The Right, The Left, The Radical and the Conservative

I have said time and again that the lack of response to my efforts at an analysis of events causes me to have less and less enthusiasm for this endeavor.

However, I have also indicated that where I have a private exchange that I think might interest my readers, the work already having been done, I will continue to post and distribute.

In this case I received a succinct e-mail from Janet Wood, an American citizen residing in Toronto, Canada.

She wrote:

This was sent to me by a very Conservative friend.  It's succinct and I thought you might find it interesting.

For the article, which she sent, see here. The reader must read the article to comprehend the rest of the exchange,

My response was:

That is rather curious. Why would a conservative friend send this to you? It represents what is generally associated with a liberal viewpoint. Though I have a problem with the terminology that is in vogue. Increasingly, the Right wing view seems rather radical (not conservative) and the Left (don’t touch Social Security or Medicare) rather conservative.

But the article is right on the money as far as I am concerned. Here again I find the political debate often strained. The Right wants taxes “flatter." The liberal wing wants taxes on the wealthiest increased to generate more revenue. The Right says we generate more revenue by growing the economy. The liberal wing rarely responds to this. But of course growing the economy is the best way forward and we should all agree on this. The question is what is the best way to grow the economy? And the answer should be obvious. With 70% of the economy being generated by consumers, putting more money into the hands of consumers (i.e. those who will spend it, and those at the top who already have everything they want. will not) is the best way forward, provided the there is slack in the means of production, which there is.

The article points out that money in the producers is not being spent to increase production but rather to inflate the value of the assets. But increasing the productive capacity, without increasing demand can only bring deflation; just as demand outstripping production capacity will create inflation. Balance is all.

At this time consumers whether in the US or in Germany or for that matter in China are not spending enough and so these economies depend on export, but we can’t all be exporting economies and the US isn’t even successful in this area, since we have an unfavorable trade balance.

There is no economic justification for the tax system to favor capital over labor, particularly at a time where there is excess capital and not enough demand. We love to hold forth the Protestant work ethic, but then discourage work by this tilting of the tax code in favor of capital. But the tax code is even worse than most appreciate. Not only are Capital Gains taxes lower than earned income (labor) but we favor capital in myriad of ways that are not often even discussed, e.g. when assets with great gains are sold, a tax, albeit a relatively small one, is assessed, but if held and passed on by way of inheritance, the capital gains are forgiven and the beneficiary gets a new tax basis, so that if the beneficiary sells there is no tax (none) on the gains. This for some reason is never even discussed.

In the long run our economy will only thrive if we invest, and right now, as the article points out there is little investment in the private sector, and even less, in the public. If future generations are to thrive, and we keep hearing of generational theft, we must create the infrastructure that will give them prosperity. That means dealing with the greatest threat to their future in global warming, and building the equivalent of the railroads of the past. We need larger ports. We need better transportation. Our bridges are falling down and our highways are strangled with congestion. NJ Governor Christie in canceling the NY-NJ rail tunnel undermined a vital project for regional and national prosperity, and even though this was first proposed by the Giuliani Administration, got very little push-back.

Above all our future depends on the education of our children. We neglect that at our peril.

P.S. And Canada thinks only of the tar sands.

Which prompted this insightful reply:

Thanks for your response.  It is always a pleasure to get you going because you always have something "meaty" to say!

I am hoping they sent me this because they are experiencing a change of view, if not heart.  These two voted for our notorious Mayor Ford because he was going to control spending and reduce taxes!  The fact that he was unfit was visible then if one cared to see.

And it's not just the tar sands; it's fracking as well.  I am very worried about water and the cavalier way they contaminate it.  Water is a quiet worldwide issue--Ethiopia damming the Nile, the Kurd territory having the water and Tibet as well--no wonder China is going to keep it.

I have to say I find the world a much scarier place then I used to.

Prompting this extensive expression of my views:

I agree with you that water is the canary in the coalmine.

It is indeed a worldwide issue and future wars will not be fought over oil but over water. This along with climate change will bring about the greatest migration in the world’s history, with huge causalities from people drowning, and from bullets, as countries try to keep hordes off refugees from overrunning their borders. I dread to think about the future. I will not live to see the cataclysm, but I fear that my daughter and certainly my granddaughter will.

But I have to disagree with you about fracking. When considering whether something needs to be stopped, consideration of alternatives must always be evaluated. Let us be frank. The US, Canada, China, indeed the world, need an abundant energy supply. Nothing will change that. The only question is from what source. Ideally, it is renewable clean energy, from the sun, wind, and even tides. Maybe some day atomic fusion, (not fission) but not for a long time. 

But these are all still very inadequate and very expensive. What happens in the meantime?

