Sometimes a couple of pictures are indeed worth a thousand words.
The real problem? Yeah, spending. Revenues are actually .4% over the normal 18% (that’s right, the government takes 18% right out of the GDP, in addition to all the debt it has amassed (over $15 trillion).
Oh and that “fair share” thing?
Seriously. We have a 15 trillion dollar national debt. Ever wonder how we got there?
Yesterday, although the paper warped it into a completely stupid rant on race, the NY Times told us that government workers are losing their jobs. Why? Because revenue is down and budgets are tight. But there are other reasons as well.
Montcalm County recently received a $900 Arctic Blast Sno-Cone machine.
The West Michigan Shoreline Regional Development Commission (WMSRDC) is a federal- and state-designated agency responsible for managing and administrating the homeland security program in Montcalm County and 12 other counties.
The WMSRDC recently purchased and transferred homeland security equipment to these counties — including 13 snow cone machines at a total cost of $11,700.
The machines were funded by a grant from the Michigan Homeland Security Program. The request for a snow cone machine came from another county, but all 13 counties received them.
Your first question has to be “why wasn’t a request to “Homeland Security” for a Sno-Cone machine summarily turned down with a warning that such requests were inappropriate? Especially in tight fiscal times? Well the simple answer to that is because Homeland Security isn’t dealing with its own money. It’s dealing with your money. And because of that apparently nothing is inappropriate, tight fiscal times or not.
Note the job description of the WMSRDC I’ve emphasized. And what is the reason for a Sno-Cone machine? Well here’s the reason given why it was “necessary”:
MCES Director David Feldpausch said the machine could be useful at the scene of a large fire or during very hot weather.
“I don’t like the term snow cone machine, because it sounds horrible,” Feldpausch said. “When you look at it as an ice shaving machine and its purpose, it makes a little more sense. I assume it will get used in Montcalm County a lot more in the summertime by the Fire Corps.”
Of course he doesn’t like the term “snow cone machine”. It doesn’t just sound terrible, it sounds inappropriate and wasteful. And it is both of those things. Oh sure, it might be nice to have. But a “necessity”? A bucket of ice and some water could serve the same purpose.
And of course there’s the matter of a single $900 request being turned into a $12,000 dollar expense when some bureaucrat decided all of the counties, even the 12 who never asked for one, get a Sno-Cone machine.
Now I know this comes from a completely different bucket of money, but any idea of what percentage of an employee’s salary this would pay if layoffs are being contemplated in the area? Is this the best and most appropriate use of Homeland Security money? Does anyone even review this stuff?
Profligate spending is the symptom of an out-of-control government. While $12k spending is but a mere speck on a drop in the bucket of money spent by government each year, it is indicative of how we got into the debt mess which we now find ourselves and is ever getting worse. Multiply these sorts of transactions by the millions and you understand how we have gotten where we are.
There is no necessity for shaved ice at a fire. Note the word. Necessity. There are plenty of much less costly alternatives. Like bagged ice and water. And this is for a contingency (“large fire”, summertime) for an event which may or may not happen.
The reason I highlight things like this is because the are better understood by people than complex and much more costly examples which are essentially the same but harder to wrap your head around. This is relatable. This shows clearly how wasteful government can be with a fairly low cost example that people can readily identify with.
Its like showing a picture of luxury food which is able to be purchased with EBT cards (Food Stamp Cards). You naturally know “this ain’t right”. You sort of go with the idea of helping the less able, but you bristle at being taken advantage of. Well the above example “ain’t right” and certainly an example of taking advantage of the taxpayer, but typical of literally millions of government purchases over the years.
Result. Well just take a gander at the national debt clock if you need a reminder.
As Bruce points out below, the failure of the Super Committee should come as no surprise to anyone who was paying attention. Even where committees arrive at an agreed solution, it rarely ever gets implemented. What’s worse, in this case, the Super Committee was operating under the sword of automatic spending cuts to domestic and military programs should it fail to arrive at a consensus — i.e. no side had any incentive to deliver more or less than what would automatically go into place anyway. Of course, Pres. Obama running a re-election campaign based on a “do nothing” Congress certainly didn’t inspire his Democratic brethren on the Super Committee to find common ground either.
