Deficit Passes $1.4 Trillion as National Debt Approaches $12 Trillion

The Office of Management and Budget released the latest federal deficit figures. For the Fiscal Year (FY) 2009, which ended in September, the federal deficit was $1.42 trillion.

FY2009 includes the last four months or so of the Bush administration in addition to the first eight months or so of the Obama administration. Both Bush’s TARP program and the initial spending under Obama’s economic stimulus plan were included in the figure.

The ongoing federal spending spree (part of which was surely justified by economic circumstances) raised the national debt to $11.9 trillion.

Just over a year ago, Newsprism noted that the national debt had surpassed $10 trillion.

Just over six months ago, Newsprism noted that the national debt had risen another $1 trillion dollars in the previous six months. Now the national debt has once again risen nearly $1 trillion dollars more in just over six months.

President Bush inhereted a national debt of around $5 trillion along with a federal budget surplus when he took office in 2001. Since 2000, here’s how the federal deficit has grown:

 

 

 

 

 

 

 

Both parties are responsible for overspending without adequate revenue to pay for that spending. While the TEA Party movement is right on in decrying this, the blame must be spread evenly between Democrats and Republicans, and between Bush, Obama, and presidents dating back to Ronald Reagan, all of whom have failed to keep federal spending in check.

We’re stealing from future generations—”we” because we continue to vote for politicians who refuse to confront our fiscal problems.

Shame on us. Shame on all of us.

Newsprism

Something Has to Give—and It Ain’t the Taxpayer

Pat Buchanan’s latest column repeats his ongoing plea for sanity in American fiscal policy. Spending has been out of control for decades, and in response, we’ve been adding entitlements rather than eliminating them. Current levels of spending for Medicare, Medicaid and Social Security cannot be sustained. Our foreign policy includes billions of giveaways. We welcome legal and illegal immigrants who, in sum, take more than they give to this nation.

This kind of irresponsible spending, however well intentioned, cannot be sustained without seriously eroding, and eventually destroying, America’s economic stability.

We just dodged an economic collapse of historical proportions. What sense does it make to set out immediately on the same path—a path that leads off a cliff?

If you think Buchanan is an extremist and/or an alarmist, take note—the director of the nonpartisan and highly credible Congressional Budget Office came out yesterday with a chilling statement:

Under current law, the federal budget is on an unsustainable path, because federal debt will continue to grow much faster than the economy over the long run.

Unsustainable.

Nature imposes limits on everything, including generosity. We as a nation can heed those limits, or march like lemmings off the cliff of good intentions.

Newsprism

National Debt Up Another Trillion—IN SIX MONTHS

Just six months ago, the national debt passed the $10,000,000,000,000.00 mark, having roughly doubled during the Bush administration.

Due in part to the tail end of the Bush spending splurge, and in part to the beginnings of the Obama spending splurge, our national debt has now passed the $11,000,000,000,000.00 mark.

When will our representatives in Washington stop putting their short-term interests first—getting re-elected, supporting pet projects, getting their names on bridges and buildings, greasing the palms of special interests for whom they hope to lobby—and take seriously the long-term interests of the nation?

This is shameful. One day our descendents may look back and wonder, “What the hell were they thinking?” (Or more to the point, “Were they THINKING???”)

During the next few decades, what was once an economic supremacy not seen since the British and Roman Empires will have been squandered over the course of just a generation or two.

While the economies of Brazil and China are poised to skyrocket, ours seems doomed to fizzle like a wet Fourth of July firecracker.

For some perspective, check out this clever way to visualize what eleven trillion dollars’ worth of $100 bills (not ones or tens!) would look like:

See that tiny spot in the lower left corner of the image? That's any US citizen staring up at what we'd be leaving future Americans IF WE STOPPED ADDING TO THE NATIONAL DEBT TODAY!

 Thanks to PageTutor.com for the image.

That massive debt lays at the feet of both Democrats and Republicans in both the Executive and Legislative branches of government. As Americans, we should be outraged, and the younger the citizen, the more outrage is called for.

Maybe this Fourth of July, instead of shooting our fireworks into the sky, we should put them somewhere more appropriate…

Newsprism

AIG Bonuses—A Pimple on a Heart Patient

The story dominating the headlines this week involves insurance giant AIG, the recipient of a $170 billion dollar bailout from the taxpayer, giving $165 million in bonuses to current and former executives.

While rewarding perhaps history’s most damaging economic failure with huge bonuses rightly deserves our scorn, the bonuses are insignificant compared to the meltdown occurring in the world economy.

Why the obsession with AIG? Simple: outrage over the bonuses makes for a good cable TV (and radio and blogosphere) controversy. It pumps up  cable TV news and talk radio ratings and drives traffic to blogs.

Because the media made this a huge story, Congress chose to take advantage of the situation and create yet another three-ring circus. AIG’s CEO was dragged before a committee for a public flogging by representatives, many of whom wrote and/or voted for the bill that allowed the bonuses in the first place.

Both David Brooks and Charles Krauthammer—the former a moderate voice on the right, the latter an increasingly extreme one—agree on this one.

Brooks, in Perverse Cosmic Myopia, put it like this:

The Washington political class has spent the past week going into made-for-TV hysterics over $165 million in A.I.G. bonuses. We’re in the middle of a multitrillion-dollar crisis, and our political masters — always willing to throw themselves into any issue that is understandable on cable television — have decided to risk destroying the entire bank-rescue plan because of bonuses that account for 0.001 percent of the annual G.D.P.

Krauthammer, in Bonfire of the Trivialities, wrote this:

…in the scheme of things, $165 million is a rounding error. It amounts to less than 1/18,500 of the $3.1 trillion federal budget. It’s less than one-tenth of 1 percent of the bailout money given to AIG alone…. For this we are going to poison the well for any further financial rescues, face the prospect of letting AIG go under (which would make the Lehman Brothers collapse look trivial) and risk a run on the entire world financial system?

