The Federal Budget Versus the U. S. Constitution

The major issue with all government spending, on a case-by-case basis is, what is the "return on investment” which seems, perhaps to be the point of this article.  The real question in the case of weather related research, as with all research, do we benefit more economically than we pay (traditional cost:benefit ratio)?  I believe that what James Kwak has offered at The Baseline Scenario (see http://baselinescenario.com/2011/12/16/money/)  is a valid argument that such is true in the case of hurricane related research (assuming ad arguendo, that the methodology is effective AND efficient in terms of expenditures, or is there a more effective and efficient alternative?).  There are lots of areas of governmental expenditure which cannot be argued as being efficient and effective alternatives to other competing possibilities.  I have just finished reading a very scary and amazing book:  Top Secret America, by Dana Priest and William Arkin.  Unlike the obvious argument we may have about the advisability of spending amounts to theoretically save lives and preserve assets potentially risk from hurricanes, which are a statistical fact of life and which have distinct defined costs in both areas, the national security, counter-terrorism budget is completely and utterly out of kilter regarding efficiency and effectiveness pursuant to any possible argument. 

Let's consider the amount of budgeted expenditures for the sixteen agencies tasked with protecting us from terrorism (some with other purposes, but not many), which are somewhere in excess of $300 billion (because of certain factors they have become more than a little difficult to quantify, since they extend into all areas, federal, state and local).  Consider that one could argue that not included in that number is an amount of military spending essentially dedicated buy not identifiable as serving that specific purpose.  Consider that, in our history, we have lost less than 5,000 lives (not counting troop losses in Afghanistan, but only civilian lives on American soil, including embassies worldwide).  Compare this expenditure to protect us against losing about 400 to 500 lives a year from terrorism, with the expenditures and losses related to, say, enforcement of laws against illegal drugs.  I would suggest that we spend about 10% or less of that $300 billion annually to protect ourselves from the effects of illegal drug commerce and usage, and that the loss in terms of lives and economic losses in that area would be an order of magnitude greater than that from terrorism (tens, if not hundreds of times more).  The contrast of competing priorities is truly striking and is reaching the point of absurdity.  Why can't we have only three agencies related to terrorism beyond the military?  I say that the FBI, CIA and Homeland Security should be plenty (and one could argue that in this case, Homeland Security is superfluous beyond the FBI, which should have total authority to control "internal" terrorism and terroristic threats.  As an example, Umar Farouk Abdulmutallab’s trip to America (the underwear bomber) was missed due to a purely administrative SNAFU between multiple agencies (a simple, well-documented failure of communication).  The major problem with our post 9/11 national security policy is that it has fostered its own "complex" which overlaps with and corresponds with the Military-Industrial Complex, such that now that we have created it, its lobbies have become so powerful that we not can hardly discuss limiting it without the oligarchs associated with this drastic overspending successfully countering any such actions through lobbying, disinformation, and other clandestine means.  As an example, we now have nearly a million citizens with Top Secret clearances, and a two year backlog to obtain them (and, by the way, just processing one such clearance costs tens of thousands of dollars).  We have an agency which will soon be able to monitor the daily lives of almost every American in multiple ways.

I completely agree with any efforts to restrict government expenditures to justifiable tasks at justifiable levels, and that what we need is some oversight on the overseers who are now bought at auction by special interests in every election at every level.  In this atmosphere, democracy simply can't happen, and what we spend for our government will continue to be less and less efficient and effective.  Of course, the corruption of the budgetary processes within our governments at all levels has completely overwhelmed the ability of anything resembling rational government to succeed.

The real tragedy at the moment is that both ends are crippled, that is, we cannot effectively pass measures to make what we already have more effective and efficient, so that we literally can’t control spending in any meaningful way, and, we also can’t reform the massive imbalances created in a corrupted tax code and actually raise the revenues necessary to pay for even what is necessary.  The obvious answer is to reduce (or, ideally, eliminate) the effects of money in our politics.  What that will take is electoral and lobbying reformation, and, since that is asking the fox to change the rules for his chicken house, that can’t happen, unless we find a way around the Supreme Court’s rulings in Buckley v.Valeo (corporations are people), and Citizens United (money is speech).  The only way to do that is to pass a constitutional amendment to change those decisions (The Supreme Court can’t rule that a constitutional amendment is unconstitutional, thank God!!).  Last Friday, December 16^th, David McGrew of the Occupy movement posted the following article on the internet:  http://www.truth-out.org/occupy-constitution-get-money-out-politics/1324070807, which enumerates thirteen proposed 28^th Amendments to the U. S. Constitution which would make these changes, some of them proposed by quite eminent people, including congresspeople and senators.  Whoever you are, wherever you are, please become active, and join one of these movements, some of which are beginning to merge and consolidate their efforts.

Economically, Where Do We Go From Here?

