debt – Hank Kalet

Progressive Democrats vote ‘no’ on debt bill

An interesting Facebook comment from Doug Henwood, the economist who runs Left Business Observer:

Another fun fact: two-thirds of the yes votes in the House for the budget bill came from Republicans; they were for it by 174-66. Dems were divided, with 95 for, 95 against. Has Obama become the de facto leader of the Republican party?

I think it is instructive to look at the Democratic “no” votes, to understand what this budget/debt bill means for the long haul. The most progressive members of the House cast votes against the bill, members who have committed themselves to defending programs that aid the middle class and poor, who view government as a necessary bulwark against the predations of capitalism.

Here is the statement from the cochairmen of the Progressive Caucus, Raul Grijalva (D-Airz.) and Keith Ellison (D-Minn.):

While voting to increase the debt ceiling is a necessary step, the deficit-reduction measures included in this deal will further harm our economy and hurt working Americans. With unemployment still above 9% and stagnating economic growth, taking money out of the economy will only place a heavier burden on working families.

This is the wrong approach for our economy at the wrong time, and it goes against our basic values. For that reason, we and many of our members will be voting no.

Progressives are committed to prosperity for the middle class, and we believe that reasonable deficit reduction can be achieved while advancing our values. But today’s deficit-reduction deal falls short. Republicans have sought to dismantle basic services for average Americans while spending more to support millionaires and corporations.

Tea Party Republicans have held our economy hostage to those demands, but deficit reduction should not be enacted in a hostage situation. We have long said default on the full faith and credit of the United States is unacceptable. If this bill is defeated, we urge the President to use his 14th amendment powers to raise the debt ceiling and avoid default.

We will continue to fight for programs that help working families. During recent weeks the Congressional Progressive Caucus stood with millions of people across the country to protect Social Security, Medicare and Medicaid from being cut in the deal being voted on today.

But preventing the worst from happening is not enough. Americans will not stand by while their livelihood comes under attack. We can structure our economy in a way that benefits everybody—not just special interests, and not just the extremely wealthy. We can articulate a vision for the country not based on what America can’t achieve—but what it can. That is the type of leadership Americans expect.

Obama is mentioned in the statement only tangentially, but the attack on false leadership must hit him along with the GOP leadership, which has used the Tea Party minority to stall the debt debate and push the compromiser-in-chief into a corner. A president more committed to progressive principles might have pushed back, but a Wall Street-friend Democrat just isn’t going to do that.

Send me an e-mail.
Read poetry at The Subterranean.
Certainties and Uncertainties a chapbook by Hank Kalet, will be published in November by Finishing Line Press. It can be ordered here.
Suburban Pastoral, a chapbook by Hank Kalet, available here.

Bad deal on debt

It appears that we’ve avoided default. So why don’t I feel better about the economy or America’s future?

The answer can best be summed up by U.S. Rep. Rush Holt, the Democrat who voted against the debt deal. In an e-mailed statement, Holt characterized the debate as a hostage-taking in which the “Tea Party and their enabler … have insisted that, unless Congress enacted their radical, ideological agenda, they would force an unprecedented default on America’s obligations and thus trigger an economic collapse.”

That approach, he said, led to an unbalanced deal that will do damage to the American economy and leave the most vulnerable Americans at the mercy of the market.

The House has voted for vast cuts in government services that ordinary Americans depend on: student loans, unemployment insurance, food safety inspections, highway safety programs, and more. These cuts will force layoffs among teachers, public safety officers, construction workers, and more. These laid-off workers will, in turn, be forced to pare back their spending at their local grocery stores, drug stores, and small businesses, forcing still more layoffs – a vicious circle that threatens to destabilize our fragile economy. We saw in last week’s economic reports that job growth has been choked back by cuts in state and local governments. This deal does not help the situation. It hurts the economy.

The deal lays the groundwork for another $1.5 trillion in cuts to come, to be negotiated behind closed doors by an unelected super-committee. Given that the first round of cuts will have decimated discretionary programs, these later cuts will very likely focus on Social Security and Medicare. The citizens who will be hurt most are those who have the least voice in our democracy. After all, when a handful of politicians gather in the proverbial smoke-filled room, the interests of ordinary Americans are nearly always left out.

Yet although most Americans will sacrifice greatly, the most privileged among us will be immune. Favored corporate interests, millionaires, and billionaires will continue to receive special tax breaks as far as the eye can see. That is not the sort of fair, balanced deal that Americans asked for and expected.

As poor as this deal is on its merits, I am even more troubled by the precedent it sets. The Tea Party and their enablers have, by taking the American economy hostage, transformed a routine budgetary authorization into the most dramatic reshaping of government in decades. Today’s deal establishes that government-by-hostage-negotiation is a legitimate, effective way to achieve one’s political ends. I am frightened by what this means for the future of our democracy.

Send me an e-mail.
Read poetry at The Subterranean.
Certainties and Uncertainties a chapbook by Hank Kalet, will be published in November by Finishing Line Press. It can be ordered here.
Suburban Pastoral, a chapbook by Hank Kalet, available here.

Send me an e-mail.
Read poetry at The Subterranean.
Certainties and Uncertainties a chapbook by Hank Kalet, will be published in November by Finishing Line Press. It can be ordered here.
Suburban Pastoral, a chapbook by Hank Kalet, available here.

Manufactured crisis v. real crisis

The American government is barrelling foward into an abyss in which the nation’s credit-worthiness will be called into question and its economic well-being badly damaged.

