The Fiscal Cliff

Over the past few days, I keep stumbling over the term "fiscal cliff" as I read through the business and political news.  It's surfacing everywhere, and it's primarily used to describe two related events.

First, there's the automatic repeal of the Bush-era tax cuts.  Second, barring any meaningful movement on deficit reduction, there will be major, mandatory, and significant reductions in government spending, up to and notably including military spending.

In the business media and in the general press, this is being cited as a reason to ring alarm bells.

We're approaching the cliff!  If we go off the cliff, we'll destroy our economy!  Something must be done!   Turn!  Hit the brakes!  Turn!  Go back!   Concerned defense industry folk and contractors and the financiers who sell and hold US debt are beginning to freak out a little bit.

And yet we're not turning.

Nothing is being done, because the divided Congress elected by divided America is inexplicably divided.

Here, I confess to find myself confused.  Sure, we're approaching what looks like a cliff.

But to my eyes, we're not approaching it from the top.  We're approaching it from the bottom.  It's the side of the deficit hole we've dug ourselves into, that deep pit of false and unsustainable growth.

The "cliff" is nothing more and nothing less than what we need to do to get out of debt as a nation, or at least reduce debt to manageable levels.

We'd not be going over the cliff.  We'd be starting to climb up it.

That's probably why the financial and political classes seem so alarmed.

How We Can Save Three. Hundred. Billion. Dollars.

As our current POTUS starts spooling up a semi-serious response to dealing with the deficit...an issue that has been kicking around since I was a child...I find myself preparing to be unsurprised by one nearly inevitable outcome.

Cutbacks will be proposed, of course.  Some tax hits for the richest of the rich and major corporations will be pitched out there, right on cue for the 2012 election cycle.  But one particular thing is unlikely to be brought to the table.  Obama is unlikely to address our out of control military spending.

Yes, we all Support Our Troops (tm).  We all love America, and want her to be safe and secure.

But there is simply no sane argument for our current level of military spending.  None whatsoever.  Where we are, as 2009, is in a place where we spend $687 Billion dollars every year for our military.

As context, in 2009, number two in the military spending race was China.  The People's Republic of Selling Us Stuff That We Used Make Ourselves devoted $114 Billion dollars to their various military branches in Oh Nine.  Next up was France, at $61 Billion, and then Great Britain, at $57 billion and change.

Using a little second grade math, we see that...hmm...we spend...ahh...hold on...got it!  We spend almost exactly six times as much on our military as China.   Assuming that spending equals military competence on the field of battle (dubious, I know, but let's run with it), America might be taxed in a military exchange in which we found ourselves faced by a hostile coalition comprised of China, France, the UK, Russia, Japan, Germany, Saudi Arabia, Italy, India, Brazil, South Korea, Canada, Australia, Spain, the United Arab Emirates, Turkey, Israel, the Netherlands, Greece, Columbia, Taiwan, and Poland.   Those militaries, combined, are roughly a match for ours on a dollars-spent basis.

Is that the future for which we are preparing?

'Cause if it ain't, what in the Sam Hill do we think we're doing?

There is no reason for a Constitutional Republic to be so inordinately overarmed.  Were we an imperial power, or an expansionist fascist state, I could see the rationale.  It would be an evil rationale, but at least it would jibe with the broader story we tell ourselves about the values of our nation.  Now, though...we've got a coherence problem.

John Boehner's basement...and he's still afraid...

Yeah, yeah, we all like to feel secure and strong.  But at a certain point, feeling insecure stops being about reality, and starts indicating that there's some real mental problems going on.  We are, as a nation, just a little crazy.  Those who argue that our current level of spending is necessary for our defense are like that highly twitchy neighbor down the street who has a wall-full of AR-15s, a man-portable M-134, and 15,000 rounds of assorted ammunition in his basement because he's sure someone is out to get him.

We do not want to be that guy, no matter what John Boehner says.