Every day I awaken and watch Morning Joe.  It is an entertaining morning show, a mixture of politics and many other topics.  But it is mainly politics and economics.  It is, by necessity, not slanted left or right.  Joe is Joe Scarborough, former Congressman from northern Florida, and Mika Brzezinski, daughter of President Jimmy Carter’s Secretary of State, Zbigniew Brzezinski is his co-host.  Mika is moderate left, and a supporter of our current President, and Joe is fairly right, and takes a conservative, albeit holistic, view of our nation’s appropriate governance.  At any rate, I highly recommend this show for its substantial breadth of commentary and subject matter.  There are other reasons to watch it, and it is nearly always entertaining.  I am also a fan of Huffington Post, believing that it is the closest thing to a truly middle of the road major media publication, as it is extremely inclusive of commentary from nearly every angle.  I also consistently read one of the most cogent of all economic blogs, The Baseline Scenario, published by Simon Johnson, ex Chief Economist of the International Monetary Fund and MIT professor, and his blogmate, James Kwak (see http://en.wikipedia.org/wiki/James_Kwak).  These sources are great sources of stimulating and thoughtful commentary, and I highly recommend them to any who might be inclined to tune in.

I decided to write the following based not only on many recent readings, among them Michael Lewis’s Boomerang, and Naomi Klein’s The Shock Doctrine.  I also decided that it was time to let my readership in on my well-considered view of the dire state of our national and international economic situation.  As a lead in to my conclusion, I simply want to point to the following:

1.      American politics is substantially controlled by the American oligarchy, that is the citizens and corporations (or companies) which control the majority of our national privately held assets (i.e. money and possessions). 

See:  http://en.wikipedia.org/wiki/Oligarchy

2.      The massive disparity between the haves and have-nots in America, about which many articles have been written, and which is the primary motivating force behind the Occupy Wall Street and “Occupy” movements in general.  In America it is truly the 99% at the bottom vs. the 1% at the top of the economic food chain. 

3.      The total corruption incorporated in the United States Tax Code, fostered and perpetuated by the purchase of our government by the US Oligarchy which exists in our present defacto system of government, most appropriately characterized as a plutocracy.

See:  http://en.wikipedia.org/wiki/Plutocracy

4.      The desperate straits in which a vast majority of our 50 states find their budgets and fiscal well-being.  Under present circumstances the states are wont to increase taxation, since the massive unemployment and failure of real estate markets has substantially drained the tax base of even potential resources which could serve to support the continuation of basic state governmental services.  They are cutting services continuously on all fronts in an effort, a losing effort, to keep up with their budgetary constraints, remembering that states cannot do deficit spending, by law. 

5.      The failure of the Super Committee to create any kind of legislative resolution to the federal debt problem.  Presently our national debt stands at about $15 trillion dollars or about 100% of GDP.  This is not sustainable in the long run, but, owing to our economy’s essential weakness (I believe that, although we are not now technically in recession, that is running a negative GDP, we are still in actual recession because there is no real estate market, and there are more than 58,000,000 Americans either unemployed or massively under-employed according to BLS calculations.  See http://en.wikipedia.org/wiki/Bureau_of_Labor_Statistics).  It is important to note that America did not emerge from the Great Depression until after WWII, which served as a massive stimulus to the economy, and that, after WWII, America had a debt to GDP ratio of more than 150%.  The way we handled that debt level was to tax at very substantial progressive rates (see http://en.wikipedia.org/wiki/Income_tax_in_the_United_States), with the top rates at or above 90% for more than two decades.  The greater tax collections allowed us to develop massive infrastructure, including the Interstate Highway System, to make massive loans to Europe under the Marshall Plan which allowed for a more rapid recovery and greater growth in exports, and to provide housing and education to veterans of the War from the Veteran’s Administration.  It also led to the development of a very large and stable middle class.  

It is important to understand that nearly every serious independent economist, as well as Ben Bernanke, has stressed the need to do everything possible to encourage and cause growth in our economy, and not to worry about debt reduction in the near term, but to devise a plan to reduce that debt in the long term.  The failure of the Super Committee is completely acceptable, except that it did no arise from a recognition of the relative urgency of its work, but rather from massive political polarity, which is truly deadly and destructive.  The failure of the Super Committee simply points to the massive dysfunctionality of our Congress.  The inability of our Congress to find a solution to creating a level of greater revenues through tax reformation is a key issue.  There needs to be a combination of reformation of our 15,000 page Tax Code, and an adjustment of the present rate structure to recognize the need to redistribute our national income.  I know that income redistribution is a sore subject, seen often as associated with Communism and Socialism, but, when the system is rigged to benefit a very small portion of our society, then it simply must be changed. 

6.      Lastly, unless we can reform our political system such that those voted to public office consider their primary obligation in governance to be the general public weal, nothing will change.  There are lots of movements and suggestions to this end in many quarters these days, and I see many as favorable potentially.  I am certain of only one thing, and that is that whatever is done must be done by Constitutional Amendment.  The Supreme Court rulings in both Vallejo and Citizens United, which recognized money as speech and corporations having rights equal to individuals, are utterly contrary to sanity in government.  Hence the need for a Constitutional Amendment.

