Drawing the Lines

November 28, 2012 at 11:42 am | Posted in Congress, Economy, Obama Administration, Politics, Taxes | Leave a comment
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The bombardment has already started, and will intensify until, as the year ends, either a solution to the “debt crisis” will emerge—or our fearless leaders will kick the can down the road. Again.

There are actually three sides to the discussion. One side believes that the need to eliminate the national debt has been overhyped. After all, they say, people have been crying for decades that the sky has been falling. But it hasn’t, and it isn’t. People, regardless of nationality, have been falling over themselves trying to lend us money, with the result that the interest rate on our national debt is at an all-time low. (There are many other arguments for not worrying so much…but I understand that one, and agree with it.) What we need to do is worry about improving the economy as a whole; if we can do that, the national debt will take care of itself.

The other sides are mostly debt hawks, and they have framed the discussion in terms of reducing/eliminating the national debt, with the health of the general economy at a lower priority.

One group (let’s call them conservatives for short) has an economic philosophy akin to the European Austerity policy. They believe we can’t afford social programs, we need to spend more money on the military, and we must reduce taxes. They say that cutting social programs (especially entitlement programs) will save the money we need to reduce the deficit. They say that by reducing taxes we will induce business and wealthy individuals to create more jobs, thus raising more revenue to further reduce the deficit.

But look what Austerity has brought the Europeans: their economies are in decline, and their people are rioting or striking because they’re not getting a fair return on the time and energy they spend working. They’re not creating jobs. They’re not increasing revenue. They are imposing poverty on their populations.

Another group (yes, we’ll call them liberals) believes differently. They’d like to increase taxes on the very rich. The increases won’t make a bit of difference to the lifestyles of these people, nor cause them to fire people. The proposed increases would apply only to the income over $250,000. The liberals would like to eliminate certain tax breaks treasured by big businesses and wealthy individuals, like the oil depletion allowance. They’d like to eliminate tax breaks that help pay for corporate jets, and tax loopholes that encourage businesses to make as much of their money as possible overseas and avoid taxes here. Liberals say that by increasing taxes on the very wealthy and eliminating tax breaks and loopholes we’ll increase revenue we can apply to the national debt.

They’re probably right. But both groups are forgetting that the best way to reduce the national debt is to create jobs. We need to invest in physical infrastructure, like roads, bridges, power grids, and buildings. Those physical projects will create thousands and thousands of jobs, most of which can only be done here. The workers who get those jobs will pay taxes and buy products, creating more revenue for the government and more demand for products, thus even more jobs. Employers will hire, but only if there is more demand for their products and services.

The federal government needs to invest in the states. Money for education will help our workers compete in an ever more challenging workplace—and provide jobs for teachers. Money for public safety will reduce crime rates and improve state and local responses to disasters—and provide jobs for police officers, firefighters, and disaster relief workers. Those are only a couple of examples of areas where federal investment can provide programs, equipment, and jobs to improve our lives. And the workers who get these new jobs will pay taxes and buy products, creating more government revenue and more demand for products and services.

The top priority is not the national debt: it’s the economy. The conservatives and the liberals need to work together, to find compromises that will get the job done. You need to pass this message to your friends and let your elected representatives know how you feel. They need to stop “standing on principle” and start governing: the country is at stake.

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NC DOT Plan for I-95

March 13, 2012 at 4:18 pm | Posted in Economy | Leave a comment
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The North Carolina Department of Transportation plans to add lanes and replace or modify some interchanges and overpasses along I-95. They want to pay for the improvements by charging tolls.

The plan for Robeson County would add two lanes to our part of I-95. Adding two lanes would add at least 24 feet to the width of the road, and the plan is to widen the median as well, making the road even wider.

Increasing the width of the road would have a serious impact on businesses on Kahn Drive, Dawn Drive, Capuano Street, and Lackey Street. Hotels, motels, restaurants, auto dealers, and other businesses might lose large pieces of their parking lots, if not access to their property. Many of these businesses would be unable to relocate. They would close, and the area would lose jobs, tourism revenue, and tax revenue. Many of the existing buildings would become abandoned eyesores bordering the highway.

In addition, the DOT wants to turn I-95 into a toll road. Those who use I-95 to commute to work, to go to stores, restaurants, and other businesses, or to go on vacation or to recreational areas would have to pay ten cents a mile, with a minimum toll of $.25. If you go border to border it would cost you about $19.20. If you drive an 18-wheeler it would cost you about $57.

