Beguiling Simplicity

Boston Tea Party revolt, via Wikipedia

Mollie and I have been out of the country for a week. Talk about timing! The cause du jour of course is the debt ceiling crisis being played out, emotionally, both on Capital Hill and throughout the world. It really is an unprecedented faltering of the tripartite representative democracy crafted by the founders. With unprecedented zeal, bordering on and in some cases identical to religious fervor, the Tea Party has been successful in bringing the country to the precipice of financial calamity.

But, is it justified? One might even ask, is it understood by those who precipitated it?On this evening’s national news I saw and heard one passionate Tea Party member of the House (from New York, as it were) justify his support to his cause by saying, “This President is addicted to spending!” Clearly he, an apparent victim of sound-bite reasoning, believed that capping spending through the mechanism of the debt ceiling is the appropriate means to remedy the problem. But, is it? Please consider an editorial in the nation’s largest and, arguably, most successful newspaper entitled, “Misinformation Mars Debt-ceiling Battle”. It lists “five leading myths about the debt ceiling to keep in mind”, and here is the first:

The debt limit is a blank check. Perhaps the most destructive misinformation about raising the limit is that it would give the president a “blank check” for more wasteful spending.

Raising the debt limit —something that has been done 49 times under Republican presidents and 29 times under Democratic presidents since 1960 — just lets the government pay for spending that Congress has already approved: interest on the national debt, Social Security benefits, paychecks for soldiers in Iraq and Afghanistan, tax refunds, highway construction and so on. Think of it this way: Refusing to raise the debt limit is like going to Best Buy, bringing home a 50-inch flat panel TV — and then arguing that you shouldn’t pay the credit card bill.

Not raising the debt limit puts President Obama in the bizarre situation of either not spending money that Congress already told him to spend, or attempting to spend money and exceeding the ceiling. Either way, he fails to execute the law.The time to get tough about deficits is when the tax and spending decisions are made in the first place, not when the bills are coming due.

Now I don’t know how this could be phrased any clearer, and yet the person in the street in America is clearly confused and angry at what is going on in Washington, and in many cases, mad at the President. Yes, many of them heard and believed what the Tea Party told them about America’s financial problems, and central to that message was that the Democrats (alone) had spent the nation into the poor house and were still doing so. And, the message goes, the solution is very simple: we must spend no more than revenues allow.

Well, that does seem simple! After all, it works for a household budget, why shouldn’t it work for a government budget? This reasoning was emphasized in an editorial by my colleague, Anson Burlingame in today’s Joplin Globe. Anson used the term “simple” repeatedly and touted a balanced budget amendment to the Constitution as ” . . . the obvious fix.” Anson urges us to ” . . . forget war as a topic of concern. Forget abortion, immigration and all the other side issues.” He continued, “And don’t let them try to scare you with Medicare, Social Security and other entitlement concerns, or defense spending as well. Focus on the amount of federal spending any candidate will authorize in the next three years.”

What would a balanced budget amendment do to fix the problem, given that emergencies happen and that revenues are unpredictable?  Will Congress say, “Sorry, Arizona.  We know your whole state is burning up, but we can’t afford to help?  Or will Congress eliminate breakfast for the mentally retarded in order to afford it?  Sorry, the balanced budget amendment is like asking an addict to sign a pledge that he won’t fall off the wagon.

Anson’s message is that fixing entitlements is simply scare tactics, but how can that be when about two-thirds of all expenditures are entitlements and a huge chunk of what’s left is the Defense Department? Everyone agrees that spending must be cut, they simply (that word again) don’t want their spending cut. Entitlements are the heart of the problem, not something to be ignored. Number one is Medicare, a program terribly inefficient and rife with abuse. Social Security is eminently fixable, if we would only do it now.

Marrowfat Peas

Image via Wikipedia

Appointing twelve Congress persons to a super committee to make the hard choices would be laughable if it weren’t damned to failure. No, simply capping spending without making the hard entitlement-capping decisions is simply kicking the can down the road. It will land in the simple gutter in 2012 and we will then try to solve it with a simple choice. But it won’t work. What we should do is make the hard entitlement choices and make them early. We need to clean our plate. We need to eat our peas.  It would be good for us.

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About Jim Wheeler

U. S. Naval Academy, BS, Engineering, 1959; Naval line officer and submariner, 1959 -1981, Commander, USN; The George Washington U., MSA, Management Eng.; Aerospace Engineer, 1981-1999; Resident Gadfly, 1999 - present. Political affiliation: Independent, tending progressive as the GOP recedes from its Eisenhower roots.
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7 Responses to Beguiling Simplicity

  1. ansonburlingame says:

    Jim,

    First, welcome home to you and Molly. I wonder where “out of the country” you have been and what you saw in terms of foreign reaction to our political drama over the last two weeks.

    Now having been polite, let me welcome back to the “real world” of local blogging.

    First your quotes or implications from the article are on the mark. Debt limit does nothing more than allow the Executive Branch to borrow money to be spend as previously directed by Congress. To really limit spending, laws, old laws must be changed. And to control revenues old tax codes must be changed as well. BOTH are needed.

