Unsweetened Tea … Party

August 11, 2011

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For as long as I’ve been born the United States of America has had a policy of not negotiating with terrorists, even in a hostage situation. The thinking is that rewarding people who take hostages will just entice them to take more hostages. It’s a pretty common and widely accepted theory in psychology – we see it’s applications on things a lot more prevalent than hostage-taking; reward the dog for sitting down and the dog is more likely to sit when you want it to. Go pick up the baby when it cries and the baby will learn that crying leads to parental attention. In the same way, our current broken political system THRIVES on 11th-hour “crisis” situations.

The recent debt crisis is a glaring example of the extremism in politics, and in my opinion it is closer to a hostage crisis than we’ve ever been. Hostage situations almost always arise from the routine; it’s easier to both take hostages and shock and terrorize people when you disrupt their daily lives in everyday situations. In that same way, this debt crisis arose from something that’s so routine it’s been done 102 times before and never with stipulations attached. In the same way our financial system was shocked when it was held hostage despite the wishes of the majority of US citizens. After George Bush cut taxes in the biggest revenue loss in US history, despite having some of the lowest tax rates in the industrialized world, congress was so concerned that they … that’s right, raised the debt limit with nary a debate.

Had we handled raising the current debt ceiling the same way that was done George W. Bush, Bill Clinton, Ronald Reagan, and every other president this would have been done weeks ago with almost no attention from the public. What was different this time? Well, just factually speaking, this was the first time the “Tea Party” had any kind of say in congress. This was the first time that Obama didn’t have a majority in both houses. Those are the only significantly relevant issues that apply to this specific debt increase. As a percentage of GDP, we’ve had more debt – this was back in World War 2, and we’re fighting 2 wars right now, both started by George W. Bush.

The combination of the Tea Party influence and Obama not having a free pass in both houses gave Republicans a prime opportunity to hold the possibility of a default over Democrats’ heads. As usual, the Democrats had no spine and caved in and as usual the Republicans went against the wishes of a majority of Americans to push a horribly misguided philosophy of “trickle-down” economics that has been proven to not work.

All through this situation I heard Republicans pandering to the camera and saying how they wouldn’t let Obama and the Democrats raise taxes on America. Yet from the moment this situation was labeled a crisis the Democrats did not want to raise taxes on 98% of Americans, only on the richest 2%. Your average Republican will immediately knee-jerk and come back with “but … but … but … if taxes are raised business won’t hire people.” I will point out that corporate tax revenues are at an all-time low (mostly thanks to loopholes).  I will also point out that despite corporate profits being up 22%, the unemployment rate has only slightly improved and that’s not counting the hundreds of thousands who have simply stopped looking. All that is in addition to payrates for the average American decreasing, in relation to inflation. The bottom line: The Democrats wanted to raise taxes more or less on just those very people benefiting from the 22% increased profits, and the Republicans held our economy hostage because they opposed that. Once again, I will point out that the Republicans are getting lots of campaign finance from the very companies that have flourished the past decades, and it has been Republicans in the past to oppose campaign finance.

Back on the 2010 campaign trail all we heard from Republicans was how we needed to turn around the economy by creating jobs, specifically by making it easier for business to hire people by lowering taxes and creating more loopholes. Yet, they were so concerned about the jobless rate that as soon as the debt ceiling deal was done, Eric Cantor called for the Summer recess for congress despite the fact that the FAA was shut down due to disagreement over the ability to make it easier for FAA employees to unionize.  Think about it this way: After crying for weeks during the debt limit crisis that they weren’t getting their way, Republicans were so concerned about the average American that they were letting millions in non-controversial tax revenue go each day and putting 90,000+ people out of work while they went on a SIX WEEK vacation. Aren’t you glad they represent you so well?

So, over the past 1+ decades my long-view take on US economics is this: Republican politicians relax Wall St. oversight rules and regulations. Wall St. takes too many risks and ends up crashing, dragging the economy down with it. Government knee-jerks and saves Wall St. Too many corporations lay off people as part of the crash. People stop spending in fear. Government revenues go down. Government lays off people. More people stop spending in fear. Private agency that’s funded mostly by Wall St. banks decides that the US might be a risky investment despite the fact that statistically it’s better than many others that were labeled as safe by that same private agency – despite the fact that as of this writing the stock market is tanking and US Treasury bills can’t sell fast enough.

The basic problem is not that the US Government spends too much. The problem is the US Government spends more than it earns. There are three ways to correct that problem: decrease spending, increase earning, or both. To determine which method is best requires one to prioritize spending needs. THAT is where the real issue is. Our representatives and, indeed, our people cannot come to an agreement on what the purpose of government is.

Heck, if we can’t even agree on that, how do we expect to move forward? Well we’re certainly not going to now that the hostage-takers have gotten their way – they’ll simply think that they can just take hostages to get what they want. Keep your eyes open, because they have their eyes on Medicare and Social Security.

