Category Archives: deficit

All Posts, American Foreign Policy, budget, deficit, Terrorism, war

WE NEED MORE UGLY AMERICANS

1 Comment

Who was “The Ugly American“?  Most of us know the phrase, but few are aware that the original Ugly American is the hero of the novel by the same name.  Published in 1958, the book described American diplomacy in the fictional Southeast Asian nation of Sarkhan.  Obvious similarities to actual events in nations where the US and the Soviet Union competed for influence (especially Vietnam) made the book a hot topic of discussion in the press and the congress.

The “Ugly American” was Homer Atkins, an American engineer who went to Sarkahn with a desire to help local citizens improve their own lives.  Doing hard, physical work in the fields to design and build simple devices like a bicycle-powered irrigation pump often left Atkins sweaty and dirty, and that “always reminded him that he was an ugly man”.  “Ugly” was a title that he applied to himself, not to others.

In 1958 the Soviet Union was spreading communist ideology into emerging nations around the world.  They portrayed the US as an empire-building colonial power enriching itself and capitalists by dominating smaller nations.  Our diplomatic corps was focused on influencing rulers (often dictators), business owners and military leaders.  The Soviets were interested in the general citizenry, especially any movements to depose rulers or to create wealth among peasant classes and divide them from rulers.  As far away as Vietnam and as close to home as Cuba, the Soviet approach was succeeding.

After reading “The Ugly American” a Senator from Massachusetts was so impressed that he bought a copy for every one of his Senate Colleagues and encouraged them to read it.  Less than two years later, that Senator became President John Kennedy.  Only six weeks into his presidency, Kennedy created the Peace Corps by executive order.  Its mission was to recruit highly qualified volunteers, educate them about local language, customs and issues, then send them to emerging nations as representatives of America.   Kennedy’s decision to create the Peace Corps was inspired by The Ugly American and based on his belief that talented young Americans working alongside local residents without compensation would be excellent ambassadors for our nation and our values.

Today, the Peace Corps remains active and successful, but it is woefully undersized to address needs and opportunities around the world. The Peace Corps budget for 2016 is $410 million.  For comparison, the Department of Defense spent $437 million on military bands in 2015.  The estimated cost of the Iraq and Afghanistan Wars (including derivative costs such as benefits for veterans) for the years 2003-2014 is $5 trillion.  That is almost $52 million per hour.  Eight hours of these wars costs more than a full year of Peace Corps funding.

The Ugly American argued that, “…we spend billions on the wrong aid projects while overlooking the almost costless and far more helpful ones…”.  Today budget deficits are massive and our world seems increasingly dangerous. We should re-examine our spending, the results that we are getting, and our national values.  Despite great sacrifice, uncountable deaths and heroic effort, military intervention in Iraq, Afghanistan,  and throughout the Middle East has not produced peace, safety, prosperity or stable nations.  Instead we see civil war, poverty, terrorism and refugees that no nation wants to accept.  Americans and Europeans now fear home-grown terrorists who have been nurtured by brethren in the nations that we have invaded.

The three Middle Eastern nations with a history of Peace Corps involvement, Jordan, Morocco, and Tunisia have plenty of problems but seem more stable and less susceptible to anarchy and terrorism than their neighbors. We’ve supported a wealthy and radical dictatorship in Saudi Arabia that seems increasingly vulnerable to popular uprisings because oil revenues are down.  The most stable large nation in the region appears to be Iran – the only one that has avoided our efforts at military driven nation-building.

One can only wonder what the Middle East might be like today if we had consistently offered Peace Corps style nation-building that helps individuals and families improve their own lives based on their own values rather than regime change and military solutions.  People of the region might be more inclined to treat us well if we send “Ugly Americans” to help them build the kind of nation that they want rather than arming them to fight each other.  Under the circumstances, it seems like an idea worth trying.

All Posts, budget, Congress, deficit, taxes

NEW IDEAS FOR A BALANCED BUDGET AMENDMENT

3 Comments

Our elected officials in Washington congratulate themselves for avoiding a government shutdown and argue about which non-budgetary legislation to tack onto “must-pass” short term spending bills while we limp from month to month with no long range financial plan .  This column is my attempt to persuade readers of all political stripes that we should pass a constitutional amendment requiring a balanced budget – not because I like the idea but because nothing else seems to work.

