Boom, boom, boom, boom – the US deficit and debt continue to explode

In honor of John Lee Hooker’s famous lyric, which is played at the beginning of “NCIS – New Orleans” and in the movie “Blues Brothers,” a good wake-up call for our US deficit and debt is “boom, boom, boom, boom.” Please note, this is not the trade deficit, which is overblown as a problem as we are more of a consumer nation. This is due to our government spending far more than they take in revenue.

Per the following introduction in a Bloomberg News article, “U.S. Budget Gap Balloons to $739 Billion Despite Tariff Revenue,” we have an escalating problem.

“The U.S. budget deficit widened to $738.6 billion in the first eight months of the fiscal year, a $206 billion increase from a year earlier, despite a revenue boost from President Donald Trump’s tariffs on imported merchandise.

The shortfall was 38.8% more than the same period a year ago, the Treasury Department said in its monthly budget review released on Wednesday. So far in the fiscal year that began Oct. 1, a revenue increase of 2.3% hasn’t kept pace with a 9.3% rise in spending.”

Right now, our US debt tallies more than $22 trillion and was expected to increase by $10 trillion over the next ten years, before the tax cuts in December, 2017. Our fiscal year runs October through September, so this is the first fiscal year with full benefit of the tax cuts. The Congressional Budget Office forewarned the tax cuts would increase the debt by $1.5 trillion over the next ten years over the already projected $10 trillion. That will put us closer to $34 trillion at that time.

Yet, Americans were told by the president and favorable politicians that the CBO was wrong and growth would accelerate enough to pay for the debt using the assertion “the tax cuts will pay for themselves.” Per the Committee for a Responsible Federal Budget, tax cuts do not pay for themselves, with the best historical result being in the neighborhood of 30%, but usually much less. That leaves 70% of the revenue reduction adding to the deficit in the best of times.

The reasons for the increase in deficit are increases in military, healthcare and interest cost spending, which have overshadowed the revenue increases due to the longest running economic growth period in the US. Even the worst budgeter amongst us knows, we should be paying down debt when times are good, not increasing it. Sadly, the economy has begun to slow some, so the tax cutter’s rosy projections of 4% and above growth have not materialized (except in an isloated quarter) and economists are expected  lower growth rates than the current 3% per annum the rest of the year.

Per The Concord Coalition, the above Committee for a Responsible Federal Budget and the Simpson-Bowles Deficit Reduction plan from December, 2010, we must solve our deficit and debt problem through spending cuts and revenue increases (tax increases) both. The math will not otherwise work. If any politician, no matter how smugly, tells you otherwise, they are not be honest with you or are misinformed themselves.

To be brutally frank, I said so then, but the tax cuts passed in December, 2017 were malfeasance in my mind. We borrowed from our future to make a pretty good economy a little better. It was also hypocritical. Former Freedom Caucus members got elected saying the previous $5 trillion, then $8 trillion, then $13 trillion debts were abhorrent. Now, when it is just below $22 trillion, they pass a bill that increases it even more.

When I raised this with a Freedom Caucus staff member, he curtly told me the CBO is often wrong and they are wrong on this. My push back was simple. These folks do their homework to try and get it right. And, what I have found in my 40 years of adult life, is politicians hail the CBO when their number agree with their decision and call them on the carpet, when they don’t. Yes, it is a projection, but these folks try to be apolitical.

Folks, we have a problem that is not getting talked about enough. We must cut spending and raise revenue. My GOP friends have ceded their fiscal stewardship mantra – that is highly unfortunate. My Democrat friends need to question every candidate on how they plan to pay for their ideas and what they plan to do about the debt. We cannot have Medicare for all if we cannot pay for it.

So, let’s get real and ask politicians some pointed questions. If we don’t, John Lee Hooker will sing even more loudly. “Boom, boom, boom, boom.”

 

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A little bit of this, a little bit of that this Wednesday

Happy hump day. Let’s cruise into the downside half of the work week. With multiple themes percolating in my mind, here are few little bits of this and that to bite into.

Former host of “The Daily Show,” Jon Stewart has been fiercely active in helping gain funding to pay for the medical costs of the 9/11 first responders in NYC. He gave an “out of the pool” criticism to a Congressional Committee in person as the funding has run out. He said in essence the first responders did their jobs, now you do yours. Forceful is an understatement. Let’s hope it sinks in. Congress and this president need to be shamed like that when they fail to do the obvious. In essence, he said I don’t give a crap about your politics, do the right thing. Amen brother.

The greatest talent of the current US president is marketing schtick. He can make a pair of twos look like a full house better than anyone. Like this analogy, most of what he does is untrue or blown way out of proportion. He knows fear sells, so he sells it daily, if not hourly. One of his greatest triumphs is to convince his followers that everyone is against him and that only he speaks the truth. He has his followers parroting his remarks saying “you just don’t like him” or have “Trump derangement syndrome.” In other words, it is your fault he lies far more than he does not.