Considering all of the above factors (and others unmentioned here), as well as the fact that Europe is suffering from many of the very same problems in governance, and general economic malaise and weakness, the European economic union is about to collapse.  It has no meaningful path forward to maintain its unity.  Once German bonds began not to sell last week, the writing was on the wall (see this article:  http://www.bloomberg.com/news/2011-11-28/the-euro-area-is-coming-to-an-end-peter-boone-and-simon-johnson.html, which is only the latest written by Simon Johnson of The Baseline Scenario and his friend and fellow economist Peter Boone, both of whom are recognised experts in international and, specifically, European, economic issues).  We live in a truly globally connected world, and its most major international connections are banks.  Owing mainly to massive political power, the banks are in horrible shape.  They are not appropriately regulated, especially with respect to the related issues of capitalization and leverage.  They are all heavily invested in international bond holdings.  They are all massive participants in the substantially under-collateralized world of derivatives (much of the nearly $600 trillion dollars of which are in credit default swaps, or hedges against the upcoming collapse).  This bank problem, of course, is where the real peril is, and the single greatest reason why the various European Union members have not been able to come to a consensus regarding fixing their economic crises, that is owing to the fact that all of their resources are essentially directed at saving the massively corrupted mega-banks, which are all closely affiliated with the big six in the US.

Of course, the ultimate upshot of the massive corruptions of the international financial world is that the next crash, when, not if, it comes, will take down all of the world’s economies, large and small, since they all are so closely tied.  The coming crash will be an order of magnitude larger than the one which occurred almost exactly three years ago, since it will result also in an untold magnitude of political and cultural upheaval.  You see, it is quite different when we are talking financial losses for the 99%, and when we are talking about the destruction of all wealth, including most of that held by the 1%, and the upcoming crash will take all of us, even the wealthiest.  In the new world which emerges, if we can maintain social sanity,  things will get massively better, but it will take a fair amount of time and patience for this to happen.

Be prepared, it’s only a matter of time.

Iranian Nukes and Terrorism

Last Friday I had the pleasure of watching an amazing debate on Morning Joe.  I watch all of that show nearly every day.  It is massively educational, and fascinating to listen to the discussions led by Mika Brzezinski and Joe Scarborough.  Mika is essentially progressive/liberal and Joe is essentially progressive/conservative.  Notably, Joe was a member of the House of Representatives (Republican from Florida who served from 1995 to 2001) and Mika’s father Zbigniew, was Secretary of State under Jimmy Carter.  These are bright, interesting  people, and, although I kind of get tired of many of a regular cast of characters on their show, they have a wonderfully wide selection of guests.

Last Friday, they had on Richard Haass, President of the Council on Foreign Relations, a council comprised of many of the most powerful and politically connected in America.  Also amongst their guests was Mohammed Larijani, the Secretary General of the Iranian High Council on Human Rights.  Most of us might think of Larijani’s position as essentially oxymoronic, however I actually believe that not only is he serious, but also that, sadly, since Iran has been substantially criticized in this country, is viewed by our leadership as part and parcel of a nation of leaders who are pariahs in human culture.  Before I go any further I want to make clear that I am not Iranian, that I do not wish them to be a nuclear power, and that I find their theocratic leadership to be somewhat of a sad political farce.  That having been said, I will now go on to defend both Larijani and Iran’s right to exist amongst nations and be respected as any other nation.  If we start from that point, we can engage is serious conversation and sort out facts from lies.

The conversation on Morning Joe last Friday, November 18, centered on Iran’s nuclear program.  Larijani claimed that Iran was not attempting to fabricate nuclear weapons, and that their entire program was about electricity production.  This month, the International Atomic Energy Agency issued a report indicating a reasonable probability that Iran is working on developing nuclear weaponry.  There is no absolute proof, only information on their atomic project which points toward the probability.  It is not an established fact, and, I would argue, based upon our Saddam WMD error, that we should not jump the gun on this one.  We should certainly press for answers, so we could actually know, rather than make an intelligent guess.  So, my view, at this moment is that we would be loathe engaging in any serious saber rattling, but rather should be restrained.  In this vein, I believe that two of our major allies, who have much closer ties to Iran, could prove amazingly useful in making a more certain determination, that is both Russian and China.  Each has a very close relationship as a trading partner.  Each has different views on sanctions sponsored by us against Iran through the UN.  Their views, incidentally, are more than a little supportable, but that’s another discussion.

Also, during the conversation, much to the consternation of the other conversation’s participants made the statement that the United States is a sponsor of terrorism.  I truly think that this is not just an amazing statement, but is thoroughly and completely supportable, and this is where we American’s like to ignore history in favor of myth.  At this point, I would point the reader to Iranian history, with specific reference to the late Shah, and our role, through CIA intervention, in restoring him to power in 1953.  The Shah was a brutal dynast.  He was our friend.  We sponsored his power, and he vastly abused the Iranian populace.  Needless to say, in 1979, in a revolution essentially sponsored by Iran’s Shi’a clerisy, the Shah was deposed and exiled (to the United States), and the Ayatollah Khomeini took over the leadership of the theocratic Islamic government.  This historical summary hopefully explains, at least in part, not only the Iranian leadership’s antipathy toward the US, but also just how an Iranian could see the US as a sponsor of terror (they see the Shah as visiting terror on the populace).  I would argue that not just in this matter, but glaringly in our putting Saddam Hussein (even worse than the Shah as a brutal dictator) in office, but also by our arming of the Mujahedeen during the ouster of the USSR from Afghanistan, and subsequent abandonment under the infamous Charley Wilson’s War also did the terrorism sponsorship trick.  After all, by backing the Mujahedeen (and Taliban) and then abandoning them, we had a direct hand in the rationale for the existence of Al Qaida, which would never have existed had it not been for this episode.