First, a dose of reality – Social Security is not the problem.  In 66 of its 77 years Social Security has brought in more money than it spent. That includes the most recent 34 consecutive years.  Because we are living longer and have the large baby-boom generation retiring, Social Security will need some combination of delayed retirement, increased taxes, and reduced benefits; but if congress will act soon, the changes will not be massive.

The real problems are in other areas of the budget.  Our deficit for 2015 was $439 billion despite a $19 billion surplus by Social Security.  Historical data from the US Office of Management and Budget show only two recent balanced budgets: 1999 and 2000 (President Bill Clinton’s last two years).  Prior to that it was 1960, the last year of President Eisenhower’s term.  We have had budget deficits for 53 of the last 55 years and our Congress seems more interested in cutting taxes and increasing spending than in balancing budgets.

Federal spending prior to WWII was typically 10% or less of the value of all the goods and services produced in the nation (GDP).  Since then the US has emerged as a world military power and has developed our social safety net.  As a result, Federal spending has been about 17-20% of GDP since 1975.    Data from the Federal Reserve Bank demonstrate that our serious debt problems emerged in the early 1980s when the Reagan Administration began cutting taxes for corporations and the wealthy without cutting spending.  Historical data from the Office of Management and Budget show that deficits became consistently large around the same time.  Total tax collections have actually remained fairly stable at 17-19% of GDP but the corporate share has been cut in half and capital gains taxes have been reduced while payroll taxes increased.

That is the background information.  Here are some ideas for a constitutional amendment:

  1. Congress is required to pass a budget and establish taxes to fund the budget for periods of time that are not less than one year.  The budget and taxes must be passed and sent to the President at least three months prior to the effective date.
  2. If the congress fails to pass a budget on time there will be a new election 90 days later to replace the entire congress.  The prior year’s budget and taxes will be automatically extended for one year or until they are changed by the new congress.
  3. The debt of the nation is limited to the sum of values of trust funds established by the congress (Social Security for example).
  4. The requirement to balance each budget may be waived during a state of emergency declared by a 60 percent majority of both houses of Congress.  The declaration is valid for not more than one year but can be renewed as many times as the Congress thinks necessary.
  5. At any time when there is no declared state of emergency, 2% of non-trust fund tax revenues will be set aside for reduction of excess debt.

The amendment will:

  1. Force the Congress to do its job.
  2. Protect Social Security and other trust funds that provide pre-paid benefits.
  3. Allow enough flexibility to deal with genuine emergencies and wars.
  4. Gradually pay down existing debt.

The amendment would force serious debate about priorities.  We will be less likely to go to war if we have to raise taxes for it.  There will be more pressure to eliminate wasteful spending and tax loopholes.  There will be pressure to raise taxes for infrastructure, research, and human services.

I was taught in high school that “Economics is the science of meeting unlimited human wants with the limited resources available.”  A balanced budget amendment will require our government to help us do exactly that.

 

All Posts, budget, Christianity, Congress, deficit, economy, justice, medicaid, poverty, public education, taxes

STICKS STONES AND STEREOTYPES

4 Comments

Election campaigns are under way and the name-calling season is open.  Names, labels and stereotypes can influence our opinions and our elections so it’s important to be aware them. Continue reading STICKS STONES AND STEREOTYPES →

All Posts, budget, deficit, economy, taxes

Your Christmas Gift From Wall Street

Congress and taxpayers bailed out too-big-to-fail financial firms that now seem interested only in profits; not in repairing damage that they did. This column demonstrates how Wall Street firms and Congress subsidize each other at the expense of the middle class. Continue reading Your Christmas Gift From Wall Street →

All Posts, deficit, justice, taxes, war

IS NO NUKES ALWAYS GOOD NEWS?

January 11, 1994 BRUSSELS — “President Clinton on Monday announced agreement with Ukraine and Russia to dismantle Ukraine’s entire nuclear arsenal, hailing the long-sought accord as “a hopeful and historic breakthrough that enhances the security of all three participants.” – The Los Angeles Times.

