SIMPSON BOWLES REVISITED

A friend gave me an editorial criticizing President Obama for failing to encourage Congress to vote on the Simpson Bowles’ (The national Commission on fiscal responsibility and Reform) recommendations to reduce the deficit.

The plan was never voted on because there were very few Democrats or Republicans who would support it. The democrats hated the proposed changes in Medicare and the Republicans hated it because it proposed, through tax reform,  large increases in government revenue.

The Commission recommended a $500 deductible plus a 50% contribution to the next $5000 of medical expense incurred by seniors. Voting for that would have been tantamount to submitting your resignation.

It also recommended, in the guise of tax reform, a substantial increase in taxes including a 15% tax on gasoline. Can’t picture there being much Tea Party support for that one.

It would have been wonderful to hear honest debate on the issues raised but in this political climate everyone is afraid to offer a compromise for fear of it being used in an attack ad in the next election.

If a Republican suggests that he will support tax increases if a Democrat will support spending cuts... he will face charges in the next election that he favors tax increases. If a Democrat were to vote for the changes in Medicare he would have been blasted for destroying Medicare.
Look at what happened to Democrats who voted for health care reform although the changes to Medicare made by that bill were minimal!

I believe that the President's big mistake was not allowing the Bush Tax Cuts to expire unless Congress acted to get our deficit under control. When he agreed to compromise he lost the battle but perhaps not the war.

It is possible that he didn’t want the tax cuts to expire while our economy was so fragile and in fact through that compromise and the recent one resulting from the Republicans blocking the increase in the debt ceiling, simply postponed the day of reckoning.

A year from now - 1.2 trillion dollars, 120 billion a year, will be automatically cut from the budget, half of it from defense. At the same time the Bush tax cuts will expire adding 300 billion a year in revenue. Together they will reduce the deficit by over 4 trillion dollars in 10 years ,enough to erase the deficit, without Congress doing anything (something they are really good at) . Neither side wants this and the result might be honest, real and hopefully public negotiations which may result in tax reform and budget cuts similar to those recommended by Simpson Bowles.

All of us should read the Commission’s plan. It is short and both easy to read and to understand. While it is easy to find fault with particular recommendations, it is hard to fault the plan in its entirety. The end result, a balanced budget, is of course what is really important.

Anyone wishing to review their recommendations can access them by clicking on this link:

http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth12_1_2010.pdf

A number of other plans have been offered. The Paul Ryan Plan can be found at http://www.roadmap.republicans.budget.house.gov/

and the progressive caucus plan can be found at http://cpc.grijalva.house.gov/index.cfm?sectionid=70http://www.roadmap.republicans.budget.house.gov/

are two of them.

The Commission did not try to dictate specific spending cuts to specific programs (although it does make a number of suggestions) It attempted to provide a broad outline to follow in order to achieve both reductions in spending and increases in revenue.

Unfortunately it was completed after the 2010 elections and flew in the face of the newly elected Tea party candidates pledge to not increase taxes. The election also made it apparent that if you wanted to win a Republican primary, revenue enhancement was off the table.

The plan reduced tax rates, but by eliminating what it calls tax expenditures (deduction and subsidies that favor the rich and special interests) it increased revenue. It decreases everyone’s after tax income but the poorest 20% by only .025% and the richest 20% by 3.4%. When your income is over a million dollars 3.4% is a lot of dollars.

There were a lot of other suggestions for revenue enhancement that should have pleased democrats but apparently by not enough. A 15 % increase in the tax on gasoline (the proceeds dedicated to much needed highway construction and maintenance), a reduction in the corporate tax rate, eliminating mortgage interest as a deduction except on your personal residence, an increase in the capital gains rate and the tax rate on dividends to the rate your other income was taxed at and other changes which all seemed reasonable to me.

It says there are 75 special tax breaks for different corporations and other special interests. It proposes eliminating almost all of them. I saw that as a make-work project for lobbyists. It took them 25 years to convince Congress to stick these breaks in the tax code. If the Commission's report was approved the lobbyists could go back to full employment trying to obtain those exemptions again!

The reductions in discretionary expenditures were divided between security and non security spending with both areas suffering cuts. These recommendations were made in general terms leaving it to Congress and the Administration to decide where these cuts could be made while causing minimum damage. Again all of these recommendations seemed reasonable.

The recommendations were also sensitive to our present economic problems. Most provisions did not take affect until 2014 or 2015.

The plan contains much to love but you could make a multitude of changes and still end up with the same result. We are never going to create a system which satisfies everyone. We need to compromise. If we are going to save the country we need to elect people who are ready to do that. Centrists who are willing to engage in calm debate... not slaves to the Tea Party nor to the far left.

