Sanity Zone 11-4-2010 Post Election Analysis
Posted 11-04-2010 at 06:20 PM by xan
Nothing less than the expected results for the midterm elections on Tuesday. While there were a couple of suprises both ways, several trends emerged.
Today, we address The Rise of the Far Right
Tea Partiers who believe in a smaller government and fewer regulations advanced. In some cases, the Tea Party Republican displaced a moderate Republican or RINO (Republican In Name Only). In others, they replaced a “Blue Dog” Democrat, one that, for the odd stand on social issues would have been a Republican in another life.
“Out of Control Government Spending” is their primary theme and “Lower Taxes” the secondary. The 2011 US Federal Budget is $3.69 Trillion. If it sounds like a lot of money, it is. However, much of that spending is “untouchable” unless they dismantle some very popular social programs.
Mandatory Spending includes:
So, unless there is a radical reorienting of the basics, $2.45T is off limits, at least for the foreseeable future.
Discretionary spending of $1.24T includes many programs that could suffer the knife:
For those who think we waste money, sure, of course we do. Waste is everywhere. Yet one man’s waste is another man’s treasure. One can make a solid case for cutting spending programs because we cannot afford them as a nation. This is where expectations must to meet hard reality. In order to balance the Federal Budget, we must either lower spending by nearly $1.03T or raise taxes by that amount. Let that ONE TRILLION DOLLAR figure sink in. That’s how much we are missing. No one tax is going to cure it and no single cut is going to close the gap.
Tea Partiers who believe that taxes are too high already endure the lowest marginal tax rates in over 60 years. Lowering them further will only cause deeper issues for Federal debt. Cutting essential services for a rapidly growing class of seniors already in distress is going to backfire in both the short and long run.
Raising taxes during a recession has always been the boogeyman. However, England just raised taxes and their economy is responding positively. They also reduced government payrolls and entitlement programs. No class is spared. Yet, because everyone is contributing, very little squawk is heard. Sure, some groups feel unduly targeted, but every group got hit. Hopefully, our Tea Partiers recognize the fiscal realities that our European partners have and the programs they have already successfully implemented.
Thanks for reading! I look forward to your comments.
Today, we address The Rise of the Far Right
Tea Partiers who believe in a smaller government and fewer regulations advanced. In some cases, the Tea Party Republican displaced a moderate Republican or RINO (Republican In Name Only). In others, they replaced a “Blue Dog” Democrat, one that, for the odd stand on social issues would have been a Republican in another life.
“Out of Control Government Spending” is their primary theme and “Lower Taxes” the secondary. The 2011 US Federal Budget is $3.69 Trillion. If it sounds like a lot of money, it is. However, much of that spending is “untouchable” unless they dismantle some very popular social programs.
Mandatory Spending includes:
- Social Security and Medicare $1.236T; if you want to ensure defeat in 2012, make poor old people poorer during a recession.
- Income Security of $0.502T(which includes programs such as unemployment and disability benefits, child tax credits, child nutritional programs and foster care and adoption services) takes care of those who have had misfortune or are severely disadvantaged; most of these go directly to states to mete to citizens.
- Net Interest services our nation’s debt, and luckily enough is only $0.251T because interest rates are so low; a 1% rise in interest rates would double that number.
- Medicaid and other health services total $0.308T; one can quibble, but denying poor people basic health coverage is not a smart public health policy.
- Other programs totaling about $0.150T are mandatory by law and are mostly things like highways and veterans’ pensions and student financial aid.
So, unless there is a radical reorienting of the basics, $2.45T is off limits, at least for the foreseeable future.
Discretionary spending of $1.24T includes many programs that could suffer the knife:
- $0.75T goes to Defense spending, and you’re not going to give up on the holy war now, are you? Tea Partiers’ defense of the “American Way of Life” have mostly exempted defense spending, though some have questioned whether the US’s safety is really in jeopardy if the radical, non-peaceful Muslim extremists acquire nuclear weapons.
