The Deficit--Where did it come from?

This article was published in the August 24 issue of the Dawson News and Advertiser.  The previous week two Tea Party articles were in the paper.  The articles were basically calling liberals "socialists" and saying that only they cared about our country and our economy.  I thought this was a good follow-up.

The State of Our Economy

We have some real problems with our economy.  Not just in the United States but all over the world.  I stress the word “our” because it seems many Tea Party/Republicans answers to some of these problems is--“we shouldn’t have to just because the rest of the country wants to.”

Let’s start with some figures that tell how we got to where we are—that is the deficit and the recession.  Many want to blame it all on President Obama.  But here are the facts as stated by Bruce Bartlett, Assistant Treasury Secretary under President Bush #1 and an advisor to Ronald Reagan.  The national debt before Bush #2 took office was $6 trillion.  There was a budget surplus of around $6 Trillion.  Bush spent the surplus.  Then, the increase in the national debt from 1998 to 2011 went like this.  Unfunded Bush Tax Cuts added $3.7 Trillion.  The unfunded wars in Iraq and Afghanistan and Medicare Part D added another $4 trillion.  Shortfalls in programs like Medicare and Medicaid added $3.5 Trillion.  At the end of Bush’s term we went into the worst recession in American history (not counting the depression).  That added $2 trillion.  Obama’s policies in the last two years added $1.5 Trillion.  That totals $14.5 Trillion, with only $1.5 belonging to President Obama.  The major cause of the debt has been the Bush Tax Cuts and the unfunded spending that took place during his 2 terms.  Conservatives keep talking about the Obama stimulus, which was $711 Billion. Yet under Bush, his stimulus including TARP totaled $1 Trillion! (Ezra Klein, New York Times, 7/25/11)

The Bush Tax cuts and all the previous one’s begun by President Reagan have caused another issue.  We now have the greatest gap between wealthy and middle class Americans than ever before. In the last 30 years the richest 1% in the US has gone from owning 22% of the nations’ wealth to owning 40%.  This is largely due to tax cuts for the wealthy investor class that began under President Reagan and continued under Bush. They were supposed to encourage investment and strengthen the economy. But over those years, the average annual GDP growth dropped 25%.  The favored tax treatment for investments and the wealth concentration that resulted lead to the demand for investments exceeding the supply of worthy investment.  (Econ 101)   Investment bubbles and recessions happen and all but the wealthiest are at risk of losing their jobs, homes, and retirement savings.  Hence, our recession.

So to many, one answer is to get rid of the Bush tax cuts, at least for the wealthy.  This will have to be done together with cuts in spending, both in defense and in other national programs.  Over the past several months, several multi-millionaire/billionaires including Warren Buffet, Michael Bloomberg, and Bill Gates have said their taxes are far too low. Bill Collins, a millionaire, writes: "Those of us who have the greatest ability to pay are not being asked to. I am not keen on being part of the freeloader class."  In USA today and the NY Times this past week Warren Buffet, the 3^rd richest man in the world said, “While the poor and middle class fight for us in Afghanistan and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks.”

For more insight into how unfair our tax structure is, including a proposal for comprehensive tax-reform that would have everyone pay their fair share, cut middle class taxes by thousands a year, cut the deficit, and fix the economy by balancing the tax incentives for investment and work see the website “Fair Share Taxes” (http://fairsharetaxes.org/default.aspx).

What is the answer from many Tea Partiers and Republicans when they hear these people saying they need to pay more taxes?  When I recently mentioned this to one of Tom Graves’ Tea Party Field Representatives, he said fine, let them pay more if they want, but everyone shouldn’t have to.  And last week in a conversation with a conservative neighbor after Buffet came out with his statement, he said the same thing.  This must be the mantra that is going around from Fox (Tell me what to think) News.  So basically what the(Tea Party/Republicans are saying is even though the majority of Americans believe that the very wealthy should be paying more taxes, if you are a member of that group and don’t want to pay, then you shouldn’t have to!  In fact, some are saying that it is the poor and middle class that should be paying more taxes. Unbelievable!