Both the media and the government share responsibility for this ridiculous diversion. Both need to get back to the business of handling a financial crisis that threatens a devastating global collapse.

The AIG bonuse issue is like a pimple on the ass of a patient suffering a massive heart attack.

Newsprism

Bush Shines as Cheney Whines

A longstanding, informal rule asks that outgoing presidential administrations refrain from criticizing incoming ones. Most former presidents and vice presidents obey this rule for the good of the country, though there are surely strong disagreements that would tempt one to rip a new administration a new you-know-what.

Over this past week, former Vice President Cheney chose to ignore this informal rule, while former President Bush chose to obey it.

Whatever you may think of the policies of the Bush-Cheney years, both men put the safety of the nation foremost, even if that meant violating our Constitution (warrantless wiretapping) or international law (torture, rendition).

With the new administration struggling to deal with a severe economic crisis and the consequences of the Bush administration’s foreign policy, President Bush took the high road in his speech yesterday in Calgary, Alberta, Canada, and again when asked about Obama’s changes to Bush policies.

Said Bush:

I’m not going to spend my time criticizing (Obama). There are plenty of critics in the arena. He deserves my silence…

I love my country a lot more than I love politics. I think it is essential that (Obama) be helped in office.

Bush went on to say that he would be happy to help Obama in any way if asked; this gracious offer comes after Bush showed great class and patriotism during the transition between administrations.

Vice President Cheney, on the other hand, has repeatedly criticized Obama for his handling of the economic crisis, his domestic policy agenda, and most recently, for his changes to American foreign policy. On CNN’s State of the Union last Sunday, Cheney said that Obama had made the country less safe, and that the president is using the economic crisis to inappropriately expand federal power. Two Cheney quotes from the CNN interview:

(Obama) is making some choices that, in my mind, will, in fact, raise the risk to the American people of another attack.

(Obama’s policies are) one of the greatest expansions of federal control over the private economy, probably in the history of the republic.

Of course, Dick Cheney has every right to speak his mind in whatever forum he chooses. To undermine the president so publicly, however, weakens the nation and opens the door for future ex-administration officials to do the same.

Worst of all, it appears that Cheney is motivated in part by a desire to influence judgments of the economic and foreign policy choices of the Bush years—a process better left up to more objective voices speaking in the fullness of time—and in part by a desire to innoculate himself and his former boss from accusations of responsibility for future terrorist attacks.

Cheney also refused to criticize Rush Limbaugh, who famously hopes for the Obama administration to fail.

One wonders if Cheney shares that profoundly immature and unAmerican wish.

Newsprism

Stormy Seas, Uncharted Waters…and We’re Adding Ballast?

Let me torture a metaphor for a moment.

The Ship of State is currently sailing through stormy seas in uncharted waters.

We’ve sailed into stormier seas before—in 1873 and 1929, for instance, the US entered more severe depressions (interesting article here about which depression more closely parallels the current situation.) We’ve spent many a decade in uncharted waters as well, for example, when we transformed the country from an agrarian to an industrial economy, and from an industrial to an information economy. The first transformation helped spark the Civil War, and the second led to the bursting of the dotcom bubble and, to some degree, the credit crisis.

Now, we seem to be struggling through some stormy economic times while transforming from a nationally-based economy to a globally-based one, and from a production-based economy to a borrowing-based one.

So how should we steer the Ship of State through this storm?

On real ships, “ballast” is weight added to stabilize the craft, improve steering, and control buoyancy. Ships of state take on added debt for a similar purpose.

The problem is that both kinds of ballast take up room that could be used more productively. On the real ship, ballast replaces cargo with dead weight; on the ship of state, debt, while enhancing economic stability and allowing for more precise “steering,” the ballast of debt takes capital out of the system. Debt is like dead weight on the economy.

The budget submitted by President Obama will spend over $3.5 trillion in the upcoming fiscal year. The Omnibus Spending Bill up for a vote in Congress will spend over $400 billion in the remainder of this fiscal year. Hundreds of billions more are promised to failing banks and mortgage holders. Another $500 billion is proposed to shore up the FDIC—and if you want to see these stormy seas turn into a tsunami, just let the whisper of mass bank failures start to spread.

This is not the time to be adding tons and tons of ballast, of debt, to the Ship of State. It’s well past time to instead jettison as much debt as we can.

That means raising the retirement age and reducing Social Security, Medicare, and Medicaid benefits. It means cutting government programs that aren’t vital (and that would be the majority of government programs…) It means freezing government spending, not increasing it. It means making difficult and unpopular decisions that shrink the size and scope of government and put more responsibility on the individual for his or her own well being.

It means asking us—all of us, rich and poor—to make sacrifices for the greater good.

Instead, President Obama is expanding the size and scope of government, increasing benefits, and running up an already obscene national debt to levels that make the waste and idealism of George Bush look modest.

What good is stabilizing a ship with ballast, if that ballast could cause the ship to sink?

Newsprism

Promises, Promises

Barack Obama’s speech before a joint session of Congres tonight (video) was expansive in scope and evocative of hope (transcript).

To call it ambitious would be an understatement. Three major policy thrusts were put forward, each of which is designed to enhance the long-term prospects for our economy. In health care, the president proposed reforms intended to take the burden off both families and businesses by reigning in costs and eliminating waste. In energy, he promised a long overdue reversal of our dependence on oil and a concomitant effort to enable the growth and development of alternative energy sources. In education, he pledged that every American will be able to afford a college education and that by 2020, America will once again lead the world in the proportion of citizens with a college education.

On the financialal front, Mr. Obama said his administration was working to shore up the banking system and get credit flowing once again. On the fiscal front, he said that old ways of hiding government spending would come to an end, that earmarks and wasteful or ineffective programs will be terminated, and that future generations won’t be burdened with an overwhelming debt. Att the same time, he promised that no one making under $250,000 a year will have their taxes raised and that taxes will be cut for 95% of the American people. He also noted that beginning not this year, but next year, the federal budget would be gone over line by line to eliminate waste and earmarks.