- Also included is our National Institute of Health, which funds research into cancer and diabetes; the oversight of the safety of food, water and drugs, and supports rehabilitation services for mentally compromised and drug abuse total $0.050T.
- Army Corps of Engineers, Department of Energy, NASA, FEMA, FAA/Transportation Safety, Homeland Security, Disaster Relief and the like total about $0.110T.
- Discretionary Education totals $0.073T and includes things like retraining for displaced workers and special education and the Smithsonian.
- International Aid totals about $0.031T, including State Department operations, puts about $20 billion in aid and relief to the poorest on our planet.
- Government operations and prisons essentially make up the rest.
- Less than $25Billion goes to pure “transfers” which the rich protest against paying their taxes ("welfare mothers on crack" and other pejorative characterizations).
For those who think we waste money, sure, of course we do. Waste is everywhere. Yet one man’s waste is another man’s treasure. One can make a solid case for cutting spending programs because we cannot afford them as a nation. This is where expectations must to meet hard reality. In order to balance the Federal Budget, we must either lower spending by nearly $1.03T or raise taxes by that amount. Let that ONE TRILLION DOLLAR figure sink in. That’s how much we are missing. No one tax is going to cure it and no single cut is going to close the gap.
Tea Partiers who believe that taxes are too high already endure the lowest marginal tax rates in over 60 years. Lowering them further will only cause deeper issues for Federal debt. Cutting essential services for a rapidly growing class of seniors already in distress is going to backfire in both the short and long run.
Raising taxes during a recession has always been the boogeyman. However, England just raised taxes and their economy is responding positively. They also reduced government payrolls and entitlement programs. No class is spared. Yet, because everyone is contributing, very little squawk is heard. Sure, some groups feel unduly targeted, but every group got hit. Hopefully, our Tea Partiers recognize the fiscal realities that our European partners have and the programs they have already successfully implemented.
Thanks for reading! I look forward to your comments.
Total Comments 4
Comments
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I certainly hope the tea party, the old-school republicans, the dems, and everyone else recognize the fiscal realities that exist in Europe, because sadly, to this point, the Obama administration has been hell bent on implementing their failed policies and programs right here.
It's high time the average working american pushes back.Posted 11-04-2010 at 10:52 PM by saintfan
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So far, the "failed" policies have worked. The recession is over and growth is returning (2% last quarter). Nine consecutive months of private sector job growth and price stabilization have been achieved. In not time during US history have 4% of the labor force been absorbed into paying jobs in 18 months (except during the gear up for WWII, and never during "peace time"), and the expectation of the Obama administration to make that happen with "passive policy" is ridiculous. It will not change under this Congress and will not change even with a new President.
The problem with macro-economic policies is that implementation timing is critical and the magnitude the effort must match the magnitude of the problem. Unfortunately, Mr. Obama took office 3 years into the recession. Mr. Bush did not begin addressing the downturn until mid 2008, and only half-heartedly. The current Republican theories on intervention is "Do Nothing - the Free Market will Decide." The current Democrat theories on intervention is "try anything that has historically worked."
I know the frustration with the speed of the recovery is not to anyone's satisfaction. Unfortunately, the globalization of our economy has taken much power away from our government's ability to nudge the economy as effectively as we want. I will refer you to a previous blog entry that discusses policy options.
BTW, Europe's new fiscal policies may wind up causing their currency to appreciate in the next quarter, and that would be devastating to jobs.
When you say "pushes back" what does that mean?Posted 11-05-2010 at 10:04 AM by xan
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The failed policies I speak of are those in Europe that are falling like dominoes, and while it's hard to pin him down to it, anyone who is paying attention can see that Obama would take us there tomorrow if he could. Europe cannot currently (or historically) defend itself from a termite invasion. Its health care is horrible. Its economy is worse than ours. Its standard of living is far below ours.
