Protect Your Country and Save Money: Contact Your Sentator

Russia has thousands of nuclear warheads that can reach America in an hour or so. If they are launched, for whatever reason, even a simple mistake, America will be destroyed. Al Qaeda can do damage, Russia can kill most Americans in hours. Fortunately, we can substantially reduce that threat and save money at the same time.

Following in Reagan's footsteps, President Obama recently signed a new START treaty with Russia. Like the previous START treaty, this will

• Substantially reduce the number of Russian warheads that can reach America.
  
• Put American inspectors on the ground in Russia to make sure the treaty is observed.
  
• Reduce the number of American warheads we have to pay for, leaving 1,550 -- more than enough to deter any aggressor.

This treaty is a complete no brainer. It increases America's security and saves money. Opposition is limited to those who don't understand the facts and those playing stupid political games with our survival.

To go into effect, the Senate must vote for the treaty. Contact your Senators today and urge them to do so.

U.S. Federal Debt, Part II, Incentives

In Part I I laid out our debt problem. The short story: $13.7 trillion and growing fast. In that piece, I noted that all the major players: powerful people, Congress, federal managers, taxpayers, federal employees etc. all have strong incentives to increase the debt. Part II, this essay, is devoted to exploring ways to change that.

Let's start with an easy one: Congressional earmarks. For many years, each Congressman has been given a quota of money that they can spend in their district more-or-less as they please. Congressmen use these funds to get votes by giving voters stuff. Consider a new rule: earmarks are only allowed if total federal debt shrank the previous year. This would give each Congressman a powerful incentive to stop borrowing.

Now the hard one: a debt tax. This is an additional graduated tax on all income with most of the burden falling on the wealthiest (1), who are generally the most powerful and thus in a position to affect the debt. This tax is cut in half when we stop borrowing, and goes away entirely when the government has a surplus rather than a debt. The exact percentage is not critical, so long as it is too small to sink the poor and big enough to really matter to the rich. I suggest the following rates by income:

• 1% $0-50,000 (55% of taxpayers)
  
• 2% $50,001-100,000 (30%)
  
• 3% $100,001-150,000 (10%)
  
• 4% $150,001-200,000 (3%)
  
• 5% $200,001-250,000 (1%)
  
• 6% $250,001-500,000 (all others combined 1.5%)
  
• 7% $500,001-1,000,000
  
• 8% $1,000,001-10,000,000
  
• 10% $10,000,001-100,000,000
  
• 15% $100,000,001-1,000,000,000
  
• 20% $1,000,000,001 and above.
  

This would give a strong incentive to the most powerful people in the country to have the federal government stop borrowing and pay off the debt. Yet even at the highest level, total tax when combined with current income tax would still be far less than the top tax rate of the 1950s and 60s; which was 91%. If the debt tax creates too much government income, damaging the economy, then other taxes can be reduced. I prefer taking people on the bottom off the tax roles entirely but there are other sensible approaches. For example, for the vast majority of Americans -- those earning less than $250K -- reduce the current income tax by the amount of the debt tax leaving taxation levels the same.

Right now federal managers are severely punished when they do not spend all the money they are responsible for by the end of the fiscal year (October 1). This is why the government goes on a buying spree every September -- managers are desperately trying to spend all their money. Instead of punishing managers who are fiscally responsible they should get awards, their projects should keep at least some of the money, and their budgets should not be cut. Those who over-spend should be cut. This could make a very big difference.

Finally, consider rank and file government employees. Their incentive is to increase their pay, which increases government spending. There is no way around this. However, federal employees are civil servants. Civil servants have strong job protection. Before the civil service was established it was normal for a new president to fire the entire government and replace them with campaign supporters. Laws to prevent this require a RIFF (reduction in force) to fire civil servants in any significant numbers. Usually the firing is by seniority -- the youngest, least expensive employees get canned. Civil servants could be given an incentive to reduce the debt if RIFFs were only allowed when the debt is increasing. As a general rule civil servants make less than those in private industry doing the same job, but they are compensated by job security. This would make job security contingent on reducing federal debt, a powerful incentive.

