My twitter account is basically saturated with HUFFPOST/NYTIMES/WASHINGTON POST/24 HOUR NEWS CYCLE BLOGGER JUNKIES/and Ezra Klein, who I will leave in his own category. It goes without saying that the debt debates have been dominating my feed, and each day there is a new headline with perpetually dismal news. The entire debacle has been a series of blunders by congress to come to a conclusion, followed by a collosal math error and a downgrade of nation’s creditworthiness, market freakouts, and finally Obama declaring that he just doesn’t give a rat’s ass.
“Markets will rise and fall, but this is the United States of America. No matter what some agency may say, we have always been and always will be a triple-A country,” Obama said. OK. So, I paraphrased.
(Obama’s statement proves that the international marketplace is in fact all about a good attitude.)
Yet amidst the madness an agreement has been made. A joint bipartisan congressional committee, to be formed under the legislation passed last week that averted a government default, is to report its recommendations in late November on how to cut $1.5 trillion in spending over a decade.
With the ultimate goal of Rendering AAA public credit and reducing deficit, here’s how I think we can get there.
Step 1: Take a deep breath. Being in debt is a good thing.
Well, maybe I should rephrase that. Incurring national debt has created a marketplace for sovereign debts which has spurred the development of private capital markets –countless industries and millions of jobs the world over. It has also been the glue that holds nation-states together and accountable by tieing stockholder interests to the federal government. On the other hand, we all know that too much of a good thing is no good at all. Once the deficit becomes larger than the means to eradicate it, the debt works contrary to our best interests. In other words, when the government can no longer pay interest on its debts (sound farmiliar?).
Step 2: Reform tax code and federal budgets
The big picture of Step 2 is to restore AAA credit rating by using a policy that would tie bonds to taxes that are backed by revenue. Tieing taxes to revenues would be psychologically advantageous for many reasons – the primary one being that by doing so, it would force Americans to recognize the need for fat trimming and a return to American austerity. I myself do not promote Big Government but I am no tea-partier either. I believe in a government that provides a wide range of public services that fully encompasses “life, liberty and the pursuit of happiness.” I also don’t think that includes funding fictitious college students, spending $100 million on unused plane fare, and the billions wasted at the Department of Defense and on Medicare. Ok – I’m off my blue dog dem rant chair…
The first area of attack is no small feat – entitlement programs. Obama himself said that he would make modest adjustments to popular but expensive entitlement programs and that “making these reforms doesn’t require any radical steps. What it does require is common sense and compromise.” I wholly agree. I think that this can be achieved by creating primary taxes supplemented with contingent taxes (if the primary taxes failed to balance the revenues and expenditures.)
Step 3. Ignore pressure from the right to rapidly deploy cuts in expenditures
This will achieve nothing and is entirely unnecessary. We hear threats all the time of a “double-dip recession” and that’s because world markets are still incredibly sensitive to shocks. By unleashing the Cracken of expenditure cuts, like the right suggests, this is an almost certain reality.
Step 4. Institute pro-growth progressive policies
Instead of relinquishing a bevy of cuts upon a weary constituency, and then leaving the global marketplace to bear the grunt of it all – the US should ease its way out of this crisis by implementing policies that embrace growth. What’s more – we must bet on innovation. The Kauffman Foundation revealed that over the past generation the greatest number of new jobs were generated in firms less than 5 years old. Slowly easing out of this recession requires more of the same measures to promote job creation from the Obama Administration – but with a renewed focus on innovation and supporting startups and small businesses. Increasing their odds of succeeding will increase our odds of succeeding.
Step 5: Don’t get into any more foreign entanglements and get out of the ones were already in!
Enough said.
Step 6: Make strategic cuts in expenditure by reducing waste in the most obvious areas like defense and medicare
Enough said.