Allow me to quote from NPR:

"Despite a slowdown in U.S. consumption, coal is poised to replace oil as the world's top energy source — possibly in the next five years, according to the International Energy Agency. The rise will be driven almost entirely by new energy demands in China and India, the IEA says. 

"'This report sees that trend continuing. In fact, the world will burn around 1.2 billion more tonnes of coal per year by 2017 compared to today – equivalent to the current coal consumption of Russia and the United States combined."   "Together, China and India will account for more than 90 percent of the rise in demand for coal over the next five years, according to the IEA. "The agency predicts that coal's growth trend will hold everywhere in the world except the United States, where it says the wide availability of cheap natural gas brought a decline in coal demand — a situation also summed up in a recent post by NPR's State Impact team."

As can be seen from the above the problem is coal. Anything that replaces coal is a plus. Oil is better than coal; natural gas is better than oil.

Fracking has created a huge windfall for the US’s energy supply. It has the potential to free us from Mid-East oil and even for the US to become a net-energy exporter. That is good for our economy and for the world’s economies, as well on the amount of CO2 that goes into the atmosphere.

Yes, it has the potential to poison our water supplies and that makes it very dangerous.

But fortunately proper regulation can obviate most of that. I quote:

"On Monday, Governor Pat Quinn signed legislation to regulate fracking in the state of Illinois. Legislation overwhelmingly passed both the Illinois Senate (52-3) and the House (108-9) last month. The law is now seen as the nation’s strictest for oil and gas drilling.    

 "The Chicago Tribune writes that the legislation will force oil and gas companies to register with the Department of Natural Resources. In the permitting process they must detail:  

• how the well will be drilled 

• the amount of fluid used and at what pressure 

• how it will withdraw water, contain waste, and disclose the chemicals used 

  

"Additionally, a 30-day public comment period begins seven days after the Department of Natural Resources receives a permit application; and people who suspect fracking has polluted their water supply can request an investigation forcing the Department of Natural Resources to investigate within 30 days and reach a determination within 180 days.”

Other states are in the process of adopting regulations.

The answer in my view is proper regulation The alternatives to fracking are far worse than fracking, and if we look at fracking’ downside, without evaluating what happens without it, we follow a destructive path.

And then added:

Since writing the e-mail below I came across an interesting article in the New York Times.

This is an area of pollution and misery that cannot be overlooked.

I particularly call your attention to the following paragraph:

"The developed world needs a smarter approach toward cleaner fuels. The United States has been showing the way. Hydraulic fracturing has produced an abundance of inexpensive natural gas, leading to a shift away from coal in electricity production. Because burning natural gas emits half the carbon dioxide of coal, this technology has helped the United States reduce carbon dioxide emissions to the lowest level since the mid-1990s, even as emissions rise globally. We need to export this technology and help other nations exploit it.”

We do not live in a world where the ideal is the practical.

 Comments, questions, or corrections, are welcome and will be responded to, but will only be published at my discretion.

The Silence is Deafening

It has been more than a month since I posted and distributed my commentary "Racism Rears Its Ugly Head In The SCOTUS/The Sequester" where I suggested that the focus on preventing any changes to Social Security and Medicare might just be “the concerns of a predominately white middle class, who are more concerned with their entitlements, than with the effects on the most vulnerable.”

I concluded with “It is time to ask that question!!!”

I had hoped that in posing this challenging question, I would start a discussion of our priorities, but as my title exclaims "The Silence is Deafening."

I urge my readers (and I don’t know how many of the approximately 80 who indicated a desire to remain on my distribution list actually read my posts) to read or re-read my post: "Racism Rears Its Ugly Head In The SCOTUS/The Sequester" (click on the title) or the relevant portion, which you can find here and to express their views.

It is instructive that where at one time a main theme of Presidential campaigns was a concern for the poor, that is no longer a subject addressed. The poor vote in very small numbers. The middle class votes in large numbers. But that is precisely why the middle class, or at least the Liberal segment thereof, must represent the poor.

How much we should be concerned with the poor in our midst is illustrated in an article in the New Yorker entitled "Our Invisible Poor" and commented on in Smithsonian Magazine under the title "How a New Yorker Article Launched the First Shot in the War Against Poverty."

At the same time the New York Times reports in an article entitled "Growing Number Are Near Poverty" that in New York City "nearly half of the population (has fallen) into the ranks of the poor or near poor in 2011" but the problem gets scant attention as the Times Public Editor points out in a article about Times Coverage. See here. 