There you have it, ways to give the major players significant incentives to reduce rather than increase the federal debt. There may be better ways, but these would almost certainly work. It's also safe to say that as long as the incentives stay the same, and all the incentives are to borrow more rather than pay off the debt, the debt will increase until default and disaster (see Part I for details).

Part III: reducing government size and expenditures is next. Stay tuned.

Notes:

1. Small states, such as New Jersey, have raised taxes on the wealthy only to see them leave the state. However, leaving the U.S. is a much bigger step than moving from New Jersey to New York, and the U.S. has low levels of taxation compared to other industrialized countries. Not only are income taxes at the top brackets generally higher elsewhere, there is often a very large VAT (Value Added Tax) on everything purchased. Thus, flight of the wealthy to avoid the tax is unlikely.
   

U.S. Federal Debt, Part I, The Problem

Today, the Federal Government of the United State owes $13.7 trillion. In the last year alone we have borrowed $1.7 trillion (source: TreasuaryDirect) on an income of $2.1 trillion (source). Worse, we have been borrowing huge amounts of money, almost every year, since the early 1980s. No one, not even the U.S. government, can borrow this kind of cash (1) without eventually being unable to make the payments. Indeed, there is already speculation that our creditors are getting nervous about being repaid. Without a major change in course, default is inevitable. When default happens the government will no longer be able to borrow; requiring us to immediately cut expenditure and/or raise taxes by roughly $150 billion per month if it happened today, more if later. This will almost certainly mean:

• Most of the U.S. military will be demobilized and all foreign bases abandoned. We will lose whatever wars we are in.
  
• Social security checks will be substantially reduced or eliminated.
  
• Poor and elderly people will not get medical care.
  
• All federal research will end: NASA, National Institute of Health, National Science Foundation, etc.
  
• Most federal employees will lose their jobs.
  
• The states and cities will lose all, or almost all, of their federal funding. Many teachers, police, firemen, etc. will lose their jobs.
  
• All government bonds ($13.7 trillion today) will lose much of their value, throwing the economy into a deep dive, probably much worse than the Great Depression.

The borrowing must stop, and the debt must be paid off (2). It will be hard and painful, no part of the government can be spared and taxes must be raised, but the alternative is disaster.

Right now the short term interests of all the players is to increase spending and reduce taxes, hastening the catastrophe. For example:

• Congressmen get votes and money by reducing taxes and giving people money (or tax breaks, which, for all practical purposes, is the same thing). They lose votes by increasing taxes and cutting off the federal money spigot.
  
• Republicans win elections by cutting taxes and increasing military spending.
  
• Democrats win elections by increasing social service spending.
  
• Government managers are severely punished if they do not spend all the money allocated. I've talked to multiple mid-level government managers who proudly came in under budget their first year, and got clobbered. They all say they will never do that again.
  
• Taxpayers do not want to pay for the government.
  
• Government funding recipients, including everyone on social security, everyone on medicare or medicaid, everyone using a tax deduction, and all government employees, which means all military, almost all teachers, all police, almost all firemen, almost all researchers, etc., want their income to increase.
  

Everyone in this country has a choice: either increase your taxes and reduce the goodies you get from the government, or go off a cliff. In the near future I will lay out one approach to accomplishing this, including changing the incentives of the major players -- particularly the most powerful, which will increase revenue and reduce the size and cost of government.

However, no matter how we wiggle and shake, we owe $13.7 trillion, which means someone is going to pay at least $13.7 trillion in taxes. There is no way around this. It won't be the poor, they don't have any money. It will be the middle class, the rich, or some combination. How we allocate these taxes will determine what kind of country we are to become. Get the $13.7 trillion from the middle class and America will be a country of a few wealthy and many poor. Get the $13.7 trillion from the wealthy and the middle class has a chance to prosper and there will be fewer extremely wealthy individuals. Choose.