Yes, there has been what you call "job growth" in the private sector for several consecutive months, but Obama himself acknowledges that the growth is not enough to put a dent in unemployment. As an example, an 800 BILLION DOLLAR construction stimulus and still nearly a quarter million construction jobs lost? Obama is not for the private sector. Not now. Not ever. He a statist from the jump. I say it isn't enough. So does he. I'd say that it's not working is accurate.
Saying it can't happen under 'this' congress, I assume, means the Republicans will prevent it? I would like to suggest that there has rarely been a more polarizing president than the one we have now. Dare I say ever? No, it's can't happen overnight for any president or congress, but my health care costs just increased by 40% under Obama's plan to make it 'more affordable'. More affordable to whom? His constituents perhaps - the same people who will likely not show up again in two years to re-elect him because they thought the free ride was coming. I think THOSE people are the ones who fail to understand how much time change can take. If the Republicans are smart enough to keep Sarah Palin out of the main stream of their party, Obama is gone in 2012.
But let me allow Obama to speak for himself. He said this two days ago:
There is no "as if" to it. He is a big government guy. He doesn't hide from that, and for that at least I can applaud him, but he is wrong.Quote:"I think people started looking at all this, and it felt as if government was getting much more intrusive into people's lives than they were accustomed to..."
You might even theorize that the problems we face today are, in some ways, the direct result of the failed policies put in place to recover the economy during the great depression. There are many similarities. Many of those programs were sneaked through during the middle of the night and have been used and abused ever since as a way to continue to fuel big government. Businesses today are uncertain of what is to come from this 'big government'. They are reluctant to hire as a result. This is horribly similar to the 1930's, and it took WWII to fix it - more than a decade after it began, and the current administration is following the same script.
In my humble opinion, the recent election says the country has come to recognize this president's agenda as harmful and anti-American spirit - that it has far less to do with the expectancy of immediate results but rather has everything to do with a way of life. Working people are tired of unchecked handouts, and that which has been handed out by the Obama administration dwarfs any tax cut proposed or implemented by the previous administration.
I knew this day would come, and I knew it far before the politicians in Washington did. This president has an agenda that puts our country on the wrong track, which is not to say he hasn't had some good ideas, but there is only so much money to go around - and you can't just print more. This lesson has been learned by the European collective and, a bit closer to home, is being learned, albeit it stubbornly, by the failed People's Republic of California.Posted 11-05-2010 at 08:19 PM by saintfan
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I love this discussion., Thanks for engaging.
Before tackling broader policy issues, we should acknowledge some ground level facts. Policy based on misinformation breeds disaster.
The World Health Organization (WHO) identifies and promotes best-in-class standards and practices of care. While not the only non-partisan and independent NGO, it has the reputation, at least, of having fewer axes to grind as it has one of the broadest sets of country participants, access to the world's best health institutions and the core data necessary to make assessments.
The WHO ranks every western European nation ahead of the US in terms of outcomes, access, and overall health of population. The only aspect of health care delivery that the US ranks 1st in is cost, and we are TWICE the cost per patient than the next highest costing nation. The most notable issues with the US system is its asymmetry. Access is severely limited to 15% of the population and roughly 70% of the rest are covered in what is termed "catastrophic care," where the patient is responsible for everything other than an emergency, life threatening situation. Some key analysts have termed our private health care system as a "denial of care" or "wait until and emergency" protocol system, as profits for the firms entirely depend on NOT providing or paying for health care, especially preventive care. Nations ranked highest in outcomes, access and overall population health are single payer systems that focus on prevention rather than emergency care.
