Irresponsible Brinksmanship

Am I missing something about this debt crisis? Let’s run down some of the more salient issues at play.

While the costs of two wars and fighting the recession play a role, the major cause of the build-up in debt is the revenues lost by virtue of massive tax cuts under the Bush administration. Not surprisingly, the tax burden placed upon US taxpayers is at a 60 year low. Despite these two salient facts, the Republican leadership will not countenance even a semblance of discussion on cutting the deficit by raising taxes.

Unemployment remains stuck at over nine percent: the rate among minorities is almost three times this amount. Republicans and Democrats alike have essentially given up on developing programs to reduce unemployment for the simple reason that such programs take federal funds.

At the same time that nothing is being done to reduce unemployment, Republican measures to control the debt favor substantially reduced spending on those safety nets such as Medicaid, unemployment compensation, and TANIF that cushion some of the misery associated with being out of work.

The brinksmanship being played over the debt ceiling only serves to exacerbate America’s economic problems. The prospect of a federal debt default, no matter how remote, has caused businesses to stop in their tracks. The economic optimism of a few months past has turned to growing investor pessimism over the ability of the government to govern responsibly.

The key word is ‘responsibly’. To be fair, the Republicans ran on platform promising fiscal responsibility, and it is clear that their message resonated with the majority of Americans. Republican control over the House of Representatives means they control how much money is raised and spent. They have been successful in cutting government spending and can continue to do so.

The debate that has been opened up between the left and right on the proper long term course for America – further tax cuts and heavy spending reductions vice less severe cuts to entitlements along with some tax increases – is a good example of responsible government. It needs time to be fully vetted and explained to the American voters: let the 2012 elections be a referendum on which way Americans wish to go.

Holding the Democrats hostage by tying a vote on the debt ceiling to massive cuts in spending with no tax increases is irresponsible brinksmanship. This is different than the clash between then House Speaker Newt Gingrich and President Clinton that led to a short closure of the US government. In this case the long-term creditworthiness of the United States is threatened: the ramifications of even a short default are long-term in nature, at a minimum raising the cost of borrowing by the US government (paid in the end by US taxpayers).

There is no need for the Republicans to be so heavy-handed at this point in time. The risks to American economic recovery and financial solvency are too great. Although the Republicans control the House of Representatives, the Democrats still control the Senate and the White House. With this in mind, a compromise would seem reasonable. Republican leaders should agree to the increase in the debt ceiling that is required for American solvency while continuing the debate with President Obama on the proper future role for the federal government. If they have it right, Republicans will be rewarded with control of the Senate and the White House next year.

The Obama Way

The strike against Osama Bin Laden speaks volumes about president Obama's leadership style. In his presidential campaign, Obama was very direct on his approach to Osama Bin Laden: if elected he would track down and kill Bin Laden even if it meant unilateral actions in Pakistan. This was a marked departure from candidate Obama's overall stance on national security and foreign policy, where he pledged to end the Bush-era unilateralism in favor of a multilateral approach to international affairs.

President Obama has been true to his word on both counts - trampling Pakistani sovereignty on the one hand while refusing to take a leadership role in the coalition of forces seeking to end the reign of Omar Kadafi.

What then, have we learned about President Obama's presidential timber? Firstly, he is deliberate in his decision-making while having the mettle to make the hard calls. Secondly, the buck really stops on his desk on important matters: pundits have criticized his use of the first person when discussing the mission, but the shoe fits - Obama is intimately involved in key administration decisions. Thirdly, everything is situational. While he ha over riding domestic and foreign policy visions, President Obama decides each issue on its own merits. These characteristics - on vivid display in recent days - hold true on domestic issues as well.

Uber-Rich or Rank and File

In a recent op-editorial E.J. Dionne discussed the obligation of the elites to ensure the continued well-being of the larger society. In effect he was blaming the uber-rich for the battle against higher tax rates.

I’m not sure the very wealthy are the problem. President Obama opined, in his recent speech, that he wasn’t getting much mail from the people who would bear the brunt of higher taxes. Some of America's wealthiest have publicly stated their willingness to shoulder a higher tax burden.

The political problem has a different dynamic. The Republicans defend tax increases the way that the NRA reacts to gun control: defend each potential inroad at all costs. Is it possible that higher taxes have become so politically intertwined with big government that the two cannot be separated in the context of diminishing federal deficit spending? Presidents Reagan and Bush I supported higher taxes to deal with mounting deficits. In contrast Speaker Boehner has declared that discussion of tax increases are 'dead on arrival'.

While the uber-rich have certainly enjoyed their good fortune, I’m not sure they are the problem.

Defunding Socialism

Paul Ryan’s budget proposal is consistent with a vision of America where all Americans must ultimately fend for themselves. It reflects the notion, held by many, that America must not go the way of those West European societies which ascribe to the notion that citizens are collectively responsible -by paying significantly higher taxes - for ensuring an minimum standard of living for all, to include universal access to health care and quality old-age care.