But these aren’t the real reasons for the Super Committee failure. Instead, as Jeb Hensarling (R-TX) writes in the Wall Street Journal today, the underlying problem is one of ideological impasse:
Ultimately, the committee did not succeed because we could not bridge the gap between two dramatically competing visions of the role government should play in a free society, the proper purpose and design of the social safety net, and the fundamentals of job creation and economic growth.
For the members of the Super Committee, the choice seemed to be between raising taxes on a small percentage of earners and making no cuts or reforms to the shibboleths of Medicare and Social Security, or reducing taxes and modestly curbing entitlements at some point in the future. In other words, it was a choice between expanding or slightly retarding the growth of government. However, it’s not just the specifics that make compromise difficult, if not impossible. Where one side believes that government is always the answer to what ails us, and the other (at least nominally) operates from the premise that individual effort leads to greater prosperity for all, there is only so much compromise that can be reached between the two. Eventually, government will be either too small or too big for the other side to bear.
This is the crucible in which somehow a compromise was to be reached on federal spending.
As it stands now, government spending is equal to about 35% to 40% of GDP, while our national debt is around 100% of GDP. At the federal level, we are borrowing 40 cents of every dollar that we spend, and entertaining trillion dollar plus deficits year after year for as long as we can reasonably forecast. This is the vision of those who see government as playing the primary role in most every aspect of society since it costs a lot of money to execute that vision. Yet, despite the fact that government has done nothing but grow over the past sixty years, they are convinced that anything smaller than what we currently have will lead to economic and social ruin. To be sure, after finally getting the government foot in the door of universal health care, the liberal base is not about to countenance any willing walk-back on those gains. The Democrats on the Super Committee were well aware of this, and that accepting changes to Medicare and Social Security or any other dearly loved social program would result in a deep backlash from those who believe that all of life is dependent on government.
Opposing that vision are those who think that government should be smaller and less intrusive, especially with respect to our economy. They look at our ever-growing debt and anemic, if not illusory, economic gains and see nothing but trouble down the road we’re traveling. Unfortunately, while total government spending is often publicly recognized as the problem, too many of these visionaries think that simply reducing tax rates will flood the federal coffers and all will be right with world. It’s true that raising taxes in a declining or struggling economy will tend to exacerbate, not alleviate, the problem. But Republicans on the committee also know that their base stand ready to punish any member who suggests raising taxes, now or in the future, regardless of the fact that the spending cuts necessary to get our debt problems under control simply aren’t feasible. And they won’t have much better luck at the ballot box if they even hint at reforming Medicare or Social Security.
Even where they are willing to take that chance, however, the Democrats can’t politically afford to compromise:
The Medicare reforms would make no changes for those in or near retirement. Beginning in 2022, beneficiaries would be guaranteed a choice of Medicare-approved private health coverage options and guaranteed a premium-support payment to help pay for the plan they choose.
Democrats rejected this approach but assured us on numerous occasions they would offer a “structural” or “architectural” Medicare reform plan of their own. While I do not question their good faith effort to do so, they never did.
Republicans on the committee also offered to negotiate a plan based on the bipartisan “Protect Medicare Act” authored by Alice Rivlin, one of President Bill Clinton’s budget directors, and Pete Domenici, a former Republican senator from New Mexico. Rivlin-Domenici offered financial support to seniors to purchase quality, affordable health coverage in Medicare-approved plans. These seniors would be able to choose from a list of Medicare-guaranteed coverage options, similar to the House budget’s approach—except that Rivlin-Domenici would continue to include a traditional Medicare fee-for-service plan among the options.
This approach was also rejected by committee Democrats.
The Congressional Budget Office, the Medicare trustees, and the Government Accountability Office have each repeatedly said that our health-care entitlements are unsustainable. Committee Democrats offered modest adjustments to these programs, but they were far from sufficient to meet the challenge. And even their modest changes were made contingent upon a minimum of $1 trillion in higher taxes—a move sure to stifle job creation during the worst economy in recent memory.
Even if Republicans agreed to every tax increase desired by the president, our national debt would continue to grow uncontrollably. Controlling spending is therefore a crucial challenge. The other is economic growth and job creation, which would produce the necessary revenue to fund our priorities.