The polls show that 77% of Americans understand that tax increases are required.

The other 23% listen to Rush Limbaugh and Fox news. Unfortunately they are also the Tea Party and are choosing our Republican Congresspeople.

Tales of two Politicians

I recently read two books, one written by the former Republican Governor of Indiana, Mitch Daniels, the other by Democrat Jennifer Grandholm, the former Governor of Michigan. I chose these authors since I thought they would contrast the right and the left, the conservatives and the liberals. I hoped that this would enhance my understanding of these conflicting views.

I will start with Daniels' book.

The Republican

I learned that he both hates and loves different groups of people. I will discuss them in the order of vitriol or love he expresses.

First there are the government employees, civil servants or as he likes to call them, with a sneer, bureaucrats. These are the lowest of the low., worthless, good for nothings who are overpaid and under worked.

He got rid of 18% of those employed by Indiana and since they weren’t doing anything nobody missed them. He says he accomplished this without inflicting pain, but I am sure some of those unemployed civil servants missed their pay check. I am also sure a few banks missed receiving those mortgage payments and the local merchants missed the periodic visits to their stores.

While he doesn’t like civil servants as individuals he really hates them when they gang up on their employer. With the stroke of a pen he ended collective bargaining and transported Indiana back to the 60’s when civil servants served at the whim of the political party in power. Now he and his cohorts could reorganize departments, promoting and giving to those they liked, while firing anybody who complains. I’ve known a lot of teachers, policemen, firemen public works employees, Government office workers and they all treated me well and provided the service that I expected and was paying for. I must not know those lazy bums in Indiana that the governor describes.

As much as he hates bureaucrats... he loves the rich. They are the job creators he says we need to reduce their taxes. Stop regulating them and sit back while they grow the economy! Sounds good to me! (especially the sitting back part, something I’ve gotten really good at since I retired)

The next group he hates is Democrats. He really dislikes the Democrat in chief, Barack Obama. He believes that they have cornered the market on attack ads. He accuses them not only of misrepresentation but of outright lies.

Hmm...

Perhaps it is because of the people I know but I receive one or two e-mails every week attacking democrats and so far about 99% of them are based on lies and misrepresentations. Type Obama into Snopes or Fact Check and see how long the list of untrue e-mails is.

While he hates Democrats, he loves Republicans, who never lie and are always sweet, warm and fuzzy. He particularly loves the Gipper, Ronald Reagan, and includes his down to earth quotes through out the book. He doesn’t mention the fact that Reagan cut taxes, increased expenditures and tripled our nation’s debt. He also loves G W Bush who did the same thing. In fact Daniels was the director of the Office of Management and the Budget during Bush’s first three years when he cut taxes and launched two wars, ultimately increasing our debt by 5 trillion dollars. When Bush did it: GOOD! When Obama does it: BAD!

Reagan’s Director of the Budget David Stockman at least realized what he had done and wrote a book, Triumph of Politics, apologizing to the American people. Too bad Daniels didn’t fess up to the mess he made before telling us how to fix it.

The part I enjoyed the most was when he suggested a truce between people who are discussing social issues like abortion or same sex marriage. The truce would prevent gays from advancing same sex marriage, leaving the status quo, which he loves, in place.

And then, he spends the rest of the chapter talking about all the laws he had passed making it more difficult to get an abortion and that was before he refused to give money to Planned Parenthood unless they quit providing abortions. A new definition of “truce”! - I can do whatever I want to advance my position but you can’t do anything to advance yours. That certainly would avoid arguments.

In another chapter he attacks the health care act. Of course he refers to it as Obamacare. At the end of that chapter he summarizes why he hates Obamacare and every other program suggested by democrats. He says” these programs demean and diminishes the rights of the free people Americans were intended to be” He doesn’t mention that it will provide health care for 40 million Americans who don’t have it now.

He attacks Obama for bailing out AIG. He doesn’t mention what would have happened to the world economy if AIG had been unable to meet its obligations to the worlds banks to whom it had sold billion of dollars in Default Credit Swaps. (Insurance on mortgage backed securities)

He also doesn’t mention that the bailout worked. AIG(or at least its parts) will survive and the taxpayer will not lose a nickel.

He criticizes the bailout of the automobile industry. He was upset because an Indiana pension fund with out standing loans wasn’t going to get paid, while retired UAW members were going to receive their pensions. When you weigh 100,000 jobs, 100’s of thousands of retired auto workers pensions and three major American industrial manufacturers against the companies general creditors even most Republicans would arrive at the correct answer. Once again this rescue is going to be accomplished without costing the taxpayer anything.

Would it hurt him to say, just once, good job Obama!!

