Waving The White Flag On Debt Reduction

President Obama gives his State of the Union speech tonight.  The Washington Post is reporting that we won’t be hearing much about debt reduction.

In fact, the President believes that our goal should be to “stabilize” the debt, rather than actually reducing it.  In short, he’s just aiming to slow the incredibly rapid rise in our debt to a slower rate of increase.  Under the President’s approach, our debt would continue to grow — just at the same rate as the economy generally.

Moreover, the President says that, with the tax increases that took effect recently, we’re more than halfway toward the goal of debt stabilization.  Of course, such confident statements about progress toward “debt stabilization” are based upon long-term forecasts about how the economy will perform, how it will be affected by the tax increases, and other guesswork.  How accurate have the Administration’s economic predictions been over the past four years, and why should we believe them this time around?

It’s disappointing that President Obama thinks we should simply accept our huge existing debt and a scenario in which that debt continues to grow, and grow, and grow until the end of time.  He’s like the employee who sets minimal workplace goals — say, 50 percent attendance — to ensure he can ultimately say they were accomplished.  Actually cutting spending and achieving a balanced budget is hard work; reframing the objective to be “stabilization” of a debt that will continue forever sets a much easier target.  And perhaps the President believes that if he says it often enough, people will believe it really means something.

The problem, of course, is that more debt is more debt, and interest on the debt must be paid.  In 2012, the U.S. paid $220 billion in net interest on the debt.  As our “stabilized” debt grows, our interest payments will necessarily grow as well, and if investors begin to grow skittish about our mountain of debt and being to insist on higher interest payments (which is what has happened in Europe) the interest component of our budget will grow faster still.  Erskine Bowles, one of the chairs of the Simpson-Bowles Deficit Reduction Commission that made recommendations the President ignored, says our interest payments could reach $1 trillion annually by 2020.  That’s not just $1 trillion that could be used for other purposes — or that could remain in the pockets of taxpayers — it’s also simply not sustainable.

So, let the President wave the white flag on debt reduction and try to convince the credulous that “debt stabilization” will do the trick.  I’m not buying the snake oil.

Guns, Guns, Guns . . . And Distraction

Your daily newspaper and your favorite news websites have been dominated recently by news about guns and gun control.  Since the awful shootings at the Sandy Hook elementary school, where a heavily armed lunatic murdered more than two dozen children and adults, our political leaders have been talking a lot about firearms and what we can do to prevent another horrible massacre.

In an odd way, the opportunity to talk about guns must be a kind of welcome relief for our politicians, because the gun control debate lets each party retreat to safe, time-honored positions that appeal to their bases.  Democrats understand that most of their voters will support attempts to license gun owners, register all weapons, and restrict or even ban ownership of “assault weapons” or other firearms.  Republicans, on the other hand, know that their supporters will cheer vigorous defenses of the Second Amendment right to keep and bear arms and stalwart opposition to overly zealous attempts to regulate gun ownership.

I suspect that all of the talk, talk, talk about guns is, in part, a means of distracting voters from other pressing issues.  Members of Congress and the Obama Administration would rather stay snugly in their gun debate comfort zones than deal with the spending, tax, and budget deficit issues that have far more long-term significance for our country.  With all the talk about guns, how much discussion of those core economic issues have you heard recently?  When those issues are in the forefront, and feet are being held to the fire, there are no easy, pat answers and no rote appeals to political bases.

As terrible as the Sandy Hook shootings were, we shouldn’t let our political leaders divert our attention from the federal debt time bomb and other issues that are restraining our economy.  Yesterday we received an unpleasant reminder of these problems when it was announced that gross domestic product dropped in the fourth quarter of last year.  Imagine:  our economy actually shrank during the hottest shopping season of the year.  It’s time we remind Congress and the President of the paramount need to focus on the hard budget and economic issues, before our economy plunges into another recession.

Congratulations, Mr. President, And Good Luck

President Obama was re-elected last night, narrowly beating Mitt Romney.  I congratulate the President on his victory and wish him success.  In my experience, a successful President usually means we have a successful America.

