Thursday, August 9, 2012
Sunday, July 15, 2012
Friday, September 9, 2011
I Can't Believe I am Agreeing with Sarah Palin
Some of Sarah Palin's Ideas Cross the Political Divide
By ANAND GIRIDHARADAS, The New York Times
Published: September 9, 2011
CAMBRIDGE, MASSACHUSETTS — Let us begin by confessing that, if Sarah Palin surfaced to say something intelligent and wise and fresh about the present American condition, many of us would fail to hear it.
That is not how we’re primed to see Ms. Palin. A pugnacious Tea Partyer? Sure. A woman of the people? Yup. A Mama Grizzly? You betcha.
But something curious happened when Ms. Palin strode onto the stage last weekend at a Tea Party event in Indianola, Iowa. Along with her familiar and predictable swipes at President Barack Obama and the “far left,” she delivered a devastating indictment of the entire U.S. political establishment — left, right and center — and pointed toward a way of transcending the presently unbridgeable political divide.
The next day, the “lamestream” media, as she calls it, played into her fantasy of it by ignoring the ideas she unfurled and dwelling almost entirely on the will-she-won’t-she question of her presidential ambitions.
So here is something I never thought I would write: a column about Sarah Palin’s ideas.
There was plenty of the usual Palin schtick — words that make clear that she is not speaking to everyone but to a particular strain of American: “The working men and women of this country, you got up off your couch, you came down from the deer stand, you came out of the duck blind, you got off the John Deere, and we took to the streets, and we took to the town halls, and we ended up at the ballot box.”
But when her throat was cleared at last, Ms. Palin had something considerably more substantive to say.
She made three interlocking points. First, that the United States is now governed by a “permanent political class,” drawn from both parties, that is increasingly cut off from the concerns of regular people. Second, that these Republicans and Democrats have allied with big business to mutual advantage to create what she called “corporate crony capitalism.” Third, that the real political divide in the United States may no longer be between friends and foes of Big Government, but between friends and foes of vast, remote, unaccountable institutions (both public and private).
In supporting her first point, about the permanent political class, she attacked both parties’ tendency to talk of spending cuts while spending more and more; to stoke public anxiety about a credit downgrade, but take a vacation anyway; to arrive in Washington of modest means and then somehow ride the gravy train to fabulous wealth. She observed that 7 of the 10 wealthiest counties in the United States happen to be suburbs of the nation’s capital.
Her second point, about money in politics, helped to explain the first. The permanent class stays in power because it positions itself between two deep troughs: the money spent by the government and the money spent by big companies to secure decisions from government that help them make more money.
“Do you want to know why nothing ever really gets done?” she said, referring to politicians. “It’s because there’s nothing in it for them. They’ve got a lot of mouths to feed — a lot of corporate lobbyists and a lot of special interests that are counting on them to keep the good times and the money rolling along.”
Because her party has agitated for the wholesale deregulation of money in politics and the unshackling of lobbyists, these will be heard in some quarters as sacrilegious words.
Ms. Palin’s third point was more striking still: in contrast to the sweeping paeans to capitalism and the free market delivered by the Republican presidential candidates whose ranks she has yet to join, she sought to make a distinction between good capitalists and bad ones. The good ones, in her telling, are those small businesses that take risks and sink and swim in the churning market; the bad ones are well-connected megacorporations that live off bailouts, dodge taxes and profit terrifically while creating no jobs.
Strangely, she was saying things that liberals might like, if not for Ms. Palin’s having said them.
“This is not the capitalism of free men and free markets, of innovation and hard work and ethics, of sacrifice and of risk,” she said of the crony variety. She added: “It’s the collusion of big government and big business and big finance to the detriment of all the rest — to the little guys. It’s a slap in the face to our small business owners — the true entrepreneurs, the job creators accounting for 70 percent of the jobs in America.”
Is there a hint of a political breakthrough hiding in there?
The political conversation in the United States is paralyzed by a simplistic division of labor. Democrats protect that portion of human flourishing that is threatened by big money and enhanced by government action. Republicans protect that portion of human flourishing that is threatened by big government and enhanced by the free market.
What is seldom said is that human flourishing is a complex and delicate thing, and that we needn’t choose whether government or the market jeopardizes it more, because both can threaten it at the same time.
Ms. Palin may be hinting at a new political alignment that would pit a vigorous localism against a kind of national-global institutionalism.
On one side would be those Americans who believe in the power of vast, well-developed institutions like Goldman Sachs, the Teamsters Union, General Electric, Google and the U.S. Department of Education to make the world better. On the other side would be people who believe that power, whether public or private, becomes corrupt and unresponsive the more remote and more anonymous it becomes; they would press to live in self-contained, self-governing enclaves that bear the burden of their own prosperity.
