“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.

Does anyone find a pro-life republican candidate destroying perfectly good unborn chicken eggs on local television even a little bit hypocritical?

Obama is asking wall street now to “join him, not fight him” in an attempt to pass legislation that would attempt to reform the financial sector. The new legislation proposes:

-A system to protect the economy from a large firm’s failure.

-Limiting the size of banks and what risks they can take.

-Bringing more transparency to derivatives markets.

-Creating more consumer financial protections.

-Giving investors and pension holders more say in who manages companies.

All of this has made me think about the “ideal” free market. When Adam Smith first dreamt up the invisible hand, do you think that hand belonged to Goldman Sachs, or the American people?

Answer: neither. Adam Smith was scottish. If anything, those hands were playing bagpipes.

There is a saying that speaks to nostalgia. It says that our hearts have the ability to magnify the good and erase the bad; it is by this artifice that we manage to survive. There is so much conservative banter that speaks to this experience: we remember a time where doctors made house calls and, if you had no money, would let him leave with a bottle of whiskey. Or when “governments stayed out of our lives,” and women stayed home and baked pies and how you fear for this country and for future generations. Now I don’t want to call you a liar, but that’s not at all what it was like, at least not for the majority of Americans. Blacks were lynched and weren’t allowed to pursue the same quality of education as their white counter-parts. Women couldn’t get jobs to support their families and remained dependent on men for survival. All other minority groups, Hispanics, Chinese, homosexuals, I could go on, were politely told by our government that their demands would not be met, and that they would remain second class citizens. Maybe those with this nostalgic memory of “what was” really have conveniently forgotten the harsh reality of our past, because it is an artifice for them to survive. Because the people that are saying this are wealthy white Americans whose survival depends on refusing even basic, fundamental rights to the rest of society.

That’s why conservative Americans are making such a fuss about healthcare. I doubt it’s because they’re like the guy from the Green Mile or Bruce Willis from “Unbreakable” and they never get sick, or because they’re afraid of financially and morally bankrupting this country. I’m going to take a wild guess and say that those against health care reform either

a) don’t understand or haven’t read the actual bill or b) are a part of a faction of conservative society who historically has opposed women’s suffrage, African-American civil rights, the Clean Air Act and Medicare (liberals have worked to achieve these milestones) or c) stand to lose profit in the healthcare industry now that they won’t be able to deny anyone based on gender or a pre-existing condition, and abide by caps on fees.

 I just refuse to entertain your arguments that we stand to lose the moral ground in which America stands on, or that the bill will financially bankrupt our country. We spend already 17% of our GDP on healthcare opposed to countries with universal healthcare who pay about half of that. The reforms outlined in the bill address affordable health care and prevent gouging. It’s going to kick-start the economy: no longer will the uninsured have to put away money for medical emergencies or go without consuming during an emergency because they can’t afford it, or go bankrupt because of an tracheotomy or because they needed a new liver. It is SMART economy policy.

Policy Suggestions:

Just two:

1. Dear Teabaggers, wake up, your taxes WERE cut. And go ahead and sign petitions to outlaw the Grand Canyon, Medicare and walking on socialist sidewalks and move over to the grass. Just be careful, it may have been cut by one of those job-stealing, good for nothing Hispanics.

2. Read this article by the Huffington Post which outlines “The Top 18 Immediate Effects of the Health Care Bill.”

http://www.huffingtonpost.com/2010/03/22/the-top-18-immediate-effe_n_508315.html

& Read my other post on Healthcare:

http://policysalon.wordpress.com/2010/03/04/health-care-reform-the-last-act/

Everyone applauds Portland for its effective use of light rail; there may be some good reasons for having a rail system in any part of the country, but saving the environment from CO2 emissions is not one of those good reasons. What is true is that rail systems are ineffective because 1) most rail lines (light, heavy, and commuter) are less efficient than that average passenger car 2) the cost of construction outweighs the benefit, if any 3) cars are becoming increasingly energy efficient while rail technology is stagnant 4) Since the operating and capital costs of rail lines are so high, it causes rail lines to go into debt and has made them extremely vulnerable in our current economic crisis 5) It’s far more effective to address technical solutions (making energy efficient passenger cars) than to change the behavior patterns of passengers (switching from car to train).

It’s time to finally debunk the urban streetcar myth. Rail lines, even in Portland Oregon are less energy efficient than the average streetcar. Even in places like Dallas, even SUVs are more energy efficient than rail lines! I was shocked to see data from the Federal Transit Administration in 2006, 2007 and 2008. The results were consistent, and though certain cities were worse off than others, it showed that CO2 emissions per passenger mile were far greater for rail lines than for passenger cars. Rail lines are really only energy efficient when they are used in high-corridors, and here’s the thing, rails are confined to…a rail. They can’t take efficient routes and they aren’t as convenient as busses or cars, leaving the trains empty at the beginning and end of their lines.