The biggest challenge Obama faced was to renew confidence in the economy. Rhetorically, he did exactly that; the speech was stirring and highly encouraging. In reality, however, one wonders whether a single speech, no matter how brilliant, can have any lasting effect on a disheartened public. Both the speech and the speaker were Reaganesque; no one can say whether it’s morning in America again, but for an hour at least, if felt that way.

In foreign affairs, the president promised a new era of engagement, with aggressive diplomacy replacing unilateralism. At the same time, he threw down the gauntlet to our enemies, insisting that those who wish to harm us won’t be allowed to plot against us from safe havens anywhere, particularly from Pakistan. He declared that Guantanamo Bay will be closed and that most of our troops will be withdrawn from Iraq while maintaining order in that country.

There were three overt rebukes of the Bush administration. On torture, the president made an unequivocal declaration that the United States does not torture (implying, of course, “any longer.”) The Joint Chiefs of Staff and John McCain were among the first to stand and applaud, and rightly so. The president made a pointed reference to the squandering of the balanced budget Bush inherited from Bill Clinton, and another to the Bush administration’s mismanagement of the $700 billion dollar bank bailout.

Perhaps the most remarkable aspect of the speech was its invocation of hope. Whether that hope is more realistic or fantastic remains to be seen. What President Obama didn’t make clear was how, short of divine intervention, we can do everything he promised while at the same time reducing the budget deficit and chipping away at the national debt.

Mr. Obama appealed to the promise of America, which he called the most powerful force for progress on earth.

The promise of America isn’t built on promises, however.

Talk is cheap. What the president promised tonight won’t be.

Newsprism

Freedom, Order, and the Limits of Individualism—A Crisis for American Conservatism

The 2006 and 2008 elections were, at least in part, rejections of the extreme individualism of American conservatism in favor of a more collectivist approach to governance.

As a libertarian conservative, I value individual liberty above all else. But I also recognize that social order is a fundamental necessity if liberty is to thrive.

Absolute freedom is anarchy, and anarchy inevitably subverts individual freedom to the tyranny of the strong and the ruthless. What good is your absolute liberty if you’re oppressed by others who will inevitably abuse theirs?

Absolute freedom is not perfect freedom; far from it.

In its original conception by Edmund Burke, modern conservatism had at its center the wisdom inherent in tradition. Social traditions evolve out of social order; that which works to create and maintain order wins out over that which destroys or erodes it. Over time, traditions may change, but their essence always tends towards the maintainance of order.

To the Burkean conservative, society is conceived of not as a collection of individuals, but as a single organism, as in Herbert Spencer’s sociology.

In the West, a tradition of individual liberty and individual responsibility has nonetheless produced a dynamic and relatively stable civilization. Liberty unleashes the most innovative and creative human faculties. The French and American Revolutions (which Burke strongly criticized at the time) produced a paradox: a high degree of individualism can lead to a thriving and prosperous, well-ordered social organism.

Individualism and social order aren’t opposed to each other, but rather depend on each other. Still, there are limits, and over the last sixteen years, the limits of individualism have been stretched to the breaking point. The reckless and selfish indulgences of Bill Clinton, while damaging to the presidency, were, compared to the policies of the Bush years, superficial distractions from an otherwise relatively centrist administration.

The character and politics of both Baby Boomer presidents were formed in the social turmoil of the sixties, but with very different results. The Great Irony of post-Reagan conservatism is that the sixties generation so famous for its leftist radicalism has produced a kind of conservatism so undisciplined, and so self absorbed, that the label is nearly meaningless. If sixties leftism made a fetish out of progress, contemporary rightism has made a fetish out of self interest.

While he has plenty of company, most notably Rush Limbaugh, George W. Bush is the poster child of this undisciplined, shallow, idealistic conservatism, which has no intellectual roots, little knowledge of its history, and a poor understanding of the singularity of circumstance. Neoconservatism as practiced by Bush isn’t conservatism at all. It’s far too radical and far too rigid, rejecting the vital center—social, cultural, and political—so brilliantly elaborated in the sociology of Edward Shils.

Neoconservatives, and to a lesser degree Republicans in general, act as if self interest is all that is needed to maintain social order. What Burkean conservatives understand is that enlightened self interest undergirds social order, while merely crass, atomistic self interest erodes it. In addition, Burkeans understand that social order evolves slowly, step-by-step and institution-by-institution, with every society unique, every circumstance singular. To attempt any radical change in a society is to invite unintended consequences, and to ignore the latent virtues that exist in traditional, socially centrist institutions like marriage.

This is why on the economic front, Bush and Limbaugh’s ideology has brought such disastrous consequences. The current crisis is largely the result of unregulated and unenlightened self interest, of naked greed masquerading as virtue, of an “I’ve got mine” attitude that isolates the individual from the traditional social context so necessary to true human liberty. Gated communities and McMansions, much like the sky-scraping commercial fortresses of our cities, where the affluent are insulated from the realities of the larger society, are sad, lonesome icons of the times.

On the foreign policy front, the Bush agenda has been an equally tragic disaster. The naive and idealistic notion that American-style democracy can be transplanted into the Middle East makes as much sense as the hope that one can chop down a fig tree and expect a cherry tree to spring up in its place. Does anyone really believe that if China were the world’s hegemon, she could impose communism on America by force? Iraq and Afghanistan can’t be transformed by brute force or good intentions. To attempt to do so was the height of arrogance, and of ignorance.

The more intellectual conservatives—George Will, Pat Buchanan, David Brooks, the late William Buckley—realized early on that Bush is no conservative, at least not in any sense that retains the essence of conservatism. Similarly, intellectual conservatives, like those at The American Conservative magazine and (sadly, less and less so) National Review hold their noses while their powerful ally, Rush Limbaugh, sacrifices far-sighted traditionalism on the altar of short-term individual self interest.