I guess we are no longer all Americans doing what is best for our country.  From the Tea Party/Republican point of view, “if I don’t want to I don’t have to!”  As we now know, the Tea Party held up any real compromise in Congress during the debt ceiling debate and as a result, Standard and Poors dropped our credit rating.  Last week in this paper two editorials were written blaming President Obama for the debt ceiling mess.  A spokesman for the S & P stated, ". . . the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned."  The refusal of the Tea Party to compromise is the reason we had the debacle in Washington over the debt ceiling.  It’s time to take some responsibility!  And time to get our economy back on track! Oh, and look up the meaning of the word “compromise”.

The Tea Party/Republican destruction of our economy

On August 10 I published the following editorial in our local paper.  That was before the S & P Downgrade.  More to follow on that.

Default Avoided, But Who Won?

The crisis created by the Republican Party and the Tea Party over the issue of raising the debt ceiling is over.  It is evident that the Tea Party feels like they really showed their strength and came out the big winners in this debacle.  Unfortunately, they made the rest of the American people the losers. Remember what John Boehner and Mitch McConnell said when the 2011 session of Congress began?  Their main goal was to make sure that President Obama wasn’t re-elected.  The Republicans and the Tea Party have proven that it doesn’t matter if the economy remains stagnate and millions of American people continue to be unemployed, because if the economy remains bad, there is a chance President Obama won’t be re-elected!

So they tied the issue of raising the debt ceiling to deficit reduction.  The debt ceiling has been raised multiple times (74 times since 1962) without any questions.  But they used scare tactics and lies to convince Americans it was the right thing to do. Sarah Palin, in a recent interview said, the Tea Party members were brave to stand their ground and not vote for the compromise debt ceiling package.  They shouldn’t vote to allow even more spending by raising the debt ceiling.  Does Mrs. Palin just not understand what raising the debt ceiling means or was she just lying for Fox News?  When you raise the debt ceiling you are saying you will pay the bills you have already incurred not giving the OK to incur new debt!  If we didn’t raise the debt ceiling we would have almost certainly lost our AAA credit rating (still in doubt), interest rates would have sky rocketed, and the stock market would have lost even more than it already has.  Maybe the Tea Party feels you shouldn’t have to pay your bills.  Take for example our 9^th district Representative, Tom Graves.  He took out a loan for $2.25 million and now says he shouldn’t have to pay it.  His Attorney, Simon Bloom contends “Bartow County Bank never should have issued Graves and his business partner a loan, citing statements in a deposition in which a bank official admitted knowing the partners did not have the money to guarantee the loan.”(Gainesville Times, July 22, 2011).  Maybe that reasoning is why Graves didn’t care if our government went into default and therefore voted no on the “debt deal.”

Last week I visited Tom Graves’ office and spoke to a field representative about issues that concern me and many of my friends.  The main issue I wanted to address was the Republican Party and the Tea party’s refusal to raise revenue.  Most economists believe that the only way to really cut the deficit is to include new revenue along with cuts.  What I heard from his representative was what we hear on the news all the time.  No new tax revenues, cut programs that help families and those in need, and even if you do work hard for your $50,000 a year, you are not as worthy as the millionaire or billionaire.  Rep. Graves will be back in town conducting town hall meetings next week.  You may want to question him about this attitude about working people.

So what did the Tea Party accomplish?  They tied up the government for more than a month over an issue that should have taken 30 seconds to decide.  Instead of working on finding ways to create jobs, our Congress and President battled over the debt ceiling and tied it to deficit reduction.  The “deal” that finally passed calls for budget cuts of about $900 billion.  These cuts could possibly cause as many as 1.2 million jobs to be lost!  It also calls for a “super committee” of congressional leaders to begin meeting to come up with another $1.5 Trillion in budget cuts by November, 23, 2011.   So at a time when we should be focusing on jobs, we instead are implementing programs that will mean the loss of even more jobs!  And Republicans have vowed not to place anyone on the committee that would ever consider raising revenue!  Sounds like a stalemate in Congress in the making!