In the meantime the emphasis on raising the federal minimum wage is getting scant attention, even though the Campaign for America’s Future reports: “4.4 million Americans currently earn the federal minimum wage of $7.25, or less. 284,000 of them are college graduates. Worse, the minimum wage has not kept up with the cost of living. After adjusting for inflation, the minimum wage is lower than it was in 1956." 

But it seems that the only thing that matters is preventing any change to entitlements.

It is not as though we were protecting the original conception of Social Security. The number of times the Social Security Act has been amended is legion as can be seen from the listing shown here and here. Benefits paid in 1940 totaled $35 million. In 2009, $650 billion was paid out in Social Security benefits. It wasn’t until the 50’s and 60’s “that domestic labor, household employees working at least two days a week for the same person were added in 1950, along with nonprofit workers and the self-employed. Hotel workers, laundry workers, all agricultural workers, and state and local government employees were added in 1954.”

It wasn’t until 1972 that the average payment per month rose from $133 to $166 and the cost-of-living adjustment (COLA) was instituted. See here.

The payroll tax as set forth in the original Social Security Act of 1935 was 2% (employee and employer combined). It is now 12.4% (employee and employer combined). That is an enormous burden on low wageworkers. Isn’t it time that we addressed this very burdensome regressive tax. See here. 

Don’t get me wrong!! I have no sympathy for the Republican/Ryan approach, which is to gut the program, and I think the President’s proposal for a chained CPI is wrong, for it reduces benefits on all recipients, including those who desperately need an increase in benefits.

According to the AARP nearly nine million older Americans are facing the threat of hunger; Over 20 million low-income people over 50 do not have adequate financial resources. Over 13 million older Americans cannot afford their housing costs. See here.

But people who have an adequate and even generous income from pensions, 401k savings and/ or investments or other income can accept lower benefits, and even none, so that the needs of those who truly need more can be addressed. The payroll tax on lower incomes must be reduced or even eliminated.

My proposal as set forth here is an attempt to at least start a conversation.

If I cannot trigger some thought, and/or some discussion, then I am wasting my time in writing these posts.

Comments, questions, or corrections, are welcome and will be responded to and distributed with attribution, unless the writer requests that he/she not be identified

Racism Rears Its Ugly Head In The SCOTUS/The Sequester

The presently constituted Supreme Court has long been criticized for the very activism that was once directed at a more progressive Court, but never before has it given any cause to accuse it of overt racism.

To be sure Robert Bork was rejected for a position on the court in part because in a New Republic article he condemned “the public accommodation sections of the (then) proposed 1964 Civil Rights Act aimed at integrating restaurants, hotels and other businesses” because he “feared that government coercion of private behavior threatened freedom… (ignoring the fact that) restaurateurs were not legally permitted to reject service to well-behaved whites and that the new law intended simply to extend that principle to blacks.”

But this is the first time that a sitting judge has allowed his racist views to escape his lips. During argument on the Constitutionality of the Voting Rights Act of 1965 Justice Scalia referred to Congress’ near-unanimous re-enactment of the act in 2006 as a “perpetuation of racial entitlement.”

Yes, the reader read that right. The right of US citizens to vote is, according to Scalia, a “racial entitlement” totally ignoring that the XIV Amendment to the Constitution guarantees that “No State shall make or enforce any law which shall abridge the privilege or immunities of citizens of the United States… nor deny to any person within its jurisdiction the equal protection of the laws.” And in Section 5 of that article: “The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.”

Or does Scalia’s doctrine of “Originalism” deny the validity of its amendments.

But what causes him such concern is that the Act of Congress might interfere with “state sovereignty”, which are words not to be found in the Constitution.

But enough said about a Supreme Court justice who claims to be a close adherent to the Constitution.

The Sequester

This is a calamity that has me scratching my head.

It was not so long ago that my friends on the Left were clamoring for the President to allow the country to go over the fiscal cliff unless Republicans caved, and agreed to the President’s proposal that the Bush tax cuts be extended for all except those making over $250,000.

Or in Paul Krugman’s words: “So what should he do? Just say no, and go over the cliff if necessary… This time, nothing very bad will happen to the economy if agreement isn’t reached until a few weeks or even a few months into 2013.” And “No deal is better than a bad deal.”

And the headline on an article in the Atlantic dated November 21, 2012 screamed: “The Fiscal Cliff Is Not as Scary as You Think (but a Bad Deal Should Terrify You).”

But what would have been defined as a bad deal? Well Krugman, and many others define this as:  “where they must agree to large cuts to public investment and social insurance programs like Medicare and Social Security…”

So now we have what amounts to half the Fiscal Cliff. So if the Fiscal Cliff wasn’t so bad then surely the Sequester would be even less disastrous. What does Krugman say? He calls the Sequester “one of the worst policy ideas in our nation’s history.”