There is much more history to know, but it is important to understand how Mohammad Larijani could make such statements.  To the casual, ignorant, observer, this seems absurd.  To the educated it makes perfect sense.

Back to the nukes.  I am not concerned about Iran gaining nuclear weapons, any more than I am concerned with the existence of these demonic destructive human constructs.  I am in favor of complete disarmament, however that is purely impossible.  Once they became part of reality and were a part of the world’s weaponry, getting them to go away entirely is a pipe dream.  We had a chance for a brief moment during the Khrushchev-Reagan disarmament conference in Reykjavik, Iceland in October of 1986, the Soviets offered full disarmament.  In order to get this, President Reagan had to agree to scrap his Star Wars antimissile defense program.  Reagan would not agree, end of story (from the memoirs of George Shultz).  The most essential reason for my attitude is that there is a substantial proliferation of these weapons, with nine nations presently openly possessing atomic weaponry (US, Russia, China, England, France, India, Israel, North Korea, and Pakistan).  It would seem obvious, even to the casual observer that there are two nations whom we should be most concerned with, namely Pakistan, a nominal ally, and North Korea, a sworn enemy.  I find it inconceivable that we should be more concerned with Iranian nukes than those two countries.  It is important to remember that, although Iran probably possesses the strongest military in the Middle East next to Israel, it makes no sense for that nation to be interested in producing its own nukes, since, if it ever considered using one, the other nine countries would make that country into a very large smoking hole.  But, even if they do, I certainly don’t consider them to be any greater threat to us and our allies than North Korea.  The country which really scares me is Pakistan, where there are direct ties between elements of the Taliban and the Pakistani military and intelligence.  Now, that is scary, for everyone.

Lastly, to watch and hear this wonderful “debate” on Morning Joe, go to:

http://www.youtube.com/watch?v=Unby99wa9gA

The Super Committee Farce

I am, and always have been, from my earliest memories, a student of the English language, and, in fact, of language generally.  There are lots of reasons for this, among them, the love of language expressed by my parents and made obvious by their speech and reading habits, also, what I will call genetic predisposition (it’s baked in my cake).  In today’s world, I am aghast at what passes for English, whether in written form, or spoken.  I watch a lot of “educational” television shows, and, even there, I find that the writing is appalling, with massive numbers of errors.  I find that disturbing.  What I really find disturbing, since I am an intent observer of all things political, is the ways in which the political class has co-opted and corrupted our language.  It’s one thing to engage in political hyperbole, which has been done since the days of Tom Jefferson and Ben Franklin, but to corrupt our language in the ways politicians do for the purpose of creating a special coded hyperbole which enables the production of shorter and shorter, more efficient sound bites is disgusting to a fare thee well.  A great example of this comes to mind in the creation of the new definition for the term “personhood” which is now used to describe fertilized human embryos.  Any good semioticist will understand the value of special terms which change language and discussions.  They do this constantly in the advertisements that they design to persuade potential customers of value.

Let’s face it, the “Super” committee is definitely not super.  In fact, the super committee in Congress, convened to propose ways to reduce our national debt, is a committee which could have been designed by a combination of Aesop, Alfred E. Newman, Salvador Dali, and Edward Albee.  It is a charade, a kabuki farce, and obfuscation of serious politics.  It is emblematic of what our Congress has become, which is a governing body fully separated in thought and action from its constituencies.  On the Democrat’s side, we have a group which suffers from the idea that government is the answer to all problems social (as though it is on a holy crusade to protect those who they claim are helpless (but only by their definition), they are small minded, self-serving cry babies who really are, by using their special ideology, protecting those, not who elect them, but who sponsor them.  Then we have the other side of the same ideological coin that is the Democrats, who espouse Friedmanomics to support the idea that taxation is, de facto, morally and practically wrong.   And, therefore, it is by the simple act of continuously using inflated, unrealistic, absurd rhetoric, that both parties have painted themselves into ideological corners, and actually seem to believe that if they betray, even in the smallest way, their rhetorically enforced philosophical positions, they will lose their popularity (which, right now, is at about 9% nationally).  In fact, what the real risk is, is that they may lose the support of the wealthy constituents who sponsor their office holding by paying for their elections.

