November 13, 2010

Avoiding the Abyss: The National Economic Rescue Initiative

Filed under: Economy,Taxes & Government — Tom @ 12:25 pm

Why a groundbreaking initiative debuting today is so important.

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Note: This column went up at Pajamas Media and was teased here at BizzyBlog on Wednesday.

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First, the good news: The Congressional midterms, gubernatorial races, and various state and local electoral contests resulted in the large-scale, unmistakable repudiation of the political tax-and-spend culture that so many of us were hoping for.

Now for the bad news: The distance between where we are and a genuine long-term national fiscal and economic recovery is daunting. This is no time for disengagement.

Many American have begun to recognize just how deep the short-term and long-term financial holes we face really are. Others, sadly including many politicians who won key races last week and their party overlords, still don’t seem to get it.

The near-term situation is scary enough, and needs to be stabilized soon, or, as I said a month ago, there won’t be a long-term. But even if we satisfactorily resolve the short-term, the long-term problems we face are intimidating at levels most people have only begun to absorb.

Focusing on the short-term for a bit: Fiscal 2010, which ended on September 30, was the second time the U.S. government ran an annual deficit of well over $1 trillion. Fiscal 2009 was the first. As I noted two weeks ago, this year’s real spending deficit was worse than the first. Some departments went hog-wild. Spending at the Department of Education was up 30%. Spending increases at the Energy Department and the EPA (36%) were ridiculous. I could go on and on.

Federal collections on the whole came in barely higher than a year earlier, and were still about 20% lower than fiscal 2008 before subtracting IRS stimulus payments. Tax collections in most categories were down. The only reason receipts increased was that collections from the Federal Reserve increased by $42 billion.

Federal Reserve collections … What’s that all about? It’s about Ben Bernanke performing the 21st century’s equivalent of printing money. The Fed calls it “Quantitative Easing” (QE).

Properly employed, QE can be a stabilizing mechanism to keep an economy from nose-diving and assist it as it recovers. The Fed creates money out of nothing and invests it in government bonds, mortgage-backed securities and corporate bonds for a while. It is supposed to wind down those investments when condition warrant.

The trouble is that conditions don’t warrant pulling back, because a) there hasn’t been a meaningful recovery, and b) fiscal policy is a scandalous mess. What little economic improvement has occurred has not been enough to put people back to work. Unemployment has been stuck at over 9% for the longest period since the Great Depression.

Because of the deficits created by fiscal policy and the weak recovery that has accompanied it, the Fed can’t pull back on QE without significantly disrupting the economy. We can argue all day and night about whether the pullback should happen, but the fact is that at least for now Bernanke & Co. are determined not to let it happen, even as the administration continues to push for more historically ineffective stimulus and continued trillion-dollar deficits. The fed has embarked on “QE2,” a second round of quantitative easing that will increase the Fed’s investment portfolio by another $600 billion.

The deeper the QE hole, the harder it will be to dig out, and the worse the consequences will be if — hopefully we catch it in time before it becomes “when” — the American people and foreign governments (not necessarily in that order) come to realize that the house of cards is unsustainable. That’s why government spending must be slashed and the government’s budget must be brought into balance — and soon.

But even if that occurs, there are serious long-term problems. They come in four major areas:

  • Social Security
  • Medicare, Medicaid and Health Care
  • Military
  • All other spending

Social Security’s actuarial deficit was over $7.6 trillion a year ago. The actuarial deficit in Medicare alone is five times as large. As the Baby Boomers continue to retire and age in record numbers, both numbers are moving higher — and quickly.

Sadly, projected spending in the first two categories above threatens to totally wipe out the government’s ability to spend any money in the other two, even though they happen to be the areas where the specifically defined constitutional duties of the federal government (defense, courts, etc.) are carried out.

Today, the PJ Institute, the research and education arm of Pajamas Media, is introducing the National Economic Rescue Initiative (NERI) to the American people. While its timing in the euphoria of the Tea Party wave that has swept the nation is perfect, its overall warning is stark, sobering, and demands action:

Because of decades of overspending by both Democrats and Republicans, our nation will reach a time (possibly around 2020 or sooner) when we can no longer borrow to finance our annual trillion dollar deficit.