Now I happen to agree with Krugman on the Sequester. It is indeed one of the “worst policy ideas in our nation’s history”. It was designed to be! The theory having been that if this terrible idea was the alternative to a balanced approach, the balanced approach would win out. But this theory didn’t take into account the extent of the Republican commitment to protecting the rich and destroying everything that does not fully serve the interests of the rich.
So where does that leave us. Is preventing any changes to Social Security and Medicare really the most important thing on the planet? Certainly, the President should never agree to the Republican plan for these programs which amount to their abolition. But does it follow that all changes must be resisted as the many “liberal” organizations are urging? Or as the Campaign for America’s Future calls it; “the Grand Swindle.”

Whether we like it or not according to the Social Security Administration, in 1940 life expectancy for males (at age 65) was 12.7 years. In 1990 it was 15.3. As I said in my blog post entitled "The President’s re-election (More Discussion)," “I have nothing earlier or later, but if we go back to 1930 and forward to 2015 we can assume that it is double that, or 6 years. 

So an increase to 71 for males would be justified. Or we could consider changing it altogether, to kick in after 40 years of work. This would have the advantage that those who start work earlier, usually the under class, could draw earlier than those going to college, who earn more and are more advantaged. The figure for women as of 1940 are 14.7 and for 1990 19.6, so at the risk of being sexist, it might make sense to have an older eligibility age for women than for men.” but none of my readers thought this worthy of comment and one in fact asked where I got these ridiculous statistics.

But the Social Security Administration isn’t the only source for life expectancy figures. According to the broker Fidelity “In 1935, when the Social Security Administration was founded, the average life expectancy was about 62 years. Today's average life expectancy is over 78 years.”

I am familiar with the argument that blue collar worker’s have a shorter life expectancy than the more affluent, but that is precisely why I think changes along the lines outlined above should be considered. But I would go further. The payroll tax is 6.2 percent on income under $113,700 and an additional 6.2 percent on the employer. That is a bearable tax on middle and upper-income earners, but it is a devastating tax for those making little, and those earning the minimum wage, which at present is nationally $7.25 an hour, or just over $15,000 a year. Many don’t even make the minimum wage. Isn’t it time that we removed this onerous tax from these people, and all those making under $30,000 or even $50,000 and made it, like the income tax, a graduated tax.

Of course the money would have to be made up by such devices, among others, as raising the eligibility age, removing the cap for the tax, increasing the tax on the affluent, taxing those who have other income, e.g. above $100,000, so that they would in effect get no benefits and possibly increasing the benefits for those having no, or little, other income.
These are not reforms that would bring joy to the Right, and therefor are not tenable at this time, but it isn’t time for a conversation, instead of the cry “no changes."

And may not some of the damage done by the sequester be even worse then being flexible on entitlements? For example, according to the White House, the effect of the sequester, just in the Washington area, would mean, “About 2,000 poor children would lose access to early education. In the area of public health, less funding would mean 31,400 fewer HIV tests and thousands of children may not get necessary vaccines in Georgia."
Is there less concern about these effects then about entitlements because these sequester effects would have less impact on the Middle Class? Are the concerns so heavily weighted about entitlements, the concerns of a predominately White Middle class, who are more concerned with their entitlements, than with the effects on the most vulnerable.

It is time to ask that question!!!

Comments, questions, or corrections, are welcome and will be responded to and distributed with attribution, unless the writer requests that he/she not be identified.

The Fiscal Cliff

In my last post entitled "We Interrupt this Debate for Some Timely Comments.” I commended to the reader an article entitled “President Obama: The Democrats' Ronald Reagan” but introduced my subject with: “As the impending fiscal cliff moves ever closer, some timely observations appear to be in order and they will follow soon.” and that will be the main subject of this commentary.

In the meantime, however, the tragedy in Newtown, Connecticut cannot be ignored or as Ernst Hauser of the Bronx and Manhattan, NY said:

Yesterday’s events have interrupted the interruption - since the Supreme Court has chosen to break the SECOND AMENDMENT into 2 pieces, separating the "well regulated militia" and the "right to bear arms" the time has come to REPEAL it and replace it with a clearer worded one, that neither the CJ nor Scalia could twist. In the meantime Congress could repass the Brady bill, without an expiration date or time.

So much has been said on this subject that I have not much to add, except to observe that the tragedy in Newport, Connecticut is dwarfed by the carnage that goes on every day throughout the US without much publicity. The Brady Center to Prevent Gun Violence reports that more than 30,000 people are killed by guns in this nation each year. Yet this daily tragedy, neither commands the attention of the media, nor the attention of the nation.