What would make the most sense from a budgetary standpoint...not that it will happen, of course...is standing down our imperial army.  But to what level?

Let's imagine, for a moment, that our warfighters aren't the best in the world.  Blasphemy, I know, but it's just a thought exercise.  We can say forty Hail Pattons when we're through to make amends.

Let's say that the Chinese...the number two world power...could defeat America if we spent the same amount on our military as they do.  Yeah, we're not at war, or even formally enemies, but no-one wants America to be defeated.

So what if we spend twice as much as the People's Republic of China?  Would we feel secure being twice as armed as they are?

No?  Really?  Their command of kung fu coupled with their ability to put on some really amazingly coordinated Olympic opening events has you a little freaked out?   Alright, you wuss.  How about we spend three times as much as China?  For every one gun they have, we have three.   For every tank, we have three...or one that is three times as good.

And remember, our soldiers are the Best In The World.  Right?  Right?  Don't tell me you don't think so!  Given three times the resources, the men and women of the United States Military couldn't prevail?  You aren't going there, are you, my friend?

I thought not.

That would mean savings, on an annual basis, of nearly $300 Billion dollars that our government currently spends...and doesn't have. 


Sigh.  I really wish America wasn't so totally insane.

Lurponomics

I'm a fiscally conservative person.  I don't believe that debt is good.  Period.  While I'm happy to spend freely if the resources are there, I vigorously resist the idea of buying things I can't afford.  If I can't buy it now, I won't.  I would rather live simply than be in debt.

This is a foundational value.   I drive cars I can pay cash for.  I have a modest home.  My wife and I have have one credit card, which we pay off every month.  We live very slightly under our means, whatever those means may be.  Over the last twenty years, this has helped build a comfortable nest egg.  If you pay now, and build up savings with whatever remains, then life will be more manageable.   It is for this reason that I get, without fail, at least a dozen solicitations for new credit cards every week.  Every one of those solicitations is torn up unopened and recycled.

Looking at the economic state of our nation, I find myself completely at odds with both political parties.  The idea that government can spend without taxing convinced me long ago that the American right is completely insane.  It's been thirty years, folks, since the trickle-down and supply-side lurping of Reaganomics spread like sweet delusion across the gullible of this nation.  That hole is just getting deeper.  It isn't just a conservative problem, though.  The left is equally delusional.  Honestly, the point at which I first realized all would not be well with Obama was with the passage of the stimulus.  TARP, which was designed to be repaid, seemed necessary.  It unlocked a seized-up system.  But the stimulus just dug us deeper and deeper into hock, at a time when going into hock had nearly cost us our economy.  It was nuts.  It was as ill-advised as doing a couple of shots to ward off a hangover.    Heck, it was worse than that. 

It was the economic equivalent of meth.  Debt may be the engine that drives our economy, but it is a false energy.  Debt-driven spending is not real growth.   Yeah, it stimulates.  Stimulants like meth are great at that.  You feel real good for a bit.  Then, less good.   Then, crappy, but you'll do anything to feel slightly less crappy.  Eventually, you find yourself spent and broken and toothless, living on a stained mattress in some guy's shack in back country Gansu Province.

As Republicans continue to shout for lower taxes, and both Democrats and Republicans keep guzzling down debt to expand our security apparatus and our social entitlement programs, I find myself despairing for our nation.  The will to do what is needed to change direction...meaning, we pay taxes sufficient to provide for the common defense and support the general welfare, and reduce our spending to levels that make the income/outflow match...that will just isn't there. 


The last week has been particularly painful.  Watching the deficit reduction commission's recommendations get shot down, and then seeing the fiscal irresponsibility of the Bush administration continued by our current administration is as agonizing as watching a dear friend on a self-destructive bender.  You know the type.  Tomorrow will take care of itself.  All they care about is their next fix.  Reality is nowhere to be found.  And we need to grasp reality right now as a nation.

