Monthly Archives: August 2011
This past week has been one filled with all the anticipation of a school boy awaiting a field trip as I made my way to the scene of the most significant battleground of the Civil War: Gettysburg. In preparation, I even read a chronicle of the Gettysburg Campaign written by Shelby Foote. You might remember him from the Ken Burns series on the Civil War. I had hoped to broadcast this morning from Cemetery Ridge, in sight of the hallowed ground of Pickett’s Charge where General Armistead breached the Union line but fell amid 6500 of his men who lay dead or wounded; or from the summit of Little Round Top where Colonel Joshua Chamberlain turned away five charges of the 15th Alabama Regiment, preserved a Union victory and earned the Medal of Honor.
A close friend of mine reminded me that the day doesn’t know what history will bring. In life, despite the long rumination of strategic thinking, we are frequently handed unique opportunities that must be acted upon in an instant. We react to the vision in our minds eye on instinct and intuition. In Gettysburg that hot and humid week in July 1863, leaders emerged from the crucible of conflict. Some were expected to lead and could not, others seized the moment and served to rally morale and exhort the most noble and courageous performance from their troops. All were expected to make a decision when minutes counted.
In the three day battle, over 50,000 Americans were killed, wounded, captured or missing. There is no period in American history outside of the Civil War that rivals the scale of human carnage. I was reminded that more than 620,000 soldiers died in those four years, nearly 2% of the US population. Today, such a percentage would claim 6 million lives. Gettysburg is a place to which all Americans should make a pilgrimage to begin to appreciate the sacrifice that Americans are willing to make for America.
This essay is not intended to be a lesson in military history. It is intended to remind us of two things as far as American history is concerned. First, all challenges must be placed in proper perspective. Those at Gettysburg were fighting to preserve a way of life and were willing to place their destiny firmly in the hands of their leaders. Secondly, the most notable leaders emerge amid the great and desperate challenges laid before them. They place country before self.
Let’s fast forward a century and a half to now. Given the headlines that define our current events, one might think that our Union was under siege. Bond ratings are downgraded; the stock market is volatile; we are engaged in foreign conflicts on the far side of the world; our Congress appears impotent; we can’t balance our budget; foreign potentates could call our stifling debt; unemployment is high; and our moral compass seems to be spinning.
All of these maladies afflict us, this is true. But it fails the test of perspective. Ours is a country that has proven in our short but splendid history to be capable of weathering tumultuous storms. In the past 150 years we have witnessed repeated financial scandals, political assassinations of multiple Presidents and civic leaders, two World Wars, a Great Depression that still dwarfs our current economic crisis, a continued quest for civil rights that set cities ablaze in the 1960’s and reflected shame upon our national soul, a war in a far away jungle that tore apart generations, a Presidential resignation and a Presidential impeachment. Need I go on?
We must apply the test of perspective to today’s problems. They are neither historic nor intractable. They were created by us and can be solved by us. There is no genie to come out of a bottle to magically snap a finger to resolve our problems. We don’t need one.
We must demand from those in leadership positions just that: leadership. Our country’s heritage is rife with examples of people who, when confronted with unexpected challenges under crushing pressure, rose to the occasion when called to perform and did so at the precise moment of need. That is all we need right now. Our problems of today do not need a Lincoln to solve.
We have figuratively quartered the horses in Washington to lead the country but do they have half the horsepower and courage as those who spilled their blood on the battlefield of Gettysburg to lead us through the muck and mire of our nations’ challenges? We often speak of the courage of our Founders who pledged their lives, their fortunes and their sacred honor to birth a nation. That creation has been buttressed four score and seven years plus seven score more by patriots who held true to the noble cause of freedom and who traded their youth that the Union may be preserved.
The day does not know what history will bring. The time for leadership to emerge in Washington is now. Who knows what real problems are in the offing? We owe it to our ancestors and our posterity to place country above politics and to advance this noble experiment called the United States of America.
The Dog Days of summer have come and are almost gone. It is just about time for vacations to come to an end and the reality of work to creep back into our lives. Many Americans did not take a vacation this year due to a tenuous employment situation. Out of work or underemployed, the last thing they need to be is out of sight and out of mind amidst this persistent economic decline.