Footnotes:

1. Note that I do not use the term 'deficit.' This is because the official deficit is artificially manipulated to look much lower than it is. For example, until recently most of the cost of the Iraq and Afghan wars were not included in the deficit. Also, until last year the social security trust fund loaned hundreds of billions of dollars a year to the treasury but this was not included in the deficit. A truer measure is the total debt, which is used here.
   
2. If we continue to borrow, the interest on the national debt will hit $1 trillion per year within about a decade. Regardless of the size of the interest payments, those tax dollars won't buy one gun, fund a single research project, build a single road, pay a single teacher, or fund a single social security check. The only way to stop bleeding interest is to pay off the debt.
   

What has the Democratic Congress Done?

One can argue that this Democratic controlled Congress has done the wrong thing, but if you know the facts you sure can not argue that they haven't been hard at work. Consider this very partial list of legislation passed:

The first comprehensive health care bill ever.

Credit card reform protecting the consumer.

Financial market reform.

The largest middle-class tax cut in history.

The largest investment in green energy in history.

Making college loans more affordable.

The Cash for Clunkers program to help the auto industry.

Making it easier for women to challenge pay discrimination.

Increasing federal regulation of tobacco products.

Cracking down on waste in Pentagon weapons acquisition.

Reform of the ITAR trade regulations making US aerospace corporations more competitive.

Funding for the first private, commercial human space launchers.

Making attacks based on sexual orientation a federal hate crime.

Giving businesses tax incentives to hire unemployed workers.

Tax credits for first-time homeowners.

They also passed legislation to reverse massive job losses and forestal another Great Depression. All this in the face of literally hundreds of Republican filibusters.

If you think this work took the country in the wrong direction, if you liked where we were going before Obama became president, then vote for Republicans. They say they haven't changed and I'm sure they haven't. If you think the legislation of the last two years is headed in more-or-less the right direction, then vote for Democrats, you'll probably get more along these same lines. Otherwise, expect a hard right turn.

I would have liked more here or there, but by and large I think the Democrats have taken us in the right direction, and we should keep going.

I coach youth soccer. When the kids are playing defense I tell them: don't give up. If you don't get the ball right away, keep after it. To those angry that in two years the Democrats have not fixed all the ills they inherited, I say the same thing. Don't give up. The second thing I tell my soccer team is trust your team mates. Even if they lose the ball, keep passing to them. When times get tough, there is a tendency to turn on your friends and allies. This is a mistake. Don't be a fool, support your friends and go after your opponents. If your favorite legislation didn't pass, don't attack the people that voted for it, attack the people that voted against it.

How I'm Voting and Why

Here's a list of most of the propositions and positions that I can vote for this November (2010) along with my choice and a little bit about why. Note that I'm not voting for the Green, Peace and Freedom, or Libertarian parties. With a few exceptions, these folks are not serious. They all had a free opportunity to send a paragraph to every single voter in California in the voter information guide. Most of them didn't bother to write more than a line or two. Serious candidates take advantage of such opportunities.

In any case, here's how I'm voting and why:

Sam Farr for representative. He mostly votes they way I want him to and he takes care of the district. Also, his opponent doesn't want the people to elect U.S. Senators, he wants the state legislatures to do that. More important, over the last two years the Democrats under President Obama have turned this country around. It's not steaming ahead very fast, but at least we are creating 50-70,000 private sector jobs a month rather than losing 750,000. I think they've done a fairly good job in the last two years and deserve another two before it's reasonable to expect great things. See Have the Democrats Delivered? for details.

Barbara Boxer for senator. I like Senator Boxer. She's smart and capable. She mostly votes the way I like. I'm not at all impressed by her opponent, who seems to be clueless as to how to win counterinsurgency wars. Also, Boxer is a big champion of President Obama's space program, which, in my personal and professional opinion, was terrific (see Obama's Brilliant Space Policy). Barbara Boxer's worked hard to get the best possible version through Congress, although it was significantly watered down by others.