Democrats kept control of the U.S. Senate, while Republicans kept control of the House of Representatives.  In short, the United States is in for more divided government.  After two consecutive “wave” elections, the message of this election seems to be to maintain the status quo.

Divided government is not necessarily a bad thing.  The Constitution, with its complex system of checks and balances, contemplates divided government, where one man or the passions expressed in one election can’t fully control the direction of the nation.  Our system — wisely, I think — contemplates compromise and collaboration to accomplish legislative goals.  Our problem lately is that we haven’t had meaningful compromise, or perhaps even meaningful attempts at compromise, from the President or the two Houses of Congress.  Perhaps that unwillingness to compromise was due to the rapidly shifting views of the electorate and the looming presence of the 2012 election, but with that election now one day behind us that rationale no longer exists.

With more divided government a reality, President Obama and the congressional leaders of both parties need to figure out how to compromise, because only through compromise will we be able to address the huge problems confronting our nation.  We all know what those problems are:  the “fiscal cliff” of self-imposed cuts and tax increases that will take effect in less than two months, trillion-dollar deficits that extend into the foreseeable future, adding to a dangerous amount of national debt, and entitlement programs that are on the road to bankruptcy unless reforms are instituted.  All of these issues, and others, have reached the point of criticality.

We can no longer afford drift and inaction in the face of these challenges.  It is time for President Obama and Congress to grapple with these issues and to reach the kinds of rational compromises that people of good will, but different political viewpoints, can find acceptable.  It will be a big task that requires leadership, bipartisanship, and a recognition that the needs of the country must take priority over momentary political advantage.

When I left our house at 5 a.m. today for the morning walk with Penny and Kasey, I noticed that some of our neighbors of both parties who had put candidate signs in their yards had removed them already.  They recognize that the election is over and it is time to move on with our lives.  We need some of that same attitude at both ends of Pennsylvanian Avenue.

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.

President Obama Gets The Last Word — For Now

President Obama brought the Democratic National Convention to a close last night with a much-anticipated speech accepting his party’s nomination for re-election.  As always, the President gave a well-delivered address that addressed concepts that have become familiar from the 2008 campaign and his four years in office, and that sought to stir some of the same emotions that made his 2008 a crusade for so many people.  The burden for the President, I think, is that every speech he makes is compared to some of his prior addresses to rapturous audiences; for many it will be hard for him to approach, much less equal or exceed, his efforts four years ago.  He has set a high bar for himself.

The President’s speech reminded me of President Clinton’s speech the night before in that it was heavy on brief references to a host of issues and policy concerns.  The President mentioned a number of matters — job training, renewable energy, investment in education, climate change, women’s health, oil and gas exploration, and countless others — and then moved on quickly.  The speech included lots of round-number goals (“100,000 math and science teachers” or “a million new manufacturing jobs”) and future dates (“over the next decade”).  It was as if the President wanted to touch every conceivable base.  It certainly seemed that he did so, but talking, however briefly, about disparate issues makes it more difficult to knit together and present broad, unifying themes.

The President acknowledged the difficulties in achieving his promises from the 2008 campaign, without getting into specifics of discouraging data on  unemployment, foreclosures, and the federal deficit.  He spoke of “hope tested by political gridlock,” said he never said it would be easy, called our recent economic issues the “Great Recession,” and added that it is clear that it will take more than a few years to solve the problems.  He referred to his failings, and said he was moved by the hope that ordinary Americans gave to him, not the other way around.

The speech was more pointed in its criticism of his opponent than you typically hear in addresses by incumbents, who often attempt to appear above the fray and largely ignore their adversaries.  He said Republicans don’t want Americans to know their plans, which consist only of lower taxes and reduced regulations as the remedy for every malady.  He noted the lack of foreign policy experience of Mitt Romney and Paul Ryan, accused them of being in a “Cold War time warp,” and chided Romney for purportedly “insulting” Great Britain, “our closest ally,” during a recent visit to that country.  From such remarks, I think we are safe to say that we are in for a hard-fought, and probably personal, campaign.