    But my real disagreement is when you said in your blog, “the Tea Party has been successful in bringing the country to the precipice of financial calamity.”

    I of course would argue that the Tea Party has changed the nature of the debate over spending and taxation at the federal level to “avoid a looming precipice of financial calamity”. Actually it did not even go that far. It merely reduced the speed at which we were heading for the precipice or “cliff”.

    And HUGE issues remain ahead of us, left totally unresolved in the latest crisis debate, the second one this year and with a third one looming ahead either in the form of FY 2012 spending authorization and.or the report from the new Congressional Committee.

    $2.?? Trillion in cuts (are they indeed “real”) is a mere drop in the bucket and I hope you realize that. There is AT LEAST another $7 Trillion to be determined in either tax increases or spending cuts or a combination of the same.

    And God Almighty is the debate lining up now for the 2012 election campaigns with McCaskill’s being front and center nationally for sure. And even then, after whatever results from the November 2012 election we will still have decade(s) of fiscal fights ahead of us. I suspect you and I will be dead and gone before any ultimate resolution to our fiscal crisis is resolved. By that I mean we live within our means, nationally, and I have no idea the debt level when we reach that point.

    But I will also suggest that the longer it takes us as a nation to come to grips with that SIMPLE concept, live within our means, the weaker and weaker we will become both domestically and internationally. We cannot continue to borrow money to buy our greatness. We must return to earning our own money through hard work and national endurance to remain great.

    Finally, it to me at least is the height of simplicity to realize we spend too much money. The first step is to STOP that. Then we can all work hard to find the right split in how we spend the money we have left. But that is the second argument, not the primary one. Just go check out my recent post discussing defense spending to see how I might approach that secondary issue.

    Anson

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  2. Jim Wheeler says:

    Anson,

    But, it really was the brink of financial calamity, and a credit-rating downgrade is still possible, maybe even likely. That is going to hurt everyone. The reason I call it “financial calamity” is because it should have been unnecessary, if only the two parties could work together on the obvious problem: the need for entitlement reform.

    I will give the Tea Party this, and I believe it to be your point too: they may have awakened the complacent masses to the need for entitlement reform, and if that is so, then good for them, however addled their misplaced blame. I just regret that it took such an embarrassing spectacle to do so. Whether the people are really awakened, however, won’t be apparent until at least November, as I understand it. Who knows what is in the fine print in this thing?

    Like the passionate warrior you are, I sense that you want to fix this debt thing quickly. I approve your motive, but not your method. A national economy can be damaged by too-strong medicine as well as by neglect. Herbert Hoover found that out the hard way. But now that the engine of the economy is still sputtering and now that the brakes are being tapped, thanks to the Tea Party, let’s hope the thing doesn’t completely stall before all cylinders catch fire.

    Lest you think I am the only nut who thinks this way, and not simply, allow me to recommend this link to David Gergen’s latest thoughts:

    http://www.cnn.com/2011/OPINION/08/02/gergen.debt.deal/index.html?eref=rss_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fcnn_topstories+%28RSS%3A+Top+Stories%29&utm_content=My+Yahoo+SBC+co-brand

    Jim

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  3. ansonburlingame says:

    Jim,

    The continuing possibility of a credit rating downgrade is DIRECTLY related to WSTMM. That is the only way the government can hope to convince lenders that we still have the strenght, morally and financially, to always pay our debts. Now we may always keep our moral compass to pay our debts but someday, if we keep on with business as usual, we will be financially unable to pay our debts, no matter what level of taxation is implemented.

    Yes the standoff last month showed clearly the looming cliff “if we….”. But we did not go over that cliff after all the games of chicken were played out.

    But the challenge now is what else MUST we do to SSTMM to keep that looming (still) “cliff” on the other side of the horizon. There is the challenge. Now where are the solutions that can actually be accomplished, real solutions for a real problem, no political solutions to cover up the simple facts related to our “crazy spending”.

    And yes entitlement reform is a huge part of that solution and you know it, just like defense reform is part of it. No single “reform” will fix the problem and no single tax increase will do so either. But when I point such out on the EC blog I am told that a BBA can NEVER be achieved or achieved so far in the future, maybe, that it will not in any way avert all of us going over the “cliff”. And in the meantime I STILL see Krugman on TV calling for us to SMM, today!!! Do you support Krugman?

    Anson

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  4. Jim Wheeler says:

    Anson,

    WordPress has been driving me crazy lately. I just spent 15 minutes on a comment here only to have it disappear when I hit “enter” while intending to start a paragraph. Something’s changed – must be bugs is all I can figure.

    Anyway, here goes again. This time I will use an editor and paste the comment in.

    Do I support Krugman? Interesting that you should ask. Yes, I generally find his reasoning quite good. Last week I read one of his columns criticizing people who take a middle road in economic discussions simply to try to bring the two sides together. It caused me to examine my own reasonings. I have to tell you that I do not consider myself guilty of that, but I admit the temptation may have flavored some of my writing.

