Fiscal Reality

The conventional wisdom is that one of the most important planks in the Republican platform is 'Fiscal Conservatism'. In other words, the idea is keeping the government's purse strings pulled tight whenever possible and limit spending for non essential items.  Sounds like a good idea, doesn't it? I would have to say that I like the sentiment. I'm sure I wouldn't agree with everyone else on what's essential, but that's its own issue. The point is that Republicans and Conservatives in general are always harping on about fiscal restraint. Conversely, we are also told that Democrats like to spend and spend freely. Ask just about anyone and they'll tell you that Democrats are the spenders and Republicans are the party of fiscal restraint. What makes it so inconvenient is that it's not true.

First let's look at history. The previous five Presidential Administrations all increased the national debt, which probably surprises no one. But you might be surprised by how much each Administration contributed to our current debt. The Republicans' mythological hero, Ronald Reagan ballooned the national debt by 189% in his eight years in office, making him by far the biggest spender. Next on the list is another Republican, George W. Bush who increased the debt by 89% in his eight years. You're probably thinking that Clinton must be next, as the only other eight year Administration, right? Well, as a matter of fact, you would be wrong. George H. W. Bush takes the number three spot with a 55% increase in his four years in the White House. Number four is Jimmy Carter having added 42% in four years. That's right, William Jefferson Clinton, after eight years only added 36% to the national debt. He even managed to run a budget surplus towards the end of his second term. So here we have five Presidential Administrations and all three Republicans outspent the two Democratic Administrations. On top of that, the Clinton White House presided over the most fiscally responsible spending despite being reviled by Republicans. I realize that this simplifies the financial details of these administrations, yet it's hard not to see a fundamental hypocrisy from the 'Fiscal Conservatives' on the right.

Today the deficit is a major issue to the country, but has become the very raison d'être for the Conservative movement. In fact, since March of this year it has been a grueling fight to get unemployment extensions passed in the Senate as Republicans thump their chests and demand that they be paid for in the budget before they can be passed. On the surface this sounds somewhat reasonable. But as far as I can tell, emergency measures like these have historically never been paid for up front. That's probably because they are needed due to an . . . emergency. Another thing to realize, despite several prominent Republicans' moralistic babbling, is that unemployment benefits in a deep recession like we have now are just about the most direct form of economic stimulus possible. You are putting desperately needed money into the hands of people who will spend just about all of it back into the economy immediately. This prevents even more foreclosures, car repossessions and loan defaults by people on the edge. You keep people in their apartments rather than pushing them onto the streets to become an even bigger issue for the nation. But the steady thrum of Republicans chanting 'deficit, deficit, deficit' drowns out these obvious facts. What is really infuriating is that during lulls in the unemployment extension arguments, the same Conservatives who decried unpaid for benefits are calling for extending Bush era tax cuts for those who are least affected by the recession. Incidentally, both rounds of tax cuts pushed through by the Bush Administration and Republicans in Congress were, wait for it . . . UN-paid for. I wish I was surprised by the hypocrisy but for good or ill I'm getting a little numb to it after the last decade. The logic, if you'll allow me to demean the term for a moment, given is that tax cuts will pay for themselves. I'm serious, that's the idea. Worse yet, some people with functioning brains actually believe it. Oh, I'm not saying that in the long term the cuts may not have some positive effects that could make back a percentage of the original cuts. But tax cuts that pay for themselves are about as viable as the mythic perpetual motion machine. It might make sense four hours into a Friday night bar crawl, but in the sober light of day it's complete drivel.