Meanwhile, we operate under a tax system that is so heavily skewed towards the highest income producers that our government is dependent on about five percent of the taxpayers for a majority of its revenue, and only a quarter of all tax payers for more than 85% of that revenue. To the Democrats, this is apparently a good start. Republicans, on the other hand, see an unfair system that, if properly reworked, could raise even more revenue. Either way the spending, and thus the government, grows.
The definition of “priorities” is the real sticking point. It means either that everything from price and income support to cradle-to-grave health care is a priority, or that only the basic structural necessities of national defense, courts of law and last-resort safety nets qualify. There has been a great deal of compromise on that definition over the past several decades (albeit, always resulting in an expanding government), but it seems that we’ve finally reached the limit where any further acquiescence by one side results in unbearable loss to the other side. It’s difficult to see how we can successfully move forward as a unified country with such diametrically opposed visions for the role of government. Indeed, maybe we can’t for very much longer.
Question: is anyone – and I mean anyone – somehow surprised that the Supercommittee failed?
Seriously? Is there anyone who actually thought that this collection of ideologically loyal representatives handpicked by leaders on each side was ever going to compromise and try to work something out?
I’m not suggesting that compromise was the right or best thing to do – I’m simply asking a question about the make up of the committee and how anyone who knows anything about how Washington DC works could have or would have expected success.
And, as Michael said in the podcast, there was no incentive for them to succeed. There was every incentive to do exactly what happened, fail to reach any sort of consensus.
So, as Jim Geraghty quips in today’s Morning Jolt, they now get back to what they do best:
After the Supercommittee, Congress returns to its core competency: finger-pointing
And we will certainly see much of that in the next few weeks. Already some in the media are trying to spin it a certain way.
The imminent failure of the congressional deficit “supercommittee,” which had a chance to settle the nation’s tax policy for the next decade, would thrust the much-contested Bush tax cuts into the forefront of next year’s presidential campaign.
Why do I consider that “spin”? Because the “much-contested Bush tax cuts” are simply the current tax rate, nothing more. Tax rates have changed over the many years of income taxation and never has one rate, which has been in effect for years, been referred too as a “tax cut”. They certainly didn’t refer to tax increases under Bill Clinton as the “much-contested Clinton tax increases” did they?
No, they were simply the new tax rates.
So as with many things, the media has bought into the description that one side has put out there to keep attention focused in a negative way on the so-called “rich”. Rarely do they point out the amount of the total taxes these “rich” pay when they parrot the politicians call for the rich to pay their “fair share”. Nor do they bother to point out that even if the “rich” pay 100% of their earnings in taxes it won’t solve the deficit problem.
Presented as the unchallenged panacea to all that is wrong is this tax increase.
Note what isn’t mentioned. Spending. In fact, we’ve quietly slipped past $15 trillion cumulative national debt in the last week. That means that in less than a year, another trillion in spending borrowed money has occurred. We’ve now managed to run up a debt equal to 100% of our nation’s GDP.
That should be what we’re talking about in the 2012 presidential campaign. How we managed in 3 short years to push the debt from $9 trillion to $15 trillion. It certainly wasn’t the “rich” who did that, nor would increasing taxes on them have stopped it.
While at some point revenue increases may end up being something the Congress will discuss, the problem to this point remains the fact that Congress has done absolutely nothing to stem the red ink that keeps running our national debt through the roof.
And the sequestration cuts supposedly triggered by the failure of the Supercommittee take place when? 2013 of course. After the election and when a new Congress, which can’t be held to the cuts made by a former Congress, comes into existence.
In reality, this is nothing more than a new fangled way for our politicians to kick the can down the road while they squabble about something which really has no bearing and would have little effect on the primary problem: out-of-control spending.
Lawrence Korb, who obviously sees defense as the budget cutting device that can save other spending programs, opens his POLITICO piece with this:
Defense is not now — nor was it ever intended to be — a jobs program.
So when an Aerospace Industries Association study — supported, unfortunately, by Defense Secretary Leon Panetta and House Armed Services Committee Chairman Buck McKeon (R-Calif.) — attempts to warn Congress and the American people that cutting projected defense spending by as much as $1 trillion over the next decade, which might happen if sequestration takes effect, could cost 1 million jobs, the appropriate response is that this is irrelevant.