    But, as far as indicting Krugman as wrong for calling for “more spending”, I think you are missing something fundamental in economics. A national budget is not a family budget. You can not stop anything nationally on a dime. In fact, it’s hard to effect any immediate change on the massive flow of economic factors that are driven not just by current politics but the combined and chaotic effects of past policies and laws. Please consider what just happened in Washington:

    1. Both sides agreed that there is too much spending and that cuts need to be made.
    2. Both sides agreed to amounts that would be cut, $900B now and $1.5 T by Thanksgiving.
    3. Both sides declined to be very specific about the nature of the cuts, especially regarding entitlements. Tax-code reform got only lip service.
    4. Both sides kicked the hard questions to an unspecified committee of 12 likely hard-liner ideologues to resolve, with the provision of another hostage situation if they don’t agree.

    What we see happening here is the inability of representative government to make hard choices that will affect people right away. Medicare, Social Security and Defense are at the heart of it, but instead all the pols have talked about is Defense, and that only in generality.

    Meanwhile, the pressure of NOT doing what Krugman recommends, which is to keep the economic engine going, has raised the real specter of a double-dip recession. That is why the stock market is tanking. The smart money knows that Congress has failed to handle the problem. A BBA is no substitute for hard, specific reform of entitlements, Anson. Either you didn’t read my post on that, or you simply refuse to give up your idea of a simple solution. It’s not simple, it’s damn hard and it’s complex because someone has to decide specifically how to reform the medical industrial system and how much grandpa’s Social Security check gets changed. Generalities won’t cut it.

    Tea Party members may feel smug in squashing attempts by the administration and Krugman to keep the economy going because of symbolism, but that will be a bitter victory if we enter a double-dip recession. Hey brother, can you spare a dime?

    Jim

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  5. donvphilly says:

    Jim,
    I could not believe more in the FACT that the mess we are in DOES NOT HAVE a simple solution… Furthermore, I think only simple minded people like the TEA PARTYERS whose religion is LOWER TAXES and the hell with the needs of the country, can believe there is a simple solution.
    We are closing in on becoming a 2nd class country very fast and, with industry making record profits and sitting on millions in cash while it lays off employees, our only hope is for the government to step up and, through the private sector, get people back to work. Certainly there is a lot to.be done in this country in what is refered to as infratructure that would help keep us a 1st class country.
    WOW! I just thought eliminating the Bush Tax Cuts on those earning over $500,000 would help pay for it. Ahd the fact that Wall Street Players pay half the tax rate as my very hard working children almost drives me us a wall. Taxing them as they should be taxed might add enough to get the unemployment rate below 6%.
    I think people should remember that all the thlngs that were done to end the Great Depression were very complicated and were marginally successful, but what truly ended it was World War ll, which required massive government spending and got a lot of people working, including “Rosy the Riveter”.

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    • Jim Wheeler says:

      Exactly, donphilly,

      We surely agree that economics is not at all simple. Money is not a physical thing, it is an accounting method by which human beings measure their respective contributions and receipts among themselves. The contention arises over judgements about fairness, and that is subordinate to the concept of capitalism which in turn goes to survivalist instincts. It is the tribe that defines us, and in my opinion what defines our humanity is the size to which we can expand the definition of “tribe”. Pearl Harbor, as you allude, allowed us to reach a peak of unity that has never since been equaled. To that end, symbolism is very important, including the symbols of building unneeded airports and and of subsidizing an oil industry awash in massive profits.

      Right now, the two principal tribes in Washington are warring and the country is suffering for it. I fear that much worse is to come.

      Thanks for your sentiments.

      Jim

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  6. ansonburlingame says:

    To both,

    And thus we once again come full circle it seems. We all agree that we have a mess on our hands. One side calls for MORE government to get us out of the mess and the other side for private intiative to be unburdened by government to achieve the same goal, get out of the mess!!.

    I could not agree more that the “devil is in the details” however.

    Now go read the string of comments on my Tax Code Reform blog with HLG representing the left and Caldwell, Rawhide and me on the right. It was in my view a great and honest exchange. The “simple” point in the string was that the TAX CODE is a real MESS and must be fixed.

    My position is such a change to the tax CODE is very easy but only IF each side focuses on the CODE to make it clear, simple, transparent, etc for ALL, meaning EVERY American tax payer and leave the debate to JUST that issue, a SIMPLE tax CODE.

    THEN once we all have a very simple code, we can go back to tax RATE debates to make our system “fair” with all contributing in some way (except the really and very poor) to our society.

    Here is another example that I have recently suggested. Yes Medicare and SS are complex problems for those “in the middle” of the debate, like I am. But one clear first step to me is to “fix” the “high” end in the debate. No one with taxable income over $1 Million (or so) should receive a “dime” in ANY Medicare of SS benefits for that year, period.

    That is in fact a very SIMPLE step to reduce benefits that are in no way needed to achieve the goals of taking care of those that really need care.

    And if we ever fix the tax codes, go see my suggestion for a negative tax rate for some as well. Simple again in my view.

    Anson

    PS: Word press is driving me crazy too, Jim.

    Like

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