Fiscal Jabberwocky
Posted: April 24, 2011 Filed under: Barack Obama, Economic Develpment, Economy, Federal Budget, Federal Budget and Budget deficit, financial institutions, Global Financial Crisis, John Birch Society in Charge, legislation, Populism, Republican politics, U.S. Economy, U.S. Military, U.S. Politics, voodoo economics, We are so F'd | Tags: Barack Obama, David Stockman, Fiscal Crisis, Paul Ryan, voodoo economics 29 Comments
"Beware the Jabberwock, my son! The jaws that bite, the claws that catch!"
It’s not often I get to post pictures of mythical beasts for a few days in a row but here I go again. Plus, I’ve gotten another chance to use one of those wonderful Alice in Wonderland book illustrations. Too bad they’re attached to posts where the perverse wonderland rules. It seems to be a year for fictional monsters in Op-Eds and real ones in congress.
David Stockman, Budget Director for Ronald Reagan, has joined the ranks of Republican advisers calling shenanigans on the Boehner/Tea Party Republicans AND the dithering Obama Dems. He must be very financial and professionally secure. His op-ed in the New York Times draws blood on all sides. He starts out telling President Obama what is what then moves on to hammering that petulant ninny from Wisconsin, Paul Ryan. Go read it if only for the creative use of words like that in the heading above.
On the other side, Representative Ryan fails to recognize that we are not in an era of old-time enterprise capitalism in which the gospel of low tax rates and incentives to create wealth might have had relevance. A quasi-bankrupt nation saddled with rampant casino capitalism on Wall Street and a disemboweled, offshored economy on Main Street requires practical and equitable ways to pay its bills.
Ingratiating himself with the neo-cons, Mr. Ryan has put the $700 billion defense and security budget off limits; and caving to pusillanimous Republican politicians, he also exempts $17 trillion of Social Security and Medicare spending over the next decade. What is left, then, is $7 trillion in baseline spending for Medicaid and the social safety net — to which Mr. Ryan applies a meat cleaver, reducing outlays by $1.5 trillion, or 20 percent.
Trapped between the religion of low taxes and the reality of huge deficits, the Ryan plan appears to be an attack on the poor in order to coddle the rich. To the Democrats’ invitation to class war, the Republicans have seemingly sent an R.S.V.P.
Stockman call the entire situation “fiscal jabberwocky”. Good turn of phrase that. He then moves to skewering the FED and adds Chinese currency pegging into the villain mix. I guess there’s nothing like a good rant when you can get primetime ink. This seems to be an interesting foray into harsh policy critique for economists with a republican bent.
Stockman, like Bruce Barlett and even David Frum are yet more Republicans who are pointing out the current GOP leaders are no more serious about budget reform than the Democrats are. The main difference is the GOP has better slogans and marketing, and slides into full blow demagoguery more easily.
But in terms of actual strategies for intelligently addressing the issue? The most glaring truth is the lack of leadership on both sides of the aisle.
The Barry Ritholtz blog post on Stockman’s op ed does score some points on mentioning the leadership chasm, but, even more telling is the absolute adherence to fairy tales over reality in policy making these days. Is there an economist in the House? Joe Wiesenthal says that Stockman is suffering from “fatalistic populism”. Here’s Stockman’s ending barb to prove that point. It’s also the two sentences that offer up the policy solution.
So the Ryan plan worsens our trillion-dollar structural deficit and the Obama plan amounts to small potatoes, at best. Worse, we are about to descend into class war because the Obama plan picks on the rich when it should be pushing tax increases for all, while the Ryan plan attacks the poor when it should be addressing middle-class entitlements and defense.
I’ve said many times that the Bush tax cuts just need to expire. I’ve also said that since the Reagan years we’ve basically started chumming our economy by jumping into interventions wherever and whenever. Afghanistan and Iraq are two such adventures that need to be de-funded and ended. We also need to reign in the congressional and pentagon weapons fetish which is basically whipped into a frenzy by free spending lobbyists for companies like Halliburton, GE, and Boeing. I can only image what they all want the drone budget to look like. MENA appears to be filled with hives these days.
