U pdated below.
Or, Welfare Music. That’s my take, really, regardless of the real issues involved; the debt ceiling showdown is just another ruse to try to force the citizens to accept cuts to the programs that protect our health and well-being as we age. Disgusting.
Here are some issues in trying to understand this and I think you might all agree, though maybe not.
I know nothing about the operations of the government as regards “the dailiness” of managing the world’s largest economy. But, I’m not sure that anyone in Congress knows either. At least that’s the picture painted by most economists. We have very real problems in our economy. We have more to care about and be angry about than a faux “showdown” over “debt.”
If you read Krugman you know this, if you read Galbraith you know this. Who do you read that tells you otherwise? Rather, what talking head or disembodied “angry fat man on the radio” voice is telling you otherwise?
More and more we discover that the national leadership of this country is a disgrace. We are the world’s largest exporter of war; that is our business. Of the “wealthy” nations we have the worst health care system by far, paying nearly double per capita compared to any other comparable industrialized nation and our outcomes are no better and often worse. We like to imagine machines that go “ping” and that cost millions make a real difference in health outcomes. It is likely that our health care industry is one of our major economic problems; that’s the industry, not the government programs that must use the industry (Krugman speaks to this on Charlie Rose). We are climate change deniers and we refuse to “play” with the other kids in the sandbox when it comes to reducing our carbon emissions. We are among the least “equal” in the world as regards the gap between the wealthiest among us and the poorest, and most of us are the poorest.
But hey, there’s a debt ceiling we can’t extend because, gosh darn-it, we’re spending beyond our means! First, the nation is not a household and there is no way to compare the two as an analogous way to understand this. You and I can’t print money, first of all. But further, debt is how we operate as a financial system. It is one aspect of how our economy works and in that sense it is required. But again, I know little that I can comment on.
And here’s another truth, you don’t know much either. Why are you worried about the national debt? Because you’ve been told to day in and day out via our media outlets and still no one has really discussed the actual issue, only the theater of it. We’ve got a lot of theater these days, with those calling themselves the Tea Party seeming to want to play a zero-sum game on every issue setting the tone for this debt issue, i.e. blackmail. (Of course, this also seems normal now–our Foreign Policy is Cosa Nostra so why shouldn’t our Domestic Policy also be criminal?)
Here in Bloomington, we were treated to an editorial yesterday by our Republican representative to the House, Todd Young, about debt. It is apparently the only issue worth discussing. Of course, Young speaks in Congress and on his website about how Indiana is an example of how cutting taxes raises revenues. Again, I’m not an economist, but there is zero evidence that this is the truth. And more to the point, the common sense says the opposite–”cutting” a revenue stream won’t “raise” revenues but will lead to a greater deficit. The tax cuts in question are for the wealthy and for corporations, those mysteriously corporeal beings offered more legal protections than actual persons, and what do they do with them? Accumulate more wealth and/or invest it elsewhere.
I propose to look at one part of the editorial in order to try to understand it. Here it is:
Over the last 40 years, America’s national debt has been about 37 percent of the size of our entire economy, and that’s right about where it stood in 2008. But government policies enacted since 2008 have already exploded our debt to nearly 70 percent. The CBO analysis shows that within a decade our debt will likely exceed the size of our entire economy.
Now, as I said, I’m not an economist, so what I have to do is try to discover what this means out of a position of very real ignorance. But first, I want to point out that it’s written with the intention to “scare” and also to lay the blame of this particular debt on the current administration. (Before 2008 the world was great; policies enacted since have made it horrible!) As a reader, I find that I immediately suspect this claim because of its pointed and partisan rhetoric; a crisis involves us all but Young puts politics first. But, let’s go on.