Actually it’s not irrelevant in the least. Not when you have an administration trying to spend more money on “infrastructure jobs” and touting jobs it has “saved or created”. Not when you have a president who is claiming the national priority is jobs, jobs, jobs.
It isn’t irrelevant at all.
I agree with his essential point and made it myself yesterday. Defense isn’t a “jobs program”. And no one is arguing it is. That doesn’t make the impact of cuts to this particular sector less “relevant”. Again, a million jobs in the middle of a deep recession means more trouble not less. So Korb’s cavalier dismissal of that impact as irrelevant is, well, irrelevant. It’s a false premise.
This isn’t about the jobs, necessarily (although they are important), it is about the future of our national security. As the Air Force generals I quoted yesterday emphasized the decisions made today will have a profound effect in 20 to 30 years. If we cut major defense programs now, we suffer their consequences then. Sure, we’ll see a million jobs go down the drain now. But the short sightedness of huge cuts now really doesn’t have anything to do with jobs. It has to do with a badly degraded national defense in the future.
Korb attempts to use this false premise to sell a trillion dollars in cuts to defense programs and then promises vapor jobs in return:
That $1 trillion can be used to lower our federal debt, which Adm. Michael Mullen, the former chairman of the Joint Chiefs of Staff, called the greatest threat to our national security.
Or it could be used to create at least 2 million new jobs — to replace the 600,000 that could be lost.
Note that Korb claims, with no basis for his claim (after supposedly taking apart the argument that a million jobs will be lost with sequestration cuts) and then blithely hand waves “at least” 2 million new jobs into existence by doing what?
Spending that trillion dollars. That’s worked so well for us in the past 3 years hasn’t it?
And his desire to “create at least 2 million new jobs” to replace those lost tells you what?
That those lost if the cuts to defense are made aren’t irrelevant at all – are they Mr. Korb?
One of the center pieces of the Obama administration’s recovery plan has been its green jobs program. It was touted by the President as an investment in the future. And he even managed to snooker Congress into including $38.6 of your dollars in a federal guaranteed loan program in the Stimulus bill – a version, in this case, of the government going into the venture capitalism business.
The results, as they say, are predictable:
A $38.6 billion loan guarantee program that the Obama administration promised would create or save 65,000 jobs has created just a few thousand jobs two years after it began, government records show.
The program — designed to jump-start the nation’s clean technology industry by giving energy companies access to low-cost, government-backed loans — has directly created 3,545 new, permanent jobs after giving out almost half the allocated amount, according to Energy Department tallies.
Half the money is gone and it has created 3,545 “new, permanent jobs”? You do the math – pretty high cost of job creating wouldn’t you say? Oh, and that number is actually down by 1,100 thanks to Solyndra.
So are green jobs, of the type to be found in alternative energy, the best way to approach easing unemployment? Not really, say some experts:
Obama’s efforts to create green jobs are lagging behind expectations at a time of persistently high unemployment. Many economists say that because alternative-energy projects are so expensive and slow to ramp up, they are not the most efficient way to stimulate the economy.
“There are good reasons to create green jobs, but they have more to do with green than with jobs,” Princeton University economics professor and former Federal Reserve vice chairman Alan Blinder has said.
Which is a nice way of saying this is more about political agendas than putting Americans to work, and unemployment is an excuse, not a reason, for pursuing this agenda. And the cost of that agenda has been pretty prohibitive with no real worthwhile results in the ostensible problem it was supposed help solve – unemployment.
Another example of government using your money to pick winners and losers and everyone coming out poorer in the bargain.
UPDATE: No, I didn’t see Dale’s post. My bad. I’ll leave mine, but now that Dale’s putting up a lot more stuff, I’m going to have to discipline myself to look first before I go popping something up (I use Live Writer, so unless I specifically look at the blog, I don’t see a list of what is up).
I know, you’re wondering, how does Obama plan to pay for his $450 billion plus job plan, right. Because in the speech he made the claim this was all going to be “paid for”, remember.
White House Office of Management and Budget Director Jack Lew outlined President Barack Obama’s plan to pay for his $447 billion jobs plan — mostly through tax increases.
Lew said itemized tax deductions and exemptions for those making more than $200,000, and families earning more than $250,000 would be cut — raising about $400 billion to pay for Obama’s jobs plan over 10 years.