So many of our fiscal problems would go away if we would just put things back to the where they were 10 years ago. This includes putting Wall Street back in its box instead of letting it go completely gaga with nonstandard, unregulated financial innovations. We can’t afford Obama’s muddling policies that seem like voting present while Republicans go wild with his inability to stand any firm ground. I believe he got elected to undo the Dubya years. Instead, he’s put the Dubya policies on steroids. So, if most of us–that would be voters–are saying let’s take it all back to the Clinton years, what I’d like to know is who are the real conservatives and who are the real radicals?
peej
Carissa
bostonboomer
ecocatwoman
mablue2
peggysue22
quixote
skydancingguestblogger
Mona (aka Wonk the Vote)
Sky Dancing 
Listen, all of this drives me crazy. They make me put my money in a bank, then they charge me for using my money to gamble illegally. Then the government bails them out on my dime.
How hard could this be to fix? Not hard if anybody was serious. I’m not an economist, but still I do have a brain.
1. Nationalize the banks. No gambling from here on out. No more CEOs, no more Wall Street welfare. (And, while we’re at it, throw the banksta gangstas in the slammer.)
2. Nationalize health care: Medicare for all or a single payer system. No more health insurance industry. Buh bye.
3. Get rid of a standing army. When our national security is really at stake, then reinstate the draft – for all, no exceptions, except for physical impairments and true conscientious objectors. This necessarily means immediate withdrawal from all conflicts worldwide, since not a one that I can see poses any threat to our national security. Also, it means getting rid of all subsidies to GE, Boeing, and whatever other companies are getting rich off our warmongering. (Oh, and I’d like to see the CIA dismantled. It’s crooked to the core, operates in total secrecy, and has way too much power.)
[If you’re going to keep the armed forces, then give the soldiers a decent wage and all the health care necessary.]
4. Estate tax. The first $5 million is not taxed. The rest is taxed at 95%.
5. Capital gains. Taxed as ordinary income.
6. Mortgage deduction for the primary residence only.
7. Huge tariffs for businesses that off-shore. Enough so that there is no profit in doing so.
8. Stop privatizing prisons and schools. It’s more costly and less efficient. (Also stop the hiring of mercenaries to fight our wars.)
9. Make jobs available for everyone who wants and needs one. A public works program would be just fine. Everything is falling apart in the country anyway. And reducing unemployment would certainly increase tax revenues. Uh, duh.
Then, we have the ideas I presented the other day:
1. Congressional salaries cannot be raised by Congress whenever the mood strikes. When Social Security gets a cost of living increase, Congress can too.
2. No pensions for Congress. They can use Social Security.
3. No health insurance plans designed especially for Congress. As long as private industry is the only game in town, Congress must pay like the rest of us.
Finally, of course, the biggie: Get rid of 401k plans and any other defined contribution plans. No stock market for any pension plans. All private pension plans must be shifted to defined benefit plans (like Social Security).
I despise every single one of these looters. This stuff is so simple. It just happens not to be their goal, which is to stuff their pockets as quickly and as much as they can. Loathsome pigs.
You ever consider primarying Obama? I’d support you on that platform!
Me too!!
Ditto! Maybe we need to expel the so-called ‘financial experts’ that spew the nonsense and have made things immeasurably worse and have a noneconomist’s approach.
Btw, I’ve listened to Stockman several times, the last on the Eliot Spitzer hour. Even Spitzer was seemingly suprised at how much of Stockman’s viewpoint he agreed with. In fact, he said, “David, you sound like a Democrat [that’s a real Dem as opposed the faux-Dems running around].
But I could easily sign onto mjames’ approach. The key word is ‘serious.’ None of the plans I’ve heard thus far are serious or even plans, per se. Ideology rules the day on the Republican side and lameness and/or incompetence on the do-nothing Dem side.