Imagine Limbaugh, who quite literally advocates gluttony and ridicules frugality in our use of oil, trying to explain to Burke (or to future generations) how maximizing consumption of natural resources, rather than conserving them, is conservative!

Buckley put it this way:

Mr. Bush faces a singular problem best defined, I think, as the absence of effective conservative ideology — with the result that he ended up being very extravagant in domestic spending, extremely tolerant of excesses by Congress. And in respect of foreign policy, incapable of bringing together such forces as apparently were necessary to conclude the Iraq challenge.

The reaction to President Obama’s stimulus plan illustrates the crisis American conservatism faces as it attempts to balance individual liberty with social order. The same congressional Republicans who slathered bill after bill with pork during the Bush administration are suddenly aghast that Obama is spending hundreds of billions of taxpayer dollars in order to stabilize the economy they helped to devastate.

Hypocrisy reveals self indulgence and a lack of intellectual discipline, as when the same Rush Limbaugh who celebrates imprisoning marijuana users was found out to be a narcotics addict. Now, Limbaugh would rather see Obama’s social policies fail, with all the damage that would do to the greater society and the world, than see them succeed and discredit even slightly the extreme individualism of the contemporary far right. Conservatism is by its very nature center-ist, if I can coin a word, not radical or extremist.

Earlier this week, Rick Santelli of CNBC went on an on-air rant about how unfair it is that some citizens who made poor financial decisions may be bailed out by those of us who made wise ones. But wouldn’t a true conservative understand that sometimes circumstances demand some sacrifice by the few to maintain the social order necessary for all? To whine about necessary, albeit perhaps overreaching, solutions to a social crisis because you might lose a few dollars yourself is short-sighted and selfish, not conservative.

The conservative American Issues Project  condemns the $787 billion stimulus package in a TV ad that shows the three wise man as the narrator says, “Suppose you spent $1 million every single day starting from the day Jesus was born — and kept spending through today. A million dollars a day for more than 2,000 years. You would still have spent less money than Congress just did.” The upshot of the ad is that Jesus would oppose the stimulus… But what true conservative actually believes that Jesus, the champion of the poor, would oppose taxing the prosperous to protect those who are at risk in a communal crisis?

David Brooks, as usual, gets right to the heart of the matter. While he bemoans the irresponsibility of those whose greed and dishonesty led to the economic crisis, Brooks accepts, in “Money for Idiots”, that the stimulus package is, from the perspective of social order, a necessary evil. He begins,

Our moral and economic system is based on individual responsibility. It’s based on the idea that people have to live with the consequences of their decisions. This makes them more careful deciders. This means that society tends toward justice — people get what they deserve as much as possible. Over the last few months, we’ve made a hash of all that. The Bush and Obama administrations have compensated foolishness and irresponsibility.

But unlike all but three Congressional Republicans, and Limbaugh, Santelli, and the American Issues Project, Brooks is able to put rigid ideology and his own self interest aside and think about what’s best for the social order. He concludes:

The responsible have been punished along with the profligate….(But) it makes sense for government to try to restore some communal order. And the sad reality is that in these circumstances government has to spend money on…people who have been idiots.

The nation’s economy is not just the sum of its individuals. It is an interwoven context that we all share. To stabilize that communal landscape, sometimes you have to shower money upon those who have been foolish or self-indulgent. The greedy idiots may be greedy idiots, but they are our countrymen. And at some level, we’re all in this together. If their lives don’t stabilize, then our lives don’t stabilize.

I don’t relish the advance of socialism under the Democrats. But after eight years under Bush, maybe we need to turn left to get right.

And as conservatism demands, ideology must not trump the contingencies of the moment. The natural enemy of conservatism is radicalism, not liberalism. Part of the genius of the American system is that the people, that reservoir of traditional wisdom, can choose leaders suited to the circumstances of the day.

Excessive individualism subverts social order, which in turn threatens individualism itself. Freedom requires order. Until American conservatism learns that lesson, it risks being increasingly marginalized.

American conservatism must return to First Principles. We must reject the pop culture conservatism of Rush Limbaugh and the neoconservatism of George Bush in favor of the philosophical roots of conservatism: Edmund Burke’s traditionalism, Herbert Spencer’s organicism, and Edward Shils’ center-ism.

Newsprism

Mirror Missing in Congressional Hearings

Yesterday’s hearing before the House Financial Services Committee combined the worst kind of political theatre with the most shameless kind of scapegoating.

Representatives Barney Frank and Maxine Waters, for example, share at least as much responsibility for the financial crisis as the bankers they were scolding. That didn’t stop Frank and Waters from heaping scorn and blame on the CEOs of eight major banks that have accepted government bailout money.

But the winner of the sanctimony contest had to be Democrat Michael Capuano, who told the bankers,

You created the mess we’re in. And now you’re saying ‘Sorry. Trust us.’ . . . America doesn’t trust you anymore.

Newsflash: Americans don’t trust Congress, or government in general, any more than they trust the captains of finance.

In the latest CNN/Opinion Research poll, the American people gave Congress a 29% approval rating, with 71% disapproving. That’s down in George Bush territory. And to be brutally honest, many among the three in ten who claim to approve of the jobs done by Congress and Bush probably don’t mean it; they’re simply loyal to a fault.

There was a prop missing in yesterday’s episode of our national situation comedy: a huge mirror facing the shameless Representatives as they spoke.

Newsprism

Stimulating the Center

With economic indicators plummeting and an increasing chorus of business leaders and economists warning of a potential depression, how are pols and pundits inside the Beltway responding?

Badly.

Liberal Democratic politicians on the Hill have taken advantage of the situation to ham-handedly cobble together a pork-laden stimulus bill. Conservative Republican politicians on the Hill rightly bemoan the bill’s excesses, but instead of working to trim the fat, many are posturing and grandstanding and moralizing as if they didn’t spend the last eight years turning surplus into deficit and more than doubling the national debt.

Same old same old.

