Andrew WhiteI am not a tea-party activist or tea-party anything – but I am a pseudo-monetarist that is in favor of small government and individual rights. Anyone can see that the west, and the east for that matter, has only dabbled in the last 100 years with “big government getting bigger”. We have NOT dabbled with smaller government – look at public expenditure the world over, ever since large scale public debt became possible late in the 19th century.
That being said, how Robert Reich can suggest that the Tea-Partiers are on the verge of treason is just ludicrous. See “The Tea Party’s Plot Is On The Verge Of Treason“. It is not the GOP that is holding “up” government progress. The government is split – because the American people are split. Many have been conned into believing that big government is good and that it can hand down money to them without any consequences; and many others cannot even be heard above the din and are lambasted for being “nutters”, if they are ever heard.
The government is stuck in a rut because it is a reflection of the same rut we find our political, social and economic ideas in. We could argue the theory; but the facts stand tall. The underlying political model we are now reaping has been building for 100 years – big government and only more of it. Even when the right wing parties get in, the government gets bigger! This then is not a discussion of left versus right. This is a broader issue. It so happens that many on the “right” say they want small government – even if what they “do” is different to what they “say”.
The underlying economic argument has drifted off into the weeds. Irrespective of your school, the facts are that no economic environment has thrived outside the context of growth – and I mean private sector growth. Not one political movement and its attendant government that grows its own expenditure at the expense of the private sector have outlasted another that has built its sustainement on private over public growth. Not one. This is not about taxes. This is not about taking from the poor. This is not about re-distribution. Those are nits. This is a basic issue. Economic growth in the last 70 years has masked a lot of cracks. Even the left could do us all a favor and “go for growth” – private growth – just to hide their own warts, let alone the rights’ ugliness too. But we are stuck in a rut – and the basic argument for growth is being crowed out.
The last item is the underlying social fabric that has outgrown its capability. Political stability and historical work ethic of the 20th century have given rise to a fat cat. We are living off that fat cat. We have become so accustomed to stability and growth that we have decided, like the fictitious Krell in Forbidden Planet, to focus on “better things”. We now spend our hard earned money, and the money of tomorrow, and the money of the young and unborn, on social toys of the day and social engineering. We have bought the right (with debt) and are now blind to the paymaster awaiting. Even if the argument for the social toy is valued – the point is we are way past our means. The argument is lost people. Debt is not a way to run a business – when everyone else is at the same time! Debt works in small lumps; and if there is an equivalent credit, but when everyone (indivudlas, firms, or economics) are beyond their means, there is no Universal Banker to save us.
And that, perhaps, is the root of all. Debt, as a financial instrument, is what has led is to this point. There has always been debts – even in barter based society – but the automation of it, the scale, and the lack of any global clearing creditor, has led to this peak. And the only option is to go down the other side. I don’t think the Sequester is a good idea. But we need to cut. If only our politicians in power could see that there is time set aside for politics. Now is not it. We all need to buy some time – to give ourselves the luxury to argue. Now is the time for cutting and growth; less regulation – and targeted investment in growth strategies (not gerrymandering winners).
Robert Reich is part of the treason he lays at the feet of others. We should stop the talk of treason and start the talk of growth. Before the warts get too big they swallow us up.
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3 responses so far ↓
1 Joseph Bentzel March 2, 2013 at 12:41 pm
Articulate and well argued. I would have thrown in over-dependence on passive income and passive ‘wealth creation’, export of high tech manufacturing in the name of ‘supply chain’ efficiency, and shined the flashlight a little more closely on Wall Street as a driver of dysfunction, as argued in a recent Frontline episode on PBS.
Thank you for taking a stand.
2 Doug Laney March 4, 2013 at 5:55 pm
Actually, Reich makes a solid argument, e.g. Tea Party threats to overthrow the government and violate the constitution. He doesn’t even get around to those blocking an actual vote on the bills. They would be the ones you deny are “holding up the process.”
It’s important to note too that the Congressional Budget Office projects “under current laws” (i.e. prior to the sequester and including the tempering of the Bush tax cuts for the wealthy) that the deficit will shrink this year to its lowest level in 5 years, and the public debt will shrink as well over the next few years.
Certainly everyone agrees that government is too big, and most probably would agree that debt-related financial instruments have gotten out of control. But it’s the broadening wealth disparity baked into post-Carter era tax policy that creates the need for so many government services. The country’s biggest GDP growth happened in years when the top marginal tax rate was between 50%-70%. And yet some people complain *today* about redistribution and socialism at 39% with loopholes galore available only to the most advantaged?
Finally, how is Reich “part of the treason?” You toss that out there at the end with nothing supporting it. Just curious.
3 Andrew White March 5, 2013 at 6:23 pm
Hi Doug! Nice to “see” you on the blog!
Good, thoughtful response. Thanks for taking the time. I was going to post the following – on the assumption I don’t lose a friend or open up a rats nest. Let me know.
As with most television discussion, the definitions of what it is we are talking about needs to be clear. According to the CBO, the “debt held by the public” increased from $12bn in 2013 to just short of $20bn in 2023. This is from the February 2013 report The Budget and Economic Outlook: Fiscal Years 2013 to 2023. Due to GDP growth (this is the kicker), the percentage of GDP goes from 76% to 77% over the same period. So yes, percentage of GDP wise, the public debt is pretty stable, even though the notional amount increases substantially. The CBO is suggesting a GDP growth from $16bn to nearly $26bn. Really.
But hang on – this is “public debt” – that is, the money the federal governance formally recognizes. What about “unfunded liabilities such as social security, Medicare, and federal employees’ future retirement benefits? According to some estimates they exceed $86 trillion, of 550% of GDP. For the year ending Dec 31 2011, the annual accrued expense of Medicare and social security was $7 trillion. Nothing of this us used in this so called “public debt”. See http://online.wsj.com/article/SB10001424127887323353204578127374039087636.html
Then from the White House we have the following graphic that is even more confusing. http://www.whitehouse.gov/infographics/us-national-debt It suggests that “debt held by the public at end 2011″ was $10.4 trillion. There is $4 trillion held by “government” meaning Social Security Trust Fund.
To clear the air, we can look at Wikipedia – here we see that US public debt is made up of two parts – and I think you were talking about the first part, not the second:
- Debt held by the public includes Treasury securities held by investors outside the federal government, including that held by individuals, corporations, the Federal Reserve System and foreign, state and local governments.
- Debt held by government accounts or intra-governmental debt includes non-marketable Treasury securities held in accounts administered by the federal government that are owed to program beneficiaries, such as the Social Security Trust Fund. Debt held by government accounts represents the cumulative surpluses, including interest earnings, of these accounts that have been invested in Treasury securities.
I think the first is not where the disaster is building – it is hidden in the second, under a range of so called, “unfunded liabilities”.
What do you think?
As to the “con” – and the “treason”….I was playing with words . I am fed up with those on the left blaming the right and those on the right blaming the left. The US political system is virtually gridlocked and I think this is because the population at large is equally torn between the two points of view. Reich promotes policies that seem to support “growth at any cost” and yet I prefer a “growth with care”. It is not the right that is holding up progress; nor is it the left. I think it is more to do with the fact that our ideas have worn themselves out and no single argument is standing tall enough to sway the country. It’s times like these that spark the revolutionary imagination perhaps…