Setting aside the big news at the end of the week with the President providing temporary amnesty for undocumented students and veterans, there were two other pieces of news that provided doses of sanity that should be strongly considered. Both Jamie Dimon and Jeb Bush offered testimonials this week which I hope will be wake-up calls to primarily the GOP, but Democrats, as well.
Jamie Dimon is the CEO and Chairman of JP Morgan Chase and is widely respected as one of the smartest financial people around. He was testifying in front of a Congressional Committee offering his apology for his bank’s failure to circumvent a $3 Billion loss due to some inappropriate risk taking. In my Friday post regarding “A Decline in Responsible Banking” I called all bankers to task to return to more responsible banking. The multiple businesses banks find themselves in have increased the complexity and risk to a degree even one of the smartest bankers could not fully recognize what was happening. To his credit, he apologized to his shareholders, customers and the committee.
Yet, some of the things he said while he was in front of the committee were quite interesting. The GOP heavy committee wanted him to be highly critical of the Dodd-Frank bill saying it was too onerous on banks and needed to be repealed. In essence, he did not do that, although he did contend there are pieces of it that are overly burdensome. And, he noted that portions of it may have helped his bank and the industry not be derailed by his bank’s recent failure. The committee members kept trying to put inflammatory words about Dodd-Frank in his mouth, but he stuck to his comments. In fact, some of it was quite comical and was obviously disappointing to the GOP committee members who wanted more ammunition.
However, a sidebar comment is the key message which I hope will be heeded. He said the major thing holding business back is the inability for our governmental leaders to address our deficit issues. He strongly advocated the Simpson-Bowles Deficit Reduction plan which includes the anti-Grover Norquist sentiment of raising tax revenue as well. These comments caught the committee truly off guard. It was not unlike the reaction when Professor Richard Mueller of Cal-Berkley testified last year in front of another GOP heavy committee that he changed his mind about global warming after doing his own research and now agreed with other scientist that it was occurring.
On a more pointed note, Former Florida Governor Jeb Bush also was in the news about his concerns over the debilitating, uncompromising direction the GOP has taken. Ruth Marcus of the Washington Post does a nice job in her “Two faces, two stories of the GOP” column this week of addressing Bush’s issues in contrast to those of Wisconsin Governor Scott Walker. Speaking directly about the deficit, Jeb Bush said we need to consider tax revenue increases as well as spending cuts. He said he would have signed up for last summer’s Obama/ Boehner 10 to 1 compromise in a heartbeat. He said we were going to have $10 worth of cuts for every $1 worth of tax increase. That should have been a no brainer.
Walker had countered with the Tea Party, Norquist rhetoric that we are taxed enough. I had written an earlier post regarding ‘What Kind of Tea is the Tea Party Drinking?” on this issue. According to the Paris based Organization for Economic Cooperation and Development (the OECD), the US ranks 32nd out of 34 countries in Total Tax Revenue ratioed to GDP. That is third from the bottom. In 2009, our 24.1% Tax/ GDP ratio was 9.7% behind the average of the 34 countries of 33.8%. And, in 2000 the last time our budget was balanced – the year before the other Bush brother tax cuts – our 29.5% Tax/ GDP ratio trailed the global average of 35.3%. For those who don’t want to think globally, we can look historically and say the current US tax rates are the lowest they have been in over 50 years. So, the data is pretty clear that we are not “taxed enough already.”
These two sane voices have pointed to the same issue as a problem. They have also pointed to the same type of solution – tax increases and spending cuts. When Congress failed to act on the 10 for 1 deal last summer, it was the key reason the S&P downgraded the US bond rating. Boehner and Obama got it right, but the uncompromising Tea Party/ Norquist crowd prevented an extremely viable approach. I also blame the President and Democrats (and GOP, too), not for the 10 to 1 deal – that was clearly a GOP failure – but for their failure to embrace the Simpson-Bowles plan. As an independent, I feel we missed a golden opportunity and I am with Jamie Dimon and many others on this. The bipartisan Gang of Six saw this and tried to move Simpson-Bowles forward, but were squeezed out.
Fortunately, it is not too late. Per Erskine Bowles, if we fail to address the deficit, we will fail at the most avoidable problem we are facing. Sanity is what we need to address this and other issues. We need the incumbents to stop trying to keep their jobs and start doing their jobs. We also need Mitt Romney to stop advocating for a 20% tax cut, because that is at the height of irresponsibility. Economists, not handpicked by the GOP and not quoted on Fox News, have noted this would increase the deficit. The Bowles-Simpson plan would verify that assertion. In Marcus’ editorial she notes when Walker counters with the prosperity that followed when Ronald Reagan cut taxes, that Reagan actually increased taxes on several occasions after the initial tax cut to combat deficit issues that resulted. Those tax increases are conveniently forgotten in the Reagan legend that echoes around the GOP these days.
I applaud Dimon for his comments in the face of due criticism of his bank. I applaud Jeb Bush for saying what needs to be said to try to right the GOP ship. It is obvious from his comments, we elected the wrong Bush brother. Republicans and Democrats, please heed these messages. I realize that any dumb ass can get elected saying they will cut taxes, but we don’t need any more dumb asses in office. We need sane, collaborative voices who are more concerned about helping people than winning an argument.