Meanwhile, liberal pundits like Frank Rich and Paul Krugman launch ideologically rigid and reductionist attacks against the right, while conservative pundits like Charles Krauthammer and Glenn Beck do the same to the left.

With the stakes this high, extremists and ideologues, who are always an impediment to smooth governance, become a real danger.

Three columns by three of the nation’s best pundits illustrate the difference between thoughtful commentary and emotionalism.

In “On the Edge”, Paul Krugman demonizes Republicans and conservatism without a shred of nuance:

Over the last two weeks, what should have been a deadly serious debate about how to save an economy in desperate straits turned, instead, into hackneyed political theater, with Republicans spouting all the old clichés about wasteful government spending and the wonders of tax cuts.

 The American economy is on the edge of catastrophe, and much of the Republican Party is trying to push it over that edge.

In “The Fierce Urgency of Pork”, Charles Krauthammer yet again demonizes President Obama while characterizing the stimulus bill as an “abomination”:

The (stimulus bill), which inevitably carries Obama’s name, was not just bad, not just flawed, but a legislative abomination.

It’s not just pages and pages of special-interest tax breaks, giveaways and protections, one of which would set off a ruinous Smoot-Hawley trade war. It’s not just the waste, such as the $88.6 million for new construction for Milwaukee Public Schools, which, reports the Milwaukee Journal Sentinel, have shrinking enrollment, 15 vacant schools and, quite logically, no plans for new construction.

It’s the essential fraud of rushing through a bill in which the normal rules (committee hearings, finding revenue to pay for the programs) are suspended on the grounds that a national emergency requires an immediate job-creating stimulus — and then throwing into it hundreds of billions that have nothing to do with stimulus, that Congress’s own budget office says won’t be spent until 2011 and beyond, and that are little more than the back-scratching, special-interest, lobby-driven parochialism that Obama came to Washington to abolish. He said.

A voice of reason on the stimulus is David Brooks, a critic of the bill who nonetheless eschews the emotional partisanship of Rich, Krugman, Krauthammer and Beck. In “The Gang System”, Brooks notes that the polarization so evident in the week’s debates may have led to a sort of revolt from the center:

The substance of the legislation set up the polarized debate that followed. Liberal interest groups were happy. Conservative Republicans were united in opposition. But something interesting happened this week. The momentum of the debate was set by moderates. Conservative protests wouldn’t have amounted to much without nagging moderate unease.

Moderate economists looked at the package and complained about the vast parts that don’t even pretend to stimulate…. (But) most of all, moderates were concerned about deficits.

Brooks goes on to suggest that this assertiveness from the center may not be as short-lived as some issue-specific coalitions in the past:

On Thursday, moderate unease translated into political action. Forty-nine moderate Democrats in the House belatedly signed a letter calling for cuts in the package, and protested the way they had been trampled by the Democratic leadership. Over in the Senate, a gang of roughly 20 moderates, led by Republican Susan Collins and Democrat Ben Nelson, huddled in the Dirksen Building to cut and focus the stimulus bill. They talked of trimming $90 billion or more.

The big news here is that there are many Democrats who don’t want to move in a conventional liberal direction and there some Republicans willing to work with them to create a functioning center. These moderates — who are not a party, but a gang — seemed willing to seize control of legislation from the party leaders. They separated themselves from both the left and right….

In the past, moderate gangs — like the judicial Gang of 14 — have appeared or disappeared depending on the issue.  But exploding federal deficits are a galvanizing issue for those in the center. Concern over these deficits will influence every piece of domestic legislation. In the coming weeks and months, there will be housing legislation, another round of TARP bailouts, the budget debate, the health care and entitlement debates. In each case, the Moderate Gangs will occupy the crucial ground…

Let’s hope so. The stakes are way too high for obstructionism and demagoguery to rule the day.

President Obama recently said of the economic crisis,

I don’t care if you’re driving a hybrid or an SUV; if you’re headed for a cliff, you’ve got to change direction.

Will he take his own advice and steer the nation towards the center?

Newsprism

Short- and Long-Term Division—Learning the Lessons of TARP

With the $825 billion economic stimulus package now at risk of failure, President Obama and congressional Democrats could learn a lesson from their own fine-tuning of TARP.

The Troubled Assets Releif Program has thus far distributed half of its $7o0 billion. With widespread disappointment at the way that $350 billion was divvied up—including strong criticism of the lack of transparency or oversight—the administration is in the process of setting new guidelines for the remaining $350 billion, of fine-tuning that spending for maximum effect.

Why not learn the lesson of TARP and divide the funding in the stimulus package over a period of time that will allow for the evaluation of its efficacy in order to fine-tune it as well? Why not separate the short-term, targeted, and/or temporary spending that will have the most immediate impact on the economy from the pork and pet projects, and from the long-term and permanent spending that can wait in any case?

Dividing the stimulus funds with an eye towards quickly passing a bill that would maximize the immediate impact on the economy would have several benefits.

First, it would avoid, or at least delay, a bitter political battle that may well lead to a filibuster in the Senate. Second, it would allow much-needed stimulative spending to begin wending its way through the economy as quickly as possible.

Third, and perhaps most importantly, it would show the American people that the two parties can work together to soften an already stunning blow to our economy.

Since the most pressing problem we face is (in addition to the loss of confidence in governance) the loss of confidence in the economy, which leads consumers to consume less and lenders to lend less, a little division could go a long way to bringing us together and healing an ailing economy.

Newsprism

Is Obama Following Bush in Overreaching?

George Bush failed to take the advice of Colin Powell in rushing to invade Iraq. The Powell Doctrine included three straightforward principles: don’t commit American military forces without 1.) a clear objective, 2.) an exit strategy, and 3.) overwhelming force.

Now, Barack Obama is at risk of mirroring Bush’s recklessness by overreaching on the economic stimulus package.