The President sought to address the charge that he views more government as the solution to every problem.  Not all of our problems can be solved by government programs, he said — but our problems can be solved.  Thereafter, however, every proposal and solution he offered seemed to involve some form of government program, benefit, or subsidy.  He talked about “nation-building here at home” through construction of roads and bridges, which sounded like a pitch for another “stimulus” effort.  It’s tough for President Obama to argue that he isn’t for bigger government, because he obviously believes that, as he says,”government has a role.”  That belief makes it difficult to convince him that some government programs don’t work and that government spending often is wasteful.  Last night, at least, there was no talk of eliminating any specific programs or spending as part of a plan to balance our budget.

The overarching challenge for the President is that, as he observed at one point during his speech, “I am the President.”  Unlike 2008, he has a performance record to explain and defend, and it is hard to sound lofty themes when your opponents are constantly bringing the debate back down to earth with statistics about unemployment, home foreclosures, or declining median family incomes.

This year the Democrats had the luxury of following the Republicans, which gives President Obama the last word — for now — but Republicans will have their say soon enough.  For all of their apparent differences, President Obama and Mitt Romney do seem to agree on one thing:  to use President Obama’s formulation from last night, this election offers the “clearest choice in a generation” between candidates with “fundamentally different visions of the future.”  With the conventions done, we now move into the final phase of this ridiculously long campaign — a time of more rallies, more attack ads, and eventually debates that will let the competing candidates go toe-to-toe.

The Race Rolls On, And The Big Issues Linger

The Republican presidential primaries, already seemingly endless, roll on.  With Newt Gingrich’s big win in South Carolina, the race is in disarray.  Gingrich is on the rise, Mitt Romney’s shield of inevitability has been dented, and Ron Paul and Rick Santorum are hanging on.

The focus now moves to Florida.  As has come to be the pattern, that means another debate tonight (No!!!!!!), lots more negative ads, and probably some new revelations before Florida goes to the polls on January 31.  We’ll hear lots of buzz words and scripted retorts and talking points, but what we probably won’t hear is much substantive talk about exactly how the remaining contenders are going to tackle the budget deficit.

You can argue about how we select a President in our country, and whether beginning with states like Iowa, New Hampshire, and South Carolina makes any sense.  The early primary voters never seem to share my perspective on the big issues of the day, but perhaps that is just a reminder that ours is a large and diverse land where people have many different views.  In Iowa, social issues always seem to take center stage.  In South Carolina, the votes for Gingrich seemed to be motivated, at least in part, by anger — anger at the news media, and anger at President Obama — and a desire to select a candidate who, the voters believe, will cut the President to ribbons in debates.

Social issues just aren’t on my radar screen, I’m not mad at the news media, and scoring debating points with glib jabs at the President isn’t important to me.  Instead, I just want to hear how specifics about the candidates will cut our spending, balance our budget, resolve our debt issues, and get our economy growing again.  Those are the issues that are most important to me and, I think, most important to our country.  Maybe — just maybe — some Floridians share that view.

Anticipating Supercommittee Failure

The news about the debt supercommittee — the Joint Select Committee on Deficit Reduction — is not good. According to the Washington Post, the supercommittee members have gone on the Sunday talk shows to effectively concede they won’t succeed and to begin to prepare for the impending failure.

We can expect that each side will blame the other.  Congress might not be able to make hard decisions, but they are peerless in shirking responsibility for failure.  Even more sad, yet predictable, Congress also is talking about deactivating the automatic spending cuts that were supposed to make a grand compromise more likely.  If they do that, of course, the entire supercommittee charade will be exposed as a silly sham that has done nothing except demonstrate that our leaders lack the discipline and the will to make tough choices — even when the grim example of countless debt-ridden Eurozone countries shows clearly what ultimately will happen if our constant deficit spending habits are not curbed.

We are seeing an amazing lack of leadership in Washington, D.C., from the President on down.  Hang on to your hats tomorrow; if the financial markets get the idea that the supercommittee will fail and that no cuts of any kind will be made, we may be in for a serious stock market meltdown.