If lenders are no longer willing to buy our debt, we will be unable to continue to fund the government’s operations through borrowing. If spending is not drastically cut, Americans will need to pay taxes at much, much higher levels.

What needs to be done to prevent this will involve much more than a little tweaking. It will require a wholesale rethink of what the government is capable of doing and should be doing — and conversely, what individuals, families, and communities are capable of doing better, and should be doing themselves.

The Congressional Budget Office projects that if we continue on our current course, federal debt owed to the public will increase from $9 trillion today to about $550 trillion a mere 70 years from now — and that’s after inflation, while assuming (many believe naively) that the government will be able to continue to borrow at low, risk-free rates.

We’re not kidding. But if 70 years sounds too far off to be believable, how about these intermediate threshold crossings: $20 trillion in 2022, twelve years from now; $40 trillion in 2032, just ten years later; or $100 trillion in 2046? Keep in mind that our current Gross Domestic Product in current dollars is about $14.7 trillion.

Nobody can possibly believe that our current financial path is sustainable.

This is where those reading this column and the American people come into play. Please, go to the NERI web site and educate yourself. Utilize its tools, and then visit its interactive Solutions Design Center.

If it hasn’t become obvious to readers during the past several years, let’s make it obvious now: The time for the American people to assume that the country’s problems can be solved with minimal citizen involvement has ended. Additionally — and this will be addressed in future NERI subscription-based offerings designed to be extremely beneficial yet very affordable — the idea that people can just “wing it” in their own personal money management, retirement savings, and overall financial planning, or play catchup after years of neglect, is similarly over.

This nation does not have the luxury of blowing this off. Failing to deal with the problem while there is still time will condemn future generations to a standard of living which will be a mere shadow of ours, and which will ultimately threaten our form of government, i.e., whether we will continue to genuinely have government of the people, by the people, for the people.

So go there. Take action. Make suggestions. Encourage others to do the same.

The country you help save will be your own.

Name That Party: Arrested Prince George’s County Political Couple Rarely ID’d as Dems

JackJohnsonPGcountyMD1110namethatpartyIn Maryland, Prince George’s County’s top elected official, County Executive Jack B. Johnson (pictured at right) was arrested yesterday, and “is accused of accepting cash in return for helping a developer secure federal funding.”

Johnson’s wife, a recently elected councilperson, was also arrested yesterday. The couple are both accused of “tampering with a witness and evidence relating to the commission of a federal offense, and destruction, alteration, and falsification of records in a federal investigation.”

The linked article at Gazette.net does not identify the Johnsons’ political party affiliation. When this failure to identify occurs, it typically means that the politicians involved are Democrats. As expected, the Johnson are indeed Dems (Jack; Leslie).

Sadly, it is not at all surprising that there is a virtual blackout on the Johnsons’ party affiliation:

  • An early Associated Press report found at ABC2 in Baltimore (HT to an e-mail from Matt at Weapons of Mass Discussion) has no party ID.
  • In a more complete item at the Associated Press’s main web site time-stamped just before midnight, reporter Brian Witte tagged Jack Johnson as a Democrat — in his 14th of his 16 paragraphs. That’s “clever,” as most subscribing publications will probably not carry the entire story, and will more than likely not include that particular paragraph.
  • In four web pages at the Baltimore Sun carrying a Washington Post story by Paul Schwartzman, Ruben Castaneda and Cheryl W. Thompson, there is one reference to a Democrat — the state’s governor: “The arrests stunned Maryland’s political world, in which Jack Johnson has been a player for a generation. Maryland Gov. Martin O’Malley, a Democrat, described it as a “sad day for Prince George’s County and for County Executive Johnson and his family” (the story as carried at the Post merely includes a “(D)” next to O’Malley’s name). A casual reader cold infer that O’Malley was taking pity on a politician from another party.

Here are selected paragraphs from Witte’s AP story:

FBI: Top county official, wife tried to hide cash

A married pair of top officials in a Maryland county is accused of tampering with evidence after FBI agents said they recorded the husband telling his wife to flush a $100,000 check from a real estate developer down the toilet and to stuff almost $80,000 in cash in her underwear.

… In an affidavit filed in federal court, FBI agents wrote that they recorded a mobile phone conversation between the Johnsons after agents went knocking on their door.