As David Brooks details in “Cleaner and Faster”, Harvard economist and Obama advisor Larry Summers recently insisted that any stimulus package should be 1.) timely, 2.) targeted, and 3.) temporary. Instead, the current plan is seriously diluted with long-term spending on pet domestic agenda items, many of which will be permanent.

We’re living with the burden of the war in Iraq; at a moment when we’re this vulnerable and overextended, do we really want to add an economic debacle to a military one?

Newsprism

Yes We Can (Say NO to Big Government Spending)

One of the first challenges President Obama faces may be the most consequential: can he say “No” to excessive spending by a Democratic Congress?

More specifically, the $825 billion stimulus package under consideration is heavy on government spending and relatively light on tax cuts. Government spending doesn’t stimulate the economy as efficiently as tax cuts and takes far longer to wend its way through the economy.

David Brooks, in “The First Test,” calls the Dem’s spending bill “a muddled mixture of short-term stimulus haste and long-term spending commitments” and notes that the nonpartisan Congressional Budget Office estimates that just half of the bill’s spending would even occur within the next 21 months. Brooks’ question for Obama is whether the president can say “No” to the extravagance of his own party:

President Obama is clearly going to have to show the hard way that he meant what he said about bringing change. He didn’t run for president just to sign whatever bills the Old Bulls put on his desk.

He’s going to have to prove the hard way that he meant what he said about being pragmatic and evidence-based. That means he won’t sweep a C.B.O. study under the rug simply because the findings are inconvenient.

He’s going to have to show that his plans have credibility, that a stimulus bill is really a stimulus bill, and not a Christmas tree for every special interest desire.

Ironically, and incomprehensibly, President Bush, who expanded presidential power at every turn, utterly failed to control extravagant big spending by a primarily Republican-controlled Congress. His veto pen was out of ink from the get-go.

George Will, in “Grand, Yes. Bargain, No“, gives us reason to worry. Despite Obama’s promise to trim entitlements, the House this week passed an expansion of an entitlement program, the State Children’s Health Insurance Program (SCHIP), that will now offer health care subsidies to families making as much as $100,000 per year. As Will notes,

Barack Obama vowed to convene a “fiscal responsibility summit”… (to) help chart a path toward what has been called a “grand bargain.” This Big Bang will aim to create a new universe of domestic policy by, among other things, making the entitlement menu — particularly Social Security, Medicare and Medicaid, which are more than 40 percent of federal spending — manageable.

Will suggests that the real goal of the expansion of SCHIP is “to get as many people on public coverage as possible and to have children grow up thinking that it is normal for them to get their health insurance from the government.”

House Democrats seem intent on using the fiscal crisis as an excuse to further expand an already bloated federal government.

President Obama, if he truly intends to govern based on pragmatism rather than ideology, if he truly intends to be a centrist and a uniter, should pull out his veto pen right from the start and send an unambiguous message to congressional Democrats:

No. No. No.

Newsprism

Big Three Bailout—Good Money After Bad?

Three of the most thoughtful and philosophically grounded conservative pundits—David Brooks, Pat Buchanan, and George Will—have weighed in on the proposed bailout of the Big Three American auto makers.

Brooks, in Bailout to Nowhere, argues that the free market should be allowed to work its “creative destruction” on the automakers. That’s how capitalism works, says Brooks. Those who made the best and most forward-thinking decisions deserve to reap the benefits of that foresight; those who made poor decisions must be made to suffer the consequences, in this case, bankruptcy.

Brooks makes the case against the bailout by appealing to the dynamism that “creative destruction” brings to a capitalist economy:

This is an excruciatingly hard call. A case could be made for keeping the Big Three afloat as a jobs program until the economy gets better and then letting them go bankrupt. But the most persuasive experts argue that bankruptcy is the least horrible option. Airline, steel and retail companies have gone through bankruptcy proceedings and adjusted. It would be a less politically tainted process. Government could use that $50 billion — and more — to help the workers who are going to be displaced no matter what.

But the larger principle is over the nature of America’s political system. Is this country going to slide into progressive corporatism, a merger of corporate and federal power that will inevitably stifle competition, empower corporate and federal bureaucrats and protect entrenched interests? Or is the U.S. going to stick with its historic model: Helping workers weather the storms of a dynamic economy, but preserving the dynamism that is the core of the country’s success.

George Will agrees with Brooks. In “In Detroit, Failure’s a Done Deal,” Will notes that the automakers have already failed, and that they’re not “too big to fail.” The question, Will asserts, is what should be done about those failures?

The answer? Do nothing that will delay bankrupt companies from filing for bankruptcy protection, so that improvident labor contracts can be unraveled, allowing the companies to try to devise plausible business models. Instead, advocates of a “rescue” propose extending to Detroit the government’s business model for the nation — redistributing wealth from the successful to the failed, an implausible formula for prosperity….

…a “rescue” without bankruptcy will make those four entities wards of government. Doing so would make the five entities (including Washington) collaborators in unfair competition with America’s thriving automobile industry that employs 113,000 Americans making vehicles containing many American-made components, but with foreign, mostly Japanese, nameplates. As Detroit continues to shrink, many American jobs “lost” will be regained in this industry, and its American suppliers, as Americans continue to buy cars.

Like Brooks, Will has faith in the market’s ability to adjust to a new circumstance in a rational way. The result may be painful for many, but good for all in the end.

The dissenting voice among the Big Three Conservative Thinkers is Pat Buchanan. Ever the champion of the industrial base and the working class, Buchanan, in “As GM Goes, So Goes the GOP,” writes:

When workers, execs, engineers, dealers, salesmen and suppliers are all factored in, the Big Three employ 3 million people who contribute $21 billion a year to Social Security and Medicare, and $25 billion in federal income taxes. Add in all the businesses that depend on the auto industry, and we are talking about one-tenth of the U.S. labor force….to let the auto industry die is to write America out of much of the economic future of the planet.