Is this because multiple deaths occurring at the same time and place make for better headlines than smaller numbers occurring simultaneously, but in different places?

Or is it because such a large percentage of the victims of gun violence are black?

The first possibility is bad. The second is outrageous. 

The Office of Juvenile Justice and Delinquency Prevention of the Department of Justice reports: “Young African-American males have the most elevated homicide victimization rate of any race or gender group. Homicides involving firearms have been the leading cause of death for African-American males ages 15 to 19 since 1969.”

Whatever the reason, the lack of attention to this ongoing carnage by the media is a disgrace.

Now to the Fiscal Cliff!

I find myself disturbed here not only by the distortions on the Right, but by the blasé attitude toward the Cliff on the part of the Left. Thus I have started to get e-mails from an organization styling itself as AmericasDemocrats.org, which refers to that looming calamity as “the so-called fiscal cliff -- and why going over it might not be so bad.” Some suggest that it would take a long time for its effects to be felt. And the rest of the Left blogosphere, while not going quite this far, proclaims the slogan: “No Deal is better than a Bad deal.” While I have no difficulty agreeing with this in principle, I find that these self-styled “Liberals” define a “Bad Deal” as anything that makes the slightest change in the Entitlement programs.

Yes, it might be necessary for the President to allow the country to go over the Cliff rather than to give in to the constant blackmail by those who have decided that they can get their way by taking the Nation hostage, but the failure on the part of the Left to recognize the seriousness of this step, or to downplay it, is deeply disturbing, to say the least.

Let us understand what it means!

I quote from pages one and two of a 10 page paper released by the Congressional Budget Office (CBO), the highly respected non-partisan arm of Congress, entitled: “Economic Effects of Reducing the Fiscal Restraint That Is Scheduled to Occur in 2013.” 

“Under current law, the federal budget deficit will fall dramatically between 2012 and 2013 owing to scheduled increases in taxes and, to a lesser extent, scheduled reductions in spending—a development that some observers have referred to as a ‘fiscal cliff.’ … The resulting weakening of the economy will lower taxable incomes and raise unemployment…” (Emphasis added) 

“If measured for calendar years 2012 and 2013, the amount of fiscal restraint is even larger. Most of the policy changes that reduce the deficit are scheduled to take effect at the beginning of calendar year 2013, so budget figures for fiscal year 2013—which begins in October 2012—reflect only about three-quarters of the effects of those policies on an annual basis. 

“CBO expects—with the economy projected to contract at an annual rate of 1.3 percent in the first half of the year and expand at an annual rate of 2.3 percent in the second half. Given the pattern of past recessions as identified by the National Bureau of Economic Research, such a contraction in output in the first half of 2013 would probably be judged to be a recession.“ (Emphasis added)

Furthermore, Christine Lagarde has urged US leaders to reach a deal to avoid the "fiscal cliff,” warning that the uncertainty was damaging the global economy. The head of the International Monetary Fund told the BBC's Katty Kay that the US had a duty "to try to remove uncertainty and doubt as quickly as possible.” 

Even as early as December 12, 2012 Reuters reported that Dupont was already curtailing spending due to the imminence of the fiscal cliff. 

Furthermore, failure to reach agreement and falling over the cliff means that unemployment insurance checks stop being paid as of Dec. 29 resulting in “about 2.1 million Americans loos(ing) their extended jobless benefits … (and) An additional 930,000 people will run out of unemployment insurance in early 2013. 

Anyone reading this analysis can see the consequences are real and they are serious. Going over the cliff cannot be approached lightly, and from a political standpoint, if it must be endured, it must be clear to the American people that there was no real choice.

This is the President’s dilemma. He cannot stonewall, as the Left would have him do! He cannot cave to their laments, “No changes to Social Security, to Medicare, to Medicaid.” He must be, and he must appear to be, reasonable. It must be crystal clear that if this calamity were to happen that it was Republican intransigence that was to blame.

The Left keeps screaming: “We need more jobs” and it ignores that falling off the cliff will increase unemployment and increase the hardship of the unemployed.

Furthermore these strident voices ignore that more is at stake than entitlements.

Eduardo Porter writing in the New York Times of December 19, 2012, points out that “loath to raise taxes on the middle class yet unwilling to cut deeply into the budgets for Social Security or Medicare, the president and his advisers proposed cutting the discretionary part of the budget devoted to everything except defense and other security agencies to 1.7 percent of economic output by 2022, down from 3.1 percent last year” but there is not a word about such cuts from the Left. For the Left it appears that nothing matters other than entitlements.