After Johnson told his wife, “Don’t answer it,” he instructed her over the phone to go upstairs to their bedroom and destroy the check, the affidavit said.

“Tear it up! That is the only thing you have to do,” Johnson told his wife, according to the affidavit.

Leslie Johnson then could be heard asking her husband, “Do you want me to put it down the toilet?”

The county executive responded, “Yes, flush that,” according to the affidavit, which noted that monitoring agents heard a flushing sound in the background.

Johnson then told his wife to put cash in her underwear, according to the affidavit.

… U.S. Attorney Rod Rosenstein said authorities have tapped Jack Johnson’s phone since January 2010. Prosecutors expect more charges to be filed and more people to be charged.

Jack Johnson, 61, has been county executive since 2002; his term ends in three weeks. The Democrat was the county state’s attorney for eight years before that. Born in Charleston, S.C., Johnson attended Benedict College and got his law degree from Howard University, where his wife was also a law student.

The WaPo/Baltimore Sun story also notes that Johnson “appeared on the cover of The New York Times magazine in 1992 for an article, titled “The New Black Suburbs’” (article posted here). The article described Prince George’s County as “fast becoming the closest thing to utopia that black middle-class families could find in America.” The level of corruption described in connection with the Johnsons would appear to indicate that if it ever was, it’s not any more.

Cross-posted at NewsBusters.org.

Positivity: US Army chaplain says deployed troops take comfort from prayer

Filed under: Positivity,US & Allied Military — Tom @ 7:42 am

From Baghdad:

Nov 11, 2010 / 01:36 pm

Confronting one’s own mortality on a daily basis can be overwhelming, but deployed servicemen take comfort and strength from prayers offered on the home front, according to Army chaplain Father Brian Kane.

Fr. Brian Kane, a priest of the Diocese of Lincoln, Nebraska, is presently deployed for the second time in Iraq. He is Chaplain for the 67th Battlefield Surveillance Brigade and oversees four battalion unit ministry teams which serve over 1,400 soldiers across the country.

“It is humbling for me to serve such a dedicated group of men and women every day,” he told CNA in a Thursday e-mail interview. “To put on the uniform, to stand and salute when the National Anthem is being played, to fold the flag after it has been draped on the casket of a fallen soldier, these are all privileges of those who serve.”

Deployed troops share the same spiritual needs as those at home, but the unique characteristics of life in a combat zone add other stresses.

“Soldiers are faced with their own mortality each day,” he commented. Even though many are not in imminent danger, bases still receive indirect fire in rocket attacks and convoys are attacked with IEDs.

Circumstances often force soldiers to consider “where they stand in their faith and what their relationship with God looks like,” Fr. Kane said. At the same time, they are away from spouses and other family members who encourage them in religious practice. Both a shortage of priests and busy work schedules keep Catholic soldiers from Mass.

The chaplain recalled his first deployment in Iraq during the U.S. offensive, when it was “very difficult” for him to minister to service members who were wounded or killed.

“To be able to stand at the bedside of a young man who is close to his last breath and console him with the sacrament of the sick, or to lean over and hear the confession of a soldier who has lost an arm or leg is a pertinent reminder to me of why we have priests deployed in a combat zone.”

Fr. Kane also recounted his helicopter landing at a small base one Christmas Eve. He was met by two young Marines who wanted to go to Confession before Christmas Mass, but were afraid the long line already formed at the chapel would prevent them.

“I was able to hear their confessions as we walked to the chapel,” he reported, adding that he also heard all the confessions of those standing in line.

In addition to Catholic Bible studies and RCIA classes, Catholic chaplains try to help soldiers grow in their faith throughout their deployment by providing Mass and Confession when a priest is available.

Asked how those at home can support deployed service members, Fr. Kane replied:

“Our greatest help comes from the prayers of everyone at home. Knowing we are surrounded by a mantle of prayer encourages us to keep going in the face of difficulty. Prayer is very powerful.

“I have seen firsthand how a soldier’s prayers as well as the prayers of others have saved them from injury or even death. When we hear from home that prayers are being offered for us it is a comfort and strength.

“Each person here knows that today could be their last,” the chaplain continued. “They know they did not have to volunteer to serve, yet they do. Our country should be proud of the men and women who make up the armed forces.”

Go here for the rest of the story. …