And yet, the crisis we face is one created in Washington having little to do with the way our economy functions.

The federal government — specifically, the president and the two houses of Congress — has until next week to raise the national debt ceiling or face the shutdown of government programs, the inability to send out government checks and default on some of our debt.

The crisis is real, if contrived, and the solution is actually rather simple: eliminate the debt ceiling. The ceiling, as The New York Times points out in a useful Q&A today, is a relic of an earlier time:

The system goes back to World War I, when Congress first put a limit on federal debt. The limit was part of a law that allowed the Treasury to issue Liberty Bonds to help pay for the war. The law was intended to give the Treasury greater discretion over borrowing by eliminating the need for Congress to approve each new issuance of debt. Over the years the limit has been raised repeatedly, to $14.3 trillion today from roughly $43 billion in 1940. But outside observers have noted that the failure to make increases in the debt limit part of the regular budget process can be risky. The G.A.O. concluded that it would be better if “decisions about the debt level occur in conjunction with spending and revenue decisions as opposed to the after-the-fact approach now used,” adding that doing so “would help avoid the uncertainty and disruptions that occur during debates on the debt limit today.”

It is an arbitrary limit that treats all debt the same way and strips legislators of their responsibility to consider the long-term implications of their budgeting decisions. Removing our multiple wars from the budget, as was done by President George W. Bush, makes it seem as though the budget is responsible, that we have the revenues to pay for what we want to spend. But the billions that are being tossed down the rabbit hole of our wars in Afghanistan and Iraq (and Pakistan and Libya and South America) come from somewhere. So we borrow.

The same goes for the Bush tax cuts, which were described by the president at the time as stimulative to the economy and, therefore, a revenue generator. The absurdity of the claim was obvious at the time, and has only grown more ridiculous as time has passed.

So, what might we consider good debt? Spending on roads and bridges, for instance, because the result is something with a long shelf life. Basically, you are paying off the use of the roads, bridges, solar grids, rail lines, etc., over the length of their lives. And, this is a philosphical point, you are asking future generations to contribute to the cost of infrastructure that they will be using.

Education would fall under good debt, because it adds value to the workforce (I hate looking at education in this way, but from a budget and debt standpoint, I think we have to). The same goes for R&D and weatherization programs, upgrades to public housing and affordable housing, environmental enforcement (because it maintains a long-term societal good), and so on.

The issue is not debt, but the kind of debt we are dealing with (we have reached a point where we are borrowing to pay off previous debt, a problem that will not be aided by a failure to raise the debt ceiling). And it is a problem with revenue — let the Bush-era tax cuts expire on everyone.

Revenue, of course, is the key issue here. Beyond the Bush tax cuts, we face a serious drop-off in revenue caused by the recession. With unemployment approaching 10 percent and about one in six Americans either unemployed or underemployed, by most estimates, the amount that the middle class can contribute to the federal budget is in decline. The only way to address this is to put Americans back to work. And the only way to do this is for the federal government — i.e., the entity empowed by the American people to act on their behalf — to step in with public works projects, aid to states (to avert public worker layoffs), etc.

And we should eliminate the debt ceiling and leave it to the market to determine whether the United States is a creditable risk.

Send me an e-mail.
Read poetry at The Subterranean.
Certainties and Uncertainties a chapbook by Hank Kalet, will be published in November by Finishing Line Press. It can be ordered here.
Suburban Pastoral, a chapbook by Hank Kalet, available here.

The debt debate: Taking bets on Democratic cave-in

Moody’s has issued a warning that should shorten the debate over the debt ceiling.

Moody’s Investors Service warned on Thursday that it might downgrade the nation’s sterling credit rating if Congress does not increase the nation’s debt limit “in coming weeks,” putting a spur to sputtering talks between party leaders and the White House to reach agreement on a long-term deficit-reduction plan.

The debt ceiling has been used as a political football by the GOP this year, though Democrats have been unwilling to acknowledge that some of the questions raised by their Republican opponents about mounting debt are legitimate.

Debt is a long-term problem and will need to be controlled, but the prescriptions being pushed by the GOP are downright mean-spirited and disingenuous. We can deal with the deficit by ending our multiprong war on terror, reducing our military footprint world wide, creating jobs (a healthy economy will go a long way toward generating added tax revenues), reversing the Bush tax cuts and closing corporate tax loopholes. We don’t need to gut Medicare or Social Security.

But don’t expect Democrats to fight for these kinds of remedies. Instead, we probably should be taking bets to see how quickly Democratic leaders cave in to Republican demands as a way to avert a catastrophe created by GOP recalcitrance.

Send me an e-mail.
Read poetry at The Subterranean.
Certainties and Uncertainties a chapbook by Hank Kalet, will be published in November by Finishing Line Press. It can be ordered here.
Suburban Pastoral, a chapbook by Hank Kalet, available here.

Hey, governor,here are some alternatives

Gov. Jon Corzine has said repeatedly that he was willing to listen to alternative approaches to heal the state’s failing fiscal health. Well, here is something interesting from New Jersey Policy Perspective. The advocacy group says that a mix of the gas tax and assorted driving fees would go a long way toward fixing things.

I agree, though I also would add that we need significant budget cuts, changes in local spending and an increase income tax.

South Brunswick Post, The Cranbury Press
The Blog of South Brunswick

E-mail me by clicking here.