The DOT forecasts that traffic will go up enough to justify the increased road capacity. I question that forecast: in the current economy, with fuel prices going sky high, I would expect traffic to go down.

I’m not aware of any studies on the economic impact of the I-95 project, but a few things seem clear. People and shippers will do what they can to avoid the tolls, and in North Carolina route 301 is parallel to I-95 for much of its length. Elsewhere, there are local roads that can expect increased traffic, heavier vehicles, and increased maintenance costs. Neither 301 nor the local roads are designed for the kind of traffic they are likely to get. High volume traffic mixed with shoppers, pedestrians, and kids on bicycles would mean more accidents: adding a toll in money to I-95 would add a toll in blood to other roads.

The Indiana Toll Road is a similar situation. The state leased the road, projecting that traffic would increase. The tolls went up, the traffic went down, and the company that leased the road is in financial difficulties. Traffic went to parallel roads, and it is now slower, more difficult, and more costly in fuel to get across Indiana.

I believe that the NC DOT plan for I-95 is a bad plan that will be economically disastrous for Lumberton, for Robeson County, and indeed for all of North Carolina. Others agree: The Johnson County Commission passed a resolution opposing the plan, and Representative Renee Elmers, who represents the Harnett area, introduced legislation in Congress to forbid it.

I’ve sent messages like this one to officials at the Federal, State, County, and City levels. If you’re a resident of North Carolina I’d appreciate your writing your elected officials. We can defeat this plan!

Debt Ceiling? What Debt Ceiling?

July 2, 2011 at 6:18 pm | Posted in Congress, Economy, Politics | 4 Comments
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People are going into panic mode—again. We are rapidly approaching the debt limit imposed by legislation and, people say, if we reach that limit the country will default. Defaulting would indeed be a catastrophe for the U.S. and world economies. It would result in a deep recession here and probably across the world. Yet President Obama still leads from the rear, and the Democrats in Congress do little. The Republicans in Congress mulishly refuse to consider increasing revenue, while insisting that we cut spending with a blunt axe before they’ll vote to raise the debt limit even if it sends us into default.

But we don’t need to default. When we reach the debt limit President Obama could thumb his nose at Congress and just keep spending the money to pay the country’s obligations, like Government bonds, Social Security and Medicare payments, subsidies for school lunches, and all that stuff.

President Obama could ignore the debt ceiling and keep spending, because the legislation that imposes the limit is… well, unconstitutional. Section 4 of the 14th Amendment to the Constitution says, “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

That means we can’t question whether any debt legally incurred by the government is valid (must be paid). It must be paid, and that’s all there is to it. But establishing a debt ceiling casts doubt on whether existing debt will be paid, because the government borrows money to pay its debts: bonds, Social Security and so on. It means that the debt ceiling law is unconstitutional, and the President can ignore it.

That’s not just my opinion. It’s the opinion of several noted Constitutional lawyers, Congressmen, and other Serious People. The option has been raised to President Obama himself at a news conference, and he did not rule it out. It could happen, and while I hope it’s not necessary, it’s a lot better than defaulting.

Raising the debt ceiling (or ignoring it) would give the politicians a chance to get off their ideological high horses, negotiate a budget in good faith, and get the country moving toward financial stability. Will they take the chance? That’s up to you. Write and tell them what you think.

A Deficit Too Big to Live With

May 22, 2011 at 3:07 pm | Posted in Banking, Economy, Politics, Taxes | 1 Comment

A few weeks ago at Rotary we were talking politics. (Our discussions sometimes get heated, but never discourteous: they’re a good model for the rest of the nation to emulate.) Somebody asked me how much money the top 2% make—the ones liberals want to tax more. So I did a little research, which turned into a whole lot of research. Most of the statistics I found were less than objective, less than adequate, and difficult to understand: I’m no statistician. Eventually I found some numbers I could both trust and figure out, and the following article is the result.

Most people agree: the deficit is too big. We have to do something about it, and the politicians are making loud noises about how to fix it. They have politicized the discussion beyond all belief, which guarantees that any “solution” they come up with will be a disaster.

The sad fact is that solving the deficit problem is going to require sacrifices from all of us: we’re all in the same boat; it’s sinking, and we must all help to bail.