To keep government at non-austerity levels, we'll need to pay for it.  That means ponying up, "patriot."  If you want to keep taxes where they are, then we need less government.  Not empty rhetoric about less government.  Real cuts.  That means across the board.  It means standing down our imperial military, and replacing it with something more fitting a constitutional republic.  It means reduced benefits for the elderly and those in need.  It means fewer subsidies for farmers.   Whichever way, there needs to be some level of diminishment, as we scale back to sustainable levels. It means effort, and struggle, and a bit of shared fiscal pain...not just by the rich, but by everyone.  Real recovery involves real effort.

But suggesting we all work together to shoulder a mighty burden doesn't get you elected.  It doesn't poll well.  

We'd rather elect reality television politicians, who'll happily pitch out sweet crystal fantasies until that morning America wakes up on that nasty mattress with a mouth full of rot and realizes we lurped America's greatness from our children.

Living In Samaria

As I preach weekly, I'm very often stuck with leftovers. Leftovers are those ideas that come pouring out of my study and reflection on the texts, but that don't really fit within the theme and focus of the day. I can't stand long meandering brain-dump preaching myself, so I'd never intentionally inflict it on others.

After two weeks of preaching from the prophet Amos, one of the big "leftovers" has to do with sociopolitical context. It's clear that one of the major issues for Amos was an unsustainable imbalance of economic power. In the eighth century BCE, Israel was experiencing a time of prosperity...sort of. Wealth and power were accumulating, but that accumulation was occurring primarily around the urban centers, like Samaria and Bethel. Those who served the king did quite well. Those who sold to those who served the king did quite well. The scribes and the priests and the merchants were rolling in it.

But everywhere else, things bit. Exorbitant prices and punishingly high taxes were the price paid to insure that the centers of power stayed powerful, and that the merchants and the merchant's wives lived in the standard to which they were accustomed. So the majority of the people...the farmers and the laborers...knew suffering, while a few islands of prosperity flourished around power.

I live in such an island. I was born and raised in the DC suburbs. That's not to say that there aren't shuttered businesses and foreclosed homes here inside the Beltway. But as our homeland security infrastructure blossoms and spreads and sprawls, most of those jobs are here. More and more military suppliers and contractors are re-siting their headquarters here to DC. Best to be near where the money is if you want to make a few bucks off of our Forever War. And so our area does really rather well.

Of course, prices here are higher. And while the apparent taxes on y'all outside the Beltway aren't punishingly high, your actual tax levels are masked behind debt, debt that is being incurred on the basis of your credit. Meaning, you are, in fact, being punitively taxed. You just don't grasp it, because the bill keeps not being sent, because America only elects cowards who tell us that we can get something for nothing. Only you don't get that something.

And so when I hear Amos laying into the wealthy, I hear him laying into the god of security which we worship. And from which my community profits.

The peskiest thing about Amos is that the stone mansions and the vineyards that he describes could be in the neat neighborhoods of Mclean. Or in the stately McEstates of Loudon County. Or in Bethesda, in the beautiful multi-million dollar homes that surround my church.

So I haven't quite gotten around to preaching about it. It's hard to turn that poison cup into a Practical Lesson for Your Life Now (tm). It's too hard a word. But though Amos suggests that the prudent remain silent in evil times, it does seem worth at least blogging about it.

Warfare and Welfare

With America's right wing now finally deciding that the budget deficit is a problem, I think progressives and moderates need to take them up on their newfound concern.

In fact, that seems to be where things are headed from inside the Beltway, as a bipartisan commission seems to be firing up to make some of the painful cuts and tax increases that will be necessary to bring the United States back into a position of solvency.

They'll need to put everything on the table. That means addressing every major entitlement and welfare program. They'll need to deal with social security. They'll need to deal with Medicare and Medicaid. They'll need to make cuts across the board, including major cuts to one of our most significant welfare-state programs: The United States Military.