All language aside, it is phenomenally easy to find many trillions of dollars in combinations of revenue and cuts in government spending over the next ten years.  And, it do mean that it is so easy that, if I were in Congress, I would just come out and tell that story.  In revenues, I would start with completely eliminating the Code of Federal Regulations as it relates to taxes (affectionately, The Tax Code).  Then I would simply adopt the same rate structure which was in when Ronald Reagan took office in 1981 (70% top bracket).  I would cut corporate taxation to 20% (obviously all exemptions would be off the table).  I would tax capital gains and interest at the regular bracketed rates as regular income.  I would cut military spending by at least 40% (which includes the 15 national security agencies).  I would make the payroll (Social Security) tax effective without income limits (it now stops at about $108K), or, alternatively, means test who gets the benefit.  I would toss out the present absurd health care system and opt for the Canadian model (effectively Medicare for All).  I would reinstate Glass-Steagall, break up all of the TBTF banks, make all meetings of the Federal Reserve public on C-Span, and require that all “derivatives” be listed on a public exchange and be fully collateralized.  I would institute a .5% transaction tax on all investment trading on all national exchanges and use the proceeds of this tax to sponsor enforcement of regulations.  I would close nearly all of the more than 800 military bases located in other nations, and stop utilizing foreign aid to control corrupt foreign leadership to our purposes (the single biggest reason for the existence of terrorists).   Obviously the Super Committee can’t do half of these things, but it can make $4 to $6 trillion in cuts and revenue increases over a ten year period quite easily.  They won’t do this.  After the failure, Congress will vote to kill the enabling legislation for this committee, including the “sequestration” which would cut into Defiance and Medicare, and they will, in effect, vote to continue to obfuscate their responsibilities in favor of continuing to kick the can down the road.  Sadly, our current political system, recently made tragically far worse by the Citizens United decision, is fully broken, and is now a full throated plutocracy, in which our democracy has been completely high jacked by the wealthy elite.

Why Should We Care About Middle Eastern Protests

I know that many of my fellow Americans are wondering why we should care about Egypt, Tunisia, Libya, Lebanon, Syria, Bahrain, and the many other countries in the Middle East and elsewhere.  Look at what’s happening in our world and ask yourself why.  Of course, there are many answers, some as simple as looking at the histories of the countries in which these massive social upheavals are happening.  Many reach far beyond their borders.  Many of the answers to the question “why” can be allocated to far wider, even global forces.

I absolutely guarantee that the answers to “why” don’t include strictly parochial explanations.  First, there is simply the chasm that has opened between the haves and the have-nothings.  Even in this country, the gap has increased markedly, and it is clear, as the wealthiest individuals and corporations hold fast to their vast wealth, that the chances of the have-nots ascending to the top are essentially at an end.  We have spoken for decades, and, in fact, centuries, about wanting our children to have a better life than ours, for each successive generation to be better educated, better housed, have better life styles, etc.   We all still want that for our scions, of course.  The opportunities are rapidly vanishing.  Think about that.

Thousands of American youth graduate from our universities every year.  Until recently, very few had difficulty finding jobs.  That is no longer true.  Sure, if you graduate with a useful degree (say medicine, finance, computer science, etc.), you may be employable.  It is certain that whatever you would have received as a starting salary and benefit package just five or six years ago cannot be matched now.  Just to have a job, most of these highly educated young people are willing to bargain for far less.

Okay, got that picture?  Now, think about the youth in the rest of the world.  If you are a young Egyptian (plug in most other countries) who has recently received a degree, your chances of actually earning a living right now are pathetically poor.  So, you pinned your hopes on education, right?  Most of those around you are surviving on less than two dollars a day.  Most are hungry when they go to bed.  Meanwhile, you have a cell phone, access to a computer, are able to watch television, where absurd things are advertised, many of which are telling you that life should be better.  And now, ask yourself, if you were one of these young, hopeful, educated, and unemployed young people, what can you expect?  Further, what can you do about the hopelessness that is rapidly taking over your heart and mind?  You have energy, ideas, and lots of friends who are equally frustrated.  There is absolutely no question, it’s time to fight back, time to take your case to the streets.  After all, if you have just wasted all of your intellect on an endeavor that promises you nothing, you are angry, even furious, about the massive injustice, not just toward you, but toward your family and friends who are suffering mightily with no hope of improvement.

Don’t smugly believe that, as an American, you are better off.  You may be, just slightly, for the moment.  There are more than seven billion people on this planet who are competing with you for food, energy, air, water, freedom….

Watching our news channels report on these “hot” spots almost amuses me.  They do no analysis at all.  They don’t look at history, or go below the surface to look for explanations.  I truly and deeply resent the fact that people with time, intellect and resources are quite happy to keep the real answers to themselves.  What’s even worse is that they use much of what they learn to convince us that this country is so much better than elsewhere.  I know, we’re not being shot in the streets by our government for peacefully rallying for change.  What I really want to know is, that with millions losing jobs, earning less, paying more for gas (and nearly everything), and having a totally dysfunctional government, how come none of the tens of millions are out protesting the destruction of this country?  Better start looking in the mirror and deciding how much the future means.  Time to speak up while it’s still legal to raise your voice in public.