No one knows yet whether Ms. Palin will actually run for president. But she did just get more interesting.
By ANAND GIRIDHARADAS, The New York Times
Published: September 9, 2011
CAMBRIDGE, MASSACHUSETTS — Let us begin by confessing that, if Sarah Palin surfaced to say something intelligent and wise and fresh about the present American condition, many of us would fail to hear it.
That is not how we’re primed to see Ms. Palin. A pugnacious Tea Partyer? Sure. A woman of the people? Yup. A Mama Grizzly? You betcha.
But something curious happened when Ms. Palin strode onto the stage last weekend at a Tea Party event in Indianola, Iowa. Along with her familiar and predictable swipes at President Barack Obama and the “far left,” she delivered a devastating indictment of the entire U.S. political establishment — left, right and center — and pointed toward a way of transcending the presently unbridgeable political divide.
The next day, the “lamestream” media, as she calls it, played into her fantasy of it by ignoring the ideas she unfurled and dwelling almost entirely on the will-she-won’t-she question of her presidential ambitions.
So here is something I never thought I would write: a column about Sarah Palin’s ideas.
There was plenty of the usual Palin schtick — words that make clear that she is not speaking to everyone but to a particular strain of American: “The working men and women of this country, you got up off your couch, you came down from the deer stand, you came out of the duck blind, you got off the John Deere, and we took to the streets, and we took to the town halls, and we ended up at the ballot box.”
But when her throat was cleared at last, Ms. Palin had something considerably more substantive to say.
She made three interlocking points. First, that the United States is now governed by a “permanent political class,” drawn from both parties, that is increasingly cut off from the concerns of regular people. Second, that these Republicans and Democrats have allied with big business to mutual advantage to create what she called “corporate crony capitalism.” Third, that the real political divide in the United States may no longer be between friends and foes of Big Government, but between friends and foes of vast, remote, unaccountable institutions (both public and private).
In supporting her first point, about the permanent political class, she attacked both parties’ tendency to talk of spending cuts while spending more and more; to stoke public anxiety about a credit downgrade, but take a vacation anyway; to arrive in Washington of modest means and then somehow ride the gravy train to fabulous wealth. She observed that 7 of the 10 wealthiest counties in the United States happen to be suburbs of the nation’s capital.
Her second point, about money in politics, helped to explain the first. The permanent class stays in power because it positions itself between two deep troughs: the money spent by the government and the money spent by big companies to secure decisions from government that help them make more money.
“Do you want to know why nothing ever really gets done?” she said, referring to politicians. “It’s because there’s nothing in it for them. They’ve got a lot of mouths to feed — a lot of corporate lobbyists and a lot of special interests that are counting on them to keep the good times and the money rolling along.”
Because her party has agitated for the wholesale deregulation of money in politics and the unshackling of lobbyists, these will be heard in some quarters as sacrilegious words.
Ms. Palin’s third point was more striking still: in contrast to the sweeping paeans to capitalism and the free market delivered by the Republican presidential candidates whose ranks she has yet to join, she sought to make a distinction between good capitalists and bad ones. The good ones, in her telling, are those small businesses that take risks and sink and swim in the churning market; the bad ones are well-connected megacorporations that live off bailouts, dodge taxes and profit terrifically while creating no jobs.
Strangely, she was saying things that liberals might like, if not for Ms. Palin’s having said them.
“This is not the capitalism of free men and free markets, of innovation and hard work and ethics, of sacrifice and of risk,” she said of the crony variety. She added: “It’s the collusion of big government and big business and big finance to the detriment of all the rest — to the little guys. It’s a slap in the face to our small business owners — the true entrepreneurs, the job creators accounting for 70 percent of the jobs in America.”
Is there a hint of a political breakthrough hiding in there?
The political conversation in the United States is paralyzed by a simplistic division of labor. Democrats protect that portion of human flourishing that is threatened by big money and enhanced by government action. Republicans protect that portion of human flourishing that is threatened by big government and enhanced by the free market.
What is seldom said is that human flourishing is a complex and delicate thing, and that we needn’t choose whether government or the market jeopardizes it more, because both can threaten it at the same time.
Ms. Palin may be hinting at a new political alignment that would pit a vigorous localism against a kind of national-global institutionalism.
On one side would be those Americans who believe in the power of vast, well-developed institutions like Goldman Sachs, the Teamsters Union, General Electric, Google and the U.S. Department of Education to make the world better. On the other side would be people who believe that power, whether public or private, becomes corrupt and unresponsive the more remote and more anonymous it becomes; they would press to live in self-contained, self-governing enclaves that bear the burden of their own prosperity.