Here’s the summary page of that CBO report that Young cites. He pulls his numbers from the opening paragraph:
Recently, the federal government has been recording budget deficits that are the largest as a share of the economy since 1945. Consequently, the amount of federal debt held by the public has surged. At the end of 2008, that debt equaled 40 percent of the nation’s annual economic output (a little above the 40-year average of 37 percent). Since then, the figure has shot upward: By the end of this year, the Congressional Budget Office (CBO) projects, federal debt will reach roughly 70 percent of gross domestic product (GDP)—the highest percentage since shortly after World War II. The sharp rise in debt stems partly from lower tax revenues and higher federal spending related to the recent severe recession. However, the growing debt also reflects an imbalance between spending and revenues that predated the recession.
You’ll note that the last sentence implicates the past in a way that Young wants you to “forget”. In other words, policies from at least one prior administration have brought us to our current status.
Okay, let’s again be clear about our ignorance: who/what is the CBO and why do their projections matter? You can read more about them at the link provided above, but basically they do the actual number crunching on budget proposals and offer budget projections based on historical indicators. Should these projections matter? Likely, no, not on their own at least. As you read the summary it becomes clear that it is what the politicians decide to do regarding the budget that matters, and if you read the suggestions in the summary you see that these can be accomplished in myriad ways.
Let’s skip around a bit in this summary. I won’t wrench anything out of context in order to tell my own tale, but you can check up on me. Here’s the “Extended Base-line Scenario.” Please note that these are summary designations and offer no particular actions OTHER than what might happen normally regarding certain laws and policies on the books:
One long-term budget scenario used in this analysis, the extended-baseline scenario, adheres closely to current law. Under this scenario, the expiration of the tax cuts enacted since 2001 and most recently extended in 2010, the growing reach of the alternative minimum tax, the tax provisions of the recent health care legislation, and the way in which the tax system interacts with economic growth would result in steadily higher revenues relative to GDP. Revenues would reach 23 percent of GDP by 2035—much higher than has typically been seen in recent decades—and would grow to larger percentages thereafter.
Expiration of Bush Admin Tax Cuts (the same that were extended recently so that Obama owns them now too), the tax provisions of the recent health care legislation, etc., lead to higher revenues. Defense spending should decline. Recall that we already spend as much as the rest of the world combined, and yet, gasp, we’re still not safe!
And the Alternate Scenario, one that Young would likely approve, is “much bleaker”:
Most important are the assumptions about revenues: that the tax cuts enacted since 2001 and extended most recently in 2010 will be extended; that the reach of the alternative minimum tax will be restrained to stay close to its historical extent; and that over the longer run, tax law will evolve further so that revenues remain near their historical average of 18 percent of GDP….
Under those policies, federal debt would grow much more rapidly than under the extended-baseline scenario. With significantly lower revenues and higher outlays, debt held by the public would exceed 100 percent of GDP by 2021. After that, the growing imbalance between revenues and spending, combined with spiraling interest payments, would swiftly push debt to higher and higher levels. Debt as a share of GDP would exceed its historical peak of 109 percent by 2023 and would approach 190 percent in 2035.
So, it looks like not cutting taxes on the wealthy and the fact that corporations often pay no taxes, even though they are legally “persons,” is a MAJOR aspect of our current crisis AND the reason it will continue to spiral towards greater debt.
That’s what I’m seeing in this summary. Young wants us to keep redistributing our wealth to the already super-wealthy and cut programs that secure our very well-being into old age. That’s the plan. More defense, no taxes on the rulers, no safety for citizens (constituents). Who is Todd Young serving?
Oh, and the bogeyman called the “debt ceiling?” It’s the distraction (the “turn”) in the bag of tricks while the illusionists offer the prestige that will destroy the welfare of all a fraction of our population. That means you…really, it means nearly everyone.
Who runs America today? The rich and the multinational corporations. Who runs the White House? David Plouffe, whose job it is to make sure that ever word, every action of the president is calculated for electoral gain rather than the country’s needs. Who runs the Congress, on both sides of the aisle? The lobbyists, who win in every negotiation. And who loses? The American people, who have said repeatedly that they want a budget that sharply cuts the military, ends the wars, raises taxes on the rich, protects the poor and the middle class, and invests in America’s future not just in Obama’s speeches but in fact.