A Quick Shot of Debt Perspective

I was just reading an excellent article by Dean Baker on the national debt and saw something that should be shouted from the rooftops.

"How about that $14.3tn figure for the debt ceiling? That's a really big number, really scary. So is just about every number connected with the United States budget. We are a huge country with a huge economy. Competent reporters would focus on this being about 90% of US GDP.

Is that big? Well, the debt to GDP ratio was over 110% after the second world war. The United Kingdom had debt to GDP ratios of more than 100% for much of the 19th century, as it was establishing itself as the world's pre-eminent industrial power. Japan has a debt to GDP ratio of more than 220% of GDP and can still borrow in financial markets long-term at interest rates of less than 1.5%."

So the U.S. is in the position of someone with an income of $100,000 a year and a $90,000 mortgage. Not so scary now, is it?

Baker accuses the news media of malpractice for ginning up the panic on this, and he's right. Calm down, increase the debt ceiling, and let's get on with things.

Obama and the Blazing Saddles Strategy

Do you remember that scene in Blazing Saddles where the new black sheriff (Cleavon Little) is surrounded by the angry white townspeople? He puts his gun to his own head and says, “Nobody move or the n----r gets it!” The idiot townspeople drop their guns and the sheriff leads himself away at gunpoint to safety. (Clip below for benighted souls who have never seen the movie)

Well, it worked in the movies. President Obama is doing essentially the same thing in the debt limit debate, except that the Republicans are ok with him pulling the trigger.

Politically speaking, the sitting president owns the economy. The president gets reelected (or not) on the state of the economy. If Congress doesn’t raise the debt limit and the government defaults, a cascade of economic failure will follow. Our ability to borrow will be damaged for the foreseeable future and interest rates will rise. Rising interest rates will raise the cost of everything, dragging our economy down and raising unemployment. Government workers will get laid off or furloughed, raising unemployment even more. It goes on, but I’ll stop there. The end result in political terms is a tougher reelection fight for Obama and Democrats in general.

You’d think that this level of cruelty and cynicism would be beyond even the most callous and ideologically driven Republicans. You’d be wrong. There is a sizable group in the GOP that would rather see our economy fail than Obama succeed. The President is throwing the Republicans every bargaining chip he has, and with each one they say “more.” They are giving him nothing because they don’t have to. So what can he do?

With a Republican majority in the House and a filibuster-vulnerable majority in the Senate he can’t do much legislatively. That leaves the executive and judicial options.

He can pursue the 14^th Amendment option. Section 4 states, in part, “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.” Defaulting on our debt is unconstitutional. Hence, the debt limit that congress is debating so vigorously can’t actually be enforced without violating the 14^th Amendment. Legal scholars can debate this, and they will, but it gives the President the option of calling the game on the debt limit. That leaves the Republicans with no hostage to kill.

He could also try a peripheral move that would partially solve the problem and distract the GOP from their present focus. I’ve written about the $70 billion or so that we lose in tax revenue each year to millionaire tax cheats offshoring their income. Obama could call a press conference with Attorney General Holder and some IRS officials at his side and announce the formation of a special task force to track down these wealthy cheats, extract the money they owe, and pitch them in jail. That would lower the deficit while striking at the heart of the GOP funding base. He could even offer a kind of amnesty. If the cheaters in question offer themselves up for audit voluntarily before the end of the year and pay what they owe (plus penalties and interest), then they won’t get prosecuted and imprisoned.

Likewise, he could propose a law to change the way certain intellectual property assets are valued when a corporation licenses them to a subsidiary. That sounds wonkish and abstract, but what it means is that a company such as Google rents its special search software to its subsidiary in Ireland for a fraction of the realistic price. Google pays U.S. taxes on the tiny amount it gets and shunts the foreign profits through the Netherlands to Bermuda, and thence to the shareholders’ pockets. Making companies charge their foreign subsidiaries market-rate licensing fees would add another $90 billion a year to tax revenues. The Republicans can, and will, come up with some bizarre rationalization as to why this is a bad idea, but it will at least shift blame to them.