Sensible, precisely directed spending cuts will help reduce the deficit, but they won’t eliminate it, nor will they achieve objectives like repairing crumbling infrastructure, reducing dependence on fossil fuels, or adding the huge numbers of jobs we need to get the economy back on its feet. Draconian cuts to needed programs won’t help either: in the long run they’ll destroy our economy and our people.

Well if you can’t solve the problem by cutting government spending, how can you solve it?

By increasing government revenue.

One approach we ought to take is to eliminate tax loopholes. The tax code could be vastly simplified to ensure that every individual, household, and corporate entity pays a fair share. Some deductions ought to remain, because they encourage behavior we want to encourage. Charitable giving is an example. Others, like the mortgage interest deduction might be phased out over the next several decades, but slowly, because the mortgage interest deduction is a huge factor in many families’ financial security.

Another approach is to increase the tax rates. Doing so would have an immediate effect, yet could be designed make the comfortable and wealthy contribute more, while minimizing the sacrifices made by those who can least afford to sacrifice. Some of you will recoil in horror: “Redistribution of wealth!” you will scream. Perhaps, but we need to increase revenue to reduce the deficit, and some of us can well afford to provide more revenue, while others cannot.

Who? Let’s take a look at how wealth and income are distributed and at how we are taxed.

Economists define wealth as being equivalent to net worth. A person’s wealth is the sum of the values of his or her marketable assets (like real estate, stocks, and bonds) less the value of his or her debts (like mortgages, and credit cards).

2007 is the latest year for which good numbers are available. In a paper titled Wealth, Income, and Power, Professor G. William Domhoff of the USC Santa Cruz Sociology department says that in 2007 the top 1% owned 34.6% of all privately held wealth, and the next 19% owned 50.5%. Remember the 80-20 rule? Well the wealthiest 20% owned 85% of the wealth, leaving only 15% for the bottom 80%! (The amount of wealth held by the top 20% is shown by the red and green areas of the chart combined.)

If that comes as a shock, don’t feel lonesome: a 2010 study showed that most Americans, regardless of income level, gender, or political affiliation, have no idea what the distribution of wealth is. If you’re ready for another shock economist Edward Wolff estimates that since 2007 there has been a 36.1% drop in the wealth of the median (middle of the middle class) household, while the wealth of the top 1% dropped only 11.1%

Wealth and income are two different things: income is money earned from work (wages and salaries) and from wealth (dividends, interest, rents, and royalties).

Looking at income gets us to the question I was asked at Rotary: “How much money does the top 2% make?” The answer is…I dunno. But I do know this: in 2009 the top 5% averaged $295,388 in income. In 2007 it was $287,191.

In the table below, the top 5% is included in the top 20%. That is, in 1983, the 20% with the highest incomes earned 45.1 percent of the aggregate income and the rest of us earned 54.9%. (Also note that we’ve added a year not included in the wealth chart.)

Income distribution is important because income taxes are the biggest source of government revenue. Our Federal Income Tax system (like most) is progressive, meaning that the richer you are the higher your tax rate. The theory is that the richer you are, the more of your income you can afford to pay in taxes. The chart below shows how much people paid in taxes (Federal, state, and local) as a percent of their income. Our system, when you count all taxes, is mildly progressive—until you get to the top 10%, where it flattens out. Then it becomes regressive: the top 1% (who held about a third of the wealth) paid a smaller percentage of their income.

They paid less because, as you can see from the blue areas on the chart, state and local taxes are regressive, meaning that the poorer you are the more of your income goes to these taxes. The problem is that the less income you have the more of it you need.

The chart below is another way to look at how income—and tax liability—are distributed. The lowest 20% earned about 3.5% of the aggregate income in 2010, and paid about 2% of the taxes. The fourth 20% earned 19% of the income and paid 19% of the taxes. Only the top 20% paid a larger share of taxes than their share of income, with the top 1% earning 20.3% of the aggregate, and paying 21.5% of the taxes.

I’ve been told, by my conservative friends, that 47% of the population doesn’t pay any taxes. Well that’s a great number to feel outraged about, but it’s not quite true. According to Congress.org, the number came from a study done by the nonpartisan Tax Policy Center. The study does estimate that 47% of U.S. Households did not pay any Federal Income Tax in 2009. 85% of them, however, paid payroll and Medicare taxes, and of the 6% who did not, most are elderly or very poor. Fair enough: they can’t afford to both pay taxes and eat, so let them eat. Over the years, the Congress has consistently ensured that the poorest Americans don’t have to pay taxes.

