Krugman has a new bad idea

June 30, 2013

Krugman changes direction

Paul Krugman has long been known as an economist who advocates increasing government borrowing and spending for such things as infrastructure in order to stimulate our weak economy and create jobs. I have disagreed with him for a couple of reasons: first, because he and others of his ilk usually qualify calls for additional borrowing and spending by stating, "until the economy recovers". To which I always reply...and what if it doesn't? And, second, because I do not trust those in government who will have control over how the newly borrowed money to spend it wisely. Their past actions predict their future behavior quite clearly.

Of course, if additional borrowing and spending were actually used for things like the infrastructure rebuild, it would add some jobs in the short term. Our nation's problems worsen in the longer term if the jobs created don't last beyond the rebuild, and don't generate sufficient tax revenues to repay their costs. The greater likelihood is we would only end up deeper in debt than we are today. That would leave future generations in even worse shape, with remaining poor job prospects, and higher levels of debt burdens. And, after all, why do we need better roads and bridges if we can't afford gas for our autos? Truthfully,, I'm not actually opposed to investing in infrastructure. I am opposed to additional borrowing and would much prefer funding come from reductions in wasteful spending instead.

Now I see in his June 14, 2013 article in the New York Times, "Sympathy for the Luddites", the esteemed columnist finally acknowledges our weak job creation might be more permanent than he earlier thought. He cites recent information showing workers in developed countries globally, both unskilled and skilled, are being increasingly replaced by technology and outsourcing. He says it has now become apparent previous calls for more education as the solution will not likely solve the increasing shortfall of jobs.

In his article he did not discuss where he now stands on his previous calls for additional deficit spending. However, it seems illogical for him to continue to support more borrowing and spending for short-term job creation, which in his own view cannot be sustained in our increasingly automated society. I would like to hear his current views on this topic.

In this new article, Krugman calls for creating bigger public safety nets to assure all citizens have a minimum level of income and health care in order to assure the survival of our middle class. He goes on to say all of this will require tax revenues from profits and investments to pay the bills. I find it interesting he and others like him always want to turn to higher taxes or more borrowing for every newly identified need. Sort of sounds a lot like a guy named Marx??

Professor Krugman: Why don't you demand our leaders immediately face the reality you describe and begin by first looking under every government rock for wasteful spending? Why don't you call for reduced military spending? Why don't you demand our President approve every possible action to allow our nation's vast oil and gas reserves be tapped in order to create both jobs and tax revenues?

Truthfully, if we don't do all of these things...we won't have any choice except to create a massive welfare state in order to provide for the needs of a growing number of our needy citizens. And, we'll only be able to sustain the required levels of spending for these things until we run out of taxpayer's money and credit.

When an increasing jobless future predictably collides with the shortfall of taxes needed to fund entitlements for the baby boomers' retirement years...it will not be a pretty picture!

I am glad the good professor finally sees a future in which human labor of all types is less needed. Now we have to show him a better path out of the hole folks who think like him have placed our nation in today.

Drill and transport baby, drill and transport! It's either that or keep increasing taxes and borrowing to pay for more and more welfare funding until we reach the end of the American dream.

These are my opinions. What do you think?

Mike Tower

American patriots--where are they?

June 24, 2013

What would patriotism look like?

I am often asked why we can't seem to find true patriots for our highest elected federal offices. A large part of the answer to this important question is staring back at us every time we look at ourselves in a mirror. After all, no office-holders ever elected themselves to office. Nearly half of us who were eligible to vote did not do so in the last national elections, and almost none of us is actively protesting in any way.

Clearly any nation's challenges constantly change. To me, patriots are leaders who will always face their own era's unique challenges by consistently and passionately placing the best long-term interests of the vast majority of their nation's citizens ahead of powerful special interests, their political party, or even their own.

If the President of United States, or members of either of our lawmaking bodies, were true patriots, they would spend every waking moment during these trying times solely focused on the following: 1. Our economy...and most importantly the creation of jobs. 2. Our national security. 3. How to control deficit spending and reduce our debt. 4. How to deal with entitlement promises. After all, aren't these really our most important challenges? True patriots would never stop working together with the opposition party to find effective solutions to these serious challenges.

After all, no individual or political party alone can ever effectively solve the multitudes of problems for the benefit of the vast majority of citizens. Both parties in the legislative houses have obstructed. Isn't it the President's role to bring them together for the benefit of all Americans...and not just stand by his party's side? After all, aren't they all supposed to govern for the benefit of all Americans...not just those in their own party? Indeed, all of our elected have much blame to share for placing their own party's interests above the overall needs of our nation's citizens.

Would a true patriot ever even consider adding to our future citizens' debt burden by taking luxurious vacations? Can you imagine George Washington, Abraham Lincoln, or Franklin Delano Roosevelt, in the midst of their era's national crises, doing such a thing?