From the breakup of the Soviet Union, Ukraine had inherited 176 intercontinental missiles aimed mostly at the US and over 1200 nuclear warheads about 600 of which were loaded on bombers. The US and Russia promised security to Ukraine if they would give up their nuclear weapons. The US provided assistance for turning the weapons into fuel for nuclear power plants. Russia agreed to provide fuel rods for Ukraine’s nuclear plants. The world no longer feared Ukraine’s nukes being stolen or sold to the highest black market bidder. Russia no longer had a nuclear armed neighbor. Continue reading IS NO NUKES ALWAYS GOOD NEWS? →

All Posts, budget, deficit, economy, health, medicaid, north carolina, poverty, taxes

JUST SAY YES TO MEDICAID

The decision by North Carolina’s governing Republicans (every single one of them) to reject Medicaid expansion will cost the state’s residents $37 billion by 2022. That is roughly enough money to run the entire state government for 21 months. They looked at the money and just said “no”. They looked at uninsured people living in poverty and just said “no”. They looked at hospitals and doctors who care for uninsured people, and they just said “no”. And they just said “no” to unemployed workers who would have found jobs in the Medicaid expansion. Continue reading JUST SAY YES TO MEDICAID →

All Posts, deficit, justice

BUILDING NATIONAL PRIDE

I am thankful for my nation and the opportunities that it provides. My pride however is in need of repair. After hearing similar sentiments from others, I have written some thoughts about how we might build pride and trust.

Nations succeed as long as the great majority of people willingly support their government. The truth of that can be seen across the span of history and it is visible today from undemocratic China to democratic socialist Scandinavian nations and capitalist democracies like those in North America and Western Europe. National and cultural pride contributed to the success of each of them. Another reason why people unite as a nation is to respond to a natural disaster or some other crisis or threat. This positive part of human nature can quickly become apparent when it is needed and it serves to make national trust and pride even stronger. Examples of these positive qualities abound in American history.

Those same positive qualities can be manipulated to unite people in vilifying and attacking others. In Napoleonic France, Nazi Germany, and the Japanese Empire of WWII nationalism and pride were turned toward dominance and exclusion of others. Nazis, for example, united most Germans by blaming Jews and communists for economic problems. Similar techniques have sometimes been used in the US to unite a political majority by vilifying ethnic and religious minorities. One of mankind’s great attributes, our desire to unite in times of crisis, can also divide us into warring clans that threaten our very survival. When the people of a nation mistrust and mistreat each other, national trust and pride are quickly eroded.

Once we define ‘other’ citizens within our nation as enemies, it is only one additional step to conclude that, “The end justifies the means.” Dishonesty becomes a way of getting people to support what a leader perceives to be “right”. Subterfuge and deception become acceptable means of defense against imagined and ambiguous and threats. Mistrust grows. The divisions within a nation become more sharply defined. Somewhere along the way, the goal shifts from building the nation to destroying the opposition. That seems to describe the USA today and it is rapidly eroding our pride and trust.

When President Kennedy proposed that we land on the moon by the end of the 1960’s the nation took up that challenge and succeeded ahead of schedule. We were proud and we trusted our government to manage the work. The same could be said of great successes such as Social Security, the Hoover Dam, and the Interstate Highway system. Today the sense of pride, optimism and confidence to do great things has waned; and instead our national energy is directed toward internal conflict.

Some steps toward building national pride would be to replace deception, partial truth, and manipulation of government processes that are the current norm with integrity, openness and equal application of laws and standards to all of us. Integrity requires much more than not telling lies. It requires intentionally communicating the whole truth; a task that is difficult when the subjects are laden with emotion. Integrity also requires listening to learn what we do not know and to understand the perspectives of others. In our discussions of social and political issues we must hold ourselves to those standards. Only then will we be able to hold our leaders to them too.

The list of reasons why people mistrust government seems unending. Elected leaders manipulated information to the extent that voters don’t know what or who to believe about Social Security, taxes, health care, bank bailouts, and climate change. They misled us into the Vietnam War and the second Iraq War; used the FBI to spy on political opponents; and deceived us about spying on both Americans and foreign governments. Because of these experiences, many Americans mistrust our government regardless of which party is in power. Misleading the public with statistics and facts that have been twisted to make a point is like pouring acid on our national pride. It destroys trust. No matter how strongly one believes his cause is right, the end does not justify the means.

