The National Debt

My name is not significant.  I am not in the middle nor upper economic classes.  I am 65 years old and have been working 42+ hour weeks for the past five years with no vacation nor days off.  I'm tired, so tired. What tires me is not work.  It's this uncle of mine.  Even though he is deeply in debt, he spends money like there is no tomorrow.  He pays contractors any price they ask.  He owns empty, unoccupied buildings he doesn't need.  He supports the child of any woman who claims he's the father, even if he doesn't know the woman.  He invests money he doesn't actually have in large corporations.  He contributes huge sums to charities.  He leaves lights on all over his house, even when he's not home, and leaves the attic windows open during the winter.   But the worst thing is that my uncle depends on hard-working relatives like me to pay for his wasteful spending.  And year by year the problem grows worse as his cumulative debt and the interest due grows.

Then there's Uncle Sam's legal representatives who support his bad  habits and help him spend more of the money he doesn't actually have.  I'm afraid these legal representatives are people who have been so well off financially for so long, they have forgotten how to save money (if they ever knew).  They seem indifferent to all the ways Uncle Sam is wasting money.  But my uncle does pay his legal representatives well.

There are a number of steps that could be taken without delay to help pay off Uncle Sam's debt and balance his budget.  These include simplifying the IRS tax code, limiting the percentage of profit companies can make on government contracts, reforming the budget allocation process to government departments/agencies, energy audits on all government buildings, eliminating the practice of giving additional financial assistance to mothers on public assistance when they choose to have more children, eliminating "corporate welfare",  decreasing congressional salaries, ending subsidies for coastal flood insurance.  Our willingness to help every foreign country with a crisis needs to be curtailed. Street drugs and prostitution need to be legalized and regulated.  Taxing political contributions of $1000 or greater would also be helpful.  Putting a cap on the amounts of money going to non-profits and not-for-profit organizations until the debt is paid off.  Before examining each of these suggestions separately, let's examine why politicians don't want to bother with them.

 My premise is that no amount of tax dollars, no matter how small, is too insignificant to scrutinize; especially when one is in debt to a mega-bully like China.  The politician's approach is to find the largest program that can be cut from the budget.  How practical is that?  That's like a person in debt giving up their car to save money on car payments without considering the difficulty in getting to and from work and the grocery store without a vehicle.  Wouldn't it make more sense to try to save money by eliminating numerous smaller unnecessary daily purchases?  If you spend $2.50 on Starbucks coffee every morning on your way to work you are spending $650 yearly.  That could amount to more than two monthly car payments.  Now multiply $2.50 times the number of government employees in this country.   If each of them wastes only $2.50 a day that could add up to hundreds  of millions of dollars that could potentially be saved yearly.

Politician's have an alternative to gutting the biggest program they can find.  It is to simply cut 25% of spending in all departments.  The latter approach is ridiculous because you are not necessarily cutting out wasteful spending.  A department could theoretically waste as much as it did before the 25% cut.   I define waste as unnecessary spending.  On a personal level, most of us spend money unnecessarily by purchasing things we don't need, by not shopping around for cheaper prices, through impulse buying, and buying things just because they are on sale. Perhaps wasting money is simply human and it does help to boost the GPA.  On a personal level, each of us wasters don't owe China or any one else trillions of dollars.  If we did we would probably declare bankruptcy.  DECLARING BANKRUPTCY AS A RESULT OF WASTEFUL SPENDING IS COMPLETELY IRRESPONSIBLE AND PROBABLY SHOULD BE UNLAWFUL.  Wasteful spending by someone in debt is senseless.  If that is true of individuals, it is also true of organizations including the Federal Government.  No one wants to see the U.S. Government go bankrupt.  So what steps can be taken now?

