Monday, September 12, 2011

Comment Response

While clicking through my local newspapers this morning, I came across this linked article. In it the writer makes his case for how the federal budget crisis we are currently under had its roots in the spending practices of the previous administration, while barely casting any blame on the current administration. As I read through his column, I began to formulate a response that I was going to post in the comments section. However, the more I wrote, the longer the response. So I decided rather than post it where my readers might not be able to find it, I will put my response here.


OK, decent article that has obviously been researched. But Talton, as a journalist you should that numbers and figures are journalism 102 (101 being who, what, when, where, and why (or how)). The statistics did make the point that spending is out of control, and the wars didn’t help matters.

They have been fought on credit (Iraq and Afghanistan). Instead, President George W. Bush pushed through tax cuts, heavily weighted toward the rich, that added another $1.8 trillion in red ink – and this was before their extension under President Obama last year.

You kind of forget to mention that the tax cuts that favored the rich also coincided with a nice long run of economic prosperity after the recession brought on by the 9/11 attacks. Gross domestic product had an average rate of just under 4% (this includes 2009 which really screwed up the curve). Our unemployment rate hovered near 5%. In terms of strict numbers, it is quite possible the tax cuts did cost the US Treasury $1.7 trillion dollars.

But why don’t we look at this from another direction. Each state in the Union collects taxes for the state coffers. Some states collects taxes through sales taxes, other through income taxes, while others still collect taxes using a combination of both. While this might be comparing Red Delicious Apples to Granny Smith Apples, I think it is worth exploring. During the recent economic downturn the state of Washington has come up close to $7 billion dollars short in tax revenue because of unemployment and people pinching their pennies. ($5.5B actual, $1.5B projected). At 6.7 million people, The Evergreen State has just over 2% of the US population. If we were to project out this $7 billion and 2%, we can come up with a possible state level revenue shortfall of somewhere near $330 billion. Keep in mind this is only state level revenue generation, which is typically lower than the federal government (except for maybe California and we’ve seen how well they’ve done with all that tax revenue).

For the sake of argument let’s just say the feds lost $330B in tax revenue due to the recession. When you couple this with the $800 billion in utterly failed stimulus spending we have now reached the trillion dollar neighborhood. It does bear repeating that fed income generation (taxes) is higher per capita than nearly all the states.

So I guess the question that needs to be asked is did the Bush-ear tax cuts really cost the federal government money? It can be argued that without the tax cuts, the 9/11 caused recession in 2001-2002 may have actually lasted longer, costing the government even more in revenue than the tax cuts did.

The United States has taken no serious steps to address either climate change or looming worldwide oil scarcity, both of which will prove to be major national-security challenges as well as costly to the economy.

I also must take some issue with your point about climate change. At what point will people realize that climate does change. It is an iron-clad fact that cannot be argued through any means that the climate changes. During the 1970s there was discussion we were entering a mini ice age. Snowfall totals were up, temps were cooler, and some experts were predicting a long-term trend. Then during the late 1980’s and through most of the 1990’s we were warmer; snowfall totals were down, temps were up, and some experts were predicting a long-term trend. Now, for the past 12 years, there has been a cooling trend. Snowfall totals are up…, well, you get the picture. We can more impact the changing climate than we can change the course of the earth around the sun.

When you mentioned “looming worldwide oil scarcity” I think I can assume you want a larger green agenda to take hold. I am also going to assume that you want the federal government to spend even more money on switching us over to green power generation. Take a look at Spain and see how well that worked out for them. It is estimated that for every “green” job created in Spain it has cost the economy two jobs. I wouldn’t call that a success. And we really don’t have to reach back very far to see how well that kind of spending has worked out for us. The US government sent $500 million to a company that has been a complete failure. After giving nearly a half a billion dollars to Solyndra, the company has laid off its employees and has gone under. I’d consider that a fail.

We are now discovering there may be other means in which we can overcome the “oil scarcity”. There are some estimates there may be as much as 2 trillion barrels of oil within our own borders. If these number bear out, we would have multiple times more oil reserves than Saudi Arabia. Some of this oil is expensive to recover, but at the current price of over $90 a barrel, it is economically feasible to get this material out of the ground a process it into useable oil. But so far, the Obama administration has blocked or is attempting to block recovery of this oil.

Education, the essential element to competitiveness, continues to falter, especially for the middle class and working poor.

One last point to make here and it has to do with education. The writer correctly points out that we lag behind many other developed nations when it comes to education and that we have done a poor job of executing our education programs. I am not even going to cover how this shouldn’t even be a federal level business, best left to the individual states. But I do want to point out that we are second in the world when it comes to spending and rate in the mid teens to high twenty in various educational arenas (math, science, etc.). So it is obvious that money is not the issue here. We spend plenty of money of money on our students.

What we need to do now it get some people in high positions that can think outside the box and start getting more bang for our buck. We need to stop spending money on self-esteem programs and focus the money on educating our children. Teach our children how to read, write, add, and subtract. If a student falls behind, don’t promote them, self-esteem be danged. Allow parents to send their children and their tax money to the school of their choice. Make the school districts compete for the students and the tax dollars. Competition can be a wonderful tool in increasing productivity and the quality of the product.

Over the course of my lifetime I have seen numerous examples of how increased competition can increase the quality. AT&T is a good example. When they had the monopoly on telecommunications, innovation was stagnant. Once Ma Bell was broken up, all kinds of improvement happened. Does anyone think the proliferation of smart phones would be possible if AT&T hadn’t been broken up 35 years (or so) ago?

And how about the auto industry? While the Big 3 still lag behind the foreign auto-makers in terms of value and quality, they have been catching up. Does anyone remember when it was typical to trade in your car after three to four years? Detroit quality was such that a car wore out after only a few years. Along came the Japanese and European companies with cars that lasted 100,000 and more miles. Detroit had to catch up. It took them a while, but they are now doing it. Where as in the past, you got a new car every four years or so, it is typical, even for a Detroit-built car, for it to last well past 100,000 miles. Why did this happen? Competition, of course.

If we want to take care of the budget and debt crisis in this nation, a change needs to happen. We need to stop spending money of programs that are failures and not start spending money that other nations have proven won’t work. It was not the tax cuts or the war spending that put us into this crisis. It was free-wheeling spending of American’s hard-earned tax dollars by people that just don’t have a clue. Until this ends, our crisis will remain.

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