Politics, Government & Public Policy: June 2011 Archives
Lawrence Lindsey says that America's debt problem is much larger than any budget deal currently under discussion. The first of his three points is scary enough:
First, a normalization of interest rates would upend any budgetary deal if and when one should occur. At present, the average cost of Treasury borrowing is 2.5%. The average over the last two decades was 5.7%. Should we ramp up to the higher number, annual interest expenses would be roughly $420 billion higher in 2014 and $700 billion higher in 2020.The 10-year rise in interest expense would be $4.9 trillion higher under "normalized" rates than under the current cost of borrowing. Compare that to the $2 trillion estimate of what the current talks about long-term deficit reduction may produce, and it becomes obvious that the gains from the current deficit-reduction efforts could be wiped out by normalization in the bond market.
Printing money (or "quantitative easing") will eventually create inflation, which the Fed will try to fight by increasing interest rates. Higher rates mean that our interest payments will increase, which means that our deficit problem will get even worse. Wash, rinse, and repeat. (Except without the "wash, rinse" part.)
It looks like Congress is actually working to reduce federal spending in conjunction with raising the debt limit, and that's a good thing. Republicans -- finally? -- seem to be grasping the proper nuance of their "no new taxes" pledge.
Revenue is another major obstacle. Many Democrats say they could never vote to gut programs that help low- and middle-income families unless the wealthy are also forced to sacrifice. Democrats argue that Republicans should at least join them in eliminating corporate tax breaks that benefit major oil and gas companies and chief executives with private jets.Senate Republicans have shown some openness to that approach, voting last week to eliminate tax breaks for ethanol blenders. But House leaders remain opposed to targeting credits and deductions without also overhauling the tax code and lowering rates. In the Biden talks, Republicans have so far declined to consider eliminating even certain temporary tax breaks, such as those for Puerto Rican rum and NASCAR tracks, that have been repeatedly lampooned by watchdog groups.
Many of those tax breaks should be eliminated -- they are based on political favoritism and they distort the economy. However, these tax breaks need to be eliminated in such a way that they don't increase revenue for the government. Every dollar raised by eliminating a tax break should be returned to taxpayers via lower rates. Republican voters should accept the elimination of these tax breaks as long as the money is returned rather than spent. Such a result should not be viewed as a breach of the "no new taxes" pledge.
David Axelrod assures the world that supporting Obama is still cool. Despite Axelrod's obvious credentials, the claim of coolness is generally self-refuting.
Should Anthony Weiner and Eric Holder form a presidential ticket in 2012?
(HT: Instapundit and Robert Sbisa.)
I just watched a few minutes of Congressman Anthony Weiner's apologetic news conference and it was one of the most humiliating things I've ever seen. It was a "high quality" apology in which he accepted responsibility and explicitly admitted to the online relationships he had developed over the past three years and to lying to cover them up. He said all the right things and seemed sincerely contrite, in my opinion. I bet some commentators are saying that it's all an act, but my gut tells me that Weiner is sorry for what he did and has learned a valuable lesson that is often difficult for those who are used to getting away with things.
I've written before that low-level government employees are paid far too much, and executive-level government employees are paid far too little, and now there's more proof: 77,000 federal employees are paid less than the governors of their states.
More than 77,000 federal government employees throughout the country — including computer operators, more than 5,000 air traffic controllers, 22 librarians and one interior designer — earned more than the governors of the states in which they work. ...But Beth Moten, legislative and political director for the American Federation of Government Employees, the union that represents 625,000 federal employees, said the bigger problem is the amount of money that contractors can collect. She said contractors can be reimbursed up to $693,000 toward salaries for their top five executives, and even more for other employees doing government work.
“So the government’s paying $700,000 and more for contractor salaries, and Sen. Coburn worries about the pay of physicians who care for wounded soldiers?” Ms. Moten said. “If those governors want to make more money, they should either become contractors or try applying to medical school.”
Wrong. Obviously doctors need to be paid competitive salaries... but so do governors and other government executives. I'm sure there are compensation experts who could come up with better numbers, but here was my idea:
As a starting point, lets bump the President up to $20 million per year. Cabinet secretaries, Congressmen, Senators, Supreme Court Justices, Joint Chiefs: $10 million. Top generals, department heads: $5 million. Work down from there. Low-level employees should match their private sector counterparts (in pay and pension) and should be easier to promote and fire.