The missing ingredient is leadership. As is the case with Gitmo, there’s no one in the WH willing to twist arms. Instead a smile and a speech is mistaken for getting the job done.
The result? Nada!
got my vote 🙂
Hear, Hear! Loathsome pigs.
I second Dak’s suggestion – ya got me.
I third it! I love everyone of these points How about taxing all church real estate besides the polt with the actual church? I think if they own a shopping mall, it should be taxed
I’d also leave out non-profit hospitals, schools, shelters, clinics, etc., church-sponsored or not, that provide direct human services. If it’s got any kind of for-profit outfit on it, though, tax it just like any other commercial property.
I’d support you too.
MJames: I just wanted to address a couple of things from being a former federal employee.
1.Congr. salaries are set/raised by the same formula as the rest of the federal employees. However, I know the past few years the Congress has not been taking them. Obama has proposed freezing pay for fed. employees for the next 2-3 years so don’t know if Congress critters will do the same or not.
2. Pensions for Congress nowdays are the same as the rest of the Fed. govt. When Raygun did away with the Civil Service Retirement System and created F.E.R.S. (Federal Employee Retirement System) that put all fed employees, including congress in it. The exception for congress and current fed employees at the time was if you were already under csrs you stayed under it or switched but new hires were automatically placed in FERS. Same for congress. Under FERS you have 3 parts to your retirement: a modest retirement program, TSP-thrift savings plan which is like a 401k and Soc. Security. The bulk of the federal retirement was meant to come from the TSP which the employee contributed to. It had some great rates of return on the various funds during the day but don’t think it’s doing that well now.
Health care: Congress critters are covered by the same plan as fed employees: Federal Employees Health Benefit Program (FEHBP).
http://www.opm.gov/insure/health/
Now granted, the critters have some perks the avg. employee doesn’t like that state of the art clinic at the Capitol. It looks like you could go minor surgery there. And the critters can also use Bethesda Naval Hospital and Walter Reed Army Hospital. I really doubt they have to pay for their admittance there and I doubt those are on the PPO list for most employees either.
See TSP next comment, can’t put 2 links in 1 comment.
Here’s a link for the TSP.
https://www.tsp.gov/index.shtml
Now I don’t know how soon after office the critters can start drawing a “retirement” but if it’s contributory plans, if they are in 4,6 or 8 years it can’t add up to much. These are really designed to be long term plans.
exactly why I left the state employment and went back to federal. With Kasich as governor, I knew the state pension would be dismantled. I also know the Congress was not going to mess with their own retirement which is the same for every federal employee. Congress doesn’t get much in the way of pension unless their long-timers. They also can’t draw on their retirement until they are of retirement age.
TSP is doing fair at the moment depending upon what fund you are in.
The financial industry is already effectively an arm of the government.
Meanwhile, I have an even simpler solution, listed by priority:
1 – End the standing military.
2 – End the war on drugs.
3 – Require that the tax code and all financial regulations be reduced to 1/50th of their current size.
4 – End the practice of agency-issued regulations which have the force of law.
5 – Unilaterally drop all trade barriers, trade subsidies, commodity subsidies, tariffs, etc.
6 – Limit the federal govt to a budget no larger than Jimmy Carter’s last budget in real terms (minus the military.)
That should satisfy everyone. 1 and 2 end the largest sources of violations of our civil liberties, a large source of govt expenditures, etc. 3 and 4 would make it infinitely more difficult for policies to be crafted that serve only to protect insiders and exclude outsiders by virtue of arbitary enforcement and incomprehensibility as much as anything else. 5 would defund almost all special interests, and 6 would end the steady “mission creep” of the federal government and the ever-increasing centralization and bureaucratization of our lives.
I chose Jimmy Carter’s last budget because, compared to the current budget, it would be tiny and because there wasn’t the rampant starvation in the streets or putting of the elderly onto ice floes that some people claim would be caused by any substantial cut.