According to the Huffington Post, the Obama's family trip to Africa will end up costing around $100 million...all borrowed money. It has to be borrowed because nearly every dollar spent on discretionary items does. Administration spokespersons say the majority of these expenses are the result of Secret Service efforts to protect the first family's safety. And the $100 million doesn't even consider the millions of additional dollars it cost for Michelle and their daughters to recently tour Ireland and Germany during the President's attendance at the G8 Summit. Is this the same administration which cancelled school children's visits to the White House because of sequestration cuts to the Secret Service budgets?

This seems no different than a family using a credit card to finance additional spending for luxury items. Except, this is America's first family using our credit card instead of their own. And it's being done when we can't afford the additional debt.

Can you imagine any way the trip to Africa can positively address our nation's joblessness, increasing debt, national security, and entitlement dilemmas?

I do not begrudge our President for taking time off to recharge his batteries. And, I understand how incredibly expensive it is these days to protect a President's safety. I also understand the need to travel in order to find solutions for our national challenges. However, this trip to Africa demonstrates more of an "emperor's mentality" than of a patriot. It certainly does not show a hint of the single-minded determination and perseverance a true patriot would display every waking hour in attempting to lead our nation out of the deep hole in which we all now stand.

During ordinary times perhaps this behavior would be more acceptable. However, these are far from ordinary times. Our nation is in deep economic trouble and our future is in grave danger. Does President Obama not understand the terrible signal he is sending to all ordinary Americans? Does he not understand how many of his fellow citizens are living paycheck to paycheck, or worse, barely surviving on food stamps and welfare checks?

Is this truly the legacy he wishes to leave behind?

To those of you who will say a hundred million dollars is chicken feed in the greater scheme of things, you may be right, but please remember...it's our chicken feed!

Even President Obama's most ardent supporters should be disgusted at this overt display of royal privilege! Does the old story about Nero fiddling while Rome burned come to mind?

These are my opinions. What do you think?

Mike Tower

Does America really face an unthinkable reality?

June 16, 2013

Dare we not think the unthinkable?

Recent actions within the current administration should make us feel very discouraged as we see more and more evidence of the danger of power at the highest levels. As I have often quoted Lord Acton, "Power corrupts, and absolute power corrupts absolutely".

Recent stories detailed the IRS especially scrutinizing conservative groups applying for non-profit status...only because of their conservative sounding names. Clearly, this was political power being directed and exercised by powerful leaders at the very top of the current administration. Who really authorized these investigations? We will probably never know. However, does it seem at all reasonable the most powerful leader in the world did not know about this until he came across it in the media?

Then we saw recent reports about the Justice Department reviewing phone and email records of Associated Press (AP) reporters. It wasn’t just a few rogue reporters being monitored, it was dozens. The reasons for such scrutiny were claims of a terrible threat to national security. One might believe that story if the reporters targeted had been few in number. However, dozens of reporters being suspected of plotting against our national security simply defies imagination! It doesn't take much of a leap to imagine a blanket investigation of every individual who has ever said or written anything negative about our current leadership? Our President denies awareness.

Then looking back a bit earlier we had the Benghazi affair. I doubt we will ever know the real reasons our Ambassador to Libya wasn't better protected, or why more vigorous rescue attempts were not made. The entire truth will probably never be exposed. What has been proven is some in the administration participated in covering up or spinning the facts as they were known. Was that done to help the President before the election? Our President, as would be expected of most politicians, denies involvement in any way.

And now we learn from a CIA/NSA consultant, Edward Snowden, that every American's phone calls and email records are easily available to our government with no apparent regard to our Constitutionally promised protection of privacy by the 4th Amendment.

How much more evidence do we need to prove our Constitution has become no more than an inconvenience easily ignored by whomever is currently in administrative power? It seems we are increasingly seeing executive orders bypassing Constitutional rule. Most of us have become comfortable with video surveillance while in public. However, now we learn any of our communications...written or spoken via technology is available to those who we must trust to protect our rights to privacy. How does this make you feel?

This is not an anti-Democrat or Obama rant. It just happens he is the current holder of the highest elected office in our nation as these recent events transpired and were exposed. These kinds of events have happened in the past under Presidents from both parties. The big difference, of course, are the giant leaps in technology which allows so much information to be so easily evaluated and then stored forever!

However, how can so many events pass any reasonable smell test when the President repeatedly proclaims he had no knowledge. He is either completely disconnected from the organization's he is responsible for managing...or???

These recently exposed events should also cause Americans to wonder about the seldom discussed massive expansion of the Department of Homeland Security (DHS) originally created by President G. W. Bush. Citizens have mostly remained spectators silently watching the creation and expansion of what can only be considered an internal national military force.

Perhaps our leaders know our porous borders already have or will allow terrorists and weapons of mass destruction to enter our country. Maybe they understand how widespread the threat of home-grown terrorism really is and are simply trying to develop an adequate policing force to protect us.

