Though this time it was brief and over within a matter of hours, there was nonetheless yet another government shutdown last night. Just three weeks after the first one. All because Congress couldn't get their act together and pass even a very brief stopgap funding bill in time, though they did ultimately come to a longer-term two-year budget deal once the perennial gadfly Rand Paul finally got out of the way.
Like the shutdown in 2013, as well as the one three weeks ago, the blame lies primarily with Republicans. This time around, like last time, it was initially their refusal to negotiate with Democrats about several pressing issues, most notably DACA, in the past several weeks that led to the current impasse, though they did finally come to a deal that Rand Paul held up for hours. Specifically, he vehemently disagreed with the increase in government spending, a point that was really not too far off the mark. Granted with a Republican president this time, the roles of offense and defense have been reversed, but Trump has clearly sent mixed signals and has essentially been engaging in chaos manufacture all this time, though he did favor this deal and sign it into law. Regardless, this Congress and the Trump regime both put the "funk" back in "dysfunctional"!
The new two-year deal, however, is also quite problematic in that it massively increases government spending, especially on "defense" (read: our already over-bloated and over-extended military), on the heels of that massive tax cut mostly for the rich and corpoations, at a time when the national debt already exceeds $20 TRILLION, which is just over 100% of GDP. The deficit alone will thus most likely exceed a trillion next year, if not sooner. There are some good things in the deal (such as disaster relief and healthcare), to be sure, but now is absolutely NOT the time to spend like a bunch of sailors and make the national debt skyrocket even further into the stratosphere. With an unemployment rate around 4%, which is basically "full employment" by today's standards, now is the time to start running budget surpluses, NOT yawning deficits. It's called "countercyclical finance", folks. John Maynard Keynes must be spinning in his grave right now!
That said, the TSAP hereby gives virtually all 535 members of this most dysfunctional Congress in history, especially (but not limited to) Republicans, a vote of "no confidence", and we will take their government shutdown to imply the resignation of such members. We also do the same for Trump as well, obviously. We thus encourage every reader of this blog to sign the following petitions:
Dear Congress: We Accept Your Resignation
No Pay for Congress During Shutdown
No Budget, No Pay
Minimum Wage for Congress
Impeach Donald Trump Now
Let them know that We the People have had ENOUGH of the gridlock, grandstanding, backstabbing, corruption, venality, follies, lies, recklessness, childishness, and otherwise outrageous behavior of Congress, along with the mendacity, recklessness, instability, incompetence, hate, chaos manufacture, grift, graft, and scandals of the orange menace in the White House. If we weren't clear, we'll say it again:
YOU'RE FIRED!!!
So what's the opposite of "progress" again? You guessed it.
Showing posts with label debt. Show all posts
Showing posts with label debt. Show all posts
Friday, February 9, 2018
Wednesday, February 17, 2016
The Ultimate Stimulus Package
Wanna know a secret, everyone? An open secret, yet probably the best-kept one of all? The total amount of global debt, all $233 trillion (!) of it, is 100% man-made. That's right--the very concept of debt is man-made, because money itself is man-made. That includes both private debt as well as the public debt that the austerity hawks won't stop fretting about. Every single penny of it. Money is really nothing more than a simple accounting entry in a computer these days anyway. So make the entry and be done with it already.
Wait, hold on--did he just say what I think he said? You got that damn right, and I didn't stutter either. The single best stimulus package that could possibly be done given the current state of the global economy is--you guessed it--a DEBT JUBILEE of sorts. You know, kinda like the ancient Israelites did every 50 years, where all debts were cancelled and forgiven across the board, period. The only difference today is the scale and the technology involved, and the fact that we use pure fiat currency instead of specie makes it even easier still. So why aren't we doing it? I mean if the world owes $233 trillion, who on Earth do we owe it all to? You guessed it--the BANKSTERS. And the biggest contributor to the gargantuan size of the debt (and the number one cause of inflation as well) is compound interest, also known as USURY. So there are plenty of powerful vested interests who would oppose such a thing, and it's time to take the power back.