Not so for our nation’s leadership, such as it is. Congress has been on recess since August 2 and is not expected to return until September 7. The President, presumably exhausted from being humbled on his armored bus tour, has headed to Martha’s Vineyard for yet another bike ride and ice cream cone. I must confess that even I took a holiday this past week but at least I produced this essay.
What our leadership is telling us is that our very real problems in earning a living, making ends meet and paying our bills are far less important than their problems in orchestrating an electoral victory in November 2012. It is about power more than progress and I, for one, am tired of waiting on government to be the savior of the economy. All I really want government to become is less of an impediment.
When it comes to regaining control of government there are only so many levers to pull and buttons to push to align spending with revenue. Let’s review some of them.
On the revenue side, taxes on personal income and on payroll account for more than 80% of what the Federal government takes in. Six levers to pull here: two large, one medium and three small. Not quite half of the rest comes from taxes on corporations and the rest from customs duties, excise fees and estate taxes. Reducing income taxes at the personal or payroll level, the large levers, assists those who are employed already and assists in increasing consumer spending to some degree. We already have a temporary payroll tax reduction in hand. On an individual basis, it is not small potatoes but it is diluted and does not stimulate job growth. The small levers of customs duties, excise fees and estate taxes provide better headlines than real leverage. I should point out that levies might be effective in leveling the playing field against unfair competition on many grounds without risking a debilitating trade war on the scale of Smoot-Hartley Tariff of 1930.
That leaves the medium sized lever of corporate taxation as the one revenue source that is directly tied to the one community that can directly create jobs: business. Large and small, businesses create jobs, not government. Furthermore, we are in a global economy and businesses large and small will source materials and labor from any corner of the world that will maximize their profit. Therefore, our corporate tax rate must be made competitive with the rest of the major economies and competitors of the world. On this point, both parties seem to agree. So let’s get on with reducing them by twice what extending unemployment benefits for a year would cost. That should reduce the corporate tax by about 25%, enough to show that the government is serious about making US business competitive across the globe and provide enough visibility to see the positive effects on employment and job retention and even job repatriation.
But here’s the rub: if you reduce the corporate tax rate, all of the special interest benefits need to go with them. Across the board reductions must be met with the termination of costly special interest perks. Characterize this shift as you will, it is fair.
Now, onward to the buttons that affect government spending. Here we have eight buttons: 4 large, 2 medium and two small. Let’s take a look at the four smaller ones that account for less than a quarter of the budget first. Interest on the debt is what it is. Today it accounts for 6% of total spending and certainly will rise as we borrow more at increasing interest rates. Other discretionary spending accounts for 12% and includes roads, tunnels, space exploration and the occasional Bridge to Nowhere, to name a few. The other 5% is split between foreign aid and education. We can make ideological arguments on both but nips and tucks but will not yield too much real reform.
The eight hundred pound gorillas are in Social Security, Medicare/Medicaid, Income Security and Entitlements and National Defense. All told, a whopping 58% of spending is contained in these four areas. For both parties, these represent the Holy Grail and third rail of politics. The only person in either party, including the President, who has taken aim at any of these, is Rep. Paul Ryan. Most have taken aim at him. But even he fell short of making recommendations on the defense budget.
I’ll take a stab at that. I am a veteran and come from a long line of veterans. My son is becoming a veteran in two weeks. I have no interest in placing our armed forces in harm’s way without proper equipment and support. But even I know there is waste and redundancy in that budget. Defense budget processes mirror those of the rest of government and are atrocious. The heavy hand of Congress is everywhere in appropriations and results in high ticket items being forced upon the Generals and Admirals for sake of political reputation more than necessity. That has to stop. There is gold in that budget.
Social Security never anticipated a life span of 80 plus years, 15 beyond retirement age. It is time to slowly, I repeat, slowly increase retirement age towards 68 years. This has tremendous positive effect on spending.
Health care spending must be capped. The Ryan Plan is a good place to start the discussion. Remember, nobody is throwing anybody under the bus. Responsible plans call for changes in Medicare for those 55 years of age and younger. If you are 56 and older, you’re grandfathered. No pun intended. Let us choose from an unfettered market of care options. I think most Americans are capable of making these choices.