Within the US care system itself, quality is extremely uneven. Paradigms vary by region, and even within regions, health centers have extremely uneven distribution of technologies. With a focus on emergency care as the primary generator of value added (read: profits) services, health providers are not incented to prevent health problems. As patients are required to pay for preventive services and not pay for emergencies, the rational consumer wishing to minimize personal cost usually opts NOT to engage in preventive care in order to foist the risk on the insurance system. Even further, because federal and state law require hospitals to take emergencies even without clear reimbursement (Medicaid as fallback picks up the tab or the costs are transferred to the premium paying customers) low and middle income people have no incentive to even buy insurance. Thus, emergencies become the breeding ground for waste, fraud and profit that have poor outcomes and lowers the overall effectiveness of the US healthcare system.
The first stage of the proposed changes in our US healthcare system is to force those who are skating by not contributing to the system to pay in. The second is to start forcing out the concept of the profit maximizing "denial of care" system and layering in preventive and inclusive care.
Your costs going up have nothing to do with this healthcare package. The majority of provisions are not due to come into effect until 2014, with only the addition of dependents under 26 can be included in parents' packages (not costly to healthcare companies) and forcing out the provisions that would deny care to those suffering from a catastrophe (which is why those with those policies were complaining) in effect immediately. Your costs have gone up because insurance companies are trying to convince you that this program will cost more money to them. In fact, all that's gone up has been these companies' profits. Care costs are relatively predictable, all that's different is the insurers' fear of the single payer system option, which would devastate their profit paradigm.
I personally don't understand why they would raise rates like this, as it only reinforces arguments that having the single payer option would benefit the participant. But what do I know.
Anyway, the point is that none of the changes to the healthcare system entail a free ride to anyone. In fact, these changes are what Newt Gengrich in 1994 and Mitt Romney in 2007 proposed to stop the burden on taxpayers, particularly the wealthy. Few of the measures come close to making us look like the European models which outclass our system. If anything, this healthcare package should be a huge boom to the private sector providers as more people will be buying products from insurance companies and more people will be seeking healthcare under the for profit system. Saying Mr. Obama has never been for business doesn't align with the most significant legislation in the past 50 years. It is decidedly pro-business. It is decidedly pro-personal accountability. Sure the government was meddling, but what recourse was there? This broken and bankrupt system wasn't going to fix itself. From here forward, when there can be ways to refine the model, the precedent is set that change is achievable. Many things can be done to improve the system, but not every change can happen immediately.
Lastly, the "failed policies" in Europe aren't failing because the policies are bad, its' because some of the rules in those policies don't match with the realities. Take their biggest problem, state pensions. Full Benefit retirement age in Greece is 53. Ridiculous. It's not the policy per se, its that it doesn't match with how long people live. Raise that to 67, like it is in the US, and their problems dissipate rapidly. Greeks pay far more into their system than do Americans, and get more out. They are all very satisfied with how their programs work in practice (from a withholding and payout basis), but they have a disconnect as to when retirement should become a benefit. We have that same problem here. 67 isn't the same today as 67 was 40 years ago. We live longer, we live healthier and most of us are capable of working well beyond 67, but none of us want to give up that "benefit." Raise retirement 3 years to 70, and Social Security's financial problems would be dramatically reduced.
In many ways, Social Justice programs like pensions and healthcare rely on the rules of engagement for success. Anarchic "free market" solutions often wind up having asymmetric results. Modern governments concerned with equity and fairness (The American Way) despise asymmetry in core markets where people have no choice in participation as the enemy of the state. It is seen as institutionalizing injustice, like slavery or denial of women the right to vote.
Remember, there is no perfect solution, but there is a "more perfect union." Free Markets can coexist with Controlled markets, each adapting from the other. Neither is a real enemy.
I have no real feel for Mr. Obama as a polarizing force. To my knowledge, none of his policies have caused unemployment, none have caused systemic breakdown of industries (like the Banking/Financial System), none have caused us to enter into needless violent conflict, and non of his policies have singled out any particular group for discrimination. Causing these would polarize me. My hope is that solutions for the above are considered and the best ones enacted.Posted 11-06-2010 at 11:52 AM by xan
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