PEW report on "The Great Debt Shift"

The PEW Foundation's report on the reasons the U.S. debt is at its current level is now available:  The Great Debt Shift.  This report lies behind Montgomery's Washington Post article reviewed in the prior post.

This discussion of deficits and debts appears to be backwards.  If our congressional representatives truly had the well-being of Americans and the long-term status of the country in mind, I suspect we would have a very different national conversation.

First, we would have a real dialogue--hopefully with minimal misleading and false talking points based on distortions of facts --centered first around what it makes sense for governments, and the federal government in particular, to be spending money on.  I have in mind the development of a consensus about expenditures essential to the well-being of the citizenry. 

 I'd include at the least items such as:

• a  national defense network (thinner than the current Homeland Security/Military apparatus, so that it does not become too powerful);
• an open, transparent and fundamentally conservative financial system that provides credibility to the US so that it can conduct its affairs and that provides a sound system of credit for commerce and individual interests;
• basic and decent health care for everyone;
• public infrastructure such as transportation, communication and energy networks;
• decent public education from child care/pre-kindergarten through college;
• seed money to support innovation (such as direct funding for basic research and short-lived tax incentives to innovative technologies that have some track record of improvement over current technologies);
• appropriate regulation of markets to avoid  (i) externalities like pollution, fishing stock depletion, endangered species extinction and (ii) generally problematic dominance of markets by a few large players;
• legal regimes that provide means of holding corporate entities and individual actors responsible in both civil and criminal actions as appropriate; and
• appropriate safety nets to ensure that vulnerable citizens are cared for in difficult times. 

After having developed some consensus around the kinds of expenditures that promote personal freedom and the general welfare of our citizenry and our society,  I'd want us to have a conversation about  the means of achieving those important expenditures.  There is no need (or justification) for arbitrary caps, such as "government expenditure should not exceed 19% of GDP" or a priori conclusions about whether or not we can "afford" such things as decent universal health care or decent old age insurance.  We should, of course, consider whether current taxation, fees, and other revenues can provide sufficient funding for the items that we have prioritized.  If not, we should consider what additional revenues might be reasonably generated to fund those priorities.  Only if the result of funding those priorities through the best means we can determine is more damage to the citizenry and societal structure than not making those expenditures at all should we consider pulling back from our determined agenda.

As I said, the US is currently doing this backwards.  We are operating with an intentionally defective tax revenue system ginned up by the "starve the beast" crowd to protect its own interests.  We had a reasonable tax system in place in 2001, a system that a majority of people considered satisfactory, even at the time that the Bush Administration was amping up the PR to push through its huge 1.35 trillion tax cut predominantly of benefit to the wealthy.  (That is not to say, of course, that there was no room for improvements, such as by removing ambiguities, deleting the chaff hanging on from decades or more that no longer had a good rationale, such as the huge agribusiness subsidies, and others.)  An ideological whirlwind, based on neoliberal views that support the primacy of property rights and hence the primacy of the propertied classes, swept that away and substituted growing deficits, growing debts and expanding military commitments.  Remember that Bush II actually increased spending while pushing through and supporting what amounts to one of the biggest tax cut packages in our history, when you take all of the various cuts from 2001-2008 into account.  And, of course, it was the GOP that pushed for using more tax cuts (particularly for Big Business) rather than direct public infrastructure investment as a huge part of the economic stimulus package that was finally passed.  Now, those resulting deficits and debts are being combined with a priori arbitrary numerical targets to purport to justify the "necessity" of eliminating important safety net programs that enhanced personal freedoms by freeing the unemployed, the poor and the elderly from some of the worst ravages of economic insecurity. 

Americans may be beginning to wake up.  Witness the fury at some of the Town Hall meetings of the House members who supported Ryan's budget proposal that combined new tax cuts for the wealthy with more reductions of aid for the poor.  But the Paul Ryans, Donald Trumps, Sarah Palins, Michele Bachmanns, Grover Norquists, Glenn Becks and all the others participating in false facts echo chambers are trying hard to prevent that from happening.  Hopefully, more and more members of both the Democratic and Republican parties will step forward to pull us back from the brink of ridiculous gamesmanship over birth certificates, college transcripts, Harvard Law Review articles, the debt ceiling (get rid of it altogether) and ideologically driven spending targets so that we can have the national discussion we need to have.