No new taxes so far, just enforcing the law and closing a stupid loophole, and we’re up $160 billion annually.

How about those multi-million dollar executive salaries? Remember, every million dollars in salary and bonus that a company pays an executive is 20 median wage jobs going in one man’s pocket. Did you know that these mega-salaries are deductible for the company? Here’s a one-two punch: Make any salary/bonus/perk combination over five times median wage non-deductible. Anything over $250k stays on the company’s taxable side. That bumps up tax revenue and discourages that giant sucking sound of executive compensation bloat. Bill Clinton tentatively floated this and got screamed at by the CEO crowd.

Meanwhile, add a buck to the federal minimum wage. Most major corporations are sitting on cash, cash they won’t spend on expansion or hiring because they see no demand. 72 million Americans make hourly wage. Only about 3.6 million actually make the minimum, but an increase in the minimum tends to raise the bar for everyone. An extra buck an hour would mean they would gross $2,000 more each year, most of which they would take home and spend. It would end up as an annual $125 billion (roughly, after taxes) demand for goods and services. Demand and spending raises both employment and tax revenue. Again, CEOs will scream and the GOP will wail, but ordinary Americans will say, “Yeah, I could use $2,000.” Conservatives will say that increased wages will cause increased unemployment. Peer reviewed studies (as opposed to Wall Street Journal editorials) show a slight boost in employment for states that raise the minimum. Even if we call the employment question a wash, the net effect in terms of consumer spending and quality of life is positive.

I’m just fantasizing here. Barack Obama needs the approval of millionaires to raise the money for his reelection campaign. They would never allow this kind of thing. This is the hair tearing part of it: Obama doesn’t really care that he has no leverage with the Republicans. He’s cool with giving away everything. He’s looking at the GOP lineup for 2012 and seeing halfway rational people like Mitt Romney who have no chance with Republican primary voters and head cases like Michelle Bachmann who have no chance in the general election. Anyone to the left of Newt Gingrich will hold their noses, vote for him, and then go get drunk.

In terms of the Blazing Saddles metaphor, Obama is telling the mob “Ok, you got me.” He’s handing his badge and gun to the mayor and going to work for the banker. Don’t expect better.

Here’s the Blazing Saddles clip.

Galen, Darwin, and P.T. Barnum

My friends would tell you that the Minor Heretic is an easygoing guy. Rarely does anything make me pound my fist on the table and utter a sharp Anglo Saxon verb. Something I saw in the paper did just that the other day.

First, I should lay some historical groundwork. The Greeks, around 400 BCE, adopted a view of human health based on the theory of four humors, which in turn was based on the four elements of ancient physics. The elements were earth, air, fire, and water, and the humors were blood, black bile, yellow bile, and phlegm. By this theory, disease was caused by an imbalance in these humors. An attempt at restoring this balance constituted medicine as it was known, and consisted of bleeding, purging, or sweating the patient, until death or recovery.

A Roman of Greek extraction named Galen (b. 129 CE, d. ~217) popularized this method in his writings. His work was preserved and disseminated by scholars of the Byzantine Empire, and physicians merrily bled and purged according to his system, filling graves till the mid-19^th century. Like a gambler attributing his occasional wins to the efficacy of his lucky rabbit’s foot, a fifth or tenth or seventeenth century physician thought that Galen had shown the one path to human health.

Of course, it was all a crock. Patients of antiquity survived despite the ignorant cruelties of their doctors. It’s a wonder anyone did. Some unfortunate medieval burgher already struggling with influenza, malaria, or cholera would be fed emetics or laxatives, burned with heated metal cups, or have a vein cut and a pint or two drained off.

The practice didn’t let up until the beginnings of modern medicine appeared in the mid 19^th century.

