Fiscal Cliff: Elephant in the Room – Roger Ingalls

With all this hyped-out talk about the Fiscal Cliff, raising taxes, cutting Social Security and Medicare, why isn’t anyone talking about the obvious?

Yes, we need to let the temporary tax cuts given to the rich during the George W. Bush administration expire as originally promised almost a decade ago. And we need to cut some spending in the right areas.

Defense spending is the elephant in the room. All the politicians are ignoring the obvious. The military budget has tripled since 2002 and is the significant contributor to the debt. Social Security and Medicare are not the evil entitlements as promoted by the Conservatives.

I do not believe defense spending will be reduced to appropriate levels. In time, many politicians get appointed to the boards of defense contractors and they also receive campaign contributions from organizations associated with them. It’s not in the best interests of our elected officials to reduce defense spending.

We all know the world is not going to end if Washington does not come to a Fiscal Cliff agreement by the end of the year. It’s just political rhetoric meant to draw our attention away from the real problems.

Fiscal Cliff: A Political Storm in a Water Glass – Roger Ingalls

“The fiscal cliff”, that’s a scary sounding phrase. If you say it real slow and low it sounds even more frightening. It’s amazing how pundits and mainstream media move from one political danger scene to the next like a well edited film with the whole thing directed by our politicians. Sound bites and scare tactics, it’s a coordinated attempt to boost ratings for media companies and make the suits in Washington look like they’re solving some country-killing crisis.

The election is over so now we’ve moving on to the next big thing…the fiscal cliff. I believe this is a big to-do about nothing. We’re led to believe that come January 2^nd, 2013 the economy will collapse if some nebulous balance of debt reduction and tax revenue collection isn’t successfully negotiated by our dysfunctional politicians. Really! If we’re relying on this motley crew of brainiacs to solve our economic woes, the party’s already over.

Would it be so catastrophic if we reached the end of the year without an agreement? The temporary tax breaks set in place by the George W Bush administration would come to an end if agreement isn’t reached. Essentially, Federal taxes would roll back to the Clinton era rates. Is this so outrageous? The country’s economic condition during the Clinton administration was one of the best in U.S. history.

In addition, government spending would automatically get cut if agreement isn’t reached. The biggest reduction would be in defense spending but the cuts would not come close to levels during the Clinton era. During the George W presidency defense spending tripled and we have nothing to show for it. Rolling back military budgets to similar levels used during the Clinton presidency is not outrageous. Again, the country ran extremely well during this period.

Lastly, if we hit the so called fiscal cliff due to lack of political agreement, Medicaid and Social Security would stay intact.

If political deadlock in Washington returns us to the responsible tax rates and spending of the Clinton administration then I say yes to the fiscal cliff. The frenzied screams of a pending financial crisis is overblown.  I can’t see why this looming event is being called a potential catastrophe.

I say we call Washington’s bluff and tell them we don’t want agreement, give us the cliff.

Deficit Straight Talk: Bush Out Spends Obama 3 to 1 (by Roger Ingalls)

I’m tired of the Republican trash talk about how fiscally irresponsible the Democrats are when it comes to government spending and economic policy. Those that point fingers and yell the loudest are usually the ones with something to hide. It’s time to set the record straight.

Republican administrations are responsible for nearly 80% of the $14 Trillion deficit. This massive debt building started with Ronald Reagan and skyrocketed under George W Bush. The chart below must be painful for conservatives to look at, especially for the followship that can comprehend such data (Democrats are in blue and Republicans are in Red, source: U.S. Dept. of the Treasury). Democrats have historically maintained or decreased the deficit while the Republicans recklessly spend.

click chart for larger view

Let’s compare our two most recent presidents. The chart below is from the New York Times and is based on data from the Congressional Budget Office. This chart shows contribution to the deficit from policy decisions made during each administration. Obama’s figures are forecasted as a two term president. As we can clearly see, Bush’s massive debt is three times greater than Obama’s.

click chart for larger view

Most striking is the debt contribution from Bush’s tax cut policy that predominately benefited the wealthiest Americans. This policy change alone increased the deficit by $1.8 Trillion and is the single biggest debt building event in American history.