No one knows yet whether Ms. Palin will actually run for president. But she did just get more interesting.
Saturday, April 2, 2011
Monday, March 21, 2011
Tuesday, February 8, 2011
Obama Doesn't Understand Capitalism
Obama: Corporate Profits "Have To Be Shared By American Workers" -- February 6, 2011
"If we're fighting to reform the tax code and increase exports, the benefits cannot just translate into greater profits and bonuses for those at the top. They have to be shared by American workers, who need to know that opening markets will lift their standard of living as well as your bottom line," President Obama told the Chamber of Commerce on Monday morning.
The Obama quote is an example of how the President doesn’t understand the difference between shareholders and stakeholders. In Capitalism, profits are to be distributed to the owners of the Company (unless the Company can generate a higher return on its cash), so that they, in turn, can invest and risk that profit on starting or growing other ventures. That is how new jobs are really created.
If a Company has a problem of disparity between the pay of its executives and its workers, it should (at least theoretically) be a disadvantage to be exploited by competitors and damaged by fleeing workers. A Company's Board of Directors is the corporate body tasked with reigning in compensation packages when those packages negatively affect the Company’s performance. A weak Board that doesn't address this problem has historically translated into poor stock performance.
Another example of the President’s misunderstanding concerning why and how capital is risked can be found in the bailout of GM where secured bondholders were crammed down in favor of union workers. Team Obama may think that the GM bailout is a big win -- and in the short-term, it is. But longer term, that precedent will make capital-riskers less likely to provide securitized funding for the next basket case company and taxpayers will be more likely on the hook for turn-around funding in the future.
"If we're fighting to reform the tax code and increase exports, the benefits cannot just translate into greater profits and bonuses for those at the top. They have to be shared by American workers, who need to know that opening markets will lift their standard of living as well as your bottom line," President Obama told the Chamber of Commerce on Monday morning.
The Obama quote is an example of how the President doesn’t understand the difference between shareholders and stakeholders. In Capitalism, profits are to be distributed to the owners of the Company (unless the Company can generate a higher return on its cash), so that they, in turn, can invest and risk that profit on starting or growing other ventures. That is how new jobs are really created.
If a Company has a problem of disparity between the pay of its executives and its workers, it should (at least theoretically) be a disadvantage to be exploited by competitors and damaged by fleeing workers. A Company's Board of Directors is the corporate body tasked with reigning in compensation packages when those packages negatively affect the Company’s performance. A weak Board that doesn't address this problem has historically translated into poor stock performance.
Another example of the President’s misunderstanding concerning why and how capital is risked can be found in the bailout of GM where secured bondholders were crammed down in favor of union workers. Team Obama may think that the GM bailout is a big win -- and in the short-term, it is. But longer term, that precedent will make capital-riskers less likely to provide securitized funding for the next basket case company and taxpayers will be more likely on the hook for turn-around funding in the future.
Tuesday, December 14, 2010
Shrinking the Federal Budget Deficit
Gentlemen,
I’d like to share with you a recent discussion that led me to do a little research on the Federal budget deficit and what levers could be pulled to move us towards a balanced budget in the coming years. I hope you find the topic interesting and it gets you thinking more about the defining issue of our generation, the burgeoning Federal Deficit. The discussion started with a friend of mine (who is a big Fox News watcher) suggesting that we could close the budget deficit by cutting the compensation of Federal employees who are being paid more than their private counterparts for doing the same job. On a gut level, I did not think that that a cut in Federal payroll could appreciably close the deficit, but I said that I would review federal expenditures to either substantiate or change my view. After reviewing the numbers, I conclude that even if we cut the Federal payroll substantially, we cannot balance the federal budget without also trimming entitlements and defense. And even that solution, if it did balance the budget, would not begin to address a repayment of the $13.8 Trillion National Debt, which is a separate liability from that of the annual deficit!
BTW, factcheck.org did a long and boring analysis of Rand Paul’s comments concerning pay differentials between public and private employees (http://factcheck.org/2010/12/are-federal-workers-overpaid/). The issue is complicated, but for the sake of this discussion, lets assume that US federal government workers are 10% overpaid visa vie their corporate counterparts.
Current 2010 Budget $3.5Trillion*
Current 2010 Tax Revenue $2.1Trillion*
Current 2010 Budget Deficit $1.4Trillion*
Currently, the U.S. Office of Personal Management estimates that there are just over 4.2 million federal employees. Thus, based on the average salary figures reported by USA Today, total wages paid to all federal employees now total nearly $300 billion per year. Add to this figure the costs of insurance, paid time off, and retirement benefits (which have not even been quantified here), and the total federal outlay to "pay" federal employees soars by billions more.