There is never another side to his arguments.

He admires a fictional character in the book “The Time It Never Rained” by Elmer Kelton. This man, Charlie Flagg, lived in west Texas during the worst drought in American history. (1947 to 1957) Although government help was available he refused to accept it. Thousands of people, despite government assistance, lost everything during this difficult time as ranch’s and farms failed.

It is a lot easier to admire the fictional Mr. Flagg from the comfort of your office in Indiana rather than a stubborn old coot watching his fields dry up and his livestock die,,,,, when he could do something to prevent it.

Government was invented to provide help in times of trouble. I thought that was the agreement. The government can use my money to help you because next time I may be the one who needs help.

I might also mention Moses who saw drought in Egypt’s future and built warehouses to store food for that emergency. Good thing the Pharaoh had hired Moses and not Charlie Flagg! Or for that matter Mr. Daniels! They would have told the people to build their own damn warehouse. “You can’t expect the government to waste the rich taxpayer’s money looking out for you”. If that had happened the Jews would still be in Egypt, the Red Sea would never have parted and Cecil B DeMille would still be looking for stories to turn into movies.

The Democrat

Mrs. Grandholm doesn’t hate anyone. She was elected Governor of Michigan before the recession but not before the automobile industry began to fail. She immediately reorganized the various agencies of government needed to attract business’ to invest in Michigan. She traveled to Asia and Europe and attracted a number of foreign investments to her state. She also had to lay off state employees and get give backs from others to balance her state's budget. She did this by working with the unions rather than by destroying them. She worked with the Obama administration to gain investments under the stimulus act and to create “green” business’ including a number of companies that will build batteries for electric cars. She estimates that those businesses will ultimately provide Michigan with 60,000 jobs. She also was supportive of education reform championed by President Obama and put in place by his “race to the top’. She also worked with the Federal Government to take advantage of educating and retraining displaced workers and to try to place those people in new jobs. She says that everything she accomplished was with the consent of state employees, their union and the Republicans who were in the majority in both houses of the legislature during both her terms in office.

Mrs. Grandholm believes that both federal and state Government must target specific industries, help them with research and development and help them bring production to scale if we are going to compete with China and the rest of the world. China and India already do this... and as Mr. Daniels points out they are buying us.

In contrast to Mr. Daniels she seems to respect the opinions of others and was willing to listen to them and happy to work with them to help the people of her state.

Not crossing the chasm

I started by saying that I hoped reading these books would help me understand the chasm that exists between Republicans and Democrats. The chasm exists because Republicans are convinced they are right and it is impossible to reason with them.

Democrats, however, also believe just as strongly that they are right.

There are many areas where Mr. Daniels and I agree and many more where we disagree. Daniels says he wants to protect the safety net. He does not tell us what he would eliminate and what he would preserve. He is proud of his reorganization of the child welfare department in Indiana which changed it (he says) from failing to one of the best in the country.

While he has no answer for the millions of Americans who don’t qualify for Medicare or Medicaid and are not insured through their employers he does want to preserve the government help that is now provided. He also seems to support Social Security although all these programs need to be “reformed”.

I would like to see his idea of a federal budget, what he would keep and what he would throw away. He wants to eliminate much of the IRS by "reforming" our tax code I could accept that although I am sure we would disagree over how the code should be changed.

He thinks privatization results in better service for less money He privatized meal preparation for inmates which did reduce the cost. While my research did not reveal the answer I strongly suspect the employees of the private vendor need food stamps and Medicaid to make ends meet. I also suspect that it's employees have little or no health insurance and no pension If you add the savings I believe they will equal the ampunt costs were reduced and the companies profit. The cost of privatizing is always born by the working man.

He recognizes that some regulation is necessary but believes it should meet a cost/benefit analysis. I agree in principle but believe we would have a big fight over the details. He believes the processing of applications should be streamlined as there is no reason why one agency cannot provide all the approvals necessary. I experienced instances where I was trying to get approval from three different agencies only to find out later the people I was dealing with in numerous separate phone calls were in adjoining offices.

The area where we will never agree is on his social agenda. I believe that people should be free to choose there sexual identity, to decide whether to have a child and preventing scientist from using embryos, which are going to be discarded, is ridiculous.

The biggest problem I have with Mr. Daniels is his strong dislike of Democrats or of anyone that holds an opinion different than his. I was amazed by the depth of his dislike (hatred may not be too strong a word) of the President that permeates his book. If we cannot discuss our differences rationally we will fail as a country not because of the “red menace” (which refers to red ink) but because of gridlock.

Unless we respect each other and are able to rationally discuss our different opinions, ideas and vision we will never be able to move forward.