Yeah, I know. I support our troops. We All Support Our Troops. But the reality of our armed services is that they are also a significant government work program. They provide an immense amount of funding to American corporations, as our military-industrial complex is one of the few sectors of the American economy that hasn't been farmed out entirely to China by profit-maximizing execs. The armed services are also an employer of last resort for the able-bodied.

It is not a coincidence that we're meeting our military recruitment quotas easily in a time of significant unemployment, where even a few years ago we were struggling to meet those goals. Sure, many folks join the Army/Navy/Air Force/Marines for reasons of patriotism. But many more are driven to it not because they are warriors by vocation, but because they need a roof over their head and health care. Or because the recruitment incentives help pay off debts. Honestly, it's a combination of many of those factors. But I've known enough active military folks to know that it is a place you go when financial hardship hits. It's viewed as a stable paycheck, a place of financial refuge. Yeah, you might have to go to war, which is not much fun. But at least the medical care is paid for, and you've got a paycheck. Even a tiny paycheck is better than none at all.

But if we're going to get serious about belt-tightening, and we're willing to inflict painful cuts on America's schools and our crumbling infrastructure and our poor and our elderly and our children, there's not a single good reason that our armed forces should be exempt.

Econopocolypse

I am naturally a pessimist. Always have been. When I was a kid, my mom's nickname for me was Puddleglum, after the relentlessly dour but redoubtable Marshwiggle from The Silver Chair. As I saw it then, being a pessimist had no down side. If things went badly, well, you right. If things went well, then things were cool and it didn't matter.

Problem is, that doesn't reflect our agency in a situation. Being convinced that things will go badly tends to demotivate most human beings. Focusing relentlessly on the negative has this unfortunate tendency to produce negative results. Yes, we're just "being honest." We're "telling it like it is." But we're also helping to define the direction in which actions will be taken. If all is inevitably despair and woe, then we may as well just sit around muttering moodily to ourselves and chainsmoking unfiltered Camels until the poo hits the fan.

It's true in church, where obsessing over the insurmountability of an issue can paralyze a community. You gotta have hope, seeing the best case scenario towards which we can direct ourselves as a reality that exists fully as a potential future. As my own wee kirk earnestly works to survive, I've starting fighting more against my innate grimness. I will be positive. We do have hope. Because we do. Because I do. Period.

Where I have more trouble is looking at the trajectory of our nation and seeing anything positive. As we fritter away the days, nothing...nothing...is happening to convince me that the United States will be a healthy, vibrant nation in the moderate-term future. We the people are divided and distracted, and that's a problem, because we the people are headed towards bankruptcy. America will default on it's debt, absent some sort of divine intervention. For all of the jabbering on the right about government being the problem, and how we'd be better off without it, the economic impacts of that on all of us will be catastrophic.

None of our leaders are willing to stand up and tell us the economic truth, not one. That truth is a pretty basic one: if you want something, you have to pay for it. But that's not really their fault. It's ours. We don't want to hear it. Politicians can't make the draconian cuts and tax increases that are needed. If they do, or even hint that they might, we run 'em out on a rail. It's the challenge of a representative democracy. This pattern has sustained for decades, and is without precedent in U.S. history. It spells trouble.

I was playing around this morning with a Budget Challenge game over at the website of the Concord Coalition. The Concord Coalition is a group with whom I feel considerable sympathy. They're fiscal conservatives who've been futilely ringing alarm bells about the debt for years. They crafted this little sim to educate folks about the difficulty of reducing the debt. It's no Modern Warfare 2, I'll admit. But it's still important. It's a little budget creation simulation that allows you to measure the impact of every major budget proposal on the debt, and to create your own budget.

Here's the rub. Play the game. If you reject every major budget proposal that increases the debt, and accept every viable option (my Canadian Army option is understandably not included) that reduces the debt, the debt still increases.

There is no escape. You can't win. The simulation is an economic Kobayashi Maru.

I do not find this reassuring. But perhaps I'm being too Puddleglummy. Tell me how you think our nation will get itself out of this mess. Show me the hope.