Thursday, March 4, 2010
Monday, March 1, 2010
Insolventus Reducto! (AKA the Debt Be Gone! spell)
Something that has been on my mind an unhealthy amount of time lately is our national debt (see here) That is why I was so very happy to discover an article by one of my favorite authors/pundits/editors (Fareed Zakaria) regarding solutions to this seemingly insurmountable problem. I know these solutions are simplified but boy did I feel some genuine hope while reading them. Unfortunately for my generation and those younger, Congress will wait precisely until the debt train is about to wreck our nation to find a solution...
Enough pessimism on my part, check it out:
Defusing the Debt Bomb
It can be done. Here's how.
By Fareed Zakaria | NEWSWEEK
Published Feb 26, 2010
From the magazine issue dated Mar 8, 2010
Everyone seems to be pessimistic about America these days. In poll after poll, Americans worry about their future. Pundits, myself included, write despairingly about the monumental challenges we face. Academics plan seminars on America's decline.
So, perhaps more to cheer myself up than anything else, I decided to ask what it would take to fix the U.S. There is one problem that overshadows all else. Washington is taking on debt burdens that are huge and, as the baby boomers retire, look truly frightening. The Peterson Institute estimates that the U.S. government's programs for Social Security and health care are al-ready $43 trillion in the hole. To cover this, the government would have to eliminate virtually all other spending and/or jack up tax rates into the 70 percent range. Foreigners would almost certainly demand higher interest rates if they lent money to the United States. And if we raised interest rates, the economy would stagnate—making the debt burden even more onerous.
So, this problem looks unavoidable, but also insoluble. Remember, though, that America has a $14 trillion economy that was, until recently, growing quite fast. We can find ways to address even this challenge. Here are three simple proposals that would defuse the debt bomb, with money to spare:
First, adopt a value-added tax. More than 100 countries have some kind of a national sales tax. If America were to enact one tomorrow, at something like the average for industrial countries (18 percent), and drop income-tax rates to compensate somewhat, we could bring in hundreds of billions of dollars every year. To get a sense of the revenue potential, imagine if the United States were to adopt a VAT at the high end of the range—25 percent, similar to that of many Scandinavian countries whose economies have still grown as fast as America's over the last three decades. Such a tax, Leonard Burman calculates in the University of Virginia Tax Review, would bring in enough money to balance the federal budget, pay for health-care expansion, eliminate the income tax for all those earning less than $100,000 (90 percent of households), and cut the top tax rate to 25 percent. The tax would also restrain Americans from over--consuming and reward them for saving, the single most important long-term shift we need to encourage.
Second, end the massive, distorting subsidies for home-ownership, health care, and agriculture. These three subsidies together cost the federal government about $250 billion a year. All of them encourage behavior that is bad for the economy. The interest deduction on mortgage has encouraged the massive accumulation of debt that is at the heart of the current crisis. (No, it does not encourage homeownership. Neither Canada nor Britain has the subsidy, and both have slightly higher rates of home-owner-ship than we do.) Tax exemptions for employer-based health plans encourage overconsumption of health services—a point on which economists from both left and right agree. Agricultural subsidies, mostly handouts to large agribusinesses, are so egregious and market-distorting, one doesn't really know where to begin.
Finally, make sensible adjustments to entitlements. The most important fix is to tie benefits to rises in inflation, not wages, a seemingly technical matter, but one that could save the government hundreds of billions of dollars. Then raise the retirement age by a couple of years, and link it to life expectancy, which increases by three months every year. This is not impossible. Germany just raised its retirement age to 67. In fact, many European countries have fixed their pension systems so that they will be solvent for decades, even longer.
Each of these policies could be phased in so that the timing is right. They could be pared back, especially if other savings and reforms are enacted. (Currently, tax breaks and deductions cost the government $1.1 trillion a year.) But just these three fixes would place the United States on a firm fiscal footing, leaving it with ample resources to invest in research, education, infrastructure, alternative energy, and whatever else we want.