A change to bring more hedge fund earnings under normal tax rules as opposed to carried interest rates would raise another $18 billion.
The new tax rules would not take effect until January 2013, Lew said. Obama is not offering any spending cuts to pay for the jobs plan.
The rest of the total would be raised by cutting subsidies for the oil and gas industries to bring in another $40 billion, and change the depreciation rules for corporate jets. All told, Obama would cut $467 billion to pay for his plan.
Lew added that the White House doesn’t anticipate that raising some taxes on high income earners would result in the loss of jobs.
Gotta love it. No politics in this. Nothing happens until January 2013 (how convenient). And the changes will pay for his spending now in 10 years. Wow, where have we heard that before? More debt boosting smoke and mirrors. More of the same old tired agenda.
And of course, we all know that no future Congress is obligated to any of this. And you wonder why there are those of us out here shouting about paying for something now vs the future?
Also, it is a litany of those interests and demographics which reside on the Obama “enemies list”. The rich and the fossil fuel industry. It is the usual class warfare politics. To sell this Obama has to attempt to demonize the rich and the oil companies – even more than he’s done so already. As everyone knows, I’m all for ending subsidies for everyone, but what Obama calls subsides in this case are tax breaks all businesses in all sectors take. They’re not direct subsidies at all (regardless of what the press or the White House choose to call them). This is selective taxation of the type that is meant to be punitive.
So here’s the money part of the great plan. It is absolutely nothing the Republicans have supported before. It should be Dead On Arrival. Obviously, knowing the Republicans won’t support such a funding mechanism, President Obama is not at all interested in a compromise jobs bill. Or bi-partisanship. He’s put a completely unpalatable poison pill in the bill and will now try to paint the GOP as intransigent obstructionists.
And, given the fact that taking those tax breaks away from the oil and gas industry will cost them an extra $40 billion it’s hard not to believe it won’t cost jobs. Note Lew didn’t address that point concerning the removal of the tax break. He’s only claiming that in regards to the so-called “rich”.
Business as usual. Tax and spend. And as usual it is spend now an collect later. Somehow we never get around to the spending cuts, do we? $14 trillion dollars of debt say “no”.
A reasonable summary? How about, ‘”let’s put aside partisan bickering because I need a political boost and spend half of what was spent on the stimulus to do exactly the same thing that hasn’t yet worked.”
As most predicted two things were evident in the speech. A president out of ideas and trying once again to shift blame to Congress. And the fact that he still doesn’t understand that the spending spree is over.
Instead of suggesting a regulatory roll back, or cutting government red tape, or even, horror of horrors, a corporate tax cut, we’re essentially get much of the failed stimulus plan repackaged. The entire purpose of addressing a joint session of Congress (instead of doing the speech from the Oval Office) was to again attempt to establish the House GOP as the bad guys in all of this.
The proposal is simply a redo of the stimulus plan, something Obama has been trying to get Congress to do since the first one failed. Obama proposed a payroll tax cut extension, an extension of unemployment benefits, the creation of an infrastructure bank, a new job training initiative, and providing aid to state and local governments, which have been hard hit by job losses.
The infrastructure bank is somewhat new, but aimed at the same sort of programs at which we previously threw over $800 billion in stimulus money. How did that work out? The payroll tax and unemployment benefit extensions haven’t produced more jobs yet, have they? In fact some argue the continuing extension of unemployment benefits works to the opposite effect. We’ve had job training programs since time immemorial and they too have very little positive effect. The one key point that those who propose such initiatives always seem to miss is there have to be jobs available for such a program to be successful. And finally, pumping money into state and local governments is a very temporary fix. It allows them to keep employed workers who they otherwise couldn’t, at least for a while. But, as they learned with the stimulus funds, once the money ends, so do the jobs. Hardly what one would consider a “jobs program”.
Obama also tried to waive off criticism of cost by claiming his plan was all paid for. AP disputes that:
OBAMA: "Everything in this bill will be paid for. Everything."
THE FACTS: Obama did not spell out exactly how he would pay for the measures contained in his nearly $450 billion American Jobs Act but said he would send his proposed specifics in a week to the new congressional supercommittee charged with finding budget savings. White House aides suggested that new deficit spending in the near term to try to promote job creation would be paid for in the future – the "out years," in legislative jargon – but they did not specify what would be cut or what revenues they would use.
