The IMF Should Shut Its Yapper

The IMF has weighed in on the silly sequestration process that our dysfunctional government implemented, saying the budget cuts in the United States were “excessively rapid and ill-designed.”

I agree with the “ill-designed” comment — no rational person could think that the sequestration process was “well-designed” — but the IMF really doesn’t seem to be troubled about the process, so much as the fact that the cuts were made at all.  The IMF report suggests that government spending cuts inevitably hurt economic growth, both in the short term and the long term.  The report states, for example, that “indiscriminate” reductions in education, science and infrastructure spending could reduce potential economic growth.

Here’s the money quote:  the IMF report concludes that the sequestration cuts “should be replaced with a back-loaded mix of entitlement savings (related to healthcare and pensions) and new revenues, along the lines of the administration’s budget proposal.”  Let’s deconstruct that conclusion.  “Back-loaded” means not right now.  “Entitlement savings” means don’t cut government payrolls or government contracts.  “New revenues” means raise taxes.

In view of the recent experience in Europe and the U.S., it’s hard to believe that reputable entities would continue to insist that government spending creates economic growth, but it’s not surprising that the career bureaucrats at the IMF and its perma-tanned leader, Christine Lagarde, reached such conclusions.  The IMF is one of those curious, quasi-governmental entities in the modern world that is supported by government money and interacts with government employees who spend tax dollars.  In view of that fact, of course the IMF is going to object to government spending cuts and contend that increased taxes are the only answer.

The IMF has zero credibility on what produces true economic growth.  It should just shut up about how the United States conducts its economic affairs and be grateful for our substantial contribution.

Why I’m Voting For Mitt Romney And Paul Ryan

On Tuesday, I’ll walk in to the polling booth at the church in New Albany where we vote and touch the screen for Mitt Romney and Paul Ryan.  I recognize that that decision won’t come as much of a surprise for loyal readers of our family blog.  I think it’s only fair to explain why, if only to add one more person’s perspective to the national conversation about this election.

In my view, the most important issue confronting our country is our federal deficit and national debt — the latter of which has passed the $16 trillion mark.  I care about other issues, of course, but I view our debt as the most fundamental issue of all because it involves basic concepts of national sovereignty.  Our debt is so large, and has existed for so long, that we tend to think of it as a kind of abstraction . . . but every dollar of that debt is a real obligation of our country, reflected in an instrument sold by the U.S. treasury to a willing buyer who will be paid a specified interest rate.  With each additional bit of borrowing, we give those people from whom we are borrowing leverage that may allow them to dictate terms — at first, the terms of the debt instruments, by insisting on higher interest payments, and then eventually the terms of how our government operates, by dictating whether we need to adopt austerity measures in how our country operates if we hope to obtain additional loans.  At that point, our national sovereignty is at stake.

We know this to be the case, because over the past few years we have seen it occur in Iceland and Ireland, and in Greece and Portugal.  Those countries borrowed irresponsibly and saw the interest rates on their debt instruments rise as investors became increasingly concerned that the debts might not be repaid and demanded higher rates as the price for accepting that risk.  And, ultimately, outside forces — the International Monetary Fund, European Union bankers, and others — went to each of those formerly sovereign nations and told them what they needed to do if they hoped to continue to borrow money.  Those governments accepted the conditions and agreed to the austerity measures imposed by outsiders because they had no choice.

I don’t want to see that happen here — yet, over the last four years, we have seen the United States move down that very same path, with annual trillion-dollar deficits that have taken our total debt past the unimaginable sum of $16 trillion.  We also passed a significant milestone on that road to perdition when our national credit rating was downgraded.  I don’t think that downgrade has received the attention it deserves.  Imagine!  Credit rating agencies presuming to raise questions about the credit of the leader of the free world, a country so stable that its currency gave rise to the now-antiquated phrase “sound as a dollar.”  But the ratings agencies are so presumptuous, and we are kidding ourselves if we think our many lenders aren’t also carefully considering our credit-worthiness.

I don’t want to wake up one morning and see that our political leaders are having to dance to the tune called by teams of grey-suited bankers from the IMF, or China, or Germany.  If that happens — and if we continue to rack up trillion-dollar annual deficits, it inevitably will — we shouldn’t kid ourselves about what it would mean.  Does anyone think federal funding of NPR or contraceptives, to identify only two of the issues being discussed during this campaign, would survive under the austerity measures forced upon us by creditors?  Does anyone think the bankers would hesitate to require fundamental changes in entitlement programs like Social Security and Medicare?  Does anyone think our country could continue to function as a world leader, and a force for good, as a debtor nation struggling to deal with its overwhelming credit problems?

I recognize this is a dire scenario, and some believe it just can’t happen here.  My response is to look at what has happened in Europe, to countries that have just been ahead of us on the irresponsible fiscal policy curve.  Their experience shows, I think, that it can happen here — and it will, if we don’t do something about it.  I’m too proud of this country and what it has accomplished to let that happen without trying to change course.

I don’t think President Obama places a high priority on grappling with our deficit and debt problems.  He’s talked about them, but his actions speak louder than his words.  He continues to propose budgets that would result in trillion-dollar debts for years into the future, and continues to propose the creation of new federal agencies and federal programs as the solution for every problem.  He hasn’t used the bully pulpit of the presidency to encourage Congress to act.  I’ve seen nothing from President Obama to indicate that his performance over the next four years on this crucial issue of national sovereignty would be any different than his performance over the past four years.

Mitt Romney and Paul Ryan, on the other hand, do focus on the issue of our deficit and our debt and have proposed approaches.  I think they understand the fundamental nature of the problem and would make working with Congress to address the issues in a meaningful way their top priority.  I want someone in the White House who will tackle the debt problem, not let us drift into catastrophe.  That’s why I’m voting for Mitt Romney and Paul Ryan.

Lifestyles Of The Rich And Famous

Americans have always been interested in the lives of the rich and famous — particularly when the story involves their misdeeds.  The arrest for sexual assault of Dominique Strauss-Kahn, the now-former head of the International Monetary Fund, and Arnold Schwarzenegger’s belated confession to fathering an out-of-wedlock child are just two of a long line of tawdry scandals that have captivated American audiences.

The sordid tale of Strauss-Kahn provides an especially rich trove of detail.  He was staying in a $3,000-a-night hotel room when the incident occurred.  He flies first-class on Air France whenever he wants.  He jets around the world, passing judgment on the economies of sovereign nations and spending other people’s money.  He’s French, and a Socialist.  And, according to the hotel housekeeper who is his accuser, when she entered what she thought was an empty room he burst out of the bathroom like some Gallic satyr, assaulted her, and engaged in forced sexual contact.  His apparent defense is that the encounter was consensual.  And, to complete the required story line, his resignation statement professes his innocence but says he is giving up his post for the good of his wife, whom he loves “more than anything,” and the IMF.

One point that distinguishes the Strauss-Kahn tale from the others is that he is French, and therefore people from both sides of the Atlantic are reacting to his arrest.  Initially, many in France seemed to blame his arrest on American prudishness and to complain that he wasn’t being treated in a deferential way that acknowledged his lofty position in the world.  More recently, the prevailing view seems to be shifting away from reflexive sympathy for Strauss-Kahn having to deal with the unsophisticated, benighted Americans to a realization that the conduct of which he is being accused is, in fact, criminal and is properly treated as such.  If this incident causes the French to be a bit more concerned about sexual assault crimes, and a bit less willing to give a pass to the misconduct of the high and mighty, that would be a good thing.