But there is much at stake here!! Possibly more than even entitlements. To quote from the article: “It pays subsidies for higher education and housing assistance for the poor. It finances the National Institutes of Health and the Food and Drug Administration. It pays for the Federal Emergency Management Agency and training programs for unemployed workers.” But even Porter leaves out much of what is in that part of the budget. How about National Parks? How about the budget for the SEC and our other regulatory agencies? How about the budget of the IRS, where for every cut in its enforcement budget, we lose a multiple in tax revenues. I could go on and on. What about spending on infrastructure? See here. But I don’t hear any concern from the Left.

I know that we live in an age of slogans, and the pretense of simple solutions, in an age of short columns and short attention spans, but unless we focus on what is truly at stake and how difficult the choices are, we undermine the very things we value. Entitlements are very important, but they are not the be all and the end all.

And then comes the final straw from this new messenger from the Left. This AmericasDemocrats.org gives the impression that it is connected to the Democratic Party. Not only is this not true, but it gives us this bit of revisionist history. It tells us:

Did you know that Democratic “bosses” made FDR accept Harry Truman as vice president?

Did you know that Truman was “very anti-Semitic and racist”?

Did you know that Japan did not surrender primarily because of the atom bomb?

The first is not true. No one could make Roosevelt do anything he did not want to do and he demonstrated this four years before when he wanted Henry Wallace on his ticket, by being prepared to threaten not to run if Wallace was not his running mate.

As for the second, it was Truman who signed an executive order integrating the military at a time when most still thought of African-Americans as inferior, and it was Truman who against the strong opposition of his Secretary of State, George Marshall, recognized the State of Israel.

The website sets forth a view of the Cold War that can only be described as being out of playbook of the then communist party, blaming the cold war on Truman and American Imperialism. For more on Wallace, see here and particularly the sections on “The 1948 Presidential election” and “Later career”.

Next time I will return to the discussions with my readers, which I left off on December 4, 2012 with The President’s Re-election (More Discussion III)

The President’s Re-election (More Discussion III)

In my December 4 blog post, I set forth the views of Albert Nekimken PhD of Vienna, Virginia. I urge my readers to go to that post here and re-read Albert’s comments.

My response follows:

Please read the following with care and refer to the source materials as shown by URLs. The theology of the Left is no better than that of the Right. No, I don't mean that. It is far better, but I prefer to be fact-based and realistic, and not live in any world that ignores unpleasant facts.

                       

Thanks for your input. I may be wrong, but the way I see our divergence, is that he (i.e. Roger Streit) and Paul Krugman seem to believe that in a depression or even a recession, deficits are good and the larger the deficit the better.

                       

Also that no changes should be made in entitlements, certainly not any that reduce spending. That seems to be the position of the Left, and I draw a distinction between the Left, which seems to be almost as disinterested in facts and evidence as the Right and Liberals, like myself, who are fact and evidence oriented. There is a reason why I spend so much of my time doing research in an effort to ascertain relevant facts. Krugman increasingly comes across as a shrill polemicist.

                       

I believe that deficits matter, and I reject equally the claim made by our former Vice-President Dick Cheney, that "Reagan proved deficits don't matter," and those made by Krugman. (That does not mean that I favor a balanced budget) Interestingly enough one should note that Cheney is being consistent, even now arguing against what Krugman calls "the deficit scolds.” Or as the Washington Post reported: 

"Cheney, said lawmakers in the closed-door meetings, urged Republicans to continue high levels of military spending, warning them to resist automatic cuts that were put in place in last summer’s bipartisan budget deal. He offered not a word about how to fix the enormous budget deficits and soaring federal debt....The vice president talked only about the pros of appropriate investments in defense,” reported Sen. Bob Corker (R-Tenn.), who worried that lawmakers might respond to such advice by abandoning attempts to restrain spending." 

                       

But I digress. Your point is well taken. Krugman has said in so many ways that he wants to inflate our way out of the recession. He ignores history on this point and pays no attention to the terrible time we had when having let loose inflation through excessive deficit spending in the Johnson Administration, that led not only to inflation, but what came to be known as stagflation. Carter and his appointment of Paul Volker to be chair of the Fed, broke the back of that by raising interest rates, stopping the inflation, but increasing the recession, which cost Carter the election, and I have to admit that Reagan got us out of that malaise, by deficit spending. The funny thing is that if we look at the history of deficit spending, it is the Republicans who consistently do it, and the Democrats who are always balancing. 

                       

See the tables below:

(Please double click on either image to enlarge.)

The addition of the Presidents in office at the time of each deficit as a % of GDP are mine.