In a “normal” situation, that is when we don’t have huge deficits, the effects of our tax policy are reasonably fair, except for the regressive State and local taxes. I think the tax code ought to be simplified drastically, and many loopholes, subsidies, and entitlements eliminated. But the simplification needs to be done carefully, so that our tax system continues to encourage socially useful behavior and doesn’t impose an unfair burden on those who are already suffering. And we should change the tax rates appropriately. What is appropriate? Let’s look at some history.

The first Federal income tax was imposed during the Civil War, but was repealed afterwards. The current system was enacted in 1913, and the chart that follows shows how the top tax rate has changed over the years.

The table will make more sense if we add some historical events:

Between 1914 and 1918 the top tax rate shot up to nearly 80% to pay for World War I. After the war the rate came down, but in 1929 the stock market crashed, ushering in the Great Depression. The top tax rate started going up again to pay for President Hoover’s attempts to improve the economy, and then for President FDR’s New Deal. Then, between 1941 and 1945, the top rate soared to over 90% to pay for World War II.

It stayed up there until 1968, paying off the war debt, and paying for the Marshall Plan and other forms of foreign aid. But (believe it or not) dropped during the Viet Nam War! It has continued to decline since then even though we spent huge amounts of money fighting the Persian Gulf War, beefing up internal security after the 9/11 attacks, and fighting wars in Afghanistan and Iraq.

There’s a pattern here: raise taxes to pay for wars and economic disasters. That technique worked for 60 years after the income tax started. Then we got the idea that we could pay these extraordinarily large expenses without extra revenue and our top tax rate is lower than it has been since 1928! We also have a deficit so big it’s incomprehensible, and an economy that totters along like a drunk navigating between curb and gutter.

We’re not going to get out of this situation by cutting spending, even if we use a dull axe and turn the whole middle class into a lower class. That strategy would turn us into a Third World country and probably a wholly-owned subsidiary of the People’s Republic of China.

We need to raise taxes. How much? I don’t know, but it’s clear that our government needs a lot more revenue to do what it needs to do. The lower income people among us are teetering on the edge of total financial disaster, and much of the middle class is close to disaster as well. We need to continue the programs that are keeping those people going, and we need to require that those who can afford to pay do so. We must make our Federal Income Tax system fiercely progressive and a whole lot simpler.

The boat is going down, and we’re all going to sink together, so pay up or start swimming.

Unemployment Compensation vs. the Bush Tax Cuts

November 20, 2010 at 11:31 am | Posted in Congress, Economy, Politics | 2 Comments
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Thursday evening the House of Representatives defeated a bill that would have extended unemployment benefits. It would have cost $33 billion next year, but would have added thousands of jobs, pumped $1.90 per budget dollar into the economy, and allowed the unemployed to live with at least some dignity while they’re looking for a job. It would have been a net gain for the economy and a humane thing to do.

Many of those who voted against the bill are also opposed to the Democratic plan to let the tax cuts for the very wealthy expire, while keeping the tax cuts for the middle class. That plan would provide $700 billion in revenue that could be used for aid to states, tax credits for job creation—and unemployment compensation. Everybody, including the very wealthy, would still get a tax break, because the first $250,000 of income would be taxed at the lower rate.

By the way, the argument that letting the tax cuts for the very wealthy expire would hurt small businesses is complete and utter nonsense. Less than 2% of small businesses would be subject to the tax increase. More than 98% would continue to get the middle class tax break we now enjoy.

Also nonsense is the argument that ending the tax cuts for the very wealthy would slow economic growth. Tax cuts lower government revenue and raise government debt; higher government debt leads to higher interest rates, which restrain growth.

According to the Congressional Budget Office (CBO), extending the Bush tax cuts would have little effect on the economy, increasing the GDP by only 10 – 40 cents per dollar. The very rich don’t spend as much of their income as lower income people do, so extending the Bush tax cuts only for the wealthiest 2% would be even less stimulative than extending all of the tax cuts. The CBO said that extending tax cuts would have the least value of the eleven economic stimulus policies it studied. A combination of direct aid to states, tax credits for job creation, and extended unemployment compensation would have three times the effect of extending the Bush tax cuts. Extending unemployment compensation alone would add as many as 600,000 jobs and boost economic output by as much as $1.90 per budget dollar. That’s because people will spend the money right away. For necessities. And for Christmas.