Most rail lines use electricity to generate energy and it results in the loss of about 2/3 of their energy in the act of generation. It creates more of an energy problem than if the same passengers were using DIESEL FUELED BUSSES. Can you believe that? Even if there were energy efficiency involved in utilizing rail lines, the high cost of construction in rail lines and operation costs will cause those lines to go into extreme debt, and make the net benefit of such a project insurmountable.

They say that it takes an average business 3 years to turn a profit, for rail lines, it would take hundreds of years to see a return on their investment. For example, in Portland it was projected that the use of light rail would save 23 billion BTUs of energy annually. The construction cost roughly 39 trillion BTUs. So, doing a little simple math – it would take about 180 years for Portland to recoup its construction costs. By then, can you imagine what kind of technology we’ll put into cars and busses? Let’s not also forget that the average lifespan of a rail is about 35 years so even in the absence of alternative technology, Portland’s environmental impact is still in the negative.

Here’s some refreshing news: hybrid busses and alternative fuels can reduce one lb. of CO2 at a substantial fraction of the cost of a rail line. That’s why I feel so bad for St. Paul, since their use of hybrid electic busses saves the city thousands of gallons of fuel per year and at so much less of a cost.

My Policy Suggestions:

1. The government should stop subsidizing oil and start subsidizing alternative transit fuels and technologies.

2. Bus systems – hybrid electric busses, efficient routes, check for peak season, reduce services and even utilize smaller busses during non-peak seasons

 3. Build more roads. We need to relieve some of the congestion we see on arterial and highway roads in the US. Not just because it’s annoying and it makes us late for work. Because highway congestion accounts for about the waste of billions of gallons of fuel per year, we need to put into place some congestion tools and highways to mitigate impact.

 4. Stop using rail lines. Bottom line…fractional benefit for huge costs.

P.S. Dogs in hats

The director of the CBO Douglas Elmendorf gave a speech a few days ago; his central message was that “U.S. fiscal policy is on an unsustainable path that can’t be resolved through minor tinkering,” and that the choice was not whether or not to change current U.S. fiscal policy but how quickly and in what way.

In Elmendorf’s blog he said that a projected sharp decline in the budget deficit in the short-term is not largely due to economic recovery but to the diminishing impact of the stimulus legislation and impending expiration of previous Bush tax cuts from 2001 and 2003.

Here’s a graph prepared and provided for by the CBO which depicts the estimated budget effects of the AARA

* in billions of dollars

We see that the effects of the stimulus package on government outlays and receipts hit the highest point in 2010 and then dip dramatically in 2011.

Discussing some of the issues involved in federal stimulus involves addressing the 1. absence of such a program, as well as 2. the calculation of the fiscal multiplier and 3. aggregate fiscal expenditure on state, federal and local levels.  Then I’ll move on to some fiscal policy insights and solutions…answering Elmendorf’s “not if, but how and when” questions.

Needless to say, there is a clear advantage in the result of extra-output as a direct result the stimulus in phase one or the “short-term,’ and some very notable discrepancies in the net benefit of the stimulus in phase two or medium-term to long-term. This, of course, is related to the existing debt and related to the nature of the investments (such as in infrastructure, which will have a higher payoff in the long run).

But first we need to focus on the difference between the pure fiscal expenditure and the published fiscal expenditure. The pure fiscal expenditure is just the sum of government consumption and gross investment whereas the published total expenditure equals the pure expenditure in addition to transfers which include automatic stabilizers. Examining the difference will help us to determine the impact of the discretionary fiscal stimulus. The key component: the pure fiscal expenditure is the key for computing the Keynesian fiscal multiplier.

Therefore there is an inherent problem with the graph above produced by the CBO. IT JUST ISNT RELEVANT to the analysis of the federal stimulus. I’d rather have the CBO produce some graphs that show the impact on government mechanisms to even business cycles rather than the outcomes of these visceral components of the model. ₁

If we’re just looking to analyze pure expenditure, the fiscal expenditure on state and local levels dramatically decreased while federal stimulus increase, resulting in a net ZERO effect.  The limits on state borrowing are the main culprit for these discrepancies. States primarily refrain from raising taxes during economic decline and are restricted from borrowing during recessions.