Please note that while during the war years '41-'45 Roosevelt (and his Congress) increased our debt as a % of GDP by a whopping 67.1%, the Truman Administration substantially reduced it by a whopping 46%, Eisenhower also reduced it, but by only 16.2% Kennedy/Johnson equaled that reducing it by 16.6% Nixon/Ford basically kept it flat, Carter resumed the reduction in deficit spending by 3.3% and then came the new Republicans screaming for balanced budgets, but under Reagan the deficit was increased  by 20.6%, further increased by H.W. Bush by 13%, decreased by the Clinton Administration by 9.7% (while having a booming economy by the way) only to have G.W. Bush increase the deficit by 25.3%, which despite all the noise is a hell of a lot less than Obama's 1st term of increasing the deficit by 10.3% of GDP in the face of a recession that is close to a depression.

If we add up all Republican and Democratic records on the deficit, exempting Roosevelt's war time spending, we get Republican - increase in deficit spending of 76.1% as against Democratic Administration decrease in deficit spending of 71.4%, and since the beginning of the Reagan era Republican increase in deficit spending of 58.9% as against Democratic increase in deficit spending of .60% even counting Obama's recession stimulus.

Which shows how easily the public is fooled into believing that Republicans are the party of balanced budgets, while the Democrats are the wild spenders. See the Pew Research Center poll which shows that the budget deficit was of the greatest concern to 69% of voters as of January 2012 and those: "... favor Romney over Obama by a 52% to 42% margin." Would they have had these views if they knew the facts? Those views are informed long before the campaign begins.

Which brings me once again to Krugman's contention that we can inflate our way out of recession by deficit spending. First as I have said before this runs the risk of run-away inflation and even stagflation as history informs us.

In addition Krugman and those who are likeminded show their inconsistency, because if the crux of getting out of the recession is deficit spending, then logically they ought to be satisfied to increase the deficit by any means, including extending all the Bush tax cuts and increase defense spending. That would have the advantage of being politically viable. But they are against this because they recognize, though they are reluctant to say so, that deficits are not the solution. Redistribution of wealth is. Recessions are caused by many factors, but one that is a primary cause is an imbalance between producers and consumers, as Henry Ford recognized, when he doubled his workers pay and started building the middle class. When producers have more resources than consumers, we get recessions and in a worldwide economy worldwide recessions. When consumers have more capacity to buy than producers to produce, we get inflation. That is a simple creed that I would think a Nobel peace prizewinner in economics, should be expounding, instead of focusing on the merits of unsustainable deficits.

That is the fundamental difference between the views of Krugman/Roger Streit and myself.

In addition Krugman/Streit want no changes in entitlements, while I believe that changes are absolutely necessary, not primarily because of the deficit, but because without changes these programs are not sustainable. As I said in my post "Social Security – An Honest Evaluation":

"But that means that even without any changes full payments of Social Security benefits would be paid to all those who are now 44 years old or older, which is better than the guarantee offered by the Ryan budget by one year, and unlike the Ryan budget benefits at a reduced rate would continue to be paid. 

"However I don’t believe that is good enough. We need to make sufficient changes so that people who are now 24 years old and are paying into the trust fund for the benefit of older generations are guaranteed full benefits. If we don’t do that, these younger generations will see little reason to support the system, and it will be doomed much earlier, simply because young people will insist that they not pay into a system from which they will not draw the full benefits of older generations."

As far as your comment below on this subject is concerned, you have to check the math and the political feasibility. You are right that SS should not be part of the budget deficit negotiations because they are not a cause for the deficit. That is the position of the President. But that doesn't change the fact that whether part of those negotiations, or separate from them, changes have to be made. Your suggestion that "making 90% of all income subject to SS tax withholding contributions," has two problems with it. By itself it will not solve the shortfall. I cannot at this moment give you chapter and verse, but I have researched this in the past and it wouldn't be enough. Secondly, it has to be politically feasible. Republicans will never allow it. So do we accept a stalemate and let SS die, or do we make such reasonable compromises as will save it.

Arguing that we need this or that if we don't have the money to pay for it is futile.

I believe that the solution I suggested in my post entitled "The President’s re-election (More Discussion)" is the right one: 

"Or we could consider changing it altogether, to kick in after 40 years of work. This would have the advantage that those who start work earlier, usually the under class, could draw earlier than those going to college, who earn more and are more advantaged. The figure for women as of 1940 are 14.7 and for 1990 19.6, so at the risk of being sexist, it might make sense to have an older eligibility age for women than for men." 

On second thought 45 years would be more realistic.

You say: As for rising life expectancies, where do you find evidence for this myth? This is downright insulting!!! You should know better than to ask me a question like that!!!! I don't deal in myths. I attack them No matter where they come from. I source everything. I wish you and others would look at my sources. I got my figures from the Social Security Administration. I am afraid that you like most others, Right or Left, reject unpleasant facts.