Republicans and Blue Dog Democrats who claim to be deficit hawks say we can’t afford to spend $33 billion to help the unemployed, even though it would add hundreds of thousands of jobs and put nearly $2 per budget dollar into our struggling economy. Nor do they want the government to have the $700 billion in extra revenue that would result from ending the Bush tax cuts for the very rich, even though the revenue could be used reduce the deficit or stimulate the economy.

Please write your elected representatives and tell them you want unemployment compensation extended. And tell them you want to let the Bush tax cuts for the very wealthy expire. That will help the economy and reduce the deficit. Pretty good deal, huh?

It’s Over; the Democrats lost. Why? What’s Next?

November 4, 2010 at 1:48 pm | Posted in Congress, Economy, Obama Administration, Politics, Uncategorized | Leave a comment
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Stop me if you’ve heard this one: “Unprecedented Republican sweep.” OK. Democrats, Progressives, and Liberals lost. The Republicans gained control of the House, and made gains in the Senate.

Why? Let’s look at some numbers. Republican leaders, who surely read the exit polls, say the message is clear: “Repeal healthcare reform!” But according to those exit polls, only 18% say healthcare reform is the top issue. 48% want to repeal it. 47% said keep or expand healthcare. Doesn’t sound like a mandate to me.

House Minority Leader (and presumptive Speaker) John Boehner says the “loud message” from the voters is “Cut spending!” Well, 39% say that cutting the deficit should be Congress’ top priority—but 37% say the government should spend more, to create jobs. 39% to 37%: another non-mandate.

It’s interesting to note that most of the voters in this election cycle were older, blue-collar white men from the South and Midwest. Those areas are not the twinkling stars of our economy, folks, and those voters are suffering.

“It’s the economy, Stupid!” Some voters wrongly blamed the Obama administration for the sullen economy, but more of them blamed Bush II, and even more blamed Wall Street. The last two groups had it right: the economy was sliding into the tank when Obama took office; the TARP package was started under Bush but passed under Obama. (After they helped pass it the Republicans repudiated it.) The Obama administration successfully bailed out the U.S. auto industry (American made cars are selling better than foreign cars and the automakers are healthy again), and bailed out the financial sector as well. (We, the taxpayers are making a profit on the bailouts, by the way.) The Obama administration passed financial regulation and consumer-friendly credit card laws that will help prevent problems in the future. And they did it over the anguished screams of Republicans—and constant Republican obstructionism.

The avalanche of money from the big-money crowd both at home and abroad is another reason the Democrats lost so many seats, but I’ve already commented on that and will do so again elsewhere. In the main it was the poor economy that bashed the Democrats, even though it’s not their fault.

But the Democrats could have done a lot better on November 2. They simply did not get their message across to the voters, or motivate the voters to go to the polls. During the first two years of his administration President Obama should have exercised the charismatic leadership that got him the job. He, Harry Reid, and Nancy Pelosi should have imposed better discipline on the Democrats in the Congress, should have been less anxious to be “bipartisan,” and should have used the bully pulpit to counter Republican arguments.

What’s going to happen in the next two years? I had lunch yesterday with a friend who had the most likely answer I’ve heard: nothing. Nothing will happen. The House will pass legislation that nobody really likes, after endless hours of wrangling, and between endless hours of hearings and endless investigations of Democrats that will turn up virtually nothing. The Senate will sit on any legislation the House manages to pass. If the Congress actually passes something on the Republican agenda (like the repeal of healthcare reform or the privatization of Social Security) Obama will veto it.

Doing nothing puts us on the road to disaster. If you don’t go forward you will go backward. It’s a law of nature as immutable as the law of gravity. The Democrats—from Obama on down—must get their act together. Get your agenda straight, Democrats! Negotiate among yourselves, but come to an agreement—and stick to it! Work together. Don’t bother to try to work with the Republicans: they’ve said time and time again that they won’t compromise. You still have power, Democrats. Use it.

Or the United States of America will end up being a Third World country.

What’s wrong with this picture?

May 2, 2009 at 11:24 am | Posted in Banking, Congress, Economy, Politics | 2 Comments
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A couple buys a house. They make the mortgage payments regularly for years. Then the guy loses his job, or a spouse gets sick and the bill is far beyond what the insurance covers, or some other disaster keeps them from being able to make the payments they signed up for.

The bank forecloses. It kicks them out, and puts the house on the market, where it sits…and sits…and sits.

