisor Paul Volcker came out at the beginning of this month and indicated that we should reduce the US economy’s reliance on consumer spending. [12] I highly applaud this thought and hope that this idea flourishes in the halls of Washington.

Volcker is correct in pushing for increased infrastructure. The whole reason that our nation developed a national debt in the first place is due to Alexander Hamilton, who felt that by establishing a line of credit for the nation, we could have access to funds that would allow us to build our infrastructure so that we could compete with the already developed nations of Europe. However, even Hamilton noted that it would be beneficial to the nation “if not too excessive.” [13] Instead of using funds that we do not have to give payraises to employees whose jobs showed no indication of going away just so that we can count them as ‘saved,’ why don’t we use that money to create jobs that will build infrastructure again? If we say that we want to end our reliance on foreign oil, why not use those funds to expand the nation’s wind energy capacity and to promote electric car technology instead of giving financial incentives to buy new Hummers and Ford F150s that get 15-17 MPG? In terms of utilizing funds to beef up the nation’s energy infrastructure with renewable energy sources and thus create new jobs, the numbers speak for themselves for direct employment alone in the wind energy sector in Europe in 2002:

Sector	Employment
Wind Turbine Manufacturing	30,946
Wind Turbine Installation	14,649
Wind Turbine Maintenance	2,768
Total	48,363

That’s right, over 48 thousand jobs. In 2002. Capacity (and in turn employment) has continued its growth trends since then. At the time, the European Union (with a majority of the capacity in Germany) constituted 74% of worldwide installed capacity. [14] Meanwhile, China has been making a big push for harnessing wind energy over the past few years, becoming the fifth largest producer of wind power at the end of 2007. [15] As demand for other markets and manufacturing segments dry up, we must turn towards new innovations, once of course our debt levels are manageable again. We must turn to new ways of thinking of our economy and our production capacity. Various people are turning to Detroit as an example of what must not be for the nation. Most readily admit now that traditional automotive jobs are not likely to come back to Detroit, but that was after years of subsidies to the automobile industry, years and years of awful financial figures as unemployment steadily rose, years of bad management and a resistance to any sort of change from all corners. We need to leave the past in the past and focus on what can be done to move places like Detroit forward. The people of Detroit, after years of trying the same things over and over again led only to more disaster, are being forced to be innovative now in order to have any sort of future at all. [16] We must take this example as a caution. Things are bad now, but as they were in Detroit, they can get so much worse unless we’re willing to move our economy forward. People are not going to be able to spend as much as they have. We shouldn’t build a new tech bubble or housing bubble or any sort of bubble at all. We must fix the fundamentals before we’re in the same fix as Detroit, before this recession becomes a prelude to something much worse and much disasterous in the long term for our citizens and for our nation.