We could start by paying off the national debt in one fell swoop via money creation, as is recommended by Richard E. Noble. The Noble Solution, if you will. And contrary to popular opinion, doing so would NOT cause hyperinflation if done properly because while creating money is inflationary, paying off large debts (i.e. "debt-deflation") is inherently anti-inflationary, so the two effects would cancel each other out. And the newly created money would be done interest-free as well. And also give everyone $1000 or $2000 as well. Remember, back in 2011 Bernie Sanders audited the Feral Reserve and found that they gave a whopping $16 trillion secret bailout to the banks in 2009-2010 (and later rose to $29 trillion in total). And with that money, they could have paid off the entire national debt (below $12 trillion then) and still had trillions left over to give to We the People by depositing money in our bank accounts. And the government would have been able to do a much bolder fiscal stimulus package since there would be no worries about the debt. Yes, really. And the "recession" (i.e. depression) would have ended a LOT sooner as a result.
As for private debt, an Act of Congress could conceivably be passed that nullifies all such debt as well, including (but not limited to) student loan debt, mortgage debt, credit card debt, and medical debt. Creditors wouldn't like it, of course, but debtors greatly outnumber creditors, so the net effect would be beneficial overall for society. And repeat every 50 years or so.
Additionally, while we are at it, we should also nationalize the privately-owned FERAL Reserve and make it a truly public FEDERAL Reserve that creates its own money interest-free, as Ellen Brown recommends. We should also put a 10% cap on ALL interest rates period, including private loans and credit cards, and eventually phase-out the very concept of interest altogether.
Also, the TSAP would recommend a Universal Basic Income Guarantee for all, an idea whose time has come and that is in fact LONG overdue. That would solve so many problems indeed.
Now THAT would be a real stimulus package! Not only would it act like a giant B-12 shot for the economy by causing increased economic growth in the short to medium term, but in the long run it would also help us end our addiction to growth for the sake of growth, the ideology of the cancer cell which eventually kills its host.
Remember, as Buckminster Fuller famously noted in the 1970s, there are enough resources on Earth for everyone in the world to live like a millionaire, but such resources are currently being hoarded and wasted by the oligarchs to prop up their massive Ponzi scheme. It's time to end the current obsolete paradigm of scarcity (most of it artificial) in favor of a new paradigm of abundance for all, that we may all enjoy mutual benefit and protection. Yesterday.
(In the meantime, though, there is always Rolling Jubilee.)
Wait, hold on--did he just say what I think he said? You got that damn right, and I didn't stutter either. The single best stimulus package that could possibly be done given the current state of the global economy is--you guessed it--a DEBT JUBILEE of sorts. You know, kinda like the ancient Israelites did every 50 years, where all debts were cancelled and forgiven across the board, period. The only difference today is the scale and the technology involved, and the fact that we use pure fiat currency instead of specie makes it even easier still. So why aren't we doing it? I mean if the world owes $233 trillion, who on Earth do we owe it all to? You guessed it--the BANKSTERS. And the biggest contributor to the gargantuan size of the debt (and the number one cause of inflation as well) is compound interest, also known as USURY. So there are plenty of powerful vested interests who would oppose such a thing, and it's time to take the power back.
We could start by paying off the national debt in one fell swoop via money creation, as is recommended by Richard E. Noble. The Noble Solution, if you will. And contrary to popular opinion, doing so would NOT cause hyperinflation if done properly because while creating money is inflationary, paying off large debts (i.e. "debt-deflation") is inherently anti-inflationary, so the two effects would cancel each other out. And the newly created money would be done interest-free as well. And also give everyone $1000 or $2000 as well. Remember, back in 2011 Bernie Sanders audited the Feral Reserve and found that they gave a whopping $16 trillion secret bailout to the banks in 2009-2010 (and later rose to $29 trillion in total). And with that money, they could have paid off the entire national debt (below $12 trillion then) and still had trillions left over to give to We the People by depositing money in our bank accounts. And the government would have been able to do a much bolder fiscal stimulus package since there would be no worries about the debt. Yes, really. And the "recession" (i.e. depression) would have ended a LOT sooner as a result.
As for private debt, an Act of Congress could conceivably be passed that nullifies all such debt as well, including (but not limited to) student loan debt, mortgage debt, credit card debt, and medical debt. Creditors wouldn't like it, of course, but debtors greatly outnumber creditors, so the net effect would be beneficial overall for society. And repeat every 50 years or so.
Additionally, while we are at it, we should also nationalize the privately-owned FERAL Reserve and make it a truly public FEDERAL Reserve that creates its own money interest-free, as Ellen Brown recommends. We should also put a 10% cap on ALL interest rates period, including private loans and credit cards, and eventually phase-out the very concept of interest altogether.
Also, the TSAP would recommend a Universal Basic Income Guarantee for all, an idea whose time has come and that is in fact LONG overdue. That would solve so many problems indeed.