Jerry Brown for governor. I remember when Brown was governor in the 1970s and I think he did a good job. He's very frugal, refusing to live in the expensive governor's mansion and renting a small apartment instead. His opponent has some promise but has two great weaknesses: 1. She's an inexperienced outsider with little knowledge of government. She didn't even bother to vote for many years. We tried an inexperienced outsider with our current governor. It hasn't worked well. I think we should try a seasoned pro who really knows the details of how state government works (and doesn't work). 2. She thinks being a CEO teaches you how to create jobs. For a company that's simple: sell product, make money, hire folk. The equivalent for government would be: raise taxes and hire people -- probably not what we want. CEOs can spend company money as they see fit, governors have to put every penny of expenditure through a legislature. CEOs can fire and hire on command, governors cannot. Government isn't a company. It doesn't work the same and it shouldn't. Government, for example, isn't about making money.

Gavin Newsom for lieutenant governor. I've been impressed by Newsom every time I've heard him speak. He also stuck his neck out on Gay Marriage. That took some guts, even in San Francisco.

Yes on Proposition 19, legalizing Marijuana. It's not really the government's business if adults take recreational drugs, prohibition didn't work for alcohol and is a disaster for other drugs, and then there is Portugal. Ten years ago Portugal decriminalized all drugs. The result: a 50% drop in the number of heroin addicts. If you're serious about really reducing drug use, see How to Actually Win the War on Drugs.

Yes on Proposition 20, take redistricting away from the legislature. Having the legislature set district boundaries is a gross conflict of interest, is used to create safe seats for incumbents, and is inconsistent with real democracy. Almost anything else would be better.

Yes on Proposition 21, vehicle license fees to pay for state parks. I like parks and I like the honesty of the proponents in saying exactly where the money is to come from.

No on Proposition 22, prohibits certain kinds of funds transfers by the legislature. I'm not too sure about this one. I'm voting against it for two weak reasons: 1. I don't understand what will really happen, and it's unwise to vote for something one doesn't understand. 2. This tries to tie the hands of the legislature to keep them from doing something. The corrupt legislators will usually find a way around these sorts of rules, and those trying to do a good job will be hindered. I see this sort of thing in the government all the time: rules are made to try to prevent bad behavior, fail in that but keep the good people from getting anything done. Better to not have the rule and live with the bad behavior, which you'll get in any case.

No on Proposition 23, suspending environmental regulation. Without air you will die in five minutes. WIthout water you will be dead in a week. Both are more important than oil or economic development. Find another way to make money. There's lots.

Yes on Proposition 24, repeals certain business tax breaks. Again, I'm not too sure about this one, but it seems to eliminate certain tax breaks used primarily by large businesses. Also, the opponents use a lot of ALL CAPS, a sign something's fishy.

Yes on Proposition 25, simple majority for the legislature to pass a budget. California has a terrible time passing a budget every year because a 2/3rds majority is required. This means a fairly small minority can hold up everything the state does. It's a mess. This legislation preserves the 2/3 requirement to increase taxes, but is otherwise a blow for majority rule and the simple ability to get stuff done.

No on Proposition 26, 2/3 vote required to increase certain fees. I'm not hard over on this one, but I like majority rule. There are times when the minority should prevail, but not at this level. 2/3 majorities for this sort of thing induce paralysis.

No on Proposition 27, eliminates the redistricting commission. This is a ploy by the legislature to continue to control their own districts so they can carve out safe ones for themselves. It's corrupt.

Debra Bowen, Democrat, for Secretary of State. She is the current secretary of state and seems to have done a good job. It turns out Republican Damon Dunn didn't bother to vote until 2009, which is a little weird for the state's chief election officer.

John Change, Democrat, for Controller. His statement was pretty good and most of his opponents, including the Republican, couldn't be bothered to write a statement (Karen Martinez, Peace and Freedom, wrote two measly lines).

Bill Lockyer, Democrat, for Treasurer. As current treasurer he apparently got through the crash without losing any money for the state -- a very good piece of work. That said the Republican Mimi Walters has a reasonably good statement.