It seems to me the best way to avoid bankruptcy is to pay one's debts.  For the federal government to pay its debts, not only will wasteful spending have to be stopped, but the incoming revenue will also have to be increased.  It seems wrong to me that people with lower incomes pay a higher percentage of those incomes to the government than people with higher incomes.  If we remove all tax loopholes, deductions, write-offs, etc. and enact one tax rate for all sorts of income so that even a child would be able to figure out how much tax a corporation or individual owes, it will result in thousands of IRS workers and private tax consultants being laid off.  But I think it would help generate more revenue for the federal government.  Some will object to doing away with deductions that favor people with large families.  Perhaps the dependent deduction should continue for existing dependents but should be phased out for dependents born in the future.  My reasoning is that if one chooses to have a large family one should be able to afford a large family without needing tax deductions.  Even Catholics are allowed to use the rhythm method to avoid pregnancy.  It may have once been in the best interest of the country to increase the population.  It no longer is.  There are a limited number of paying jobs available for an increasing number of people.   Just as illegal immigrants theoretically exasperate the unemployment problem by taking jobs unemployed Americans could do,  so will a shrinking economy plus a growing population make the problem of unemployment worse.

In regard to illegal immigrants, I am not as progressive as some.  I believe there should be consequences when a person is caught breaking the law.  Those who wish to grant amnesty and even citizenship to illegal immigrants already living in the country, are sending an unspoken message for any and all people from foreign countries to enter the U.S. illegally, to establish productive lives here and to have children here.  Is there not a practical limit to how many people America's infrastructure, physical resources, medical, social and governing services can support without additional damage to public health, the environment, the economy?

The money one saves by decreasing wasteful spending needs to be used to pay down the debt.  The self-defeating way to spend the saved money is on new programs.  If one saves $650 by cutting out lattes and then one spends that money on a fancy flat screen TV, one is simply perpetuating one's indebtedness.  New and improved programs that help the country in general are fine.  But unless these programs also allow the government to save more money than they cost, they need to be put on the back burner until the national debt is paid off.

Eliminating unnecessary spending is one source of revenue that can be used to pay off the National Debt.   Another potential source of revenue for paying down the debt is to eliminate overspending in government, not only on the federal level but also on the state and local levels.   This seems to be a non-issue anymore.  There used to be a regular feature on TV news called The Fleecing of America.  I have not seen it included in the news broadcast in a long time.  The Obama administration has taken positive steps to regain money from over billing by private companies, etc., but we don't hear a lot about that.  Nor is anyone telling us how big that drain on the treasury actually is.  I don't want to pay taxes in order to enable private government contractors to become millionaires.  I would like to see a policy put into place that would limit the percentage of profit that private contractors could make from federal contracts.  I think 20% maximum profit would be appropriate.

Government budgeting on all levels needs to be reformed to discourage wasteful spending.  As it is now, revenue is divided among individual government agencies, departments, etc.  Each department gets a certain allowance for each fiscal year.  If the department does not spend the entire allowance, they are supposed to give it back.  The more a department gives back, the smaller next year's allowance is likely to be.  This encourages wasteful spending by departments, such as parties costing thousands of dollars to boost employee morale.  I would think someone could come up with a less expensive method of boosting employee morale as well as some way to motivate departments to spend less wastefully.  It's a fine thing that the federal government helps states financially with grants, etc. and that the states help needy municipalities.  It's fine as long as those states and those municipalities don't need money because of all the money they have wasted 

Another source of wasted tax dollars that goes directly to utility companies is inefficient heating and cooling as well as lighting in government buildings.  There should be energy audits on all such buildings and requirements for the workers in those buildings to follow the recommendations of the auditors.  Windows left open in the winter while the heat is left on, leaving lights burn while no one is there-these sorts of practices are unacceptable.  The same type of audits should be required of any buildings owned by organizations supported by taxpayer dollars.

I like children. Children are great.  The old saying, "too much of a good thing is not good",  is applicable to the number of children one has.  If you can afford a large family without depending on others to support it, fine.  To have a lot of children and then depend on the government to pay for their support is irresponsible.  The government cannot afford it; it benefits creditors like China; and middle and upper class families would rather use that money to benefit their own families.  In the present system poor families get more money from different government programs if they have more children.  Studies have found that most children from poorer backgrounds, do not excel in school nor do they do well finding permanent honest full-time employment as adults.  Encouraging lower income women to have more children is not productive public policy.  There needs to be a point at which women with more than two children would be eligible for public assistance payments for the children they have at that point in time but not for any children they have past that point.  At that certain point in time, women with less than three children would not be eligible for additional welfare money if they choose to have more than two children.    I would favor an exception in the case of  a pregnancy resulting from a properly reported and verified rape.  Not to set limits invites an increasing drain on the national treasury and forestalls the time when we can pay off our debt to China.  These same guidelines should be applied to any government program like Section 8 that financially benefits people who have more children.