Or, perhaps, our leaders know our nation is inevitably headed for much harder times, and not knowing how to prevent it, are preparing for civil unrest? Are they preparing to protect the haves from the have nots? Are they preparing to fight a rebellion of Americans no longer able to feed their families?

And worst of all is the possibility an internal military force such as the DHS could someday be used by an evil leader to enslave our citizens as history has shown being done so often in other places.

Is any of this connected to the administration's strong support for firearms control?

Power has always been corrupting. Our leaders are proving they have the power and willingness to investigate anyone they choose, violate constitutional privacy laws, and, seemingly, lie to our faces.

It's to our own detriment if we deny the unthinkable?

These are my opinions. What do you think?

Mike Tower

It is our national debt!

June 9, 2013

Our national debt

Our national debt of nearly $17 trillion is incomprehensible to most of us. What follows is my attempt to put our debt (and it is our debt!) in perspective.

Our national debt is actually even larger because we have also accumulated state and local government debts of another $3 trillion. And, to make it worse, our citizen's accumulated personal debt is nearly equal to our federal debt. So, our true national debt is around $37 trillion. And, it's ever-worsening as our federal government continues to borrow another trillion or so each year to continue fueling a life-style we can no longer afford. Some economists, such as Paul Krugman, are calling for expansion of borrowing and spending in order to help jump-start our woefully weak economy. Economists such as him clearly don't understood the concept of stopping digging when standing in a hole from which escape is becoming impossible.

In order to examine the practical implications for our federal debt, consider the current federal tax revenues. Sooner or later individual taxpayers, who pay two-thirds of all such tax revenues, will have to pay back the majority of these debts. It's also worth understanding only about a third of our 315 million citizens pay federal income taxes...including payroll taxes. So, if we divide our current federal debt by the number of taxpayers proportional to their 2/3 share of all taxes paid, it shows each tax payer owing over $91,000 of federal debt. That doesn't include the average federal income and payroll taxes being paid by individual taxpayers this year of around $14,000 each.

To add fuel to the federal debt fire, www.usdebtclock.org shows a projected $124 trillion in "Unfunded liabilities" for promised entitlements for baby boomers. In other words, the recently begun retirement of these 78 million citizens will cost taxpayers $124 trillion more than currently identified revenue sources until the last of them die by around 2050. That comes close to a total future additional tax liability of nearly $700,000 per individual taxpayer.

Also, consider the whining and squealing from some of our political leaders as they deride the horrors of sequestration caused by the start of a mere $1.2 trillion total reduction in spending cuts spread out over the next ten years. Even if sequestration is allowed to play out, our federal debt by the end of the next decade will be around $25.8 trillion instead of the $27 trillion it would be without these minor cuts. Does it look as if our elected from either party are really serious about reducing our untenable expenses in order to actually confront the future financial tragedy rapidly approaching? Can you picture the heads of any family or business with such debt deciding they would reduce spending by such a small amount and keep on borrowing as a way of fixing things? Our government is doing far worse than what so many Americans families are doing by just paying the minimum balance on their credit cards?

The main debate about our national debt we hear from the two parties is focused on a battle between the Democrats wanting to avoid spending cuts by taxing the wealthy, and the Republicans focused on freezing spending instead of raising taxes. Any intelligent person should see neither of these options, alone or combined, will ever actually fix the growing national debt.

Two thirds of our annual spending, over $2.4 trillion, (which is very close to total revenues received) goes to entitlements and interest on debt, which are mandated by law to be paid first. The next big chunk of our spending....most of which is borrowed...is the nearly $700 billion spent annually for military expenses. Pro-military supporters keep saying our nation, with less than 5% of the world's population, and now accounting for 44% of the entire world's military spending, cannot remotely consider making spending reductions! Does any rational person really it's rational to continue spending borrowed money in order to police the entire world?

Usually missing in these debates is the only realistic option for creating jobs and thus increasing national revenues, which is to massively grow our economy. Since our manufacturing ship sailed to lower-cost labor nations long ago, and automation will continue to reduce the need for human labor...and the taxes jobless workers would have paid...how can this be accomplished?

The answer was recently provided in his column by my friend and colleague, LeRoy Goldman. Lee suggested our leaders unite to support every possible action to tap the immense supplies of oil and natural gas under our very feet. Lee also suggests spending a portion of the immense government royalties derived from these natural resources for rebuilding our terribly broken infrastructure.

Frankly, no other option makes any sense by comparison. Why then does our President remain so opposed to opening up drilling and distribution pipe-lines? Do we have any other rational options for creating jobs and expanding our economy?

Oh yeah...I almost forgot...let's just borrow and spend more until America disappears into oblivion as so many former empires have done before!

These are my opinions. What do you think?

Mike Tower