Our nation has remained conflicted on these issues since Social Security was introduced by FDR. Democrats and moderate Republicans have been supportive of expanding social safety nets to include Medicare/Medicaid, Food Stamps, and support to low income families. The costs of these safety nets are on the rise, to the point where higher taxes are now required if they are to be sustained. Congressman Ryan has opened the door to a fundamental reappraisal of America’s commitment to one another. At present there is no one on the left picking up the gauntlet he has thrown down. If the Democratic leadership fails answer the challenge, than someone else will.

KISS

I used to believe that an informed citizen could stay sufficiently abreast of government happenings but no longer hold this opinion. My tipping point came last week. Sixty-Minutes’ report on the adverse impact of high corporate tax rates convinced me that something had to be done to help out corporations; the subsequent disclosure that GE paid nothing in corporate taxes evoked a similar outrage albeit in the opposite direction. In 2009 the World-Bank International Finance Corporation estimated that the United States has a lower effective rate of corporate income tax than Germany, Japan, Canada, China and India. I now understand President Obama’s stated willingness to cut corporate tax rates on the condition that special exemptions are concomitantly eliminated. Apropos of Jon Stewart’s Daily Show segment, I “give up” on understanding government.

Apparently most Americans share my distrust. Last April, only 22 percent of Americans surveyed by Pew Research say they can trust government in Washington almost always or most of the time. Their fears are well based. In theory, we send Congressmen to exercise their best judgment on our behalf. We expect laws will be crafted and tweaked to reflect subtle situational differences such that all are treated fairly in the end. In reality, our government is hyper-pluralistic: corporations and interest groups – working through hired lobbyists and by providing campaign contributions – are extremely effective in getting their way. Our elected representatives and their staffs invariably seem to craft and tweak laws to serve the interests of a select few at the expense of the many.

The answers to this disconnect lies in following the bright-line rule whenever possible. The benefits of simple and transparent laws, to include regaining the public’s trust, outweigh the hardships borne by individuals and corporations in special circumstances. Following the bright-line rule when writing legislation would severely mitigate if not curtail special interest legislation. One example would be a single tax rate on corporate profits with no other conditions. A second example would be to limit virtually all adjustments to and deductions from personal income earnings when calculating personal income tax payments. The health insurance reform law’s two thousand pages speaks volumes to the obfuscation associated with Federal lawmaking. People don’t know what to think and are prey to the political spin emanating from both sides of the isle. Exemptions to government regulations – environment, food and drug-- would be similarly restricted.

At the end of the day, even though some conditions or situations qualify for special treatment when writing federal legislation, they must be ignored in order that laws are straightforward, transparent, and easy to monitor. The costs to the few should be outweighed by the gains to the many. Bright-line lawmaking offers a path to restoring trust in government and ending hyperpluralism’s strangle hold on the legislative process.

The Pendulum Must Swing

I'm not in favor of the one-way political discussions now underway: we need to address the deficit, to be sure, but it would be nice to see a more balanced discussion pitting tax increases against cutting programs. I think much of the cutting now underway, particularly in Congress, provides cover for the right to neuter those government programs not of their liking. The relatively trivial cost 'savings' from ending government support to NPR comes to mind as does ending funding to Planned Parenthood.

These programs may well have outlived their usefulness, who knows. But don't tell me this is the way to balance the budget. The focus should be on the big ticket items such as defense and the entitlement programs. The one thing not being discussed is higher taxes, not even returning tax rates to the levels that existed over the two decades preceding the Bush tax cuts. That's simply not in the cards: the Republican majority was elected to cut spending and protect the tax burden.

The pendulum has to swing. Services need to be cut and the people need to feel the pain, such as it might be. If the pain is bearable than we have done the right thing by curtailing government programs. Public support for addressing the budget deficit via higher taxes as well as slicing programs will coalesce only if the pain is too great. It may take one or possibly even two Congressional elections before the will of the people is accurately reflected in Congressional decision-making. One thing seems to be certain, however, there will be change.

The Weakest Link

The media has been rife with stories explaining the technological safeguards that were or were not in place in Japan. At the same time we are informed about the extensive measures taken in the United States to preclude an Atomic accident to include training site mock-ups of nuclear reactor control rooms.

The extensive steps taken to limit the likelihood of disaster are comforting but they do not address the real problem – human error. Reporting from Japan indicates that the reserve power generators, which would have keep the reactors cooled, failed because a worker failed to fill up the tank. Bereft of diesel, the generators shut down and water was not pumped into the reactors. Simply put, the problem was human.

If memory serves me right, human error was also responsible for the Chernobyl disaster. At Three Mile Island, it was determined that operator error played a major role in allowing the coolant to escape.

The logic is inescapable: human decision making is the weak link in any solution. Technological prowess, at the end of the day, is ultimately dependent on the quality of the human element. Perhaps, then, the media should be focusing on the quality of the American workforce employed in nuclear facilities. What are their pay scales? Do they take IQ tests? Are there limits on the numbers of hours worked.

In a world that is increasingly characterized by the widespread application of advanced technology, it is well worth remembering that some things never change – the potential for human error. With this in mind we may well question the utility of employing highly technological solutions, which essentially compound the damages that can be done by those few humans who remain in the game.