Bin Laden is Dead

Our news media are obsessed.  I feel like I’m watching the Wizard of Oz.  Remember the part where the little people dance around singing “The Wicked Witch is Dead” after they poured water on her to dissolve her evil character.  Bin Laden is part of history, not a part of current events.  We have yet to even completely resolve the story behind the WTO 9/11 disaster.  Just check it out.  I’m not a conspiracy theorist, but why would the owner collect his insurance twice, how could our security services so badly botched the whole affair?  Why attack Saddam Hussein as a compliant part of the entire affair over bogus WMD?  Does anyone remember that  Saddam was our ally in the Iran-Iraq War after the radical Islamist cleric the Ayatollah Khomeini deposed our own puppet, the Shah?  Does anyone read any history?  Does anyone know that we have more than 800 bases in other countries around the world, many of them located in countries because we pay dictators lots of money to put them there and then turn our backs to their abuses of their own people (there are many, but read up on Kazakhstan, please)?

Now that Bin Laden is dead….  But, wait a darned minute!!  Let’s see, he was living in Pakistan, within blocks of the Paki’s own bases and their version of West Point.  For six years?  That’s six years we spent in Tora Bora and elsewhere trying to find him.  Meanwhile, our “allies” in Pakistan were letting him build a posh compound (worth more than a million and no one noticed), while we were sending them billions, and fighting their own Taliban in Afghanistan while many Paki’s couldn’t even decide if they liked us.  And the entire time we are angering our much more important ally, India.  What an incredibly screwed up state of affairs!!  And now, we need to see real evidence of Osama’s death, not just what the courts call “hearsay” evidence (DNA? Huh?)  We need pictures.  We need real evidence.  The most suspicious part is that, within just a couple of hours of his purported death, he was buried at sea.  That is suspicious to say the least.  Our government’s “reliable sources” have become so suspect over the past few years that you all must forgive me.  Enough said.

Now we get to the real meat of the matter:  Afghanistan and Pakistan.  Afghanistan is the world’s largest heroin producing nation with trillions of dollars worth of mineral reserves, and we are there fighting a mythical enemy and trying to do nation building by backing a corrupt “President” who took power in a completely questionable election process.  We are spending untold billions supporting this nation, many of whom take great satisfaction in placing roadside bombs to kill our soldiers.  So, the mission is bogus, the nation is bogus, and most of our citizens are against this war as much or more than Iraq, another incredible fiasco.  Time for us to leave.  Anyone wish to argue?

This country spends many billions every year on national security, including a CIA which is located all over the world, an NSA which listens to billions of phone conversations every year, and an FBI which has yet to lock up the first corrupt Wall Street Banker.  What do our tax dollars buy?  It took us six years to find Bin Laden living near the capital of our supposed ally.  How sad are we?  Time to fess up.  We need to overthrow our own government just to take our democracy back from the Plutarchs who claim to provide leadership.  We need the Tea Party to complain about actual problems like being taxed and not represented.  When was the last time a poll showed positive ratings for any party, or even our President?  It’s been a while.

Debt Ceiling: Armageddon?

As a follow up to yesterday’s article, I wanted to comment on the first few things coming down from the Hill regarding the upcoming debt ceiling vote.  Everyone concerned with this country’s future needs to be concerned about this vote and future related legislation.

First, we all need to acknowledge (regardless of party or position) that raising our debt ceiling is vital at this moment.  That debt ceiling is our “credit limit.”  Without increasing it, we will no longer be able to sell bonds or pay our bond debt.  Go ahead and say “so what?”  This is what.  China owns about $3.5 trillion of our debt of $14.3 trillion.  Each day we don’t pay China (if the ceiling isn’t increased) is a day where they feel that their national security is threatened.  China’s recovery has slowed, so they would experience an increase in the value of their currency as the value of the US dollar suddenly drops around the world (remember that failing to increase the debt ceiling would devalue our currency instantly because our bonds would collapse and the bond rates would have to be raised to offset).  The US dollar is the world’s reserve currency (nearly every country’s money is tied directly to the value of the US dollar, other than the Chinese Renminbi, which has a relationship with the dollar but isn’t tied to it) and so the international currency markets would begin wild fluctuations, not to mention the fact that the price of gold would skyrocket, together with all traded commodities as traders and countries scurry to protect their people and trade.

Get the idea?  No reliable reserve currency means chaos in the world’s markets, exchanges, trade relationships, etc.  And I mean chaos.  We couldn’t pay our troops, our teachers, our police, or, in fact any other public employees.  Banking would collapse, and we could enter into a new Dark Ages which could make the Medieval world look positively like Shangri-La.

So, what do we do?  We do what must be done, starting with lots of good ideas which are now circulating:

Cut spending:

Military is the big one.  The public is broadly opposed to all of what we are doing in Afghanistan, Iraq and Libya (useless and unaffordable, not to mention tragic).  We have more than 800 bases overseas, and, based upon the international response to Libya, the US is viewed as the world’s police force (absurd to be that).  Close those bases, bring home the troops, and use the $700 billion or more saved to pay off our debt.

We have so many people (30 million + unemployed and their families) who need help here, shouldn’t we help them first?).  Tax subsidies and other subsidies to oil companies, corporate farmers, pharmaceutical companies, etc.

Increase spending:

Mostly on infrastructure (we are in really bad shape), education, employment retraining, small business stimulus, etc.

