Sunday, December 9, 2012

A Year and a Day

The Loop and The Lou -- long self-described as trailblazers in blogspace -- has slowed so far down, some would argue it isn't moving at all anymore. Others might argue that we're still on the go, it's just a different gear. But this blog has never been about arguing over details or semantics, has it?

We'd like to say hello again to our Dear Reader. We may have more than one reader, however our data shows that no more than one person reads our blog at the same time, so we feel comfortable personalizing our message, that's right, to you. How are you? It's been awhile, I know I know, we'll have to catch up...

I am trying to figure out what people are saying about this "fiscal cliff" thing. I like how quickly after this last election attention turned to this newest monster -- I assume in order to prove to us how effectively and earnestly our votes are working for us. As I was browsing some older posts here (our most recent ones, ahem), I noticed a striking similarity between what the politicians are doing now and what they were doing in the summer of 2011. Does this cartoon look familiar at all?

In a piece cleverly [shameless self-promotion intended] titled "You've Lost that Lovin Ceiling", it seems that the same dissatisfaction then has persisted to the present day. Posturing. Hypocracy. False Mandates. No Real Solutions. Ugh. Is Charlie Brown's Christmas special on TV? Much better for the soul.

And in case you have been suckered in to paying attention to the media/politician manufactured hype, consider this quote from a friend-of-a-friend professor in Kansas City:
The most stripped down version of the dispute between the two sides is that the Republicans do not want to raise income and corporate taxes and the Democrats do not want to cut spending. Neither position is tenable given the realities of the debt and deficit – at least according to the bulk of the analytical community. The Congressional Budget Office has been perhaps the bluntest of the messengers but they get support from nearly every economist in the country. The debt is bigger than the GDP (over $16 trillion and growing) and the annual deficit is on track to exceed $1.3 trillion. These are the facts in the debate.

The Simpson-Bowles plan remains one of the most realistic solutions as it managed to evoke massive opposition from all sides in the discussion. The task was to create a solution to the issue – not create a politically feasible solution. The result was a plan that would cut spending deeply at the same time that revenue would be hiked through a combination of higher income tax rates and closing of tax loopholes.

Analysis: The arguments that preoccupy the political leaders today are akin to asking how many angels can dance on the end of a pin. The Democrats and President Obama are bound and determined to task the wealthy but the revenue boost that will come from that hike will reduce the deficit by less than 10% over the course of ten years. The tax reform that the GOP suggests will bring in less than that. The spending cuts suggested by the Republicans will lower the deficit by perhaps 7% over the course of that decade. The Democrats have put forward a set of cuts that will reduce that deficit by less than 3%. In other words the fight is over a plan that does almost nothing to address the underlying problem.

The problem has been obvious for some time but the solutions are as elusive as ever. To reduce a debt and deficit of this magnitude means tax hikes for most everybody – something pretty close to the fiscal cliff we all fear. Reducing the size of government is not accomplished with some nibbling around the edges of marginal programs. A serious reduction means big cuts in Medicare, Medicaid and Social Security as well as Defense and other sectors. This level of reduction will most certainly mean that the economy will slow. This is precisely what has been happening in much of Europe and the region has indeed sunk into recession.
Merry Christmas, Season's Greetings and Happy New Year from the Loop and the Lou to You, Dear Reader, and Yours. As we used to say before toasting a long-overdo drink with friends, "Here's to looking up your old address."


royalthumbs said...

Good post, Butthole. How deep will the crisis have to run before the real cuts and hikes are implemented?

Ryan said...

Hi thumbs, thanks for checking in.

I do not think that a change in policy will have anything to do with a deepening of the crisis. We are already so deep in the crisis that the time to act has either passed or is now merely palliative.

As mentioned in the quote, if we do make a serious attempt to stop the bleeding, it will, as far as I can tell, hurt the economy. The optimist in me says this is what is preventing action on the Hill. The realist in me thinks that there is not now and never will be any political will to change because of the nature of power and of politicians.

Furthermore, the underlying realities of how people find themselves elected are perverse. My numbers may be off in detail, but they are accurate in brush strokes: Those guys we call the Founding Fathers originally posited that Representatives needed to come directly from the people (who at that time, were essentially White, Christian, land-owning males plugged into the system and with vested interest in future productivity). They limited by law the population size of a congressional district to 35,000. Now, the average district has over 700,000 people in it.

We can talk about technology, communication, etc., but there is clearly no way that a Rep can actualy come from and represent 700k people. In fact, if you look at the number of Reps who moved into their districts just to qualify, it gets even worse. Our House of Representatives is high priced section 8 housing, paid for by corps and lobbyists. This is reflected in the local area of Washington D.C. as well.

And look at our President, who I think received about 26% of the vote relative to Romney's 24%. The other 50% stayed home. Not healthy.

The problems are underlying and systemic. We have (I think) something like 435 Reps. We should have closer to 6500. Sounds like a wreck, but that would put us more in line with our intended history and with other similarly governed countries. It would also make it much more expensive and difficult for corporations (now given the same status rights as "people" via citizens united) to get the legislation they want. They couldn't just buy off one or two committee members and then a wedge of Reps, they'd have to buy off hundreds if not a thousand people. Much more expensive.

So until there is underlying change in the system, there will be no responsible management of the federal government. The people who still think it's important to vote have been rigged against each other effectively to create a balanced ecosystem that ensures status quo.

My advice to my fellow middle classers is to:
a) get local in political attention and economic decisions
b) stop worrying about what the federal government is doing, it will not benefit you and you cannot change it
c) get defensive, spread out
d) try to get more and more self-supportive and independent by disengaging from the mass-consumer cycle wherever possible
e) acquire hard skills either through your job choices or hobbies

As the empire unravels, it will not be pretty. We only get one life to live, so make it count and enjoy.