14 May 2011

David Brooks' column from a few days ago makes a good point. We're not going to get some in depth and substantive compromise hammered out in just a few weeks - there just isn't enough time - but something more simple is possible, and could even be better in the long run. Not that we could reasonably expect the blind partisans running the two major parties to do something so logical, but if they chose to they have the power to make something like this happen: Congress won’t be able to produce specific program cuts and policy reforms in the next few weeks, but it can come up with structural rules that will obligate future Congresses to make cuts and reforms for years ahead. The important argument now is over what kind of restrictions to impose on future Congresses. (This by itself is a sign of just how far rightward the debate has shifted). Republicans and a few moderate Democrats are rallying behind a spending cap plan, co-sponsored in the Sen...

09 May 2011

I believe that most people, regardless of their political beliefs, would agree that the level of our federal government’s spending and taxes has been “highly influenced” by what our politicians have considered important to their re-election.   Add to this the reality that most citizens want their fair share of any “free lunches”, then you have Politicians + Citizens = we now have the perfect storm for excess spending and under-taxation. About half the citizens are duped into thinking they can get their free lunch in the form of low taxes and the other half are duped into thinking that they can get theirs via specific spending that benefits them.  Many citizens think they can get both - and they do.  Of course most of us citizens don’t think that we have been duped. No, we all “deserve” and have “earned” what we want… yeah right!!! All this patriotism on the part of our politicians and citizens just gives me goose bumps.  All kidding as...

08 May 2011

Gasoline prices are rising. There seems to be no end to the almost daily increases. At week end, the average US price of a gallon of regular gasoline was almost $4.00. For many, this is an ugly slap in the face. For others, it is another sign of the vanishing American dream. There are some important lessons, however, wrapped up in this situation. First, most of us do not have a clue how the price of gasoline is established in the first place. We show up at the gas station and there is a price on the machine. Pay it or go without. But, how did it get so high? We are told that the price of gasoline is rising, due to this reason or that. The simplest answer is to look at oil prices. The higher oil prices rise, voila, higher gasoline prices go. While this is basically true there is much more to the story. For example, supply and demand can explain rising oil prices. Oil producing countries deliberately determine how much oil is available. Co...

26 Apr 2011

Traveling in the UK for a few days does not make one an expert.  However, if you are listening, you might hear something vaguely familiar.    Guess what the British media is reporting this week? First, it seems the government has budget difficulties and must reduce its deficit.  Unbelievable!  How could a modern government allow its finances to get so out of balance?  The answer is not clear but the remedy is straight forward. The UK has decided to reduce teachers pensions and require teachers to pay more towards their retirement.  How draconian.  Guess what the teachers are considering? Why yes, they are talking “job action” (more simply a strike). This approach to balancing budget should sound familiar.  Governments may mean well but they routinely miss the important steps.  Just because it is more difficult to increase taxes, the government thinks it can, instead, take away salaries and benefits.  This must be universal government pro...

25 Apr 2011

"Democracy and socialism have nothing in common but one word, equality. But notice the difference: while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude." - Alexis de Tocqueville   Socialism (actual socialism, not the garbage the right wing nuts call socialism in the West, which is really just liberalism / more highly regulated capitalism with a bigger social welfare safety net than ours) has been shown to not always be so destructive under certain circumstances, but widespread socialism in underdeveloped countries has a long history of disastrous results. Heck, even Marx didn't think that socialism would work until you already had a prosperous capitalist economy churning away. This is being illustrated once again in Bolivia, where president Evo Morales rode into control of their government with widespread support among socialistic blocks of voters and has since scared so much investment away t...

15 Apr 2011

The country is doing battle these days with the twin deficit and debt dragons.  This is a necessary war, not one of choice.  Our country has wandered so far off course that it is hard to understand what possessed our previous leaders to acquiesce.  Do you think they believed there would be a free lunch. In the past, large deficits were associated with great wars and war efforts.  This time there is a war component but by far the largest segment comes from health care costs.  The Defense Department and Department of Homeland Security registers present when it comes to adding to the deficit.  The sleeper, however, is the tax code which allows and enables all sorts of tax evasion (all legal). Any path to correcting this serious deficit problem must involve serious cuts to spending.  Spending reductions, however, are not free either.  Some spending promotes social good.  All spending in some way or other is connected to jobs.  Reductions must be m...

11 Apr 2011

Every night it is an honored practice.  Common Sense finishes its day's work, paddles out, and join the sun as it goes to rest.  This timeless task keeps the sanity of humans in check.  The night follows, common sense rests, and the next day rises with the sun and is prepared to tackle the intractable problems of the day. This is a lonely job.  One never can be sure the sun will rise the next day.  So far, it always has.  Sometimes, however, the sun comes back alone.  Its friend “commonsense” gets lost or is left behind.  I think we are living in a period where common sense is missing. Take the current deficit discussions.  Who do you hear referencing data?  What proposals do Democrats have to eliminate the deficit and reduce the debt?  Why would Republicans propose to cut the deficit by $600 billion a year and simultaneously give millionaires a tax break with lower tax rates?  What would common sense do? Mathematically one can imagine a st...

10 Apr 2011

Just for complete disclosure…this article was stimulated by one published by Solomon Kleinsmith a few days ago. I am a believer that we should pay our way for what you use or do in a society. Personal responsibility and accountability is critical to the success or our society. For me this is not in conflict with believing that a society should also help take care of those less fortunate…so I also believe in some socialism for the greater good. I say this to give context to the following… Smokers, Drinkers, Drug Abusers, Obese people all choose to live lives that “externalize” upon society much of their costs to live the lives they choose. That truly is just a fact. I understand that genetics and upbringing play a significant role in a person’s ability to make good choices… but personal responsibility is much too important to just completely excuse away. We can make some accommodations for this with programs supporting those who are struggling to...

04 Apr 2011

In my latest post on over at WNYC's It's a Free Country, I talk about how absurd it is that this Immelt guy at GE is on the President's Council on Jobs and Competitiveness. A sample: One of the quotes I've seen the most this week, from Immelt's speech, was, “Like any American, we do like to keep our tax rate low. But we do it in a compliant way, and there are no exceptions." In a very limited way, this makes some sense, but the American people don't get the same kind of sweet deals that GE gets through all the loopholes they've pushed for over the years, and the American people don't have an army of lobbyists and tax geniuses looking for ways to get out of paying their fair share. The American people also can't just shift their means of making money overseas, as GE has done for the vast majority of the products it sells, avoiding taxes while also avoiding creating American jobs for the people who buy so many of their products. Not to mention ...

01 Apr 2011

This article on taxing the rich, which appeared in the Wall Street Journal has received a lot of play in the right-blogosphere.  It tends to, at least on the surface, give a very detailed account into why raising taxes on upper incomes can in disastrous for states in the long run. I think the op-ed makes a compelling case, but I also think it’s short on answers to alternatives.  My brother-in-law, who is a professor in history and economics tends to think that that the rich tend to use more government services, such as roads to truck goods to market, and therefore they should pay more in taxes. I don’t have a background in economics, but I tend to think there has to be a limit on how much upper incomes can pay and as the article shows the fortunes of the economy can make those income very volatile. None of this means I’m against raising taxes, but there can be too much of a good thing (if you want to call taxes good). I’m curious to know wh...