Government giveaways to certain large industries needs to stop.  Some call it "corporate welfare".  $2.8 billion dollars to the oil industry annually may not seem like a lot.  However the government also gives millions away to big agribusiness, king cotton, high speed rail, etc.  Why?  It may have made sense years ago whenever it started.  It doesn't now.  Nor should the lumber companies be allowed to cut trees on public land for a cost that is less than what they would pay for the same trees on private land.  The government should not be in the business of helping big business make more profit.

Another measure that would help to balance the budget is for Congress to limit their salary to the median income of American workers (excluding millionaires and billionaires) and eliminating all the perks like expense accounts, etc.  This would help in that it would require less money to run the country but also because Congress would be motivated to increase the minimum wage for all American workers.  Higher wages would result in more revenue generated from income tax.

The federal government needs to stop subsidizing coastal flood insurance for individuals and businesses.  The ocean level has risen considerably in recent years and will continue to do so.  This is inevitably going to result in more serious flooding from more frequent violent storms.  If people choose to build and live near the sea shore, they ought to have to pay for the full cost of their insurance .  Why should those of us who are not so foolish have to pay to help insure people who choose to live or do business in a location that is bound, sooner or later to be at risk?

Foreign aid paid for by the American government and sent to needy people in other countries that never reaches the needy people, should be terminated.  For example, if the first shipment of emergency supplies is still sitting on the tarmac two days after it arrived, we need to stop sending more until the problem of delivery to those in emergency need is resolved.  Also we can not afford to get involved in armed foreign conflicts while we are in debt.  However, I think we must honor our defense treaties with other countries.

There is a problem with the idea that money no longer needed to wage the wars in the Middle East can be used to improve education in this country.  The problem being that that money is borrowed and to continue to spend that much requires continued borrowing.  This perpetuates a deficit and the National Debt. 

Instead of borrowing money to fund education, why not use the revenue that could be generated from the legalization and regulation of prostitution and illegal drugs?  No matter how much money and manpower we dedicate to these "problems", they will persist. They have been around for thousands of years and will continue to exist no matter how much money we throw at them.  Whether they would generate the same amount of interest and number of customers if the stigma was removed, is a legitimate question.

Regulating prostitution as they do in Nevada, would make it safer from the public health perspective.  It would also generate revenue for the government in the form of licenses, fees and taxes.

Legalizing and regulating all drugs would solve a number of problems.  The price of addictive street drugs would decrease.  With more reasonable pricing, addicts would not have to commit robberies and thefts in order to support their habit.  Revenue for the government in the form of fees and taxes would be collected.  Law Enforcement could direct more energy to crimes involving victims.  Addicts and non addicted users of street drugs would be less likely to accidentally overdose.  According to the Drug Policy Alliance, The War on Drugs has failed and will continue to fail, costing taxpayers more millions of dollars.  Prisons are overcrowded due to drug arrests.  Putting drug users in jail for using drugs does not solve their drug problem, if they have one.  Not everyone who uses recreational drugs has a drug addiction.  Addiction, however, is a problem for the addict and for society.  Why not make it  mandatory for any drug addict convicted of a felony or a misdemeanor to complete a drug rehab program in addition to whatever sentence he/she receives for the crime?  It could also be a condition of parole that the person remain clean and sober.  Failure to do so would result in another mandatory rehab program.   