If it’s a rental property and the owner defaults, the bank kicks out the tenants (even those who have been faithfully paying their rent) and forecloses. The property goes on the market, and sits…and sits…and sits.

The property doesn’t sell because the real estate market sucks. It’s vacant, so vandals show up and do what vandals do. Over time the uncared-for property deteriorates. The property looks bad because it is bad, so the value goes down even more. Other properties in the neighborhood lose value because nobody wants to live next to a vacant, run-down property.

Who loses in this situation? The people who defaulted lose, of course. The renters lose because, even though they’ve paid their rent, they get evicted. The neighbors lose because their property isn’t worth as much as it was and if they need to sell…well, it’s a negative feedback loop.

But do you know who else loses? The bank. They have a property that’s losing value. They’re paying real estate taxes and maybe minimal maintenance, but they can’t sell it because the market keeps dropping. And they’re getting no income from the place. None. Zero. Nada.

Fannie Mae stopped evicting renters from foreclosed properties in February, giving them month-to-month leases until the property is sold. Good idea: not only does it give the renters what they signed up for, but it gives Fannie Mae some income. Any bank could do that, but very few have. They’d rather kick out the tenants and lose money.

After all, they lobbied very hard to defeat a measure introduced in the senate Thursday. It would have allowed bankruptcy judges more flexibility to modify the terms of mortgages, and would have given the banks some income, where they now have…none. Zero. Nada.

Maybe I’m missing something, but it seems to me that it would be a good idea to keep renters in foreclosed properties and to work with people who are having problems paying their mortgages so they can pay something even if they can’t pay as much. That would keep them in their homes while giving the bank some income.

But then I’m not a banker.

Burr scores again

April 17, 2009 at 9:05 am | Posted in Congress, Economy, Politics | Leave a comment

Senator Richard “Deservedly Anonymous” Burr (D-NC) made the national news for the second time in a month yesterday. His first appearance resulted from the fact that he had used his powers as a senator to hold up the nomination of Tammy Duckworth as an Assistant Secretary at the Department of Veterans Affairs. Duckworth is a veteran of the Iraq war, a helicopter pilot who lost both legs in combat, became the head of the Illinois Veterans Affairs agency, and achieved a national reputation for the outstanding way in which she managed the department.

Senator Burr has never revealed why he blocked her nomination. Perhaps he doesn’t like women—or legless women, anyway. Maybe he doesn’t like helicopter pilots. Or maybe he was trying to fit in as a member of the Party of No.

Who knows? But it’s clear that the former lawnmower salesman isn’t really up on the whole banking thing. Speaking to the Henderson County, North Carolina Chamber of Commerce the other day, he talked about the way the economic crisis was unfolded last Fall. “On Friday night I called my wife, ” said Burr, “and I said, ‘Brooke, I am not coming home this weekend. I will call you on Monday. Tonight I want you to go to the ATM machine, and I want you to draw out everything it will let you take. And I want you to go to tomorrow, and I want you to go Sunday.'” (http://www.blueridgenow.com/article/20090414/NEWS/904149995)

Senator, for starters, if you were so worried why didn’t you tell your constituents? Nice of you to worry about your family’s assets, but how about the people who elected you? Don’t they deserve the benefit of your wisdom?

That would be the wisdom that made the Senator start a mini bank run. But as most of us know, bank runs are bad. They cause banks to fail. That’s one of the things that happened during the Great Depression, and one of the reasons we have a federal agency called the Federal Deposit Insurance Corporation, or FDIC. Most people know that their deposits are insured by the FDIC, so that even if your bank fails you’ll get your money.

If Richard Burr were still the sales manager for Carswell Distributing, which sells lawnmowers, it wouldn’t matter so much. But he’s not. He’s a United States Senator. He’s one of the people who makes the laws under which we all live. He may have an impact on the way your kids are educated; on the health care you get (or don’t get, as the case may be); on the economic situation; and even on the foreign policies our country pursues.

If you’d like to tell Senator Burr what you think of his economic policy, here’s a link that will let you email him. http://burr.senate.gov/public/index.cfm?FuseAction=Contact.ContactForm

Let’s Get Together and Be All Right

February 9, 2009 at 10:10 am | Posted in Congress, Economy, Obama Administration, Politics | 2 Comments

It was 1957 or so when I last set foot in Jamaica, so I have no idea how well their slogan is working. But whether it works for the Jamaica Tourist Board or not, it’s a good idea, and we ought to try it here.