The best line I read recently in a letter to the editor was an attempt to combat this. The letter writer said it is not the media and not the Democrats who are causing all of this chaos. He noted that the US president does not need any help in causing chaos and defaming his own character. He does a very good job on his own. I have said it differently – the greatest enemy of Donald J. Trump is the person who looks back from the mirror when he shaves. One of the reason why the volume of criticism is so high toward him is to combat the significant number of mistruths and the fact he has so many followers who see his lies on their phones.

Kudos should again go out to Republican Congressman Justin Amash from Michigan and Senator Richard Burr from North Carolina. Amash is an attorney and has read the Mueller report. He is a very lone and lonely voice in saying in writing that there exists grounds for impeachment of the president. It should be noted over 1,000 former federal prosecutors agree with him. Yesterday, he resigned from the Freedom Caucus and the vindictive president said he would “squash” Amash. To me, I see Nikita Khrushev pounding on the table at the UN with his shoe saying “we will bury you.” Fear sells.

Burr is also a lonely man, but he at least got a little air cover from Mitch McConnell. Burr subpoenaed the Junior Trump in to testify to the Senate Foreign Relations Committee. Burr got backlash, but Junior was a “no-show” twice, so Burr asked a judge to get Junior’s fanny in to talk. The issue is Junior may have lied to the Committee about his awareness of the Moscow Trump tower that attorney Michael Cohen briefed him on. Junior said he was only a little aware of the Moscow development issues, but Cohen said he briefed him 10 or 12 times. Like father, like son.

Finally, I have been conversing with our astute British blogger Roger. We are of a like mind (note he is astute even when I don’t agree with him) that the Brits are looking to a very Trump-like prime minister in Boris Johnson. That is not meant to be a compliment. The only poetic justice is if the he wins and the Brits do a hard-Brexit, Johnson will be front and center in the mess he helped create by being untruthful. I understand the rationale, but am not a fan of Brexit – it will dampen the British economy and global clout and that saddens me.  But, if the UK follows through, please, please work out a deal. A hard Brexit, so says business leaders, would be as unwise a decision as the country leaders could make (or fail to make in this case). It should speak volumes that Trump, Johnson and Nigel Farage want a hard Brexit.

That is all for now. Have a great rest of the week.

 

Out of the pool

I think it is time to fire any politician in Washington who is forgetting why they are there. We could start with the White House incumbent and then take out hundreds of members of Congress in both houses. I understand fully Congress must investigate and provide oversight over the Executive Branch. That is part of their job and the current incumbent has given them cause to dig further.

Yet, I have this simple idea that leaders of both houses sit down with legislative liaisons from the White House and figure out some things they can pass and sign into law. I think a civilian board could list about a dozen major issues to focus on and say work these out. It should not take a civilian board, but these folks are too beholden to funders to come up with a workable list.

A key reason for not listing the problems is too much discussion occurs around whether not solving an issue helps them politically. A curse word comes to mind, so please insert your favorite. A good example is a bipartisan Senate immigration bill was passed in 2013, but the House refused to take it up as leaving immigration unaddressed would help the Republicans in the 2014 midterms. The Democrats should not be smug as they do the same thing.

Because of the Republicans unhealthy focus on dismantling the Affordable Care Act, the party justifiably lost seats in the 2018 midterms. To be frank, they should have lost seats with a rushed process that did not follow form and came up with several awful ideas. They should also thank Senators John McCain, Susan Collins and Lisa Murkowski for saving them from themselves by voting against an ill-conceived vote.

But, what have Dems done with improving the ACA with their winning back the majority in the House – nothing other than “beating on their chest” bills that went nowhere? Not that they were bad bills, but don’t wait until an election in 2020 to address healthcare. The ACA is imperfect, but is working OK and needs some more stability and improvements due to initial design flaws and several efforts by the GOP to sabotage it.

So, Ms. Pelosi, Mr. McConnell, and Mr. Pence, get your fannies in a room with a white board and figure out how to get something done. I do not care which party benefits from what comes out of this. The key is we benefit. Do something that will be signed into law by the mercurial man in the White House. So, Mr. Pence you better have the Queen of Hearts’ blessing to make deals or you may lose your head.