Let’s take a $320B base figure as the cost of federal employees and benefits and then use the assumption that federal workers are paid on average 10% more that comparable workers in the private sector. If we were to implement a 10% across the board cut of salaries and benefits (politically a virtual impossibility), we would save the taxpayers $32B dollars a year. Sounds like a large number. But based on 2010 numbers, that savings would only represent 2.5% of the 2010 budget deficit. If we could to get rid of every U.S. Government worker (right-wing dream), we could only close 25% of the colossal 2010 deficit.
Now if you say that 2010 was an aberration due to the cost of the $787 Billion Stimulus Act, let’s look at 2008.
2008 Budget $2.9 Trillion*
2008 Tax Revenue $2.66 Trillion*
2008 Budget Deficit $240 Brillion*
The $32 Billion representing the 10% public/private savings differential in the original assumption would represent 15% of the 2008 deficit. A better percentage savings than in 2010 to be sure, but still not nearly enough to solve the deficit problem, in what some consider a more typical budgetary year.
For the sake of supply-siders, let’s look at closing the deficit using the other side of the ledger - tax receipts. I agree with conservatives who argue that we could cut the deficit by taking actions to speed the growth of the economy and increase the taxable base. But, to show you the limit of that approach, in 1999, a year where most economists said our economy was running on all cylinders, the U.S. ran a budget surplus of $77 Billion. According to factcheck.org, $75 Billion of that sum was attributable to a short-term surplus in the social security fund. Only $1.9 Billion of the surplus came from tax receipts.
So, although we do need to lessen regulation and create tax incentives designed to spur economic development, the deficit will not appreciably shrink without attacking our biggest expenditure categories. To properly attack these sacred cow expenditure while also promoting policies that increase GDP, I believe we need to take the following steps to reverse the current budgetary trends:
a) add a needs test to social security. For taxpayers with significant assets, social security would be capped at a simple return of money paid in;
b) increasing the age of full eligibility to 68 for taxpayers in the system less than 15 years;
c) begin bringing market forces to control spiraling medicare costs (e.g. allow purchase of prescription drugs from Canada);
d) cut all government departments 10% save for the Department of Defense which would be cut 5%
e) grow the economy by switching to a flat 18% tax on all income above $45,000 and guarantee that tax rates would not change for 10 years (a. no deductions for individuals and b. non-profits & churches would begin to be taxed);
f) enact a balanced budget constitutional amendment to stop the cycle of over-spending;
g) enact a temporary consumption tax dedicated solely to paying off the national debt.
If and when the national debt is paid off, we can then drop the consumption tax. The savings from no consumption tax and no debt interest payments would then allow for the lowering of the estate tax to 18%, equal to the tax rate on earned income (2011 estate tax is scheduled to be 35% on amounts above $5M). Without much proof beyond a gut feeling, I also believe that a balanced budget would eventually free up enough money to give each American a yearly voucher of around $2000 ($660B total) to spend solely on bare-bones health insurance. By the Federal Government footing a healthcare safety net which allowed consumers to choose among competing private plans, we re-engage the primary patient / doctor relationship and inject market forces to tame the health care beast. This change would, over time, go a long way towards curbing the increases in the cost of entitlements such as Medicare by incentivizing early intervention “health care" as opposed to the high-cost administering of critical "sick care”. Finally, Government financed/Consumer chosen healthcare would sidestep the nasty constitutional fight about to begin over whether the federal government has the right to force citizens to buy Obamacare.
Do you read these numbers differently than I do? What’s your opinion beyond the obvious fact that Washington doesn’t have the leadership (on either side of the aisle) to implement any plan that requires tough choices.
Humbly submitted,
Dave
*Numbers from Wikipedia
I’d like to share with you a recent discussion that led me to do a little research on the Federal budget deficit and what levers could be pulled to move us towards a balanced budget in the coming years. I hope you find the topic interesting and it gets you thinking more about the defining issue of our generation, the burgeoning Federal Deficit. The discussion started with a friend of mine (who is a big Fox News watcher) suggesting that we could close the budget deficit by cutting the compensation of Federal employees who are being paid more than their private counterparts for doing the same job. On a gut level, I did not think that that a cut in Federal payroll could appreciably close the deficit, but I said that I would review federal expenditures to either substantiate or change my view. After reviewing the numbers, I conclude that even if we cut the Federal payroll substantially, we cannot balance the federal budget without also trimming entitlements and defense. And even that solution, if it did balance the budget, would not begin to address a repayment of the $13.8 Trillion National Debt, which is a separate liability from that of the annual deficit!