In the USA that most of us want to believe in and support, laws and standards will be applied equally and fairly to all of us. But most priests who molested children did not go to jail or register as sex offenders. The FBI Director who illegally spied on union and civil rights leaders was not prosecuted. Demonstrators who went to the North Carolina Capitol to peacefully protest new voting rules and failure to expand Medicaid were arrested and jailed. Shortly thereafter, a North Carolina judge visited Washington DC to protest the closing of war memorials during the government shutdown. He physically removed barricades that blocked entrances (destruction of government property) and bragged about it. He was not arrested or disciplined in any way. That inequity damaged confidence and pride for other Americans.

We can and should build our national pride and confidence; beginning by expecting truth, integrity, and the same standards for all of us as we continue creating a more perfect union. Our pride does not arise from already being perfect. It comes from working together to make what is good in our nation even better. We can do that if we will.

All Posts, deficit, justice, poverty, religion

YES, WE HAVE NO MAGIC

Yes, we have no magic

“I can’t really criticize the Tea Party people, because I came into the White House pretty much on the same basis that they have become popular. That is dissatisfaction with the way things are going in Washington and disillusionment and discouragement about the government.” It may surprise many readers to learn that this quotation is from former President Jimmy Carter.

At the time when we elected President Carter, trust in government was very low. We had experienced the Watergate scandal which forced President Nixon to resign from office for spying on political rivals. His schemes included an “enemies list” of opponents to be targeted with IRS audits or malicious prosecutions.  His predecessor, President Johnson, made up stories about attacks on American forces in order to justify the Gulf of Tonkin Resolution that allowed him to start the Vietnam War.  We also learned that the FBI had been tapping the phones of civil rights leaders, including Dr. Martin Luther King. There was suspicion that President Kennedy’s assassination was part of some conspiracy. There were plenty of justifications for mistrust of government.

“I’ll never tell a lie. I’ll never make a misleading statement. I’ll never betray the confidence that any of you had in me. And I’ll never avoid a controversial issue.” Those were promises that President Carter made. And to the best of my knowledge, he kept them. He dealt with an energy crisis by urging us to become more energy efficient. He talked about national initiatives to develop wind and solar power. His fiscal policies were disciplined, leading us away from the deficit spending of the Vietnam era and toward a balanced budget. He championed zero based budgeting which meant that no government agency would get money next year just because they had it this year. He offered leadership toward building our nation at home and keeping us out of wars.

It seems that voters want to hear about painless solutions to national problems from candidates who have magical cures for whatever ails the nation. In the very next election, the voters chose easy money and the cheerful countenance of President Reagan. He created economic stimulus by cutting taxes without cutting spending, leading us along the path to our current massive deficits and debt. He wanted to overthrow the democratically elected Sandinista party government of Nicaragua but congress forbade that. President Reagan then secretly sold arms to Iran (which had been holding our citizens hostage) and used the off-the-books proceeds to finance Contra rebel insurrection in Nicaragua. We became accustomed to disclosures of covert actions that congress never authorized. Since then, we have fought two wars in Iraq and one in Afghanistan, all paid for with borrowed money and American blood. Many Americans suspect the Bush-Cheney administration of making up the evidence for the second Iraq war, just as President Johnson did for Vietnam.

We have recently learned (through illegal disclosures) that the FBI, NSA, and CIA are running immense espionage programs, some directed at our allies and American citizens. The principal government response is to try to prevent disclosure of information rather than to honestly examine the proper role of government. Big financial institutions are suspected of improper influence on elected officials and regulators who created the opportunity for the 2008 financial meltdown – and with good reason. Deregulation of campaign finance is allowing the very wealthy and the biggest businesses to pay for massive campaigns to influence voters, often drowning out the voices of citizens, science and reason and subverting the “one man, one vote” principle.

As in 1976, when President Carter was elected, the mistrust of government is palpable; and the people are divided between left-leaning and right-leaning ideologies. Here is a more recent quotation from President Carter, “I don’t want to tell President Obama how to make a speech. He’s a much better speech maker than I am. But I think always to tell the truth in a sometimes blatant way, even though it might be temporarily unpopular, is the best approach.” That may not be the best politics but it is the best public service.