Here are few items for the list:

  • Stabilize the ACA: pay insurers what we owe them (yes we reneged on two deals with them) and invite them back to the market to have more competition. Consider expanding Medicare to age 62 as a trial to improve the risk pools in both the ACA and Medicare. Push for the remaining states to expand Medicaid.
  • Address better gun governance: another mass shooting occurred yesterday and nobody in office cares. More suicides occurred yesterday and nobody in office cares. A few accidental shootings and homicides occurred and nobody in office cares. It is a holistic problem that needs holistic solutions. Do something, anything that will help even if it is just a little. Universal background checks and elongated waiting periods would be well received by the majority of Americans.
  • Address climate change at the federal level: Cities, states and some industries are moving forward without an active federal government role, which is rightfully being sued by 21 children for failure to address what they have known about for three decades. They actually have a good case. This is also a jobs and economy issue as we can look backwards and get passed by or look to growing renewables industries. As a good example of looking backward, we let China seize a significant majority of the rare earth metals market share from us which is now a threat to national security.
  • Address the debt and deficit: Trade deficits are not a big thing as we are a consumer driven economy. The far bigger crisis is our national debt and growing deficit. We have to pay for things and the less we do, the more risk we have with a growing interest cost as a percent of our annual budget. We must increase taxes and reduce spending, both. The GOP has forsaken its role in being a budget hawk passing a tax bill that made a growing problem worse. Revisit the Simpson-Bowles Deficit Reduction plan and do some of those things.

I will stop there, but there are more problems to address. Immigration is a problem, but it has been made worse under this president by cutting funding to help some Central American countries improve the lives of their citizens and the lack of judges to address the increased migration. A wall is not an answer. It is merely a structure. Dusting off that bipartisan Senate bill from 2013 would be a good start as well as addressing DACA. We need to keep educated young people in our country, as growth is an issue.

So, legislators, please get in a room and do some things that will pass. The focus should be on helping Americans, not helping legislators. Stop worrying about keeping your job and do your job. And, yes continue your oversight role as we are a republic not a kingdom.

 

 

 

Credit and blame

UK Prime Minister Theresa May is stepping down today. This imperfect person has received a huge amount of blame for the failure to deliver a Brexit deal. Yet, I believe she had an unenviable task of herding the many and varied egos in Parliament who did not focus on getting the job done.

Living in America, we see this first hand, as posturing is more important than doing. Even before the fear-mongering and storytelling that has replaced civil debate, I have been disappointed in the demise in bipartisanship behavior.

Ironically, the last period of significant legislation occurred when GOP Speaker John Boehner ignored the Freedom Caucus and worked with moderate House Democrats to pass bills the Democrat led Senate would pass into law. He did this enough, that he retired before the Freedom Caucus rebellion ousted him.

Now, only handfuls of significant laws are passed as neither major party wants the other side to get a political win. Actually helping people is secondary to the perception of looking good. We have a president who does the same focusing too much on perception. He even controls his messaging taking credit for things he has little to do with and laying off blame on others when he the finger could be pointed at his efforts.

Blowing a problem out of proportion, making it worse by not addressing the real issues, threatening an action that gets push back from all sides and then coming to agreement on efforts that are already underway, is all a show that is harmful to relationships and commerce. People and companies need more stability in their lives, not less. When applecarts are upset, they have to look at other options.

This month, the US economy will be celebrating ten years (120 months) of economic growth. The president has been sure to pat himself on the back for this and he did provide some short term tailwinds with the tax cut and regulations cuts. Yet, he has only been president for going on 29 months. That means, 91 months of this growth were under Obama and the stock market more than doubled under his watch.

To be frank, presidents get too much credit and blame for the economy, providing at best headwinds and tailwinds. The headwinds this president has caused are more long term – debt, tariffs, immigration focus, pulling out of trade deals, etc. The economy is slowing its growth and more slowing is expected to occur. But, a given is this president will lay blame on others as it slows – he started last fall making the nonpartisan Federal Reserve the bogeyman.

Credit and blame. I have often quoted a leadership consultant I know, who said a great leader deflects credit to others; a bad leader accepts credit even when not due. Think about that as you hear or read tweets from leaders.

Stop in Nevada

“And she doesn’t know what’s comin’ but she’s sure of what she’s leaving behind,” sings Billy Joel in “Stop in Nevada.” This lyric is pertinent as a stop in Nevada would reveal the only state with a female majority in the stafe legislature.

And, it works well. Nevada has far more bipartisan legislation than any other state. The women legislators find common ground and show men the path forward. As 49% of the state house consists of men, their votes are needed to pass legislation.

The women represent both parties. They socialize and do community service and events together. Republican Assemblywoman Melissa Hardy and Democrat Selena Torres sat for an interview on CBS Saturday Morning News. These two have worked across the aisle to push a bill to improve education.

Hardy said. “I think it has been the most incredible experience of my life,” Torres noted, “I know we have over 90% bipartisanship on the bills passed so far.”

This is what our country needs more of. We need representation that looks like America. Two states I won’t mention have only 15% and 17% female membership in their legislatures. It is important to increase those percentages as women tend to be the primary healthcare giver of the family and make up a higher percentage of teachers. So, dinner table issues of medical bills and education will get more weight.