Increase taxes:

When we were recovering from WWII, we taxed higher incomes at 90% or more from 1946 for more than two decades.  Do not tax corporations (or close all tax loopholes so that GE and others actually have to pay tax).  Of course, my preference would be to completely throw out the current 23,000 page tax code (Attorney and Accountants Relief Act as it is affectionately known), and go to a flat tax with no deductions and no exemptions, except for children and the disabled.  A flat tax could be comfortably set at such that the first $50,000 would not be taxed, the next $50,000 at 20%, and everything above that at 30% (ask Russia, they’ve had a flat tax for more than five years now, and balance their budget even though the average citizen there makes much less than our average worker).

To give you some idea of just how poorly we are being governed, when Congress agreed to tax cuts late last year, those cost us nearly a trillion dollars.  Now they can’t even agree on a spending reduction amounting to less than 5% of that amount.

In the next month or so, we will be able to tell a lot about our future as a nation.  Can those we voted to represent us actually represent 350,000,000 of us effectively, or will they continue to actually only represent the richest few thousand?  Sadly I have no faith at all in what they will do.

Lastly, I encourage you to spend about 20 minutes doing the budget exercise available online.  When I did this, I was able to get a surplus of $278 billion.  Try it and see.  It’s simple and very educational:  http://public-consultation.org/exercise/

Averting Catastrophe: The Looming Debt Crisis

Ah, a chance for more strutting kabuki!!  Sadly, we are about to witness a needless meltdown in the world financial climate.  Think about the potential tsunami.  So, on day one, the vote comes in.  No one wants to raise the debt ceiling.  Sadly on day two the cascade of events starts.  First, the leadership (both parties) goes on camera and says they’re opposed to increasing the debt ceiling because it would be “irresponsible.”  Ok, good so far, right?  But, as day two wears on, guys like Geithner start a scream, backed by Bernanke.   They say, rightfully, that unless the debt ceiling is raised, there are massive consequences:  we won’t be able to pay our debts (the dollar starts sliding on international money market exchanges and China’s US ambassador calls the White House to find out what is going to happen), threats of reduction in the US bond rating start a small ripple around the world.  Meanwhile the Tea Partiers are thinking, gosh, we can be heroes, so we can’t go along with some charade based upon the bond value drop.  Day three is upon us.  No answers, just more posturing and extreme ideology spouting coming from the White House and the Hill.  More calls, but many of these from Wall Street market makers and bankers.  Face is already being lost almost everywhere, and the level of public frustration at ineptitude of our government is rising steadily.  The dollar drops more.  Suddenly, no one’s making deals internationally because the currency markets have become terrifying with no handle on dollar values.  China is sweating bullets.  Commodity prices are taking frenetic swings.  Gold rises rapidly to $2000 an ounce with no end in sight.  The world’s economy stalls.  Day four and suddenly official Washington realizes that what was a meaningless debate if the ceiling were increased, has become a major global destructive force that now is too late to rein in.

This fantastic scenario probably wouldn’t happen quite this fast, but, who knows?  With the incredible interconnectedness of international finance, it might be even quicker.

This is not the time or place to have the Armageddon debate about balancing this country’s books.

How the Budget Battle is Destroying America

Where are we right now?  By my estimation, we are deeply in the cesspool and it appears that we are getting ready to overflow.  After all, even a great cesspool has a capacity, and there is one more flush which will someday push it to overflow.  And that, literally, will stink.  But, sadly the odor of that fetid accumulation of political fecal regress, is not just offensive, but is becoming deadly.

First, we have to find a way to overcome the political polarity which is destroying all rational thought.  In my opinion, in the Washington political hierarchy, there are only two rational elected representatives.  There’s Bernie Sanders, who is getting ready to leave office soon, and who can blame him (the sole true independent who takes no campaign money from the oligarchs).  And, there’s Ron Paul, who refuses to sing in any Congressional chorus, although he’s holding office as a Republican.  After that, no one.  And, I’m not even saying that I agree with the view points of either, but at least they aren’t tied to some pre-ordained world view, and tend to think and view things with honesty, and don’t propose canned solutions just to satisfy the wealthy sources of election contributions.

We are now under the control of the TEA PARTY, although they represent a fairly small percentage of the Republican majority in the House.  It’s not necessary to analyze why, that is obvious:  in today’s politics, the extremes control because the extremes are the ones who capture the media.

Paul Ryan has offered his version of the cure for the budget deficit and overwhelming national debt.  It will not work.  Why?  Simple.  It fails to address the fundamental problems we have, but focuses on spending only.  The Democrats rightfully object to his proposal, however, if you can’t present a viable effective alternative, then best be silent until you can.  Sadly, in this debate, we don’t hear much of anything about what should be done.  Most of the focus is on things that we find objectionable.

So, how can the problem be solved?  First, keep the government running at all costs.  The present fiscal year ends in less than six months.  Just let that go, so that we can focus on the future.  The debate on a new budget for the next fiscal year is the one to have, beginning now.