Income Security and other entitlements account for the remaining 18% of the budget and are rife with opportunities. Americans are tired of supporting no-loads who are too lazy to work and are scamming the people. That is an easy choice. But there is a lot of opportunity in this budget chunk for all classes of people. This area ought to be publically debated and we don’t have enough time here to elaborate.
So, Mr. President, Speaker Boehner, and Senator Reid, here is my plan to stimulate the economy and simultaneously grab hold of our budget. It contains 6 levers and 8 buttons, not all of which are even in play. I am on vacation this week as are you all. I hope you have something equally meaningful to show for your time on holiday.
It has been a memorable week to be an American. Credit downgrades, incredible and unpredictable financial volatility on Wall Street and a Republican candidate debate featuring 8 Presidential hopefuls. And there may be 3 or 4 more waiting in the wings. That would be interesting enough to talk about were it not for the other story appearing in every newspaper and television station in the world.
London is burning.
We saw the images on television of rioting and looting; of city blocks ablaze and of people leaping from burning building perches into the arms of strangers below; of seeming Samaritans who turn out to be villains in disguise. We saw this historically most civil of societies disintegrate before our very eyes as London mobs took control of the streets. And those riots spread to Cardiff and Nottingham and Manchester. I travel to Manchester frequently. I cannot fathom it. That is just this past week. We saw it in Greece, too, earlier this year.
“You can’t start a fire without a spark,” the Springsteen song goes. Every spark seems to be different but if there is a common source in this civil discontent, this unlawful rioting and mayhem, it stems from government austerity and the perceived disruption of the flow of entitlement money.
So, the obvious question that comes to my mind is this: Can this happen here in America? I fear the answer is “Yes.” You don’t have to believe me. Listen to the results of this Rasmussen poll from Friday. Forty eight percent of Americans, nearly half, think that cuts in government spending will lead to violence in these United States. Exploring the results further, it appears that younger adults, those under 50, see a higher likelihood than those who are older. In other words, those who might be drawn to violence believe it to be more possible.
Hang in there, it gets more interesting. More people think that cuts in spending will trigger violence than would tax increases. Sounds like a mere statistic until you peel back the layers of the onion. Those who pay taxes, only 50% of us, might protest (witness the Tea Party movement) but would hardly consider setting city blocks on fire. Besides, we’re too busy working. On the other hand, cuts in spending, read entitlements, could bring out to the street those who have skin in the game and time on their hands. We might take away some of which they have grown to expect for merely living in America. And this is what scares me. This is where we look an awful lot like our ancestors across the Atlantic Ocean.
It has happened before in America, this mindless violence. Pick any major American city in the late 1960’s or Los Angeles in the 1990’s. The inner cities go up first and local residents and shop owners are the earliest to be penalized. Their hard labor and earnest endeavor go up in smoke in the first wave. I fear that this violence this time would not stop in the cities. It would spread, perhaps incited by others on the entitlement and government spending gravy train, into the urban suburbs and perhaps into a street near you.
Here is what gets me. The social activists among us, the progressives, tend to look at Europe as if it is the epitome of social responsibility; that the European social safety net that has been constructed is a vibrant model that we should emulate here. The fact is, Europe, with a few exceptions, is a failing continent. They are failing in controlling debt, they are failing in sustainable social expenditure, and they are failing as world power brokers. They are failing in relevance. So why does this administration seek to emulate the path that they in Europe have embarked upon? It makes no sense.
So, is the next logical import street violence and rioting? Is this to be our destiny? I pray not. But we Americans are watching a tennis match between the two parties in Congress with the President acting as the net judge. We must get in the game. The debt compromise was a terrible compromise. Wait until Thanksgiving when the Super Committee on debt reduction will be forced to report out. They will have nothing to show for whatever effort they put in. The Democrats will dig in their heels on tax increases and the Republicans will dig in theirs over spending cuts. The only possible outcome will be across the board spending cuts in Medicare and Defense spending and an inexorable march to November 2012.
This is not leadership, this is not stewardship: this is cowardice. Is there a leader among us who, someday, might be commemorated as were our founders or great crisis leaders have been in legend and song and verse? This is a leadership moment, a teachable moment, in the history of our country. We are rapidly reaching a turning point. Dare I say a burning point? The direction we choose will determine, in large measure, whether America burns next.