The reality is that, based on past performance, Republicans seem incapable of walking the walk once they get power. They will talk up fiscal responsibility all day long and deep into the night, but their actions continually underscore a complete lack of interest in the subject. It's a hollow, empty charade for most of them. They are on full volume now because the debt is an issue after the 8 years of wars and tax cuts under Bush and the necessity of heavy spending to try and stabilize the economy immediately after Obama took office. I won't deny that the debt is a major issue. In fact I posted a piece about the need to deal with the national debt back around the end of Bush's first term. The complicating factor is that now, in the midst of a dodgy recovery from the biggest financial disaster in 80 years, is not the time to start slashing and cutting spending. Why? Because the economy is teetering on the edge and right now the Federal government is the only entity ready and willing to pump money into the economy.  The banks have somewhat recovered but are sitting tight on their cash until the economy revives. Kind of a Catch-22 for them. Banks won't lend until the economy stabilizes but the economy is having trouble stabilizing due to a lack of credit available. You see if we cut now then the States, who are already struggling to find money just to pay school teachers, will be thrown to the sharks, not to mention most any cuts of significance would result in adding more names to the already endless seeming unemployment lists. Here's where a healthy sense of irony comes in. The best time to make strides on the national debt is when the economy is doing well. That's when States are making ends meet and have some leeway in how they manage their budgets. That's when tax revenues are high because individuals and companies are buying and spending freely. That's when foreclosure and bankruptcy rates are low. That's when the banking system is flush with cash and eager to lend. That's also when politicians are least likely to cut programs and trim fiscal fat. It's when the American public is blissfully unconcerned about the debt because everything is going so darn well.

I have never claimed, and never will, that I'm a financial expert. But the most important item on the nation's agenda at this moment is stimulating the economy to spur new job creation. That's job numero uno. And that's not going to be accomplished by renewing tax cuts for the wealthiest Americans or by the Republicans' myopic plan of 'tax cuts fix everything'. No single thing is going to magically resurrect the economy. It will take targeted tax incentives, aggressive, focused spending, loosened credit markets and consumer confidence to get the nation back on its feet. This includes extended unemployment, in the short term, to provide some minimal support for those who are the most obvious victims of the collapse. Let me remind you that to be eligible for unemployment benefits a person had to have lost their job through no fault of their own. These people are not dead-beats as some pathetic politicians and pundits like to portray them. They were laid off because the economy tanked and business dried up, not because they quit or were fired. We can't ignore the ballooning debt, but we can't let it paralyze us from doing what's needed to restart the economy either. Unfortunately no single thing will get the national debt under control. Dealing with debt is like losing weight. It can't be done overnight and it's going to require long term changes and willpower.  Where it gets tough is when the recovery is complete, the storm clouds part and the sun returns. That's when we need that fervor to attack the problem because it's always more difficult to focus on cuts and and spending reductions when the cash is flowing. America must be ready and willing to demand action on the debt when we have the resources to do so and not fall back into spending it as fast as we get it. As a nation we are so fond of declaring wars on things, so why not a War on Debt? Not only would that be a winnable war, but one with concrete benefits for Americas future. When we've climbed out of this recession, let's focus on reducing government spending through cuts and changing the way we do things. For one thing, let's reduce our military commitments overseas. I'm not just talking about Iraq and Afghanistan, though to be sure both of these wars are costing us dearly. We don't need 50,000 troops in Germany anymore. We don't need tens of thousands in Japan or most of the other countries where we continue to maintain huge active duty forces. Most of these Cold War era military commitments are no longer needed. I'm not saying we should pull out everyone from everywhere, but there is no reason for the manpower commitments we currently maintain. America is capable of dealing with the financial crisis and then paying down the debt. What we have, up to this moment, been sorely lacking is the will to do so.

Repeal of Intelligence

There are those for and those against the recently passed healthcare reform bill (HCR). That would be true of any legislation of course, but what makes this time so . . . interesting is that the side that lost is in the midst of a PR campaign that is virtually pointless in real terms. Well two prongs of the same campaign. First is the battle cry, which began before the final House vote when it was clear that HCR would pass, to "Repeal and Replace" the bill. Second, which started shortly after the final vote, that the law was unconstitutional and State Attorneys General would sue the Federal Government to overturn it.

