Saturday, November 13, 2010

Deficit Reduction and the Recession.

     President Obama's bipartisan commission on deficit reduction has released a draft of some of the things the full panel is considering. The final report is due December 1st, but members of the panel are not sure that they will be able to agree on provisions of the magnitude of those in the draft by that time. In any event, if Congress were to vote on the full proposal (which is doubtful), the vote would be non-binding.
     The commission is apparently doing a good job, because there is plenty for everyone, regardless of ideology, to hate.
     Liberals positively loathe the idea of cutting back on the (usually) annual COLA adjustment for Social Security recipients, raising the retirement age to 69 by the year 2075, and making a larger portion of Social Security benefits subject to Federal Income Tax. For example, the President of the AFL-CIO commented, "The chairmen of the deficit commission just told working Americans to 'drop dead.'"
     And Conservatives cannot swallow elimination of the mortgage interest deduction, a drastic reduction in the Pentagon's budget, and an increase of 15 cents per gallon in the gasoline tax (which also might help us become less dependent on foreign oil).
     In addition, the draft recommends a three year freeze on pay raises for the federal work force, which would be cut by 10%. Surprisingly, the recently enacted healthcare plan would remain, but with greatly increased cost-control provisions. Employer-provided health plans would no longer be tax free, but tax rates would be substantially lowered. Both sides of the aisle have trouble with the elimination of all earmarks.
     I believe the full report may well jump-start talks on deficit reduction, but having said that, I also think it comes at precisely the wrong time. In a serious recession and job emergency such as the one we are experiencing now, the government should be spending money on projects that will create jobs and benefit the country in the long run: construction of highways, railroads, dams, power grids, etc; technology, education, development of renewable energy sources, and other long-term projects. This could be done directly, by pumping cash into such projects, or indirectly by means of tax breaks and loan guarantees.
     When things turn prosperous, as they will, then we should get serious about deficit reduction. We should have learned all this in the 1930s, but apparently no one studies history anymore.
     I know, it ain't gonna happen. But it should.
     The Spirit's activity started simultaneously with the creation of the universe. Within a tiny fraction of the first second, the point/events which were to become the universe were transformed into a gaseous mixture of quarks, electrons, photons, neutrinos and other particles. A few minutes later they began to combine to form the nuclei of the lighter elements: hydrogen, helium and lithium.
     Matter Matters – The spirit Runs Through It.

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