Now to Medicare you talk about the, "potential for legislating lower prices from vendors in the healthcare industry" but you don't say who these vendors are. Are you talking about physicians and hospitals? I can't comment without knowing who these vendors are.

As for your suggestion that we should "establish a national health service that provides services directly" while a fine thing to dream about, there is no point in belaboring that which is not politically viable.

We must live in the real world. We must focus on that which is possible, not "The Impossible Dream.” Ditto for the rest of your comments. The President is working on the possible. Obama Care, which has already extended the life of Medicare by seven years (See here and here) has the capacity through efficiencies in the delivery of health care, to further reduce the cost, particularly through the Medicare Independent Payment Advisory Board, 

As for your comments on the Defense budget, are you advocating that we let the sequester stand, even though it would decimate a whole range of vital services? I once again refer you to the excellent New York Times article entitled: "White House Details Potential Effects If Automatic Budget Cuts Go Through"  (You really have to read my source material.)

In our dreams we win great victories. In the real world we compromise when we must, rather than watching as everything we value goes down the drain but we have the satisfaction of remaining pure.

The President’s re-election (More Discussion II)

In my post entitled "The President’s re-election (Discussion)" I set forth comments that I received from various subscribers and my responses, including an exchange with Roger Streit of West Orange, N.J. and ended with my rejoinder. But my disputation did not end there, and accordingly, I set forth the further discussion with Roger in my post "The President’s re-election (More Discussion)." While my discussion with Roger has not ended, Albert Nekimken of Vienna, Virginia has joined the fray. I set forth below his comments and in my next post will set forth my rather lengthy response.

Here is what Albert opined with respect to my exchange with Roger:

This exchange is thoughtful - thanks for sharing it, though I'm not sure I can identify accurately exactly where you and Roger diverge. There are too many strands to the argument and chronology for that.

 Suffice to say that I agree with you that the future volatility of interest rates makes our high level of national debt dangerous. However, you may be minimizing the allure to some of inflating our way out of it by devaluing the USD, one way, or another.

 Regarding social security and retirement, we ought to remember that at least 30% of SS recipients have no other source of income. Also, by the mid-60s, many (if not most) people are exhausted and/or unable to continue to work even if anyone was willing to employ them, which is unlikely. If so, raising the retirement age is dangerous. Today, millions of people are struggling to remain employed at all, and therefore able to contribute to the SS fund.

 Based on my reading, the SS fund is NOT a debt of the federal government AND the fund can be rather quickly replenished for the foreseeable future simply by making 90% of all income subject to SS tax withholding contributions, as it was when SS was established; at present, contributions end around incomes of $125,000. This must be changed.

 As for rising life expectancies, where do you find evidence for this myth? American median life expectancy is already lower than that of many OECD countries and insurance companies still estimate that people like me, at age 68, should expect only ten more years of life. If so, that means less than 15 years of retirement on SS benefits--not excessive after a lifetime of work, by my estimate.

 Apart from paying off the Treasury bonds with which Congress irresponsibly stuffed the SS fund over the years, the next greatest federal spending burden is Medicare. Here the Republicans are pushing for a decrease in benefits, which are already inadequate, and ignoring the potential for legislating lower prices from vendors in the healthcare industry, which is currently VERY profitable. As the majority of the population is covered by Medicare, vendors unwilling to accept lower prices (and lower profits) offered by Washington will find ever smaller populations willing and able to pay their higher prices. The alternative approach to lowering healthcare costs, of course, is simply to establish a national health service the provides services directly. There is general agreement that we would see quickly a 30% decrease in useless, duplicative administrative costs even before considering bloated corporate profits.

 When U.S. vendors are unable or unwilling to sell at prices that the national service can afford, procurement should be opened globally. Also, if SS and Medicare payments were made to recipients for payment anywhere in the world where they may reside, you would see an earthquake of price adjustment in the healthcare industry. 

Finally, as you know, defense and intelligence spending must shrink. Alas, there is growing evidence (especially to Washington, DC residents) that the heretofore untouchable spending on intelligence has gone totally out of control. We could likely obtain the same, or better, intell while spending half of what we spend currently--again due to waste, duplication, and sheer incompetence. 

The defense vendor community is resisting spending reductions fiercely, but this is a fight that we must win--even at the cost of raising unemployment temporarily. Employment that is supported entirely by federal spending should be better shifted to time-sensitive, temporary unemployment benefits. 

Must end. Thanks again for resuming your blog and keeping our brains agile.

Comments, questions, or corrections, are welcome and will be responded to and distributed with attribution, unless the writer requests that he/she not be identified.