Imagine my dismay when I came across a calendar listing in a local paper advertising a workshop in “Traditional Bleeding and Cupping, Module III” Some quack by the name of Julia Graves has the temerity to charge money for instruction in self mutilation and semi-suicide. Just to add to the hair-tearing aggravation of it, she tagged it with “Module III,” as if it were part of a legitimate course of medical study. The kitchen table in the Minor Heretic household received a minute of serious abuse.

I am trying to imagine who actually signed up for this. I am assuming that P.T. Barnum was correct, that there really is a sucker born every minute, and that some gullible wretches showed up, forked over real money, and offered up their veins to the knife.

I should note that the practice of cupping often involves soaking a small piece of cloth in flammable liquid, placing the cloth in a metal or glass cup, igniting it, and then placing the cup against the victim’s skin. The flaming cloth is thereby doused and the resulting vacuum sucks out a bump of skin. In Galenic theory this extracts some humor or another. In reality it just creates circular burns.

It staggers me that people living in 21^st century America, whatever their religious or political beliefs, could be so ignorant of the basic-below-basic foundations of human biology. We learned things in junior high school that blew this out of the water. Junior high? Hell, elementary school. And yet there are dimwits out there who will consider pre-medieval torture a plausible alternative to medical treatment.

I was talking (ok, ranting) about this with my neighbor, and he suggested that there is a knowledge elite in this country. Information about the physical world is all around us for the taking, essentially free. Only a small percentage of us are paying attention to it, absorbing it, processing it, and acting on it. Many people are just skating along on the minimum information necessary to do their jobs and get through the rituals of daily life.

When confronted with something outside their normal range of experience, these people have no tools for analyzing the truth or falsehood of claims. Armed only with emotion (an instinctive distrust of profit driven corporate medicine?) they think, “’Traditional’ feels good, and ‘Module III’ sounds official,” and expose their throats to the butcher.

And yet, a trip to the emergency room will save them. Natural selection has been blunted by the Trauma Center. Modern medicine, for all its faults, is at its best when confronting the results of abject human stupidity. Reckless drivers, YouTube stunt artists, careless gun owners, and neo-medieval self-medicators will mostly get reassembled and sent off to breed. Critical thinking and impulse control are both made irrelevant by QuickClot bandages, fine suturing, and a ready supply of blood plasma.

I am hoping that the VT Department of Health and/or the Attorney General’s office catch up with Ms. Graves and shut her down. She certainly doesn’t have to worry about a skeptical and informed populace.

For those of you who want further information on medieval medicine, I refer you to the third season of Saturday Night live and a performance by Steve Martin.

If You Build It

The Anthony Weiner scandal is splattered all over the media like a double handful of swamp muck. We are also being treated to a rerun of the intimate details of John Edwards, his mistress, and the hush money. These scandals are just the latest in a series involving politicians and sex. Infidelity and hypocrisy seem to be the bipartisan standard. We really should be paying attention to the ongoing rental of our government by corporate interests, but I’ll bite the hook.

It seems that our elected representatives are no better than we are, and probably worse. We shouldn’t be surprised. Think about how these people get where they are. Remember the tag line from the movie Field of Dreams? “If you build it, they will come.” If you build a carnival side show, expect freaks to show up and staff it.

First, we have a system that requires candidates to extract large sums of money from wealthy donors. This requires a level of ass-kissing that encourages the natural con artist while it degrades and discourages the honest person. Then we run the candidates through an extended gauntlet of campaign events, rubber-chicken dinners, coffees, press conferences, intense media scrutiny, character assassination (both received and given), repetitive stump speeches, and more groveling for dollars. The candidate is alternately called a savior and a traitor. Candor and natural behavior are discouraged. A successful campaigner controls every detail of every public moment and never utters an unconsidered word. In politics, hypocrisy isn’t a flaw, it’s a technique. You’d have to be kind of nuts to put up with this. And they are. I look at Congress and all the presidents of my lifetime and I see arrogance, egotism, narcissism, and various shades of neuroticism.