Now THAT would be a real stimulus package! Not only would it act like a giant B-12 shot for the economy by causing increased economic growth in the short to medium term, but in the long run it would also help us end our addiction to growth for the sake of growth, the ideology of the cancer cell which eventually kills its host.
Remember, as Buckminster Fuller famously noted in the 1970s, there are enough resources on Earth for everyone in the world to live like a millionaire, but such resources are currently being hoarded and wasted by the oligarchs to prop up their massive Ponzi scheme. It's time to end the current obsolete paradigm of scarcity (most of it artificial) in favor of a new paradigm of abundance for all, that we may all enjoy mutual benefit and protection. Yesterday.
(In the meantime, though, there is always Rolling Jubilee.)
Saturday, February 13, 2016
How to Prepare for the Next Big Crash (Part Deux)
As we have noted before, things are really not looking good for the global economy this year. Whether we actually experience another financial crisis on the order of 2008 or even 1929 (or worse) is a matter of debate, but the time to prepare for such a scenario is yesterday. At the very least, another recession is inevitable at this point by 2017 at the latest, since no economic expansion has lasted much more than eight years straight in this country (with the notable exception of 1991-2001 that lasted exactly ten years). Granted, the expansion from July 2009 to the present mostly benefited the rich, and until around 2014 practically entirely benefited the rich, but it was still technically an expansion of the economy even if the growth was largely uneconomic in practice. And expansions can only go on so long before a contraction (i.e. recession or depression) inevitably occurs--it's just a fundamental truth of the business cycle.
One thing is for sure--things are very different this time around at least in terms of monetary policy. At least in 2008, interest rates were well above-zero, and could be cut to stimulate the economy (or, more accurately, stop or slow down the hemorrhaging). When that proved to be futile, then the Feral Reserve and many of the world's other major central banks resorted to "quantitative easing" (i.e. creating money out of thin air and giving it to the banks directly). In late 2014, the USA tapered off and ended its QE policy, and in December 2015 ended its zero interest-rate policy by raising the Fed Funds Rate to 0.25-0.50%. But now, the central banks of the world are starting from zero or close to zero--and some banks including the European Central Bank and the Bank of Japan have even resorted to negative interest rates recently. That means they are effectively charging depositors for the "privilege" of depositing money, and effectively paying borrowers to borrow money, which basically turns the world of finance upside-down. Such negative rate territory is uncharted waters, since until a few years ago no country has ever dared to do such a thing. And there is currently no evidence that such a move will be beneficial, and may in fact turn out to do more harm than good overall.
So monetary policy basically needs a new set of tools and a new game plan to deal with the next crisis, whenever it occurs. The Feral Reserve and the other central banks of the world are basically still using an outdated playbook. In the near-term, two things need to change yesterday. First of all, they need to abandon interest-rate targets altogether for the time being, and instead focus on targeting the growth of the overall economy. Like Paul Volcker did in 1979-1982, but done in reverse since the "inflation dragon" is not the problem this time. Secondly, implement Quantitiative Easing for We the People in general (as opposed to the banks, which only benefits the ultra-rich) by injecting newly-created money into everyone's bank accounts. Granted, the latter measure would probably require an Act of Congress to allow it to occur legally, but as the Feral Reserve is currently debating the legality of negative interest rates in the future, I'm sure they could find some sort of a loophole to allow it in an emergency such as a massive financial crisis. And of course fiscal stimulus would likely be necessary as well, in additional to much needed reforms to regulate Wall Street and the big banks (a law that rhymes with "brass seagull" comes to mind, as well as a financial transactions tax and better regulation of the shadow banking system), but those two changes to monetary policy would go a long way towards preventing the next recession/crisis from turning into another 2008 or worse. And of course the silly idea of negative interest rates needs to be abandoned as well.
But let's be brutally honest. What we are really witnessing these days is the death of an obsolete system, one that has been kept on life support for many years now. And eventually we will have to pull the plug on it, sooner or later. It's just a matter of time.