7 Comments (+add yours?)

  1. Squeaky
    Aug 11, 2011 @ 11:44:49

    A couple quick points:

    1. The majority of the people didn’t want the debt ceiling to rise. http://www.cbsnews.com/8301-503544_162-20056258-503544.html
    2. It wasn’t the republicans that were the problems with the FAA, it was the senate democrats. The house republicans and democrats passed a bill, the senate republicans were ready to vote on it. It was the senate democrats that didn’t want to pass that version of the bill even though the house agreed and passed it and the senate republicans agreed and were ready to pass it.
    3. Yes, let’s privatize social security. I’d love that!


  2. zarberg
    Aug 11, 2011 @ 11:54:14

    1) Read what I wrote carefully – I never once said the majority of Americans wanted to raise the debt ceiling. I merely stated the majority (vast majority, 70+%) of Americans were displeased with the way the Republicans handled it – that 70+% wanted revenue increases to go with it.

    2) It’s interesting that you say “House Republicans and Democrats” when it was a handful of Democrats – just barely enough to pass the bill – that went along. I would guess those Democrats have quite a stake in seeing FAA-approved construction go on in ther states. In fact, the reason the senate Democrats are standing firm is because the Republicans want to add on to the bill a law that would make it harder for FAA employees to unionize.

    3)Yeah, privatizing social security looks fantastic in light of the past few days of the market. Until the FTC has some teeth and Wall Street isn’t treated as a higher power than the government, we’ll have people losing large percentages of what they’re owed in a single few bad days. If the “private market” is so great, why are markets down 10-15 percent in the last week and government bonds selling at an all time high?


  3. kosmo
    Aug 11, 2011 @ 13:01:59

    Privatizing social security doesn’t necessarily mean that everyone would need to invest in equities. With the rate of return on your Social Security money hovering in the low to mid 2% range (depending on your situation), you could invest pretty conservatively and still beat it. 30 year treasuries would beat it.

    Also, I’d expect a nice recovery in the market as more people realize that panicked selling is an irrational response. If you were going to buy a specific stock a month ago, and the company’s situation hasn’t changed, it an even better idea to buy at a lower price today. General Mills is not going to sell fewer boxes of Cheerios because of S&P downgrading US debt.

    I’m not going to say that repeated increases in the debt ceiling are a good idea, per se. However, in this particular context, how was it going to be avoided? I understand working to limit spending in the future, but there was no way in hell we were getting through August 2011 without raising the debt ceiling.


  4. Martin Kelly
    Aug 11, 2011 @ 14:50:27

    Just a couple comments. The polls show that 70% of Americans are unhappy with the way CONGRESS handled the situation (not Republican or Democrate). So both parties can share that one with the Republicans controlling the House and the Democartes controling the Senate.

    This next one is not a criticism of Zarberg, it is more a generic comment. How come when a couple of people from your team support the other side of an argument they are irrelevant? And when your adversary holds on to their principles, they are horible people, but when your side does they are “standing firm”.

    Finally, just a gripe. I have heard many people say we cannot cut our way out of this problem. Well we have definately spent our way into it. We have the highest reciepts in history and are still falling deeper into dept. We have to take a strong critical look at the entire budget, from congressional paper clips to aircraft carriers. Medicare and Social Securtiy should be looked at, but only to keep them within the tax that is expressly gathered for that purpose (and no taking the surplus for the general fund). I honestly do believe that we are all taxed enough already. What I would prefer is the removal of most if not all dections for corporations, oranizations (including unions), and individuals rather than finding additional taxes to levee on those who are deemed to have too much. Simplify it all and there would be less ability to cheat or have loop holes.


  5. zarberg
    Aug 11, 2011 @ 15:00:43

    A little math:

    The majority of Americans are unhappy with how the debt deal was settled.


    Boehner got 98% of what he wanted.



    To me, it means the Dems were spineless and the Republicans once again looking out for corporate interests, not their own. We are one of the lowest taxed nations in the industrial world

    As for your gripe not directed at me, it sure seems directed at me, since you’re replying to my article. Saying “my team”, too? Really? Partisan much?

    We’re all in this together, the more you make it an “us against them” game the worse off we’ll ALL be. If you claim to be a Republican I challenge you to write to your Republican senators and ask them why their party is against cleaning up campaign finance. Ask them if they’d be willing to support a 100% transparency campaign finance law, and if not, ask them why.

    I’ve already written to Kay Hagan and expressed my displeasure on spending, especially earmarks, military, and corporate gifts.


  6. kosmo
    Aug 11, 2011 @ 15:00:55

    “We have the highest reciepts in history and are still falling deeper into dept.”

    I’ll have to poke around to find it again, but I found a good site for showing historical government revenues and I think we were actually sharply down from a few years back. Down 500B in individual income tax revenues alone, maybe (which makes sense, since the unemployed aren’t paying much in taxes …). I’ll try to link this tonight.

    There are two ways to reduce the deficit. Cutting spending on increasing revenues. We MUST do at least one of these to cut the deficit. Do neither, and the deficit will grow – it’s basic math.


  7. kosmo
    Aug 11, 2011 @ 19:21:03

    Here’s the link showing government revenue:

    Federal revenue is down about 400B from 2008.


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