Did the Tea Party Win?  I guess because there were no revenue increases in the deal, in their minds they did.  They keep complaining about paying such high taxes, when in actuality we pay the lowest percent of our income in taxes now than we ever have. Though they won the no increase in revenue debate, they set the stage for our economy to become even weaker and for even more job losses nationwide!  The stock market dropped drastically this week, many say because the damage was already done by the Congress and its inability to solve our problems.  Republicans and the Tea Party have been in control of the House of Representatives since January, 2011.  There has been nothing done to create jobs.  But they did create this false crisis so they would look like winners.  Thanks Tea Party and Republicans for caring so much about America!  

July 27 Article; Are Our Politician Governing?

Are Our Politicians Governing?

I waited to write this column until Sunday afternoon in hopes that there would be news that our politicians had made a deal concerning raising the debt limit.  I haven’t heard anything yet, so I decided I better get this done!  Hopefully by the time this is published, the debate over the debt ceiling will have ended, and perhaps our politicians will have gone back to governing.  We have a lot of problems that need solving.  The deficit is one, but we seem to have forgotten along the way the myriad of other issues.  What have we been doing about job creation, environmental issues, infrastructure issues, problems in education, foreign policy, and so on and so on!  Our politicians haven’t been governing; they have been playing a game with the well-being of our country in order to garner political gain!

The pledge that Tea Partiers and most Republicans signed to never increase taxes under any circumstances is a major cause of most of this political bickering.  Because they signed this pledge it basically precludes any possibility of compromise by Republicans. It seems that for those that signed the pledge, it is okay to cut social security, Medicare, Medicaid, and education programs, but not okay to raise taxes.  In other words, it is okay for our elderly and most fragile citizens and our children to bear the brunt of cuts, but it is not okay for those who can afford to pay more taxes to do so.  Grover Norquist has all their pledges in black folders and has sworn to “tell” on anyone who goes back on his pledge!  I compare this pledge to the pledge that many of you made to your best friend when you were ten years old.  You promised each other you would always be best friends, no matter what.  Well, that rarely happens, because our values change, our interests change, or we move away.  In other words, circumstances change!  The pledge is probably what former State Senator Chip Pearson had in mind when at a recent hearing on raising the millage for the schools he said, “Friends don’t let friends raise taxes”.  But Mr. Pearson, circumstances have changed and communities don’t let communities endanger the education of their children!

Tom Friedman, in his column on July 23 in the NY Times said, “DID I mention that I’ve signed a pledge — just like those Republican congressmen who have signed written promises to different political enforcers not to raise taxes or permit same-sex marriage? My pledge is to never vote for anyone stupid enough to sign a pledge — thereby abdicating their governing responsibilities in a period of incredibly rapid change and financial stress. Sorry, I’ve signed it. Nothing more I can do.”  Michael Bloomberg, Billionaire Mayor of NYC was interviewed on Christiane Armanpour’s show “This Week” on Sunday.  He said that there is no way to get out of our deficit mess with just cuts in spending.  We have to increase revenue through tax reform.  He pays a pretty hefty tax bill every year and he said this morning that he will gladly pay more.  Why?  Because he loves this country and as he said, he is privileged to live here.  He said “I get pretty good value for my taxes.  We get a lot for our tax dollars.”  The reason he has made so much money is that he lives in a stable country with rules and regulations that make it possible to do business and make money.  And I would imagine he wants his children and grandchildren to have those same opportunities in the future.

If it hadn’t been for the Bush tax cuts we would not be in the shape we are in now.  We pay the lowest taxes of any major nation in the world.  It is time we all—individuals and corporations—pay our fair share so we can maintain the greatness of our country!  So politicians, please get back to governing and quit the childish games!  We have problems to solve!