One thing is for sure--things are very different this time around at least in terms of monetary policy. At least in 2008, interest rates were well above-zero, and could be cut to stimulate the economy (or, more accurately, stop or slow down the hemorrhaging). When that proved to be futile, then the Feral Reserve and many of the world's other major central banks resorted to "quantitative easing" (i.e. creating money out of thin air and giving it to the banks directly). In late 2014, the USA tapered off and ended its QE policy, and in December 2015 ended its zero interest-rate policy by raising the Fed Funds Rate to 0.25-0.50%. But now, the central banks of the world are starting from zero or close to zero--and some banks including the European Central Bank and the Bank of Japan have even resorted to negative interest rates recently. That means they are effectively charging depositors for the "privilege" of depositing money, and effectively paying borrowers to borrow money, which basically turns the world of finance upside-down. Such negative rate territory is uncharted waters, since until a few years ago no country has ever dared to do such a thing. And there is currently no evidence that such a move will be beneficial, and may in fact turn out to do more harm than good overall.
So monetary policy basically needs a new set of tools and a new game plan to deal with the next crisis, whenever it occurs. The Feral Reserve and the other central banks of the world are basically still using an outdated playbook. In the near-term, two things need to change yesterday. First of all, they need to abandon interest-rate targets altogether for the time being, and instead focus on targeting the growth of the overall economy. Like Paul Volcker did in 1979-1982, but done in reverse since the "inflation dragon" is not the problem this time. Secondly, implement Quantitiative Easing for We the People in general (as opposed to the banks, which only benefits the ultra-rich) by injecting newly-created money into everyone's bank accounts. Granted, the latter measure would probably require an Act of Congress to allow it to occur legally, but as the Feral Reserve is currently debating the legality of negative interest rates in the future, I'm sure they could find some sort of a loophole to allow it in an emergency such as a massive financial crisis. And of course fiscal stimulus would likely be necessary as well, in additional to much needed reforms to regulate Wall Street and the big banks (a law that rhymes with "brass seagull" comes to mind, as well as a financial transactions tax and better regulation of the shadow banking system), but those two changes to monetary policy would go a long way towards preventing the next recession/crisis from turning into another 2008 or worse. And of course the silly idea of negative interest rates needs to be abandoned as well.
But let's be brutally honest. What we are really witnessing these days is the death of an obsolete system, one that has been kept on life support for many years now. And eventually we will have to pull the plug on it, sooner or later. It's just a matter of time.
Thursday, October 17, 2013
Default Averted, For Now
Finally, after 16 days of being shut down, the federal government has officially reopened on October 17. At the 11th hour, Congress finally passed a bipartisan deal to fund the government through January 15, 2014 and suspend the debt ceiling enough to get us through February 7. Thus, the risk of default is nil for the next few months, until the next inevitable battle on the horizon of course. The President stood his ground, and no significant changes were made to Obamacare as Bonehead and most Republicans finally backed down for now. Our economy, and indeed the world's economy, has been saved from the brink of catastrophe. So, cue the music, Maestro:
HALLELUJAH! HALLELUJAH! HALLELUJAH, HALL.......err, wait a minute. Seriously? There is really nothing to be rejoicing about, since true progressives gained absolutely nothing from the deal, the sequester cuts are still in place, and the crazy fanatics who held our government hostage and nearly drove us over the debt cliff get to walk away unpunished, salivating like Pavlov's dog at the next chance to do it all over again. The antics of the past few weeks have already done significant damage to our economy, and made America look like a dysfunctional laughingstock around the world. We must not tolerate this kind of outrageous and unacceptable behavior from any of our elected representatives, ever. Period. So, one more time, we will say it again to them loud and clear:
"YOU'RE FIRED!!!"
Now pack your bags and get the hell out before we primary each and every one of you. We the People have spoken. Don't let the door hit you on the way out.
HALLELUJAH! HALLELUJAH! HALLELUJAH, HALL.......err, wait a minute. Seriously? There is really nothing to be rejoicing about, since true progressives gained absolutely nothing from the deal, the sequester cuts are still in place, and the crazy fanatics who held our government hostage and nearly drove us over the debt cliff get to walk away unpunished, salivating like Pavlov's dog at the next chance to do it all over again. The antics of the past few weeks have already done significant damage to our economy, and made America look like a dysfunctional laughingstock around the world. We must not tolerate this kind of outrageous and unacceptable behavior from any of our elected representatives, ever. Period. So, one more time, we will say it again to them loud and clear:
"YOU'RE FIRED!!!"
Now pack your bags and get the hell out before we primary each and every one of you. We the People have spoken. Don't let the door hit you on the way out.
Monday, May 7, 2012
The Only Way to Defeat the Debt
Our national debt is approaching $16 TRILLION dollars, and our deficit
remains well over a trillion, meaning that the debt is still growing rapidly.
It is now mathematically impossible to pay off the national debt by
conventional (fiscal) means--even the Donald Trump Tax would raise "only" about a
trillion or so based on our back-of-the-envelope calculations. So what should
we do?