My hope is that regardless of ideology we will elect candidates who insist on integrity. Even if we disagree with their conclusions, their statements should always be factually true and above reproach, never designed to mislead us. If that is to happen, the candidates will need the courage to make voters uncomfortable by telling us things that we do not want to hear. We will need to learn, for example, how our spending for health care and defense compares to other nations and then decide how much we are willing to spend. Whatever we spend, we will have to decide who is going to pay enough taxes to collect more than we spend, so that we can begin paying down our debt. It will be our responsibility as voters to turn down any smiling faces who tell us that they have magical ideological solutions to our problems. Perhaps we have learned by now that they don’t exist. President Carter jokingly also said, “I have often wanted to drown my troubles, but I can’t get my wife to go swimming.” Candidates who mislead us with smiles and magical ideologies will drown us all if we continue to swim with them.

All Posts, budget, deficit, economy, justice, poverty

INCOME INEQUALITY AND A POLITICAL DIVIDE

It is said that those who do not learn from history are doomed to repeat it. We can learn a great deal from the strong historic correlation between political polarization and income inequality.

Income inequality peaked in the early 20th century when the top 1% of the population claimed about 20% of total income. Political polarization peaked around the same time as fiscally conservative Republicans and their presidential candidate, Herbert Hoover, carried the 1928 Presidential election. This was before the stock market crash but already there was rising dissatisfaction with income inequality. White southern farmers (Most blacks were barred from voting.) were pushing for increased federal regulation of banks, financial institutions and railroads that were thought to be profiting unfairly from the work of others. Organized labor gained traction among industrial workers who felt abused by their employers.

Conflict was widespread as workers banded together for higher wages and better working conditions while their employers arranged for police or private armed forces to attack strikers and organizers. In 1929, National Guard and local police intervened to end a textile mill strike in Gastonia NC, resulting in the shooting deaths of several strikers and a law enforcement officer. Bloodshed was more common in northern industrial centers.

Workers formed unions because their work was dangerous, provided no job security and they could not decently support families on what they earned. In 1912, a Socialist third party candidate garnered 6% of the popular vote for President. The “Farmer-Labor Party” gained fringe popularity along with socialist and communist movements. By 1930, the Depression was severe and FDR was elected President, subsequently passing his New Deal programs including federal economic stimulus, massive public works projects, Social Security, and strong regulation of banks. Thus began a painfully slow recovery which was not complete until the WWII effort brought full employment.

Today the share of national income enjoyed by the top 1% is again around 20% and political polarization is at its highest level since 1900. Conservatives have blamed unions for economic woes and more recently have succeeded in changing laws to make it harder for workers to organize; but labor activity is on the rise among low wage workers. Like their predecessors a century ago, they find it impossible to participate in modern society on their wages. Even among those who have jobs, hunger and homelessness are rising. Politicians respond that they would like to do something to help but they don’t have enough money. That response comes resoundingly from Republicans but also from Democrats.

Explanations of why there is not enough money ring hollow when the incomes of the top 1% continue to rise while the wages for labor stagnate or shrink. Teachers and many white collar workers are similarly affected. One factor contributing to the rapid growth of income among the wealthy while others see no increase is the more than 50% reduction in tax rates for the wealthy since their 20th century peak. Our budgets were balanced and our middle class grew to its largest size when taxes were higher. Poverty was shrinking; unemployment was low; and public education was a source of national pride.

Today, candidates from both major parties depend on the very wealthy for campaign contributions which they use to sell themselves to the general public. In 1982, the top .01% (one ten thousandth of the population) made 10% of all campaign contributions for federal elections. By 2012, they provided 40% of the contributions. Major corporations make sure that they have very wealthy people from both parties on their boards in hopes of sustaining strong influence on public policy no matter who wins an election. That is the same kind of influence which encouraged the Governor of North Carolina to send troops to break up the Gastonia strike.

Most Americans do not want a radical swing to the right or the left but they do desperately want an economy where hard work is rewarded with wages sufficient to support a family; including realistic opportunities for good education and upward mobility. We want to believe that any job worth doing is worthy of a living wage but our middle class is disappearing. We see employers back out of promised retirement plans and other benefits while using temporary employment arrangements to cut wages. People don’t join labor unions because they enjoy paying dues. They join because they believe they need protection from untrustworthy employers and because they perceive strength in unity.