Why not include addiction to any substance in the above suggested law, i.e. prescription drugs, recreational drugs, alcohol and cigarettes?  Diseases associated with habitual use of alcohol and cigarettes result in every one's health insurance premiums increasing as well.  There are numerous low-income people who must rely on taxpayers to pay for the treatment of the diseases they acquire as a result of  habitual smoking and drinking.   The result is higher government deficits which is the least of their concerns.  But is it fair that the rest of us have to pay for the results of their bad habits without at least trying to get them to stop if they are convicted of breaking the law?

Another suggestion came from a friend, Karen Ciccone.  Why not put  a 50%  federal tax on all political contributions of $1000 or more from any individual, corporation, or other organization, including superpacs?  This revenue should be dedicated to the patriotic cause of paying off the National Debt.

The Republicans, believe it or not, have made some good suggestions for cutting wasteful spending.  One idea is to sell unoccupied buildings owned by the federal government.  I would favor this measure as long as the buildings are not serving some useful purpose like storage, FBI safe houses, buildings of historic significance, etc. and as long as they are sold at fair market value rather than cheaply to some politician's wealthy campaign contributor.

The Republicans also point out that hundreds of millions of dollars annually go to not-for-profit/non-profit organizations in the form of endowments and grants.  These organizations include cultural organizations such as museums, historical preservation efforts,as well as volunteer programs. These are significant, culturally-enriching activities and I am not in favor of eliminating their government funding entirely.  I would favor a maximum cap of $500,000 to any organization now being funded.  Just because your organization is not run for profit, doesn't mean you can't learn to make less money go farther, especially when the middle class is forced to struggle financially and the country's debt continues to increase.

I believe that compassion is a strong part of the ethos of our nation.  It is why we have laws that benefit people with disabilities and handicaps.  I favor government financial support given to people who, through no fault of their own, cannot support themselves financially.  Thanks to modern science, potential parents can know the probability that they will have a child born with a birth defect, disability, or handicap that will make their care unaffordable and/or may prevent the child from ever being self-supported.  The government cannot afford to take care of these children and it is unfair to burden taxpayers with the result of parents who choose to take a chance rather than adopt.  I am not saying anyone should not have the right to bare children.  I am saying if parents choose to bring children into this world that they know will probably not become productive members of society or whose care will probably be beyond their means to provide, then the responsibility for that child should be the parents', not the taxpayers'.

I suspect that wasted tax dollars is an issue people of all income levels can relate to. First, the politicians "on both sides of the aisle" need to acknowledge that there is a problem and then work together to solve it.  I just thought of something that might be helpful.  Why not install a giant digital U..S. National Debt Clock that would track the debt in real time on the front of the platforms in both houses of Congress so that all present would be constantly mindful of this growing problem?

For views on other aspects of the economy check out the posts The American Economy, The Foreclosure Crisis, Unemployment, and Wall Street.

I'm sure I have not included all the ways in which the National Debt can be decreased.   Please add your suggestions in the comments box.

ADDENDUM

 

It is now December 8, 2012. Congress and the President are "engaged" in trying to find a way to avoid the"fiscal cliff" which , in reality, would be more like a slope. This slope which would slide the economy toward recession, would be the result of the Bush era tax breaks expiring and automatic spending cuts takin place. In my opinion, the Bush tax breaks should have never gone into effect while the country was engaged in a war. Every other war has seen accompanying income tax increases designed to pay for the increased cost to the government of waging the war. To correct that mistake, it seems that every one's taxes should go up now. But that would make politicians unpopular. It would also supposedly put us into another recession. If the President and Congress believe that the national debt, now over $16 trillion dollars, is never going to be paid off, they should tell us. If the debt ceiling continues to increase, this will be an indication that they have no intention of paying it off. Especially if wasteful, i.e., unnecessary spending, continues indefinitely.

There are moral implications which I have been reluctant to point out. I do wonder what kind of ethical training, if any, our representatives and President receive before taking office. Such training really ought to be required. If it was, our government might not be $16 trillion dollars in debt and growing. Here's the thing, borrowing money from anyone or any entity that collects interest on the debt benefits the lender. If the lender is a bully, he/she does not deserve to be benefited, and when he/she/it is benefited, it helps perpetuate suffering of the bully's victims. That, my friend, is not something for which the borrower should feel proud.  And yet the U.S. borrows money from countries like China with histories of human rights abuses, illegal occupations of other countries, unfair labor practices, and environmental abuse.