Obviously, if we find ourselves in a hole (especially one as deep as this), the first thing we should do is stop digging. That means no more deficit spending for the foreseeable future, period. But unfortunately, that's a lot easier said than done. Taxes will have to go up and spending will have to go down--dramatically. There is really no way around that.
However there is a relatively painless (albeit unconventional) method of paying off the debt. Not just this year's deficit, but all of the cumulative $16 trillion of the debt. It's called the Noble Solution (named after its creator, Richard E. Noble) and does not involve any significant tax hikes or spending cuts. So what is it? It's something we never would have advocated in the past: printing (electronically creating) money out of thin air to pay it off all at once. Alas, the genie is out of the bottle now, as the Feral Reserve has been creating money out of thin air for decades (including a recent whopping $16 trillion secret bailout of the banks) so we might as well put this practice to productive use. Call it QE4 if you'd like. Money is really nothing more than an accounting entry nowadays, so let's make the entry and be done with it.
But wouldn't that lead to hyperinflation? Not if it is properly done with due diligence. Noble points out that while creating money is undoubtedly inflationary, using it to pay off the debt (which is in Treasury bonds and is thus already part of the money supply) would be deflationary in that it would shrink the money supply by an equal amount. Thus, the two effects would cancel each other out, as paper (electronic data) would be exchanged for paper (data). Of course, we would have to bypass the Feral Reserve to avoid creating more debt in the process. Or better yet, abolish the Feral Reserve entirely and return the power of money creation to its rightful owners, our elected representatives in Congress. America would then be free and clear for the first time in history since Thomas Jefferson.
Of course, while doing it once may not be harmful, doing it regularly can be. To make sure we never have to do this again, we must make sure the debt never, ever, reaches such stratospheric levels again, period. In addition to abolishing the Fed, fiscal policy must be tightened after the Noble Solution is implemented and the debt is paid off. We have already outlined in previous posts what must be done as far as taxes and spending are concerned. We will need to have a Balanced Budget Amendment added to the Constitution as well, with deficit spending permitted only in severe fiscal emergencies. Fortunately, the latest news suggests that the deficit may already be shrinking as we speak as the economy improves (albeit very slowly). After all, a significant portion of the fiscal gap is due to reduced revenues resulting from the Second Great Depression (because that's what it really is) as well as the several fiscal stimulus measures made necessary by the crisis. (Nearly all of the rest can be chalked up to the wars and the Bush-Obama tax cuts, as well as various loopholes and tax-shelters.)
But the bottom line is that the debt must be defeated, and soon. We simply cannot afford to continue kicking this can further down the road. Otherwise we may very well go the way of the Romans.
Obviously, if we find ourselves in a hole (especially one as deep as this), the first thing we should do is stop digging. That means no more deficit spending for the foreseeable future, period. But unfortunately, that's a lot easier said than done. Taxes will have to go up and spending will have to go down--dramatically. There is really no way around that.
However there is a relatively painless (albeit unconventional) method of paying off the debt. Not just this year's deficit, but all of the cumulative $16 trillion of the debt. It's called the Noble Solution (named after its creator, Richard E. Noble) and does not involve any significant tax hikes or spending cuts. So what is it? It's something we never would have advocated in the past: printing (electronically creating) money out of thin air to pay it off all at once. Alas, the genie is out of the bottle now, as the Feral Reserve has been creating money out of thin air for decades (including a recent whopping $16 trillion secret bailout of the banks) so we might as well put this practice to productive use. Call it QE4 if you'd like. Money is really nothing more than an accounting entry nowadays, so let's make the entry and be done with it.
But wouldn't that lead to hyperinflation? Not if it is properly done with due diligence. Noble points out that while creating money is undoubtedly inflationary, using it to pay off the debt (which is in Treasury bonds and is thus already part of the money supply) would be deflationary in that it would shrink the money supply by an equal amount. Thus, the two effects would cancel each other out, as paper (electronic data) would be exchanged for paper (data). Of course, we would have to bypass the Feral Reserve to avoid creating more debt in the process. Or better yet, abolish the Feral Reserve entirely and return the power of money creation to its rightful owners, our elected representatives in Congress. America would then be free and clear for the first time in history since Thomas Jefferson.