BTW, factcheck.org did a long and boring analysis of Rand Paul’s comments concerning pay differentials between public and private employees (http://factcheck.org/2010/12/are-federal-workers-overpaid/). The issue is complicated, but for the sake of this discussion, lets assume that US federal government workers are 10% overpaid visa vie their corporate counterparts.
Current 2010 Budget $3.5Trillion*
Current 2010 Tax Revenue $2.1Trillion*
Current 2010 Budget Deficit $1.4Trillion*
Currently, the U.S. Office of Personal Management estimates that there are just over 4.2 million federal employees. Thus, based on the average salary figures reported by USA Today, total wages paid to all federal employees now total nearly $300 billion per year. Add to this figure the costs of insurance, paid time off, and retirement benefits (which have not even been quantified here), and the total federal outlay to "pay" federal employees soars by billions more.
Let’s take a $320B base figure as the cost of federal employees and benefits and then use the assumption that federal workers are paid on average 10% more that comparable workers in the private sector. If we were to implement a 10% across the board cut of salaries and benefits (politically a virtual impossibility), we would save the taxpayers $32B dollars a year. Sounds like a large number. But based on 2010 numbers, that savings would only represent 2.5% of the 2010 budget deficit. If we could to get rid of every U.S. Government worker (right-wing dream), we could only close 25% of the colossal 2010 deficit.
Now if you say that 2010 was an aberration due to the cost of the $787 Billion Stimulus Act, let’s look at 2008.
2008 Budget $2.9 Trillion*
2008 Tax Revenue $2.66 Trillion*
2008 Budget Deficit $240 Brillion*
The $32 Billion representing the 10% public/private savings differential in the original assumption would represent 15% of the 2008 deficit. A better percentage savings than in 2010 to be sure, but still not nearly enough to solve the deficit problem, in what some consider a more typical budgetary year.
For the sake of supply-siders, let’s look at closing the deficit using the other side of the ledger - tax receipts. I agree with conservatives who argue that we could cut the deficit by taking actions to speed the growth of the economy and increase the taxable base. But, to show you the limit of that approach, in 1999, a year where most economists said our economy was running on all cylinders, the U.S. ran a budget surplus of $77 Billion. According to factcheck.org, $75 Billion of that sum was attributable to a short-term surplus in the social security fund. Only $1.9 Billion of the surplus came from tax receipts.
So, although we do need to lessen regulation and create tax incentives designed to spur economic development, the deficit will not appreciably shrink without attacking our biggest expenditure categories. To properly attack these sacred cow expenditure while also promoting policies that increase GDP, I believe we need to take the following steps to reverse the current budgetary trends:
a) add a needs test to social security. For taxpayers with significant assets, social security would be capped at a simple return of money paid in;
b) increasing the age of full eligibility to 68 for taxpayers in the system less than 15 years;
c) begin bringing market forces to control spiraling medicare costs (e.g. allow purchase of prescription drugs from Canada);
d) cut all government departments 10% save for the Department of Defense which would be cut 5%
e) grow the economy by switching to a flat 18% tax on all income above $45,000 and guarantee that tax rates would not change for 10 years (a. no deductions for individuals and b. non-profits & churches would begin to be taxed);
f) enact a balanced budget constitutional amendment to stop the cycle of over-spending;
g) enact a temporary consumption tax dedicated solely to paying off the national debt.
If and when the national debt is paid off, we can then drop the consumption tax. The savings from no consumption tax and no debt interest payments would then allow for the lowering of the estate tax to 18%, equal to the tax rate on earned income (2011 estate tax is scheduled to be 35% on amounts above $5M). Without much proof beyond a gut feeling, I also believe that a balanced budget would eventually free up enough money to give each American a yearly voucher of around $2000 ($660B total) to spend solely on bare-bones health insurance. By the Federal Government footing a healthcare safety net which allowed consumers to choose among competing private plans, we re-engage the primary patient / doctor relationship and inject market forces to tame the health care beast. This change would, over time, go a long way towards curbing the increases in the cost of entitlements such as Medicare by incentivizing early intervention “health care" as opposed to the high-cost administering of critical "sick care”. Finally, Government financed/Consumer chosen healthcare would sidestep the nasty constitutional fight about to begin over whether the federal government has the right to force citizens to buy Obamacare.
Do you read these numbers differently than I do? What’s your opinion beyond the obvious fact that Washington doesn’t have the leadership (on either side of the aisle) to implement any plan that requires tough choices.
Humbly submitted,
Dave
*Numbers from Wikipedia
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