Why does the President want to perpetuate our unethical behavior by raising the national debt ceiling rather than doing everything necessary to pay it off ASAP? Is the interest on the national debt so high that more money needs to be borrowed just to pay that? If any normal, sane person suddenly realized they owed 50% more than their annual income, that person would do everything possible to cut expenses and increase income rather than borrowing even more money. I wonder if there is a virus that politicians are vulnerable to that causes them to lose their common sense. Why do they think that borrowing more is a good thing while wasteful spending is less than relevant? Why attack social security and medicare, which are not in the unnecessary spending category?

We either pay off the national debt and stop paying interest to countries that don't deserve it or we give up on paying off the debt. The latter choice would set a bad example. If my government has no intention of paying its debt, why should I, and individual citizen, pay off mine? But individual citizens have the option of declaring bankruptcy. How would mass bankruptcy affect the National Economy?

I don't know how we went from a surplus of government funds at the end of the Clinton years to being $16 trillion dollars in debt today. I used to blame the wars in the Middle East. Now I have been informed that their cost was just over a trillion dollars. I guess that means that if income tax had been raised to pay for the wars, our debt would now be in the $14 trillion dollar range.

Maybe you don't realize how big a trillion dollars is. It is equal to 1000 billion dollars which is equal to one million million dollars. Multiply that by 16. To pay off the debt it is estimated that every U.S. citizen would have to contribute in excess of $50,000. To start to pay it off, unnecessary spending needs to stop ASAP, costs to government need to be controlled, and other sources of income need to be established, including increased income tax, federal sales tax on such things as goods from China, campaign contributions, etc. I was going to write another letter to Congressman Boehner. I decided that is a waste of time. I have written plenty of letters so far, but letters can't fix whatever is afflicting our politicians!

I just learned the other day that sports franchises don't pay income tax.  Not only should they pay.  There also needs to be a federal law prohibiting tax payer money being used to help build stadiums, arenas, etc. which allow these franchises to make millions of dollars.

 



Third problem: Unemployment

I heard Mitt Romney at the Republican convention say that, if elected President, he would create 12 million new jobs.  He previously said that jobs come from the private sector which seemed to imply that the government does not create them.

The more pressing question is, what kind of jobs will these be?  One would hope they would be jobs performed in this country by American citizens, although he did not specify that.  They would probably be mostly minimum wage jobs.  That would be better than jobs below minimum wage or volunteer jobs.  There is dignity in working for any wage.  But what sort of work would these 12 million jobs entail?  Republicans seem not to be big on details, preferring sweeping generalities instead.  Details like what effect will these wonderful new jobs have on public health and the environment?  Or how about how many of these jobs will involve clear cutting of our national forests including the redwoods?  How many of these new jobs will involve fracking, mountain top removal, oil drilling on the devastated landscapes of our public lands?

I believe unemployment can be a stressful source of depression.  I've experienced it more than once in my life.  I am sympathetic to those who have lost jobs.  But I believe that not all jobs are created equal.  Some of us, hopefully most of us, would rather be unemployed than do the following jobs:
1.  Professional assassin.
2. Mafia hit man and other organized crime activities
3. Stealing antiquities from sacred burial sites
4. Poaching
5. Smuggling
6. Burglary
7. Running a business that deliberately fails to follow safety and environmental regulations
8. Illegal logging
9. Running a business that fails to follow financial regulations and ethical principles
10. Illegal drug trafficking
11. Human slavery and forced prostitution
12. Organizing animal combat, such as cock fights
13. Selling products made from endangered species
14. Terrorist
15. Kidnapping women and children and selling them into forced prostitution and slavery

It is work to buy small businesses, sell the physical assets, fire the employees thereof, depriving them of promised pensions and health benefits in the process.  This is the type of job Romney probably has first hand experience doing.  It is a job that certainly does not enhance the lives of those whose jobs were eliminated.  Would you agree that many people would be better off if the Bernie Madoffs of this world were employed on prison chain gangs rather than engaged in ripping people off?  What about high-priced defense lawyers that get guilty wealthy clients acquitted so they are free to offend again?  The only people whose lives are enhanced by that job is the rich criminal and their law firm members.
Do we really want more of those jobs?