I remember talking with a reporter I knew right after he emerged from the National Governor’s Conference in Burlington VT. I asked him what it was like inside the security perimeter. He said, “I’ll quote from Star Wars. ‘You will never find a more wretched hive of scum and villainy.’ The governors are polished shiny fake assholes, and their wives are polished and fake and their kids are polished and fake.” Sadly, that’s what sells on a 30-second television ad. It’s all image and money and sound bites. And it selects a certain type of people.

A big part of the problem is the money. Quite simply, it forces politicians to lie for their very survival. There is one story for the rich donor and another for the 1,000 ordinary voters.

Another big problem is the fractured and confused electorate bumping up against a two-party system. Two parties aren’t enough to cover all the factions, so each party sets up a fake “big tent” and then triangulates a path that panders to the power base, ignores the truly faithful, and waffles just enough to scoop up people who aren’t paying attention. It’s cynical and dishonest and its goal is the preservation of power.

Twenty-four hour profit driven news coverage doesn’t help. Politicians trade extremism for face time. They have to deliver those pointed sound bites whether they mean anything or not. Editors and reporters follow the political extremes, maudlin human interest stories, and, yes, sex scandals. Anthony Weiner’s tacky emails are the least important thing on the entire national political spectrum, but they are inescapable on the news.

(I have to say this: Weiner should answer the calls for his resignation by saying that he’ll resign over emails after David Vitter resigns over having actual sex with actual prostitutes.)

The general population is a big problem, too. The American public has been lied to long and vigorously, jollied, flattered, and pandered to, enough that a childish delusional state has set in. We’ve reached a state of personality politics where the electorate is forever looking for the perfect Daddy to kiss the booboo on our collective knee and make it all better. Of course, there is no perfect Daddy out there, and there is no magic kiss, so people are forever dissatisfied. Despite the perfect record of failure, most people keep looking instead of focusing on policy. (Borrrring!) Specifically, most people don’t pay attention to our policies on selecting politicians. They just waste time loving them or hating them.

We couldn’t design a better attractant for dysfunctional personalities if we tried. Anthony Weiner, David Vitter, and John Edwards (and the dozen others we know about) are just symptoms of the situation.

My Last Post

So, apparently the world is going to end tomorrow, May 21^st, 2011. Many have predicted it in years and centuries past, but I’m sure that this band of zealots has it right. In light of the imminent departure of the righteous for higher altitudes, your Minor Heretic would like to make a final offer.

I suppose it is too obvious to note that somebody with “Heretic” in his moniker is not only going to be left behind, but is undoubtedly hell bound. I’d like to offer any righteous types out there the opportunity of a millennium for satisfied laughter in the upper reaches of heaven.

Sure, you could just shog off to the sunny regions without another thought, but wouldn’t it be better to leave your mark, to add an extra twist to your ascension? I’m going to be down here wailing and gnashing my teeth, my tongue cleaving to the roof of my mouth in the approved fashion. Good enough, but think of the added fun, the multiplication of my despair and humiliation, if I was surrounded by a multitude of now-useless possessions?

The Minor Heretic would be glad to accept, from any righteous Christian, donations of cash, gold, silver, stocks, bonds, jewelry, cars, and real estate. I could also use a four-wheel-drive tractor with a backhoe, preferably a Kubota. Any high value items will do.

Who better to receive all your worldly goods than a self-professed heretic?

Think of the righteous enjoyment you’ll have at my expense. Think of the jokes you’ll swap with your brethren (and cistern?) at the right hand of God. “How’s that pile of cash working for bribing the demons, hmmm?” “Think that Mercedes can outrun SATAN??” You’ll be yukking it up all the more as the devil funnels molten gold (once your own) into my various bodily orifices.

So don’t delay. This offer ends tomorrow. What have you got to lose?

I mean, unless you don’t really believe.