We have always had partisan fights in this country: George Washington was the only president who was elected unanimously. That’s fine. But it seems to me that starting with the Clinton administration, the fights became nastier, focused on putting down the opposition party rather than on doing what’s right for the country. The trend continued through the Bush administration, although the Democrats didn’t demonstrate as much ideological hatred as the Republicans had.

Maybe if we had been less intent on giving the other party a black eye we would have anticipated the economic crisis we now face, and would have done something about it before it became a crisis. We’ll never know…but it’s possible. It would be better for all concerned if we were to work together.

That’s a major idea that drove the Obama campaign, and that President Obama has tried his level best to implement. Before he was inaugurated he met with the top conservative columnists and—as they said themselves—not only talked, but listened to what they had to say. Since the inauguration he has met several times with the leaders of both parties. Not just the formal leadership, but with the leading senators and representatives. Over cocktails, over lunch, and around conference tables, President Obama has presented his point of view—and has listened to the points of view of the members of both parties.

But he has done more than listen. The Economic Recovery plan he presented to the Congress had a lot of things suggested by the Republican minority. Nobody expected it to pass exactly as presented, but it was a truly bipartisan bill. Yet not a single Republican member of the House voted for it, and the Senate Republicans are doing everything in their power to slow it down.

Despite all of President Obama’s overtures; despite the fact that the Economic Recovery legislation contains huge chunks suggested by Republicans; despite the fact that Senators on both sides of the aisle negotiated compromises…the Republicans mulishly dig in their heels to prevent what they cannot prevent: passage of the bill.

They cannot prevent passage, but they can delay it, and every day of delay means a worse economy, because the worst thing we can do is to do nothing. We need to get together and pass the bill. As they say in Jamaica, “Let’s get together and be all right.”

Big 3 Bailout: Congress Does It Again

December 12, 2008 at 9:47 pm | Posted in Bush Administration, Congress, Economy, Politics | Leave a comment

The Senate, led by Republicans from Georgia, Alabama, and Tennessee, shot down the bailout plan approved by the house and backed by the White House, cutting off their noses to spite their faces. Apparently they couldn’t see beyond their noses anyway, or they would have seen that the bailout—effectively a bridge loan until the next session—is necessary to prevent an economic disaster.

If the Big 3 (well, the Big 2, since Ford seems to be more or less solvent) don’t have the cash to continue, Chapter 11 bankruptcy is the next best hope. Under Chapter 11, debtor-in-possession financing would mitigate the effects to some extent by providing capital while the automakers reorganize. But with the current credit crisis, who but the government would be able to provide that capital? And without it, they’re headed for the dread (I’m serious) Chapter 7: liquidation.

Imagine what would happen if GM and Chrysler liquidated:

Your GM or Chrysler product wouldn’t be worth what you paid to put air in your tires. The dealership would probably be out of business, and so would the corner auto parts place and tire store.

Hundreds (maybe thousands) of suppliers in every state would see a sudden, disastrous drop in revenue. Many would go bankrupt themselves, leaving the remaining (domestic and foreign) automakers with problems finding parts. Parts prices would go up, and quality would go down. The industries that supply the suppliers would suffer too: like the proverbial pebble in the pond, the ripples would go on and on.

With liquidations and other bankruptcies going on, jobs would be lost. Not just the union jobs held in such contempt by the Republicans, but white collar jobs, management jobs, and even CEO’s jobs would go down the drain. And not just Big 3 jobs: suppliers would either go out of business or cut jobs. So would their suppliers. And the millions upon millions of jobless would stop buying, driving retail stores of all kinds out of business—with a resulting further loss of jobs.

The economy would crash.

Why do the Republican members of the Senate want to block the bailout, if that’s the result? Partly because they haven’t thought it through, and partly because they are philosophically opposed to labor unions, and see an opportunity to destroy the UAW. Partly because they are philosophically opposed to government subsidies for business. They seem to have forgotten that Alabama, Georgia, South Carolina, and Tennessee have subsidized the foreign automakers to the tune of billions of dollars worth of “incentives.” And partly because they represent the states where those foreign automakers have their plants.

They want those non-union automakers to prosper. Fair enough: so do I. But they’re willing to bring down the major industry in the United States to do it. I wouldn’t agree with that even if their ideological stubbornness would work. But it won’t. It will destroy what’s left of our economy unless the Congress or (can you believe I’m saying this?) the White House does something major.

They had better do it soon!

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