Essentially, the jobs plan is an IOU from a president and lawmakers who may not even be in office down the road when the bills come due. Today’s Congress cannot bind a later one for future spending. A future Congress could simply reverse it.
Currently, roughly all federal taxes and other revenues are consumed in spending on various federal benefit programs, including Social Security, Medicare, Medicaid, veterans’ benefits, food stamps, farm subsidies and other social-assistance programs and payments on the national debt. Pretty much everything else is done on credit with borrowed money.
So there is no guarantee that programs that clearly will increase annual deficits in the near term will be paid for in the long term.
To actually pay for this, the revenue must be diverted from this years budget, not some future year(s) budget. Again smoke and mirrors to sell more spending. Eric Cantor caught all sorts of grief for claiming disaster relief needed to be paid for elsewhere in the budget. That is how you cut and control spending. What Obama has again done is use the old DC jargon that claims something is paid for if they say they plan for it in the future.
That’s simply not acceptable.
Obama challenged the Republicans with a falsehood:
OBAMA: "Everything in here is the kind of proposal that’s been supported by both Democrats and Republicans, including many who sit here tonight."
THE FACTS: Obama’s proposed cut in the Social Security payroll tax does seem likely to garner significant GOP support. But Obama proposes paying for the plan in part with tax increases that have already generated stiff Republican opposition.
For instance, Obama makes a pitch anew to end Bush-era tax cuts for the wealthiest Americans, which he has defined as couples earning over $250,000 a year or individuals over $200,000 a year. Republicans have adamantly blocked what they view as new taxes. As recently as last month, House Republicans refused to go along with any deal to raise the government’s borrowing authority that included new revenues, or taxes.
So, as AP points out, the claim is fraudulent. In fact, there are many things in the proposal that the GOP has been against.
And perhaps the biggest falsehood of the night?
OBAMA: "It will not add to the deficit."
THE FACTS: It’s hard to see how the program would not raise the deficit over the next year or two because most of the envisioned spending cuts and tax increases are designed to come later rather than now, when they could jeopardize the fragile recovery. Deficits are calculated for individual years. The accumulation of years of deficit spending has produced a national debt headed toward $15 trillion. Perhaps Obama meant to say that, in the long run, his hoped-for programs would not further increase the national debt, not annual deficits.
Perhaps. But then if that was so, he should have said it, shouldn’t he? Instead he played politics.
Probably most interesting was the man who has been driving the lead clown car in the political parade admonishing Congress to “stop the political circus and do something”. It has taken the circus ringmaster 3 years to figure out this is what he should have been focused on from the beginning. And for 2 of those years, he had an all Democratic Congress.
They guy who called for an end to politics has done nothing but played politics throughout this whole ordeal. And now, with his popularity at an all time low, his political future dimming and with him finally turning from his political agenda to that to which he should have been paying full attention from day one, he falls back on one of his favorite political tricks – blame shifting.
What he doesn’t seem to understand is this is all his now. And while the GOP should consider the proposal, it should also be unremitting in pointing out that the proposal isn’t paid for, will add to the deficit and is simply another attempt at a second stimulus throwing money at old programs and ideas which have yet to prove their worth in either improving the economy or increasing jobs.
(UPDATE) If you really want to know how bad the plan is, Krugman liked it:
First things first: I was favorably surprised by the new Obama jobs plan, which is significantly bolder and better than I expected. It’s not nearly as bold as the plan I’d want in an ideal world. But if it actually became law, it would probably make a significant dent in unemployment.
Yeah, just like the last one did, huh Paul?
The US Post Office is in deep trouble. Obviously some of the problems can be laid at the feet of the internet which has all but killed routine personal mail in favor of the faster and cheap email. Competition in the area of express delivery and package delivery have taken a ton of business away as well. Private companies like FedEx and UPS can delivery those items more cheaply and reliably than the USPS ever could.
But the biggest problem the USPS faces is its lavish entitlements driven by union demands. And once again, we the tax payers are being warned that unless we toss another 5.5 billion dollars the USPS’s way, its going to go broke. Here’s why:
At the same time, decades of contractual promises made to unionized workers, including no-layoff clauses, are increasing the post office’s costs. Labor represents 80 percent of the agency’s expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors. Postal workers also receive more generous health benefits than most other federal employees.