If we had a national goal of enhancing the quality of life for ALL Americans, that national goal could be the basis of guidelines for determining the kinds of work we should be willing to create and pay for in America.  Those would be jobs that contribute to the health and well-being of all life forms.
Desirable jobs would include those that produce clean renewable energy from wind, waves and sun.

Thousands, perhaps even millions, are employed in the acquisition, distribution, and use of coal, natural gas, and oil to produce energy in this country.  On one hand these jobs have been beneficial, especially in the past, before alternative renewable energy-producing technologies were common.  Oil rig workers, coal miners, natural gas producers were essential to creating American prosperity.  They worked hard and we should be grateful to the non-renewable energy companies for their contribution to the creation of modern conveniences.  The problem is there is an increasing demand for energy in this country which, when it comes from non-renewable sources like coal, oil and natural gas, causes an increase in pollutants like mercury, small particles, sulphur, etc.  These pollutants damage human health, property and the environment.  If there was a way to contain all poisons from these sources, that would be excellent, but it would also be expensive.  Instead of trying to contain 100% of the poisons, the utility companies, car companies, etc. pass on the cost of the damage their poisons cause.  Yes, renewable energy sources seem more expensive because the cost of the negative effects of non-renewable energy sources is never considered.  To create more jobs that increase production of non-renewable energy rather than increasing clean renewable energy production jobs would not be conducive to a national goal of enhancing the quality of life for all Americans.

The corporations that control the production of non-renewable energy seem to care more about profits than helping the country to transition to clean energy production.  The government is also complicit in preventing the creation of jobs that would support clean energy production by subsidizing companies that produce dirty energy and by giving them tax breaks.

Yes, unemployment is a problem.  But creating any sorts of jobs is not the best solution.  Not if we care about the quality of life of all Americans.  If there is something I am missing or if you agree, please comment.

Foreclosure crisis

I have to admit that I, who have never in my life owned a house, have been known to be less than sympathetic to those who are foreclosed upon. Why buy a house that's bigger or more expensive than what you need? Nevertheless, the banks have not been innocent in financing houses for people they knew would not be able to keep up the payments indefinitely. But regardless of who is to blame more, there is a problem.

My suggested solution benefits those home buyers who have lost their homes to foreclosure. It does not benefit the banks which could not find any way to allow these people to remain in the homes they were buying. What if the government would purchase abandoned land such as unused industrial property in large cities and use that land to construct green, energy-efficient, non-allergenic houses with solar power, great insulation, car ports with crushed limestone driveways, yards for gardening and recreation?

To be eligible to live in one of these homes, one would have to be a U.S. citizen, have a source of income, and not be able to live in a house of one's own because of foreclosure. A lottery based on people's foreclosure dates may be necessary if the demand for such homes by eligble citizens exceeded the initial supply.

The houses would be built by the government, owned by the government, and rent would be paid to the government. The monthly rent amount would be based on the income of the renter(s). The total cost of the building would be determined upon completion of construction. There would be no sub-leasing allowed. If the renter stayed in the house indefinitely, when the total amount of monthly rent paid equaled the original cost of the property, the title to the property would be signed over to that tenant. That tenant would then own the property with full legal rights and responsibilities.

If a tenant chose to move out of the government-owned house before the total rent amount equaled the initial cost of the house, what they had paid in rent would be non-remittable. The government would maintain ownership and the house would be made available to the next needy eligible citizen with the same financial agreement.

This solution encourages the development of clean alternative energy sources, contributes to national energy independence, helps keep down health care costs, and may even prove to be profitable to the government in the long run. It would also help to eliminate tent cities. It would also create green building construction and supply jobs. It would add tax income to cities where these houses would be built. It might even prompt lending institutions to be more flexible with their mortgage customers. What do you, the reader, think of this solution? Please comment.