Conservatives are hell-bent on maintaining the Bush tax cuts arguing they help stimulate the economy by giving the rich more money to invest (a revisit of the failed Reaganomic trickle down philosophy). Just one problem, it doesn’t work. GDP growth during Bush’s presidency was a dismal 1.66% – the lowest since the 1940s. Even if the negative affects of the 2008 financial crisis are removed from the data, the Bush era is still a 60 year low with a GDP of 2.39. During this same six-decade period, the Democrat administrations of Kennedy/Johnson, Clinton and Carter had the best GDP growth performances (5%, 4.3% and 3.7% respectively). Does it get any clearer than that, folks? This data comes from the U.S. Dept of Commerce Bureau of Economic Analysis.

Takeaways:

1)      The Republican policy of lowering taxes to benefit the rich and sold to main-street America as a growth stimulus, does not work. It failed under Reagan and it was catastrophic under Bush.

2)      Republicans spend heavily on defense because it is an easy sell to the public and it benefits big businesses that contribute heavily to their political campaigns. Keep in mind, 75% of the jobs created in America come from small businesses, not the big ones chased by Republican politicians.

3)      To offset their heavy spending, conservatives try to look responsible by cutting social programs that help the poor and elderly. They sell this by highlighting government excesses that they have created in the first place.

4)      Financial policies created by Democrats have historically out-performed Republicans ones because they are inherently balanced with responsible spending and appropriate taxation for a modern society.

Important Note: The Bush tax cuts now expire at the end of 2012. We must hold our representative’s fingers to the fire and make sure they don’t vote to extend this rich man’s benefit package. Again, trickle down Reaganomics never has and never will work!

Closing Challenge: Show me some unbiased government data that even remotely suggests Republican financial policies are better for main-street America than the ones used by Democrats. Real data, not uneducated Tea Party trash talk!

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Roger Ingalls is well travelled and has seen the good and bad of many foreign governments. He hopes his blogging will encourage readers to think more deeply about the American political system and its impact on US citizens and the international community.

The Debt Limit: A Republican Shell Game (Roger Ingalls)

Treasury Secretary Timothy F. Geithner has warned that the U.S. government will default, if the debt ceiling isn’t increased by August 2, 2011. He goes on to says, “this would have severe consequences for the economy”.

Lately, the debt limit or ceiling has received a fair amount of press because the Republicans are refusing to vote affirmatively to raise it. Keep in mind that the debt ceiling has been increased approximately 75 times in the past fifty years. Increasing this limit is nothing new and has occurred more frequently under Republican administrations.

The conservatives are trying to handcuff the Obama administration with their no vote. Newt Gingrich orchestrated the same failed-maneuver during the Clinton administration. Republicans won’t increase the limit until the Obama administration makes more budget cuts. Essentially, they want to remove $2.4 trillion from the budget over the next ten years. The President will not cut the budget until tax breaks given to the rich under the second Bush administration are eliminated and tax loopholes are closed for big business. So here we sit, stuck in political mud.

The solution is simple. Look back in time and see what worked. During the Clinton administration, the U.S. had one of the best economic eras in its history. Just undo the George W. Bush  craziness that’s still in place; bring back the Clinton tax brackets, get rid of the mid-2000 corporate tax loopholes and roll back expenditures on Defense. We don’t even need to cut Defense spending all the way back to the 1990s level.  We can double the Clinton-era Defense spending and still save $3 trillion over the next ten years which is $600 billion more than the conservatives want.

The Obama administration needs to man-up and get rid of the irresponsible financial policies put in place under G.W. Bush, as promised. Republican politicians need to quit the political sound-biting and do something constructive for the middle-class.

The debt limit discussion is just a diversionary storm in a water-glass.

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Roger Ingalls is well travelled and has seen the good and bad of many foreign governments. He hopes his blogging will encourage readers to think more deeply about the American political system and its impact on US citizens and the international community.