So you have a government agency with declining revenue number …
Mail volume has plummeted with the rise of e-mail, electronic bill-paying and a Web that makes everything from fashion catalogs to news instantly available. The system will handle an estimated 167 billion pieces of mail this fiscal year, down 22 percent from five years ago.
It’s difficult to imagine that trend reversing, and pessimistic projections suggest that volume could plunge to 118 billion pieces by 2020. The law also prevents the post office from raising postage fees faster than inflation.
And overgenerous and rising pension obligations. Sound familiar? The $5.5 billion payment due at the end of September is a payment required to help restructure that pension program. But, as expected, there’s resistance from the union as to the means taken to do so – like cutting the work force:
Cutting the work force is more difficult. The agency’s labor contracts have long guaranteed no layoffs to the vast majority of its workers, and management agreed to a new no layoff-clause in a major union contract last May.
But now, faced with what postal officials call “the equivalent of Chapter 11 bankruptcy,” the agency is asking Congress to enact legislation that would overturn the job protections and let it lay off 120,000 workers in addition to trimming 100,000 jobs through attrition.
Got that folks … the brainacs at the USPS, fully aware of the dire financial straits in which the agency found itself, agreed to a “no lay-off clause” in their new union contract last May. Incredible.
And now that it makes perfect sense to consider layoffs, as well as other measures (no Saturday delivery, closing little used post offices, etc.), that option is one that would literally take an act of Congress:
The post office’s powerful unions are angry and alarmed about the planned layoffs. “We’re going to fight this and we’re going to fight it hard,” said Cliff Guffey, president of the American Postal Workers Union, which represents 207,000 mail sorters and post office clerks. “It’s illegal for them to abrogate our contract.”
So reach deep fellow taxpayer. Time to bail out yet another failing agency which apparently never saw this revolution in communication coming, was never able to compete in the market without monopoly powers granted by government and has overspent and overpromised even as it watched it’s market share continually shrink.
Maybe it is time to, horror of horrors, consider privatizing this service? Actually, that’s something that should have been done years ago. But watch … we’ll still have this government run anachronism around our fiscal necks when your grandchildren are adults.
If you listen to Democrats, all we need to do to solve the debt and deficit problem is to let the Bush era tax rates expire and raise the tax rate on the rich. We’ve had Warren Buffet, among others, saying “hey, tax me more, I can afford it”. And, of course, those standing their ground on principle saying revenue isn’t the problem and tax increases aren’t the solution are roundly condemned for being greedy and protecting the rich.
Well what if we increased the taxes on the rich? What if we increased them dramatically? Is our deficit problem likely to be solved? The answer, of course, is “no”. And here are the numbers:
“Even taking every last penny from every individual making more than $10 million per year would only reduce the nation’s deficit by 12 percent and the debt by 2 percent,” the non-partisan Tax Foundation’s David Logan writes.
“There’s simply not enough wealth in the community of the rich to erase this country’s problems by waving some magic tax wand,” said Logan.
Rest assured you’d only get one shot at all the money as well. The next year the majority of the rich — and that most likely would include Warren Buffet — would find ways to hide their income from such a level of taxation. Human Nature 101.
So 12% of the deficit and 2% of the debt with 100% taxation. Sound like a solution to you? Of course not. How about raising taxes in general, good idea right now?
If you said, “no”, you’re in good company:
The majority of economists surveyed by the National Association for Business Economics believe that the federal deficit should be reduced only or primarily through spending cuts.
The survey out Monday found that 56 percent of the NABE members surveyed felt that way, while 37 percent said they favor equal parts spending cuts and tax increases. The remaining 7 percent believe it should be done only or mostly through tax increases.
Whether the president likes to admit it, we’re in danger of a double-dip recession, and one way to guarantee it is to raise taxes during such an unstable time as now. Obviously if taxes are increased on the rich, it won’t be 100%, so the impact on the debt and deficit are likely to be minimal at best. And it would be an action counter to what economists believe to be the best approach to avoiding a double-dip.
That most likely means that Democrats will continue to pursue such an increase with a single-minded purpose. Or, in short, they still don’t get it — it’s the spending, stupid.