Financial regulations are necessary because financial markets have a unique role and they are basically a parasite market so they don’t function like normal commodities or services market. They live on information asymmetry which the government can play a role in decreasing. The other thing I can speak to is trade … we don’t have free trade because most countries have all of number 5 … you can’t unilaterally drop all of those unless the other side of the negotiating table does the same. Our lopsided trade with China is the best example of that. Trade negotiations are spelled out in the Constitution as a federal role as is the banking stuff. You’re suggesting a lot of unconstitutional things in those two things.
I became less big on the Constitution after I took a few classes like Philosophy of Law, the American Constitution and Civil Liberties, etc, and began to realize that there’s actually precious little in the Constitution other than the first eight amendments and the fourteenth (since the ninth and tenth are universally ignored) that would prevent the govt from basically putting strings on you and making you dance like a marionette.
And even then, it’s rarely ironclad. Ever read the first amendment? It says “congress shall make NO law…”
Well, it doesn’t really say that as far as the SC is concerned. For them, it basically says “Congress shall make no law [unless a moderately compelling state interest which holds out the possibility of being justified via some imaginable manner in some remotely possible context gives them a reason to.]
Well, thanks, all. There are lots of other ideas. Non-profits like churches should be examined with a fine tooth comb.
It’s really just plain common sense and problem-solving 101 – and actually caring about regular ordinary working people.
Actually, I like that AARP is being investigated. It turned into an insurance sales company years ago.
OT – Breaking news NYT – Classified Military Files Offer New Insights About Guantánamo Detainees
The info seems to come from Wikileaks release of last year. Why is it breaking news now?
Our “war” nightmare goes directly to Bu$hit’s reign – WE here said back in 2008 BO could/would be Bu$h III and we got a seamless continuation from BO. I weep for this country and the rest of the globe as it is planned dictatorship – this is just the beginning. Rule of law, human rights gone; everything could be classified as a terrorist act because we are always under the “fog of war”. They are planning on keeping that fog of war forever.
h/t Rock – a$$hats!
I was looking through all of this for the morning post. I’ve got three links I’m going to use … I’m reading through it right now. It’s horrifying.
They are planning on keeping that fog of war forever.
Indeed. That is one of the things people in the mid-east are protesting… states of “emergency” that last over 50 years …just what they are planning here.
The thing about David Stockman is that as Reagan Budget director, he tried the Republican idea( Laffer curve ) and found out it did not work. He then wrote a book about it with a lot of candid comments.
The Reagan years were hallmarked with massive deficit pending. He said in his book, he could understand Democrats as that was their mantra. How ever it was the Republican Congress which did him in, especially the defense spending. Like Obama, Reagan a lot of rhetoric, but no real fiscal performance. The Stockman book shows that in spades.
Ryan’s plan was written by the Heritage foundation and really shows the ideologue bent. Real Libertarians can discuss both sides of the issue. Washington is pitting one faction against the other with no real plan as presented by Stockman.
We can turn this around yet. but it will require some leadership not provided by anyone in the current government. Obama is another George Bush II, in terms of implementing failed pollicies. Bernanke, Geitner, Bernanke, Shapiro and the Attourney General seme to be incapable of real movement in many fronts.
Clinton showed us it can be done if we really address the problem.
Clinton showed us it can be done if we really address the problem
Yup…and exactly why Hillary was stopped. The looting stops if the problem is addressed.
yepper.:)
Now it will be interesting to see if Obama picks up in the Stockman article. The real problem is that the Banks are the real one’s with contributions and Obama goes where the money comes from.
and so does the Senate and the Congress … money drives policy like it did leading up to the Great Depression
dak: Have you looked at this budget proposal created by the progressive caucus:
http://cpc.grijalva.house.gov/index.cfm?sectionid=70
Just glancing, it looks like it could get the fiscal house in order fairly quickly and a lot fairer than Ryan and his coupon plan for Medicare. I think all of the talking/thinking heads have said that medicare is the biggie that has to be addressed, but there has to be a fairer way to do it than what has been proposed.
I think I saw that when it came out of one of the liberal think tanks. It’s sure contrasts with the cat food commission.