There might be a good reason for this. The absence of these restrictions may lead to competitive state borrowing without regard to failure; since the fed will bail them out if need be. I don’t know about you, but I’ve been to Argentina and have seen the affects of provincial competitive borrowing from the federal government. The short story is… it’s a pretty valid concern.

My policy suggestions:

1. Direct funds to states on a per-capita basis – this eliminates competitive borrowing scenarios
2. Commit to spending the funds, not repay past debts
3. Start measuring economic recovery effectively; then you can resolve to begin economic recovery effectively.
4. The most striking increases in government outlays in the long-term include entitlement programs such as Medicare and Medicaid.  The current plan is to reduce defense spending and discretionary spending, which only accounts for 17% of the budget.  We need to look at some possible avenues to finance the future of entitlement programs (I have my own ideas on that, which can be my next post!!)
5. In the words of the wise Tom Robbins, “The Middle Ages hangs over history’s belt like a beer belly. It is too late now for aerobic dancing or cottage cheese lunches to reduce the Middle Ages. History will have to wear size 48 shorts forever.”

I think the age of ambulance economics will hang over the belt of history much like the projected high future debt overhang will…hang over…much like we’ve used the federal stimulus in a similar manner to drinking beer to cure a hangover.

Which leads me to my much overdue conclusion…

1. Let’s just utilize the federal stimulus like an Alka-Seltzer tab the morning after.

₁ If you got super bored during this post…here is a super adorable funny dog picture to look at.

read my other post on health care reform: http://policysalon.wordpress.com/2010/03/23/health-care-reform-because-you-arent-bruce-willis-from-unbreakable/

Reconciliation isn’t a new concept to republicans. They’ve used it 16 times since 1991: Bush used it on both tax cuts and on welfare reform. Yet the republicans are characterizing the move as an effort to “ram the bill through congress.” I say: a little pushing won’t hurt.  The bill shouldn’t be taken lightly because yes, this is the single most significant HC reform to pass through congress since medicare and medicaid. But once upon a time, those bills were highly contentious too – viewed by many as ….gasp….socialist, and today many Americans enjoy a higher quality of living because of those reforms. So many leftist political analysts and pundits have remarked, however begrudgingly, that Obama needs to take ques from Bush- saying that  he pushed his agenda though congress regardless of “what they thought”.  To make matters worse the republicans, who seemingly have regressed to a “terrible twos” platform in the era of “no” only holds up congress based on issues of partisanship, not actual issues.

Oh and P.S. take a little trip down youtube lane and watch as republican senator Judd Gregg in March of 2005 raves on the effectiveness and normalcy of utilizing reconciliation to pass reforms. That should put all this farcical republican outrage to rest.

My policy suggestions:

1.Let’s ask the Tobacco companies to contribute some of their profit towards the cost of health care reform. They practically invented the illustrious “pre-existing condition”.

2.Nothing says “reaching across the aisle” like a bipartisan purple tie and a mizrahi-for-michelle plum skirt. The answer to passing reforms? Invest in purple.

3. Rangles should be “temporarily incarcerated” and not just “temporarily stepping down”

4. Kidding aside, this is the most important health care reform since medicare and medicaid, as I said previously. The good news? We already have the most fundamental reforms passed through congress. The bad news is that Obama has spent nearly1/3 of his term on health care reform, and without these final revisions in place, we can’t move onto shifting congress’s focus towards our most woeful-woes: unemployment. Health care appears to dominate and BTU’s have been completely diverted from the grand task of mitigating the effects of soaring unemployment levels brought on by the great recession. Here are some facts: our infant mortality rate is just lower than…CUBA’S. At the end of 2009, about 1.9 million Americans lost their home due to illness. In the U.S. 17% of our GDP is spent on healthcare; by 2017 20% of our GDP will be spent on healthcare. Yet, Switzerland spends 10.9%, Canada spends 9.7% and every single person in their country has health insurance.

Here’s another fun fact: the GOP is running the biggest socialized medicine program in the world: forcing Americans to use their tax dollars to fund emergency room visits and giving profits to insurance companies… let’s wise up and write the final chapter on health care reform now.

(NOTE TO SELF: excessive use of “air quotes”)

Hello Everyone!

I am so excited to be joining the ranks of self-absorbed, flagrantly biased policy bloggers across America. Let’s be honest — blogs are to political enthusiasts as world of warcraft is to fanboys and comic-con attendants.

I want to make this blog like the WOW for those who want their second life to involve Nancy Pelosi and the “silver fox” Anderson Cooper.

O.K….maybe I’m being a little too ambitious. Let’s just talk about policy..environmental, fiscal, health, whatever.

Hugs and Kisses,

Amanda