I know, I know—it's the politics that makes this look hard. I understand how impossible it is for Congress to impose even a little pain, despite general agreement that we are in a severe crisis. But as we sink, let's not pretend that our problems are insurmountable. The solutions are out there in plain sight.
Find this article at
http://www.newsweek.com/id/234277
Enough pessimism on my part, check it out:
Defusing the Debt Bomb
It can be done. Here's how.
By Fareed Zakaria | NEWSWEEK
Published Feb 26, 2010
From the magazine issue dated Mar 8, 2010
Everyone seems to be pessimistic about America these days. In poll after poll, Americans worry about their future. Pundits, myself included, write despairingly about the monumental challenges we face. Academics plan seminars on America's decline.
So, perhaps more to cheer myself up than anything else, I decided to ask what it would take to fix the U.S. There is one problem that overshadows all else. Washington is taking on debt burdens that are huge and, as the baby boomers retire, look truly frightening. The Peterson Institute estimates that the U.S. government's programs for Social Security and health care are al-ready $43 trillion in the hole. To cover this, the government would have to eliminate virtually all other spending and/or jack up tax rates into the 70 percent range. Foreigners would almost certainly demand higher interest rates if they lent money to the United States. And if we raised interest rates, the economy would stagnate—making the debt burden even more onerous.
So, this problem looks unavoidable, but also insoluble. Remember, though, that America has a $14 trillion economy that was, until recently, growing quite fast. We can find ways to address even this challenge. Here are three simple proposals that would defuse the debt bomb, with money to spare:
First, adopt a value-added tax. More than 100 countries have some kind of a national sales tax. If America were to enact one tomorrow, at something like the average for industrial countries (18 percent), and drop income-tax rates to compensate somewhat, we could bring in hundreds of billions of dollars every year. To get a sense of the revenue potential, imagine if the United States were to adopt a VAT at the high end of the range—25 percent, similar to that of many Scandinavian countries whose economies have still grown as fast as America's over the last three decades. Such a tax, Leonard Burman calculates in the University of Virginia Tax Review, would bring in enough money to balance the federal budget, pay for health-care expansion, eliminate the income tax for all those earning less than $100,000 (90 percent of households), and cut the top tax rate to 25 percent. The tax would also restrain Americans from over--consuming and reward them for saving, the single most important long-term shift we need to encourage.
Second, end the massive, distorting subsidies for home-ownership, health care, and agriculture. These three subsidies together cost the federal government about $250 billion a year. All of them encourage behavior that is bad for the economy. The interest deduction on mortgage has encouraged the massive accumulation of debt that is at the heart of the current crisis. (No, it does not encourage homeownership. Neither Canada nor Britain has the subsidy, and both have slightly higher rates of home-owner-ship than we do.) Tax exemptions for employer-based health plans encourage overconsumption of health services—a point on which economists from both left and right agree. Agricultural subsidies, mostly handouts to large agribusinesses, are so egregious and market-distorting, one doesn't really know where to begin.
Finally, make sensible adjustments to entitlements. The most important fix is to tie benefits to rises in inflation, not wages, a seemingly technical matter, but one that could save the government hundreds of billions of dollars. Then raise the retirement age by a couple of years, and link it to life expectancy, which increases by three months every year. This is not impossible. Germany just raised its retirement age to 67. In fact, many European countries have fixed their pension systems so that they will be solvent for decades, even longer.
Each of these policies could be phased in so that the timing is right. They could be pared back, especially if other savings and reforms are enacted. (Currently, tax breaks and deductions cost the government $1.1 trillion a year.) But just these three fixes would place the United States on a firm fiscal footing, leaving it with ample resources to invest in research, education, infrastructure, alternative energy, and whatever else we want.