As to the first prong of the Republican response to HCR passage, you have got to be kidding me. It doesn't take a constitutional scholar, in fact most eighth graders are up to the task, to realize that it takes two thirds majorities in BOTH houses of Congress to override the inevitable Presidential veto. Keeping in mind that Republicans don't even have close to a simple majority, much less two thirds. Even if you accept the assumption that Republicans may gain seats in the mid term elections, it would take a truly historic turnover to give them veto proof majorities. How historic? They would need a net gain of 26 seats in the 100 member Senate and 112 seats in the House. If the vote was held today, that would still be almost impossible. By the time November rolls around and HCR is starting to take affect kids will no longer be subject to insurance rejection from "pre-existing conditions", Medicare recipients will have gotten drug benefit refund checks and not one person will have been sentenced to die by a "Death Panel". They may gain some seats, but I don't think they're likely to gain the majority in either House much less the landslides needed to "Repeal & Replace".

Then we have the litigation angle. I think we are now up to 13 states who are filing lawsuits or have filed them against the Federal government. Again I'm no law expert, but seems telling that only 13 Republican Attorneys General are going in on this. Even some lawyers who say they don't support the bill are admitting that there really isn't a legal case for scrapping the law. In fact, when the University of Washington tried to put together a debate between legal experts on the legality of HCR, they couldn't find anyone to champion the unconstitutionality of the bill. And in another wild dust-up in Georgia, we have a State legislature and Governor talking about impeaching the GA Attorney General for not joining the madness. Attorney General Thurbert Baker, after investigating the legality of such a suit at the Governor's request, wrote the Governor to say:

"Based upon my understanding of the current Act, I am unaware of any constitutional infirmities and do not think it would be prudent, legally or fiscally, to pursue such litigation. I must therefore respectfully decline your request." He continued, "In short, this litigation is likely to fail and will consume significant amounts of taxpayers' hard-earned money in the process." (The full letter is available here) 

Speaking of tax payer's money, the Attorney General of Virginia, Kenneth Cuccinelli, actually put out a statement in response to cost concerns for his litigation against the HCR bill:

"The court filing fee for the case of Commonwealth v. Kathleen Sebelius in the United States District Court for the Eastern District of Virginia was $350.  There has been no additional cost above this amount, as the litigation is being handled entirely by the attorney general’s staff." (Full press release here)

The $350 is simply the charge for filing the paperwork with the court. Really, that's it? So I take it that the entire AG staff has agreed to do all work on this case on their own time and using none of the AG office's resources? Is that what he's claiming? Because if not, then, forgive my directness but, he's lying. Every moment one of the AG staff spends on this useless piece of litigation is time they are being paid by the VA taxpayers and time they are not working on other business. Every piece of paper used or Kilobyte of data sent while online is using AG resources that are paid for by the VA taxpayers. That adds up to way more that $350, even just for the initial filing.

Now are these guys really too stupid to know that all this is pointless? Of course not. They are well aware that they have a snowball's chance in hell of repealing this law as long as Obama sits in the Oval Office. They are also well aware that litigation is almost certainly a waste of time as well. So why are they wasting time and money on it? Actually I just answered my own question, at least in part. Money. There is a nice bit of anger still frothing out there and every riled up citizen is a potential source of campaign cash. The longer they can keep that outrage humming along, the more cash they can raise. Guess this is their idea of 'fiscal conservatism'. Spend thousands and thousands of dollars of our money so the GOP can make theirs. Guess they have to refill the RNC coffers emptied for 'Office Supplies' from Congressional Liquors and 'Entertainment Expenses' at the Voyeur erotic nightclub in CA. Not to mention the Hawaii based convention. Now that's what I call fiscally responsible!

I think what most amazes me about all of this is that the conservative base doesn't seem to care. They are lied to and they are unfazed. They are callously used to  perpetuate misinformation and disrupt any rational discussion of the issues at hand and they keep smiling and waving signs. Conservative corporations and political action committees hijack their demonstrations and they don't mind. The same politicians who voted consistently to enact huge unpaid for tax cuts during the Bush years are now billing themselves as the last bastions of fiscal restraint, yet their supporters don't care. I can fully understand policy concerns and differences. I can understand frustration at the current Administration. What I can't fathom is how so many are willfully blind to the utter lack of respect they receive from the conservative luminaries they support. The rational conservative base should demand more than what they are getting from people like John Boehner and Michelle Bachman who only exist to perpetuate themselves and their friends, whatever the cost to the nation.