But Buchanan doesn’t suggest a simple bailout like the one offered to the financial industry. Instead, he favors trade restrictions aimed at giving American automakers an advantage, or at least an even playing field, compared to foreign automakers:

Nancy Pelosi is talking about tying loans to a restructuring of the industry. But Congress is not competent to do that.

What needs to be restructured is the U.S. tax-and-trade regime.

Dump globalism. Instruct Japan, Canada, Korea, Germany and China that if they wish to sell cars here, they will assemble them here and produce the parts here. And we shall have the same free access to and same share of their auto market as they have of ours.

To accomplish this, use the same import quotas and tariffs Ronald Reagan used to save the steel industry and Harley-Davidson.

Reciprocal trade. Even Democrats like FDR used to practice it.

Brooks, Buchanan, and Will all agree that writing another blank check isn’t in the best interests of the taxpayer, the nation, or the automakers themselves. Other means to the same end—a vibrant, comepetitive US auto industry—make more sense.

While these three conservatives should be heeded, a fourth voice with more experience in business and a background in Detroit puts it more bluntly and adds some much-needed specificity. Mitt Romney, whose father George helped save American Motors five decades ago, believes a bailout would be ruinous. In “Let Detroit Go Bankrupt,” he writes:

IF General Motors, Ford, and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.

Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.

Romney proceeds to give sage advice to both government and industry, the goal being to end competitive disadvantages under which US automakers have worked, to rethink the management/labor dynamic (under new management!), and to target government investment in ways that will help ensure the long term success of the Big Three. In the end, Romney says “yes” to government involvement, but “no” to a cash bailout: 

It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the imbedded tax penalties that favor foreign carmakers.

But don’t ask Washington to give shareholders and bondholders a free pass — they bet on management and they lost.

The American auto industry is vital to our national interest as an employer and as a hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.

In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.

Barack Obama clearly favors a bailout; a principled conservative opposition—not the short-sighted apologetics and obstructionism of talk radio—is needed to prevent Obama’s good intentions from leading the Big Three straight to Hell.

Newsprism

National Debt Surpasses $10,000,000,000,000.00—Charlton Heston Reacts

Lily Tomlin famously said, “No matter how cynical you get, you can’t keep up.”

By at least one measure—the National Debt Clock in downtown New York City (video)—our collective debt has just surpassed $10 trillion. In fact, a fourteenth digit must be added to the Clock to keep up with the (with our) debt.

Here’s a nice way to visualize $10 trillion:

One Quadrillion Pennies

Image copyright 2001, kokogiak media

$10 trillion dollars equals one quadrillion pennies, which would fill a cube roughly half a mile tall, deep and wide…dwarfing the Washington Monument and the Sears Tower.

Those responsible for this burden, including Democrats and Republicans in both the Executive and Legislative Branches over the last three decades, have put our national security at risk with their out-of-control spending. Our economic supremacy is at risk as the global financial system lurches into a paradigm shift at a time when we’re trillions of dollars in debt to our main economic competitor, China, and to our economic overlords in the Middle East.

As Charlton Heston said at the end of “Planet of the Apes”, kneeling before the remains of the Statue of Liberty, “Damn you…God damn you all to Hell.”

And that’s putting it mildly.

Newsprism

Thoughtful and Thoughtless Conservatives, and America on the Brink

The financial crisis seems to be deepening: unemployment is rising, home prices are falling, the stock market has plummeted, credit is tightening, tax revenue is falling, municipal and state governments are facing sever budget shortfalls, and the sky, if not falling, is surely sagging earthward.

As I write, the House is debating the new Senate version of a bailout bill. Prudence would dictate passing the bill, as failing to do so could result in a deep recession or even a depression.

Why are so many, most notably House Republicans, holding the bailout hostage? Primarily because the public is opposed to it, and every member of the House faces an election a month from now. What a dilemma: do I vote against the bailout and risk depression, or vote for it and risk losing in November? Am I a public servant, or a self-serving demagogue?

Thoughtful conservatives should have no trouble answering such questions. While it’s a bitter pill to swallow, this bailout is sorely needed.

Thoughtless conservatives, on the other hand, are using the bailout to appeal to the basest insticts of the far right, where too many seem willing to sacrifice the nation’s security in the name of vapid populism.

Three of the most thoughtful conservatives have come to very similar conclusions in the wake of Monday’s House defeat of the bailout.

David Brooks in “Revolt of the Nihilists” notes that the 228 House members who voted against the bailout

…showed the world how much they detest their own leaders and the collected expertise of the Treasury and Fed. They did the momentarily popular thing, and if the country slides into a deep recession, they will have the time and leisure to watch public opinion shift against them. 

House Republicans led the way and will get most of the blame. It has been interesting to watch them on their single-minded mission to destroy the Republican Party. Not long ago, they led an anti-immigration crusade that drove away Hispanic support. Then, too, they listened to the loudest and angriest voices in their party, oblivious to the complicated anxieties that lurk in most American minds.

Now they have once again confused talk radio with reality. If this economy slides, they will go down in history as the Smoot-Hawleys of the 21st century.

Brooks didn’t name names, but the fact is that Rush Limbaugh and Sean Hannity, along with the talk radio reactionaries who follow them on the AM airwaves, have put their own fame and fortune above the good of the nation.

Charles Krauthammer, in “Catharsis, Then Common Sense,” questions the motives of those 228 naysayers in the House:

Congress has every duty to be careful with taxpayers’ money and to suggest improvements in the administration plan. But part of Congress’s reaction has nothing to do with improving the proposal and everything to do with assuaging the rage of constituents — even if it jeopardizes the package’s chances of success, either by weakening it or by larding it up with useless complicating provisions designed solely to give the appearance of sticking it to the rich.

And if no bailout is forthcoming? According to Krauthammer, the bailout is needed “to prevent the American economy from going over a cliff.”

George Will is more forgiving of the 228, but leaves no doubt that some form of bailout is needed:

It is potentially catastrophic that this crisis comes in the context of a closely contested election and a collapse of presidential authority. Congress should disconnect from a public that cannot be blamed for being more furious about than comprehending of this opaque debacle. The public wanted catharsis and respect for its center-right principles and got both with Monday’s House vote. It still needs protection against obliteration of the financial system.