Of course, while doing it once may not be harmful, doing it regularly can be. To make sure we never have to do this again, we must make sure the debt never, ever, reaches such stratospheric levels again, period. In addition to abolishing the Fed, fiscal policy must be tightened after the Noble Solution is implemented and the debt is paid off. We have already outlined in previous posts what must be done as far as taxes and spending are concerned. We will need to have a Balanced Budget Amendment added to the Constitution as well, with deficit spending permitted only in severe fiscal emergencies. Fortunately, the latest news suggests that the deficit may already be shrinking as we speak as the economy improves (albeit very slowly). After all, a significant portion of the fiscal gap is due to reduced revenues resulting from the Second Great Depression (because that's what it really is) as well as the several fiscal stimulus measures made necessary by the crisis. (Nearly all of the rest can be chalked up to the wars and the Bush-Obama tax cuts, as well as various loopholes and tax-shelters.)
But the bottom line is that the debt must be defeated, and soon. We simply cannot afford to continue kicking this can further down the road. Otherwise we may very well go the way of the Romans.
Wednesday, August 3, 2011
Debt Ceiling Disaster Averted--For Now
On August 2, Congress approved a deal that raises the debt ceiling enough to cover us through 2012 while appointing a bipartisan commission to deal with reducing the deficit in the long run. However, there is currently no real solution on the table. Real solutions would include jacking up taxes on the rich (like they were before Reagan took over), closing corporate tax loopholes, ending the current wasteful wars, cutting our bloated "defense" budget in half, and actually fixing entitlement programs rather than gutting them (like the Republicans) or ignoring the problems (like far too many Democrats these days). The TSAP has repeatedly noted all the ways to fix our budget and economy, but it looks like our advice will not be heeded as long as Americans keep voting for spineless Democrats and crazy Republicans. Wimps to the left of me, crazies to the right--stuck in the middle with you, to paraphrase a popular 1970s song.
Friday, July 8, 2011
The Clock is Still Ticking
The President and Congress still have not agreed on the issue of the debt ceiling. As we have noted before, failure to raise the ceiling by August 2 will all but guarantee a default, which will be catastrophic. And the Republicans know it, that's why they would never dream of doing such a thing during a Republican presidency--it's painfully obvious who the American people will blame if such a crisis ever did unfold, and it's not Congress that will take the heat.
To John Boehner and the Republicans: STOP PLAYING CHICKEN WITH THE ECONOMY RIGHT NOW! Why are you so afraid of you and your uber-rich buddies paying somewhat higher taxes that you would be willing to either a) risk default on the debt, which hurts all Americans, or b) dismantle the social safety net, which hurts the most vulnerable Americans? And God forbid we stop waging pointless wars of aggression across the globe, of course.
To President Obama: If the Republicans want to play hardball, do your Constitutional duty and ignore the ceiling for the time being in order to prevent a default. They are throwing a tantrum at the very idea of having to pay their fair share of taxes--don't give into their demands. You have already made more than enough concessions to them as it is, and when you give them an inch, they take a mile. It's up to YOU to be the adult among the overgrown children we so foolishly elected in 2010. Oh yeah, and by the way, END ALL OF THE WARS by December. All of them. That should save a fortune.
To John Boehner and the Republicans: STOP PLAYING CHICKEN WITH THE ECONOMY RIGHT NOW! Why are you so afraid of you and your uber-rich buddies paying somewhat higher taxes that you would be willing to either a) risk default on the debt, which hurts all Americans, or b) dismantle the social safety net, which hurts the most vulnerable Americans? And God forbid we stop waging pointless wars of aggression across the globe, of course.
To President Obama: If the Republicans want to play hardball, do your Constitutional duty and ignore the ceiling for the time being in order to prevent a default. They are throwing a tantrum at the very idea of having to pay their fair share of taxes--don't give into their demands. You have already made more than enough concessions to them as it is, and when you give them an inch, they take a mile. It's up to YOU to be the adult among the overgrown children we so foolishly elected in 2010. Oh yeah, and by the way, END ALL OF THE WARS by December. All of them. That should save a fortune.
Wednesday, June 1, 2011
The Clock is Ticking
Just recently, the latest attempt to raise the national debt ceiling failed. We have already reached the debt ceiling of $14.3 trillion last month, and there is fear that if we don't raise it by August 2, the nation will default, which would be catastrophic to our already weak economy. The reason is that most of the money in the budget has already been committed when the budget was approved in March, which unfortunately requires more borrowing just to pay the interest on the debt, let alone everything else in the budget. The government can trim a little here and there with accounting tricks for now to prevent a default, but that can only last for so long.