So, where do we go now?  We can start with the recommendations of the Budget Commission.  You know, the bi-partisan group which went through months of debate over how best to resolve our fiscal quagmire.  I don’t agree with much of what they came up with, but I also believe that this is the most useful way to begin the debate.  Just deconstruct their recommendations, and start there.

There are a few things which will have to be done to make any solution work:

1.       Through away the present tax code and all of its inequities.  I mean ALL OF THE PRESENT TAX CODE, EVERY WORD, EVERY PAGE.  Replace it with a completely simple code, which would set a two tier personal income tax rate, say about 20% up to the first million, and then 35% over everything else, including dividends, capital gains, interest earnings, benefits, etc. (for the higher tier only).  Eliminate corporate taxes completely, or tax corporations only for profits they make for overseas operations.  Reinstate the Estate Tax for estates valued at more than a million.

2.      Cut military spending by at least 50%.  That’s easy.  That can be done by leaving Afghanistan and Iraq, and closing all of our overseas bases, and eliminating unnecessary weapons systems.  Don’t talk to me about national security being jeopardized by this.  It won’t be, and, in fact it will enable us to focus much more on our borders.

3.      Reduce our present non-military national security from its present size of 15 agencies to only the two necessary ones, the FBI and CIA.  This will make national security far more reliable and effective, rather than a hodgepodge of ineffectively communicating bureaucracies which can’t seem to control much of anything, including their budgets.

4.      Start taxing all carbon emissions.   If we don’t do that, not much else will matter.  Devote at least $30 billion to infrastructure and the same amount to non-fossil fuel, non-nuclear energy research and production, and pay for that with the carbon tax.

5.      Have the FED stop monetizing our debt.

There are lots of other ideas which could help, and, sooner or later we will have to completely replace the present absurd health care laws with a realistic workable program, but that’s a different, but perhaps as meaningful debate.

Will any of this happen?  Not a chance.  The can will keep being kicked down the road until we fail.  It’s the normal cycle.  Can you say Mayans?  Romans?  Greeks?  Egyptians?  There are other examples in our 10,000 year civilized history.   We are on the brink, and, sadly, when it happens, there will be global chaos.  Ask not for whom the bell tolls ….  It’s tolling for 7.5 billion people.

What do Davos and SOTU mean to us?

So, we have a President who gave us a vague and nearly meaningless outline for where the country is and how to make it do better in the future.  There were a couple of good ideas.  The one is especially liked was a reworking of the organization of the Federal Government.  The proposal is that a "committee" would essentially deconstruct our present bureaucracy, and reform it so that the responsibilities of each department would be more specifically and narrowly defined and not in conflict with another department or agency.  Wow, what a novel idea.  He gave the wonderful example of the regulation of salmon.  This was a nice simple example of the absurdity of the bureaucracy as it presently exists.  There are thousands of such examples.  He also suggested reform of the tax code.  This is a no brainer.  These are rational ideas, but, the real problem is, that when the rubber must hit the road, these wonderful ideas will get trampled under the boot of partisan politics.  Each of these reforms would have major impacts on vast areas which presently suffer from the vissitudes of many areas of the budget and governance which represent protected bailiwicks.  He also pointed to progess made by Secretary Gates on "cutting" the defense budget, that is by some $78 billion over three years.  That is completely absurd, but then even suggesting such a cut was considered bold and progressive.  Our present stated military budget is about half of all expeditures beyond servicing our debt.  That is, over $700 billion annually.  So, the cut represents about a 3.5% cut.  But, it's not even really a cut, since what they are actually talking about is reducing the already planned increases in military spending.  More smoke and mirrors that they know that no one will notice who doesn't already have a real focus on such matters.  I will write more about this in a later blog.

So, now to DAVOS, a meeting of the world's nations to discuss (coordination and cooperation on economic policies) how to proceed into the future.  This is not such a bad idea, if it weren't so influenced by a substantial cast of characters (large global corporations and banks) who are there to protect their present domination of the world's markets and finances.  Not only do these "globalists" have incredible clout with the leaders whose elections they have assured in their home countries (and even beyond borders in many cases, since many are directly linked to government contracts and financing), but also act to suppress the rational cooperation relating to the many small struggling economies of lesser countries.  Right now there is global peril all over the world.  The major players in Asia, most notably China and India, are having major success, partly because they've got economies that are becoming more self sustaining and now can not just sell to their own people, but still maintain positions as major outsourcing destinations.  The major western players are all going through what I would consider to be major economic reorganizations, trying to overcome the hangover from the catastrophe of two years ago which affected their economies (and still affect) so mightilly.  So, in the long run, with the amazing divergence of suitable action and interactions at issue in the conference, it will ultimately achieve very little, if anything at all.

What I would ask those who respond to this blog is to either detail something of interest relating to my views, but also to eliminate political rhetoric which could be viewed as liberal or conservative.  You see, I believe that these traditional viewpoints hinder progress toward rational solutions to existing problems.  Idealism is great to have, but flexibility based upon pure rationalism is more important.  I am not trying to tell you what to say, but ration suggesting that none of us waste time on partisanship.  I am interested in good speakers, but good listerners and good arguers too.