The Clear Choice

Well, both the Republican and Democrat conventions are finally out of the way.  A lot of people made a lot of speeches about how the choice is really so clear.  And they would be correct.  They would have us believe that one side screwed everything up; and the other side, the other.  And again, they would be correct.

This is, they tell us so emphatically, our clear choice.  What we have to choose from.

I believe that it is merely the illusion of choice, when the only effective options we have are between the same two parties that have at the very least presided over, but really are to me complicit in the affairs that have led us to our current dilemma.  Our "choices" are for one of two parties that have together shared complete control over this great nation since the early 1800s – making it effectively a bifurcated single-party state since.

And they spend too much money.  Both of them.  At least since I’ve been alive.  In my view, Republicans want to spend a lot of money on certain things by generally borrowing.  Democrats want to spend a lot of money on certain other things by generally taxing us instead.  And they would use these funds to effectively purchase votes from their constituents to tilt power between the two.

Both also spend a heck of a lot of time contrasting themselves with the other party.  But they are the same people.  And their rhetoric is growing more extreme, because we live in more difficult times.  Their respective party die-hard constituents absorb this rhetoric.  Through this, those constituents themselves grow more extreme, forcing politicians to follow that self-reinforcing spiral to our current intransigence.  (Only to pretend, as best they can, to be moderate for a small time between primaries and general election day to sop up the middle that hasn’t drunk their Kool-Aid.  Every damn cycle.)

It’s growing more difficult to be a politician in America nowadays.  (Smallest-violin-in-the-world-time.)  That’s because there is no longer any fat left to carve off and feed back to us in exchange for our vote.  This sociopolitical Ponzi Scheme is becoming starkly more apparent as our tide of wealth recedes – where there is less of our own treasure to take from, and promise back, to us.

There’s no more fat because, unlike before, budgets are actually going to have to become reconciled.  As our gross Federal debt has now topped $16 trillion – over that danger zone of greater than 100% of GDP.  And yet we still burn through over $1 trillion each year.  They let deficits run away because they are afraid for their own personal political careers, and as credit markets have given us a pass for now.  Which is hyperbolic foolishness – borderline treason, in my view.  (But let's just refer to it as gross negligence.)

When in 1933 FDR first rolled up his sleeves and got busy trying to right the effects of the Great Depression, he started with Federal debt to normal GDP (pre-collapse) at about 25%.  Budgets were about 3% of GDP.  The top marginal personal income tax rate was 25%; 1.5% for average incomes.

In other words, he had all the latitude in the world to harness the economic might of a young, industrializing and great economy, even despite its catastrophic collapse.  We don’t have that now.  We can’t spend our way out of this one.  There’s nothing left to spend.

I watch MSNBC plugs with Rachel Maddow, Ed Schultz or Chris Matthews for instance (no offense to them, they’re just reading the script handed to them for those bits, I hope) where they extol the virtue of Depression Era spending and public works as the way today.  It makes me chuckle (otherwise I’d be crying).

Spending on public works is not only the way.  It is necessary in a now clearly flagging infrastructure and faltering education system.  Public funding has incubated many of the most powerful private industries that helped make America, America.  I absolutely so agree with them.  But what I guess they don’t get is (and pardon the crude metaphor), parasites die to if they leech an unhealthy host to death.

The point is, increasing taxation on a healthily growing economy is all totally fine, if we can’t cut spending.  Tax rates are clearly much higher than when FDR started out in 1933.  And they can also clearly go higher.  But they would dangerously sap an already ailing economy, as spending cuts would – thus our rock and hard place.

Budgets are now 25% of GDP, not 3%.  Debt to GDP is now in the zone of when we were maxing out for World War II-time production.  We don’t have any more spending latitude so long as the economy is weak.

And not for nothing, when FDR was done, by say 1939 before the war started for us, tax rates were tripled to 79% for the highest incomes; 4% for average incomes.  Debt doubled to 50% of GDP.  The budget had tripled to 10% of GDP.  All that Keynesian effort… and unemployment was still 19%.  That’s certainly better than 1933’s 25%.  But we started in 1929 at 3% unemployment.  (For reference, I believe that “underemployment” was 28% by 1939, 38% in 1933 and 5% in 1929.)

The only obvious solution for right-sizing our debts and budgets, will have to come from all quarters – as the now two-year-long disregarded, bipartisan-composed Simpson Bowles Plan advocates.

Unfortunately for the politicians, the real work will have to involve doing things we don’t like.  Cutting popular plans we spend on.  Raising taxes (for all) to pay for what we can.  And politicians don’t like that pitch.  (Although personally, I think it’s coming right after this election, no matter who wins.  It’s either that or a credit/currency crisis in about two years.)   So they embrace the extreme.  They pander to their respective party’s fundamentalist core – blaming the other party for our nation’s woes and hoping that gets them re-elected.

In my view, the economy is weak and the necessary amount of jobs are absent, simply because the nation and world has lost confidence in the leadership of the greatest nation on Earth – the only one that has truly led the world in modern times - geopolitically and economically.  Now it can't even lead itself.  No wonder the world continues so adrift, four or five years now past the financial crisis.

The choice really is rather quite clear.  Our leaders must do the responsible thing – not the personally self-preserving thing like they continue to.  If our nation and the world see that, then we’re back in the game.  Like gangbusters.

Until then, we all just stand here, jaws agape, staring at our would-be elected officials blather on at us about how clear the choice is.

So yes, we do see how clear the choice is.  We only wish you did too.