Kamal Harris, Democrat, for Attorney General. The Republican is a strong supporter of the death penalty, which occasionally kills innocent people. Possibly quite often as dead folks don't get DNA tested to discover they are innocent, as has happened with dozens of death row inmates wrongly convicted. If you jail someone and find they are innocent, you can release them. Hard to do from the grave.

Larry Aceves for Superintendent of Public Instruction. His opponent seems to have no administrative experience.

There you have it. Now go out and vote!

The Economy, Deficit, and Republicans

The Republicans are aiming to take control of Congress this November. They say they will do a better job of reducing the deficit and growing the economy. Their stated approach is to lower taxes and reduce regulation. It is reasonable to ask: What does history say?

The Republicans have controlled the executive and legislative branches simultaneously three times in the last 100 years.

• The 1920s, which ended in the Great Depression.
  
• In the 1950s, but only for two years.
  
• And in the 2000s, which ended in the deepest recession since the Great Depression.
  

Is there reason to believe the Republicans have new ideas and approaches that would lead to something other than another economic collapse? They say no, they will follow exactly the same policies: tax cuts (mostly for the wealthy) and deregulation.

Before 1980 the federal government rarely ran large deficits, the exception being during relatively short wars such as World War II. Then,

• Republican president Ronald Reagan asked for and received large tax cuts, which were closely followed by the largest peace time deficits in our history. These deficits continued under Republican George H. W. Bush.
  
• Democrat Bill Clinton reversed these policies and the deficits were eliminated; handing 2000 election winner Republican George W. Bush a large surplus.
  
• Large tax cuts, primarily for the wealthy, were passed and by the time Bush left office in January of 2009 the fiscal year deficit was estimated at $1.2 trillion.
  

Republican solutions led to huge deficits twice in my lifetime; so do they have a new approach, new ideas? They say no, they will follow exactly the same policies.

If you like economic collapse and huge deficits, by all means vote Republican. That's what they've delivered and they promise more of the same.

Successful Conservative Disinformation

If you say something over and over again, a lot of people will think it is true. This is being used incredibly successfully by conservative media. A couple of examples:

Recent polls show that over 20% of Americans incorrectly believe President Obama is a Musliim. This is up substantially since he took office! President Obama has attended church for decades, and has been filmed leaving church with his family in DC. During the primary campaign, video clips of controversial statements by his pastor (pastors are Christian, imams are Muslim) nearly cost him the election -- yet over 20% of Americans believe he is Muslim. Incredible, but very helpful for Republicans in an election year.

The community organization Acorn was destroyed by a video, played endlessly on Fox News, seeming to show two conservative activists dressed like 1970s-exploitation-film pimp and hooker being assisted by Acorn staff in prostitution and human trafficking activities. When the California DA subpoenaed the full film, a different story emerged. First, you never see the outlandish costumes and Acorn workers in the same clip, because they were never in the same room. The outlandish costumes were used to generate footage then removed before interacting with Acorn personnel. There was one slip on the hidden camera where the 'pimp' showed his sleeve -- of a pin striped dress shirt. Footage of Acorn employees 'helping' in human trafficking turned out to be a fraud as well. In one case the Acorn employee pumped the activists for as much information as possible then maneuvered them into using Tijuana for their transmit point. As soon as the activists left the office he called his friend on the Tijuana human trafficking squad who contacted his counterpart in San Diego. Had this been a real pimp he would have gone to jail. The actual result, the Acorn employee doing exactly the right thing lost his job.

The final example has a happy ending, sort of, and points the way towards combating these lies. Again, Fox News played a heavily edited video endlessly, but this time got caught. The video was of a black government employee giving a speech to the NAACP talking about not helping a white farmer. The employee was fired that day. The next day the whole tape came out and it became clear that she was actually setting the scene for an object lesson in inter-racial harmony. In fact, she did help the white farmer and they became friends as well.

There are two lessons:

Never fire anyone because of a video you see on Fox News.

When you hear lies, counter them quickly. Otherwise they fester and we bleed.