We at the TSAP were against raising the debt ceiling back in January, but that was before the budget was passed and the money already committed. Now, however, we denounce Boehner and the Republicans' asinine and ideological attempt at playing chicken with our nation's finances, for very obvious reasons. Now that both parties have already ordered their dinner and ate most of it, one party decides to dine and dash--only in this case it's not just a restaurant but the entire nation. And the penalty would be far worse than a mere few hours of washing dishes.
The only way out of this, ironically, is to raise the ceiling just enough to get through the rest of the fiscal year (e.g. to about $15 trillion), but tie it to significant tax hikes and spending cuts. These would include:
Tax Hikes
We at the TSAP were against raising the debt ceiling back in January, but that was before the budget was passed and the money already committed. Now, however, we denounce Boehner and the Republicans' asinine and ideological attempt at playing chicken with our nation's finances, for very obvious reasons. Now that both parties have already ordered their dinner and ate most of it, one party decides to dine and dash--only in this case it's not just a restaurant but the entire nation. And the penalty would be far worse than a mere few hours of washing dishes.
The only way out of this, ironically, is to raise the ceiling just enough to get through the rest of the fiscal year (e.g. to about $15 trillion), but tie it to significant tax hikes and spending cuts. These would include:
Tax Hikes
- End the Bush tax cuts immediately for the top two brackets, and the rest of them effective one or two years later.
- Create a new 50% bracket at $1 million and up immediately, and possibly even a 60% or greater one at $10 million.
- Close ALL loopholes in the tax code that benefit those with high incomes.
- No more tax breaks or loopholes for large corporations--absolutely NONE.
- Remove the tax cap on Social Security immediately, so everyone pays their fair share.
- Pass a financial transactions tax of 0.25%.
- Raise the alcohol taxes and other excise taxes significantly.
- Raise the gas tax by a penny a week until it is $1.00 greater than it is now.
- Consider significant tariffs on imports from countries where workers are paid next to nothing.
- End the wars in Iraq and Afghanistan, with a complete withdrawal by December 31, 2011 (Iraq) and no later than July 1, 2012 (Afghanistan).
- Get out of Libya as soon as Gaddafi is captured or killed, if not sooner.
- Cut the defense budget (including the hidden parts) in half within a year, and close all unnecessary overseas military bases.
- No more subsidies to large corporations or Big Agro--NONE.
Monday, January 24, 2011
What to Do about the Debt?
The national debt (currently $14 trillion and growing) is about to reach its ceiling of $14.3 trillion, probably by March 31 of this year. Some, like the President, say we must raise the debt ceiling or risk defaulting, the latter of which would be catastrophic. Others, like many Republicans, say that we should not raise the ceiling, thus forcing the government to cut spending. Still others believe America is doomed either way. So what's the truth?
Well, first of all, not raising the ceiling is not the same thing as defaulting, and such a choice is a false dichotomy. Not raising the ceiling simply means we can't increase our rate of borrowing. If we hit the ceiling on March 31, the government will still have several more months before we actually run the risk of default. The Feral Reserve has many weapons in its arsenal to stave off a crisis temporarily. That will buy some time for further debate in Congress on what to ultimately do. However, we must never default--it is simply not an option. On the other hand, our current practice of continually increasing the debt is unsustainable.
It is interesting how the Republicans have suddenly become so hawkish about the debt, considering how they have been running up massive deficits since Reagan, and thus how most of the debt (including interest, which we simply borrow even more to pay) can be traced to Reagan and both Bushes. You know, the same borrow-and-spend "conservatives" who cut taxes on the rich while increasing "defense" (read: war) spending as well as general government waste. And today's Republicans are the same ones who held unemployment benefits hostage to force the Democrats to extend the tax cuts on the rich, further worsening our debt problem. The current brinksmanship on the debt ceiling is most likely just yet another way to extract more concessions out of the Democrats. The Republicans most likely will accept a ceiling increase in exchange for what they want.