We are again in a time when many adult workers cannot support a family and see little hope of upward mobility. In the early 1900s, desperate people tried desperate things. From their despair they built strong unions, New Deal jobs programs, and tax policies of the 1930s – 1950s. Their actions decreased unemployment and poverty and built our middle class. Once again, we are in a time when desperation will bring change. I wonder, this time will we read the writing on the wall before our backs are up against it?

Most data for this column is from the article “Why hasn’t democracy slowed rising inequality?” Journal of Economic Perspectives—Volume 27, Number 3—Summer 2013. It is available free on line or I will email it to readers on request.

All Posts, budget, deficit, economy, justice, medicaid, north carolina, poverty, public education

NORTH CAROLINA REPUBLICAN CHECKBOOK

If you want to know what is important to people just read their checkbooks and credit card bills. They are far more enlightening than press releases or diaries. The same is true of political parties. After about seven months of total Republican control, the values of that party’s leaders have become apparent in their tax reform law and their budget.

They eliminated the tax on estates of over $5 million so that the wealthiest North Carolinians will no longer pay it when tens of millions of dollars are passed from one generation to the next; and they reformed the income and corporate taxes so that those with the highest incomes will pay less than in the past. They are sure that they reduced the State’s revenue but they are not sure by how much. Good government requires matching tax revenue with necessary spending.

After reducing the state’s income they announced that they did not have enough money to budget a salary increase for teachers. Our teacher salaries were already extremely low and may well be the lowest in the nation after another year with no adjustment. Most state employees were treated little better. Republican leaders did not consider the state’s financial obligations and the needs of our schools before they cut taxes. That is not good government.

Probably the most troubled department in State Government is the Department of Health and Human Services which is responsible for Medicaid, all of our mental health services, and many other programs. To lead this critical area, the Governor picked Dr. Aldona Wos, a physician who has not been involved full-time in health policy or medical practice for many years. She is very wealthy and has been among the largest fund raisers for former President George W. Bush and for Governor McCrory in both of his campaigns for governor. President Bush rewarded Dr. Wos by appointing her as Ambassador to Estonia. Likewise, the Governor made her DHHS Secretary and she hired a young McCrory campaign staffer, Matthew McKillip, as the Chief Policy Officer of DHHS. At age 24, he has no previous health service education or experience but he has worked for a right wing think tank and now he is leading health policy development for the state.

After only a few months on the job, he has received a 35% salary increase. That is just one example of large raises for campaign supporters while there is nothing left over for teachers or other public employees. How might those other employees feel about this?

Republican leaders said that the state does not have enough money to maintain the unemployment compensation program so they cut the maximum monthly benefit by 35% and cut the maximum length of benefits from 26 weeks to 20. As a result of the change, we lost eligibility for over $700 million in federal funds intended for North Carolina’s unemployed workers while our unemployment rate remains one of the highest in the nation.

Then they turned down the Medicaid expansion which would have been totally paid by the federal government for the first 3 years and would have been over 90% federally funded thereafter. That expansion would have covered most of our low-income working people at federal expense. Through 2019 it would have brought $15 billion federal dollars to the state and created 25,000 new jobs (mostly in the private sector). That would have helped mightily with our unemployment problem. Our middle class and poor will have to pay the federal taxes to fund the expansion but we won’t get the health care or the jobs.

The inescapable conclusion is that the Governor and legislative leaders think it is more important to cut taxes for the wealthy than it is to provide health care for low income workers and fair salaries to teachers. You can read their values in the state’s checkbook. This is particularly sad, because these are not the values of most North Carolinians; and many Republicans also disapprove. Some must be wondering how their party got away from them. In retrospect, the answer seems to be that a few very wealthy people not only bought the election with incredible amounts of spending; they also bought the soul of a once proud political party. It’s quite a set of values: Take care of your wealthy donors and reduce their taxes then pay for it by denying fair wages to teachers and other public employees and by cutting back on the public education and health services which would help the poor improve their earning power. They may preach family values but support for families is not written in their checkbook.

After doing such things, the only sure way to stay in office is to prevent those who disagree and those you have harmed from voting. That is a subject for another day.