I know, I know—it's the politics that makes this look hard. I understand how impossible it is for Congress to impose even a little pain, despite general agreement that we are in a severe crisis. But as we sink, let's not pretend that our problems are insurmountable. The solutions are out there in plain sight.
Find this article at
http://www.newsweek.com/id/234277
Blubber Blabber
My uber-enviroconscious Limey friend, Phil, forwarded yours truly a Greenpeace link alerting me to the impending reintroduction of commercial whaling, which the UN banned back in the 80s. Not that it was enforceable in the first place, but at least give the movement some voice!
This is a new low that I can't begin to understand. I would have understood and laughed if Bush had the chutzpah to hoodwink us on this but I'm flabbergasted that it's going on now.
Please write a letter and stamp this flaming bag of dogshit out:
http://us.greenpeace.org/site/MessageViewer?em_id=8181.0&dlv_id=11261
This is a new low that I can't begin to understand. I would have understood and laughed if Bush had the chutzpah to hoodwink us on this but I'm flabbergasted that it's going on now.
Please write a letter and stamp this flaming bag of dogshit out:
http://us.greenpeace.org/site/MessageViewer?em_id=8181.0&dlv_id=11261
Monday, February 15, 2010
Mission Statement like whoa....
Being self-employed there is usually a shadow of guilt in my mind whenever I'm on "vacation". A quick jaunt to NYC to see Merritt for St. Valentine's day has proved no different. Not to say I'm not enjoying myself, I just feel a little indulgent taking time off from what is already a relatively ideal lifestyle... That said, yesterday's evening did involve what was the coolest V-day dinner ever @ the Rusty Knot where we shared the ever romantic $5 Busch / Pretzel Dog Combo, a pickle, and a DELICIOUS N.C. style pulled-pork sando at the bar.
Aaaanyway, when Merr was in class this morning, I continued reading the 7 Habits of Highly Effective people. No matter how effective you think you are, this book will make you feel like a lazy biotch. It asks you to do exercises in each chapter to help improve every aspect of your life. Talk about bold. One of the items is to create a personal mission statement. I read about this a few chapters ago and did nothing about it (see, it really works!). This morning I found a really helpful tool here: http://www.franklincovey.com/msb/
It was no cake walk but I'm pleased with the results. It might feel uncomfortable and maybe a bit cheesy but give it a try. See if you can't incorporate what's really important into your every-day life.
Aaaanyway, when Merr was in class this morning, I continued reading the 7 Habits of Highly Effective people. No matter how effective you think you are, this book will make you feel like a lazy biotch. It asks you to do exercises in each chapter to help improve every aspect of your life. Talk about bold. One of the items is to create a personal mission statement. I read about this a few chapters ago and did nothing about it (see, it really works!). This morning I found a really helpful tool here: http://www.franklincovey.com/msb/
It was no cake walk but I'm pleased with the results. It might feel uncomfortable and maybe a bit cheesy but give it a try. See if you can't incorporate what's really important into your every-day life.
Friday, February 5, 2010
Thursday, February 4, 2010
Trillion is the new Billion
This is a very insightful look at our national debt.
I felt punch drunk after watching it because the debt is a juggernaut. This gives me a head/stomachache from time to time. Clive Crook's comments at 51:00 paralleled an idea I had about our government and it's proclivity to borrow. Our government has been falling into the same trap that mortgagees did on a personal level during the recently popped debt bubble. The only difference is Joe the Plumber couldn't print money, tax his neighbor, or call up China for additional funds. Let's hope China never files an N.O.D.
I felt punch drunk after watching it because the debt is a juggernaut. This gives me a head/stomachache from time to time. Clive Crook's comments at 51:00 paralleled an idea I had about our government and it's proclivity to borrow. Our government has been falling into the same trap that mortgagees did on a personal level during the recently popped debt bubble. The only difference is Joe the Plumber couldn't print money, tax his neighbor, or call up China for additional funds. Let's hope China never files an N.O.D.
Wednesday, January 27, 2010
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