We at the TSAP believe that the best course of action is to not raise the ceiling, and force Congress to raise taxes and cut spending. But it has to be done right. The best way to raise taxes is to end the Bush tax cuts for the top 2% of the population, create a new 50% bracket at $1 million, equalize the dividend tax with the tax on regular income, and close as many tax loopholes as possible ASAP. (No, that will not destroy jobs--we have already debunked that claim.) When the economy improves, taxes on the lower 98% should also be restored to their 2000 levels, and/or be replaced with a VAT. Tariffs on foreign goods need to be raised as well, which will also protect American jobs. Other taxes that should be raised are the gas tax, the alcohol taxes, and the tobacco taxes--and perhaps new excise taxes should be created on other vices. As for spending, the best way to cut that is to cut defense spending by half over the next 5-10 years, close unnecessary foreign bases, accelerate withdrawal from Iraq, and completely pull out of Afghanistan no later than 2012. Waste should be eliminated, the line-item veto should be restored, and the Read the Bills Act must be passed. No more bailouts, ever. In the longer term, Social Security and Medicare do indeed need to be reformed, but not jettisoned or privatized like in the Republican fantasy world. And raiding the Social Security Trust Fund should be banned entirely.
So if the Republicans want to not raise the ceiling, fine. But the Democrats should not concede, but rather call their bluff and demand that the Republicans agree to higher taxes on the wealthy and cuts to "defense" spending and Republican waste, or else the ceiling will be raised to $15 trillion (but no higher). Turnabout is fair play--after all, the Republicans were the ones who demanded the tax cut extensions by holding unemployment benefits hostage.
Failing all that, if the ceiling is eventually raised, any such raise should be conditional on passage of a balanced-budget amendment to the Constitution. You know, the very same amendment that Bush II claimed to support when he first ran for President in 2000. In other words, from 2012 onward, no more deficits, only surpluses. Then maybe we can actually start paying down our ludicrously high national debt.
Well, first of all, not raising the ceiling is not the same thing as defaulting, and such a choice is a false dichotomy. Not raising the ceiling simply means we can't increase our rate of borrowing. If we hit the ceiling on March 31, the government will still have several more months before we actually run the risk of default. The Feral Reserve has many weapons in its arsenal to stave off a crisis temporarily. That will buy some time for further debate in Congress on what to ultimately do. However, we must never default--it is simply not an option. On the other hand, our current practice of continually increasing the debt is unsustainable.
It is interesting how the Republicans have suddenly become so hawkish about the debt, considering how they have been running up massive deficits since Reagan, and thus how most of the debt (including interest, which we simply borrow even more to pay) can be traced to Reagan and both Bushes. You know, the same borrow-and-spend "conservatives" who cut taxes on the rich while increasing "defense" (read: war) spending as well as general government waste. And today's Republicans are the same ones who held unemployment benefits hostage to force the Democrats to extend the tax cuts on the rich, further worsening our debt problem. The current brinksmanship on the debt ceiling is most likely just yet another way to extract more concessions out of the Democrats. The Republicans most likely will accept a ceiling increase in exchange for what they want.
We at the TSAP believe that the best course of action is to not raise the ceiling, and force Congress to raise taxes and cut spending. But it has to be done right. The best way to raise taxes is to end the Bush tax cuts for the top 2% of the population, create a new 50% bracket at $1 million, equalize the dividend tax with the tax on regular income, and close as many tax loopholes as possible ASAP. (No, that will not destroy jobs--we have already debunked that claim.) When the economy improves, taxes on the lower 98% should also be restored to their 2000 levels, and/or be replaced with a VAT. Tariffs on foreign goods need to be raised as well, which will also protect American jobs. Other taxes that should be raised are the gas tax, the alcohol taxes, and the tobacco taxes--and perhaps new excise taxes should be created on other vices. As for spending, the best way to cut that is to cut defense spending by half over the next 5-10 years, close unnecessary foreign bases, accelerate withdrawal from Iraq, and completely pull out of Afghanistan no later than 2012. Waste should be eliminated, the line-item veto should be restored, and the Read the Bills Act must be passed. No more bailouts, ever. In the longer term, Social Security and Medicare do indeed need to be reformed, but not jettisoned or privatized like in the Republican fantasy world. And raiding the Social Security Trust Fund should be banned entirely.
So if the Republicans want to not raise the ceiling, fine. But the Democrats should not concede, but rather call their bluff and demand that the Republicans agree to higher taxes on the wealthy and cuts to "defense" spending and Republican waste, or else the ceiling will be raised to $15 trillion (but no higher). Turnabout is fair play--after all, the Republicans were the ones who demanded the tax cut extensions by holding unemployment benefits hostage.
Failing all that, if the ceiling is eventually raised, any such raise should be conditional on passage of a balanced-budget amendment to the Constitution. You know, the very same amendment that Bush II claimed to support when he first ran for President in 2000. In other words, from 2012 onward, no more deficits, only surpluses. Then maybe we can actually start paying down our ludicrously high national debt.
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