As for thoughtless conservatives, few are as thoughtless, mean-spirited, dishonest, and self-righteous as Ann Coulter, who, in a column revealingly titled “They Gave Your Mortgage To A Less Qualified Minority,” blames the crisis on Clinton-era liberal Democrats and (note the racist code words) “minorit(ies)” and “welfare recipients”:

This crisis was caused by political correctness being forced on the mortgage lending industry in the Clinton era.

Before the Democrats’ affirmative action lending policies became an embarrassment, the Los Angeles Times reported that, starting in 1992, a majority-Democratic Congress “mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains.”

Under Clinton, the entire federal government put massive pressure on banks to grant more mortgages to the poor and minorities…

Now, at a cost of hundreds of billions of dollars, middle-class taxpayers are going to be forced to bail out the Democrats’ two most important constituent groups: rich Wall Street bankers and welfare recipients.

Political correctness had already ruined education, sports, science and entertainment. But it took a Democratic president with a Democratic congress for political correctness to wreck the financial industry.

Coulter, who knows better than to believe her own bile, takes her cues from talk radio, where it’s all about ratings and ad revenue. Liberals and Democrats are treated not as fellow countrymen with differing viewpoints, but as traitors and socialists to be reviled. The truth is irrelevant: whatever the far right will buy, Coulter and Limbaugh and Hannity will sell. In the quotation above, for example, Coulter refers to “the Democrats’ two most important constituent groups: rich Wall Street bankers and welfare recipients.” Scapegoating both rich and poor is classic populist demagoguery.

The American people deserve better. Hopefully, these cynical reactionaries haven’t gained enough influence to lead us into a depression (which, of course, they’ll manage to blame on the left.)

In the sixties and seventies, the left was discredited by the undue influence of drug-addled, radical chic musicians and anti-establishment activists, whose populist appeal led to disastrous legislation like the failed $11 trillion welfare state. Now, the right is being discredited by the undue influence of egomaniacal, faux-conservative pundits and radio entertainers, whose populist appeal has helped to enable the debacle that is the Bush administration.

The rest of us are stuck in the middle as the ground gives way beneath our feet.

Newsprism

Bailout Fails, Fallout Flies, Blame Game Begins…Empire Ends?

Most economists, regardless of political persuasion, warned that the so-called bailout up for a vote this afternoon was absolutely necessary to prevent a severe contraction of the credit markets and, therefore, the American economy.

The bailout was voted down, and the stock market immediately sank by record numbers. The bailout would have cost $700,000,000,000; the losses on Wall Street that followed its defeat total over $1,000,000,000,000. The fallout from this vote will take months to play out.

What has brought us so suddenly to the brink of a recession and, potentially, a depression?

The easy answer: greed…too much easy money from too many overly enthusiastic investors being lent with too little regulation to too many unqualified borrowers.

The fault lies not simply with one party (though the Republicans were in charge for the last eight years) or one official (though Alan Greenspan continued to lower interest rates well beyond what was necessary or prudent), but with millions of us. We went along for the ride as a careening global economy pumped trillions of dollars into our economy; we took out home equity loans, bought homes we couldn’t afford, ran up our credit cards, looked the other way as government grew at an unprecedented rate, and turned a deaf ear to those who warned of impending crisis.

When the housing bubble burst, the easy money dried up, foreclosures skyrocketed, the value of homes plummeted, and major players in the financial industry slid into insolvency, so that now many businesses can’t find money to meet payrolls, prospective homeowners can’t find money to buy houses, governments can’t find money to pay pensions or fix infrastructure, car buyers can’t find money to buy cars, and so on.

As lending slows, economic growth slows. As economic growth slows, lenders are more reluctant to lend. A vicious cycle ensues.

So today, with all the dire warnings circulating, who was it that defeated the bailout? By and large, it was House Republicans—the same House Republicans who’ve been primarily responsible for spending the nation into a massive federal debt, who supported a $10,000,000,000.-a-month Iraq War, who supported deregulation of the financial industry and sat silently as the Federal Reserve Bank lowered interest rates to irresponsibly low levels.

House minority leader John Boehner today blamed Speaker of the House Nancy Pelosi for the defeat of the bailout after she gave an inappropriately partisan speech just before the vote, alienating key Republican Congresspeople.

Pelosi’s timing couldn’t have been worse. But for House Republicans, who bear a substantial share of the blame for the current crisis, to scuttle the bailout over hurt feelings is indefensible. There are solid ideological reasons for opposing the bailout; fear of constituents’ reactions or anger at a snippy Speaker aren’t reasons at all.

It’s worth noting that the Bush administration inhereted a budget surplus and a healthy, if somewhat overly exuberant, economy. Not only has that budget surplus been squandered, but we now face the largest budget deficits in history and the largest national debt in history.

So here we are, in dire need of an influx of liquidity into the credit markets as we face the retirement of the baby boomers, a crumbling infrastructure, a military stretched to the breaking point, a Gulf Coast devastated by Katrina and Ike, a trade deficit of record proportions, that pesky national debt, and stiff economic and geopolitical competition from the Chinese, to whom we owe hundreds of millions of dollars.

Democrats aren’t blameless in this financial crisis, but President Bush and the Republicans in Congress can’t escape the fact that, as Harry Truman said, “The buck stops here.”

Only now, it might be more accurate to say, “The buck shrinks here.”

And so does the American empire.

Newsprism

Mama Metonymya—”Wall Street/Main Street” Metaphor Hackneyed to Death

The metaphorical distinction between Wall Street and Main Street has been employed by every talking head and talk host on every network in the country, by most of the politicians, and by half the print journalists during discussion of the current fiscal crisis.

From this day forward, any use of the metaphor will be considered hackneyed—proof that every cliche has a silver lining.

Newsprism