Wednesday, December 26, 2012

"We Are One Decision Away From Restoring Our Fiscal And Moral Authority From Around The World" - Jamie Dimon

Why Can't Obama and Boehner Get Along?
It is almost impossible to put the name of a Wall Street banker such as Jamie Dimon of JPMorgan in the same article with that of theologian Reinhold Niebuhr and statesman Winston Churchill, but he is correct about the US making 'one decision' to restore some dignity to our fiscal process.

The essence of politics, according to 20
th century theologian Reinhold Niebuhr is 'finding approximate solutions to basically insoluble problems'.

But as Winston Churchill said in one form or another: ‘Democracy is the worst form of government, except for every other one that has been tried form time to time’.

So, then, basically we have the ‘worst’ form of government trying to find ‘approximate solutions’ to 'basically insoluble problems’, don’t we?

All we are looking for is one decision between President Barack Obama and House Speaker John Boehner not to save the world but just to get the US back on some small track to fiscal sanity once again.

This is not as complicated as it seems to be. It is much more of a problem of real principled leadership on the behalf of our nation rather than just trying to game the federal budget for political purposes.

Balancing  budgets is easy: You either reduce spending or you have to raise taxes to pay for what you like to spend. It is that simple.

I used to work for Congressman Alex McMillan of Charlotte, North Carolina who every now and then would muse: 
‘Why is so-and-so even in elective office if he doesn’t want to do something now, today, to make things better?  It takes far too much work and takes far too much effort to get to Washington to then punt these issues down the road to the proverbial ‘someone else’ to take care of the problem.’
He’s right.  Why do we continue to elect people who will not solve our collective problems?  We can do that all by ourselves without them!

He also made a subtle point about leadership, and the lack thereof.  True leaders make decisions based on what is in the best interests of the nation as a whole first and foremost, not their own political career. 

Theoretically, all of our elected officials in America are supposed to be basically 'temporary' in nature as well. 'Citizen-politicians' we used to call them.  Do something significant of some importance in your private life and then run for office hoping to bring your talents to the greater good so we can all live better lives together, not tear each other apart with class or race warfare.

Perhaps the ancient practice of drawing lots to see who would serve for a 2-4 year term might bring about more sanity in our legislative system. No more 'seniority'. No more campaigning. Just send people to Washington to do the nation's business and come home. 

The recent demise of the ‘fiscal cliff’ negotiations points out an inherent flaw of democratic republic rule in the Grand American Experiment. We have a President who says he was 'elected by a landslide majority’ (in the electoral college at least). He honestly seems to believe that we can tax our way out of this financial mess in which our national government is now mired.

We have a Congress controlled by the Republican Party which honestly believes we are over-taxed. They will not agree to any deal that has any hike in the tax rates for anyone, not even Warren Buffett who supported President Obama.

The 'flaw' both the Democrats and the Republicans have seemed to have forgotten?  Democracies don't work without principled leaders compromising in sane ways.

In other words: 'Finding Approximate Solutions to Basically Insoluble Problems'.

We have people looking for the 'perfect' deal.  There are none in politics, not on a grand scale at least.  So forget about it. You are making the perfect be the enemy of the good if you think that way.

Accumulation of federal debt is the ‘basically insoluble problem’ neither side has wanted to attempt to solve over the past 12 years and counting today: 
‘We are overspending our national tax revenue income by so much each year that we are now on-schedule to have a national debt of over $21 trillion by 2017 that will need to have interest payments made on it in cash or else everything really will go over the financial cliff if we don’t’.
This is the ‘forest fire’ that is behind every little tree of tax hike and entitlement cut that you hear every politician say they will ‘oppose with every fiber in my body!’ apparently like they are Patrick Henry in his ‘Give me Liberty or give me Death!’ speech.

Even a massive forest fire can be curtailed if a firebreak is cut through the forest ahead of the raging fire.  President Obama making a deal with House Speaker Boehner would be like cutting a firebreak...it wouldn't totally arrest the problem but would curtail it at least a little.

Here is the logical outcome if carried to its absurd extremes:
‘We will one day have a US federal budget made up 100% of entitlement programs for everyone 100% funded by debt borrowed from overseas because we will have cut all taxes to zero.’
Just how stupid and idiotic is that for a civilized people to act anyway?

Here's the sum total of the 'victories' by each side over the past 12 years if you count yourself a Progressive Liberal Democrat who sees not one single dime that can be cut out of any federal spending or a Tax Cut Conservative who can not see 1 single dime of taxes that can go up on anyone in any effort to reduce these ridiculous deficits:

'$5 trillion of new debt since 2008.  $10 trillion since 2000'

Congratulations to both sides!  Your intransigence and short-sightedness is putting the future of our nation in more jeopardy, not less. Your children and grandchildren will not look back on your 'principled courage' if they are living in lower economic standards with high unemployment, inflation and depreciated currency, all possible outcomes of excessive debt.

The American people want our elected leaders to ‘do something’ to address the debt and deficit problems. Inherently, everyone knows and understands that debt ultimately consumes anyone dumb enough to mishandle it.

Including the Roman Empire. The Soviet Union. The Ming Dynasty. None of them escaped the basic economic gravitational forces of debt and an empty treasury.

President Obama, despite acclaim for his oratorical skills, has proved to be incapable of negotiating a significant budget deal with legislators who do not share his own political beliefs and point of view. Presidents Reagan, Bush 41 and Clinton all signed budget deals with an opposing majority in Congress.  President Obama has failed to do one yet. 

The US Senate under the rule of Democratic Majority Leader Harry Reid doesn't even seem to know what a budget is since they haven't passed one in close to 4 years now.

There are solutions out there that are not 'cataclysmic' in nature and would get us back on the right track at least on a federal budget basis. There most obvious solution out there recently was the restriction in deductions for higher-end income-earners in exchange for significant entitlement reforms such as raising the retirement age for Medicare to equal that now of Social Security (66).

The next 'least painful' option would be to hold overall federal spending to annual growth of less than 2% per annum for the next 5 years.  By 2017, our budget will be balanced (if and) when the economy finally recovers and people start paying taxes at the rate they were before the economic crash of 2008.

Letting the ‘fiscal cliff’ happen in 5 days should shock many registered voters into reality.  Let the first 4 pay stubs paid to Americans in 2013 reflect higher income taxes and the loss of the payroll tax cut from 2012 and watch how many millions of people start howling for spending cuts across-the-board.

We think that is preferable to punting this issue down the road again, don't you?

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