I also believe women will help us break through zero-sum politicking (I must win and you must lose). It should be noted it took ten female US Senators to avoid the US defaulting on its debts in October 2013 after the government was shut down. This last minute effort was highly commendable and a relief to the male leaders who could not stop their posturing long enough to keep us from driving off a cliff.

We must work together to solve problems. We must demand our politicians do the same, otherwise they are shouting at the wind or come up with extreme versions of laws. I am enthused by the new majority in Nevada as well as the wave of women who won US House seats last fall.

I hope they can break down barriers. The US Congress removed an area where legislators socialized across party lines. Now, about 40% of their time is doing fundraising phone calls, per a retired Congressman. It is hard to work on anything, much less biparisan laws, when you don’t take the time figure out how to pass laws together. Maybe, just maybe, these women will change that paradigm.

A clear and present danger

As an independent and former Republican (and Democrat) voter, I believe the current US President is a clear and present danger to our democracy. I have shared this opinion with my two Republican Senators as I beseech them to reestablish the power of Congress in the face of a regal-minded man in the White House.

I see a man who denigrates legislators, world leaders, media, institutions and our constitution. I see a man who says everyone is lying about him and all critical news is fake, when The Washington Post has tracked 10,000 lies in his Presidency.

I see a man who is pulling the US out of all agreements, rather than work to make them better. In so doing, he has stirred many pots with contention, bullying and lies. All agreements that precede him are a “disaster” and all things he touches are “beautiful.” It should be noted his first travel ban roll out was such a disaster, it was pulled after two days and is a metaphor of his Presidency.

Civil discourse was in decline before this man was elected, yet it has gotten worse as he uses fear to sell his over-simplified ideas and demonizes people. Plus, a Conservative news reporter noted he does not study issues and pays attention more to narrow and extreme so-called news sources, so he is setting policy off inaccurate information.

Our democracy is at stake as we face a constitutional crisis. Multiple hundreds of former Federal prosecutors of both parties say he could be charged with obstruction of justice. This echoes the opinion of Judge Napolitano on Fox News. And, having watched him for two years, I am puzzled by his infatuation with Putin, so there is more there than being Putin’s stooge. The CIA has noted, at a very minimum, he was an unwitting participant in Russian election influence. An article just last month called the Trump campaign team “naive” regarding Russia citing a CIA operative.

The Senators know this, as they are not stupid. Yet, the key question is what are they going to do about it? I believe the Republican Party should lead the impeachment effort. It is the only way to save our country and their party. I am not a huge fan of Mike Pence, but he is a moral and rational man.

Call me crazy

I hope everyone had a great weekend. We are living in interesting times, some would even use the word “crazy.” Here are a few random thoughts to match the times.

– A real hero is someone like Lori Gilbert Kaye, a 60 year-old woman who lost her life in this weekend’s synagogue shooting. She lost her life because she threw her body in front of the Rabbi. Please share her story rather than the name of the cold-blooded killer, who not only killed her, but shot two others, including an eight year old girl.

– I agreed with the President when he said people need to get vaccinated for measles.. Then, as I read on, he said during the campaign the measles vaccine is linked to autism. When will this man understand that words matter and people do not realize that the significant majority of the words this man says are untruthful ones?

– Speaking of lies, The Washington Post has recorded 10,000 lies by Trump as President. Former Speaker Newt Gingrich defended the President saying he is a businessman and is allowed to exaggerate. Mr. Gingrich, I am a businessman and if someone in business lied like the President, people would not do business with him very long. Further, why did an independent contractor who dealt with Trump companies say “Word on the street is if you do work for Trump, get paid in advance.”

– A recent poll conducted by Opinium said 55% of Brits now feel the 2016 Brexit vote was a bad idea. They have time for another vote, but not if they wait. A fact based process would help, but it would also help here in the states.

– With the advent of market segmentation in all things, including the pseudo-news and now data, we seem to be moving closer to another Robber Baron period. Now, it is so easy to obfuscate voters, they do not know that elected officials are making changes that help the wealthy. What is also unsurprising is how easily more strident groups can be fooled to go along, provided you play to their fears.  Immigration is being sold as the problem, but the main problems are technology and CEOs chasing cheaper labor costs. In Western countries the haves and have-nots are even more divided. Unless something is tangibly done, this bifurcation is unsustainable.

– Finally, it is amazing how little the US leaders talk about our ticking time bomb problems – job retraining as technology kills more jobs, increasing debt, environmental degradation, global water crisis, stabilizing healthcare costs, crumbling infrastructure and climate change. The GOP is running on building a wall, proliferating gun ownerships, restraining abortions and how bad socialization is. Make all candidates answer questions about these ticking time bomb problems. If they cannot, do not vote for them.

Call me crazy, but maybe, just maybe, the ones who are crazy are the ones not addressing real issues and telling real truths. You be the judge.