Monday, March 28, 2011

Getting Involved in Civil Wars – An Alternative History of America

In 1863, Abraham Lincoln’s reputation in Europe was failing. Much of the Europe saw him as a tyrant who ignored the rule of law, imprisoned political enemies, and turned a blind eye toward war crimes by his generals against the Southern rebels. That’s not saying that they supported the Confederacy. They were viewed as backwards, fighting to preserve antiquated slavery. The American Civil War was seen as an internal issue, of little concern for Europeans, and the North was winning. Everyone expected the United States to survive as a Republic, albeit with some changes. But then General Sherman started marching south. News of pillaging and burning of civilian homes, as well as rumors of executions and rape made it back to Europe. General Sherman gained a reputation similar to Attila the Hun or Genghis Kahn. The Confederate separatists were viewed as freedom fighters, not unlike the Colonials that won independence from England. All but the most adamant slavery opponents were won over to at least vocal support of the Confederate cause. Both the French and the English saw opportunity in this, and began to get involved. By supporting the Southern rebellion, they could weaken their new imperial rival with the support of many of their citizens.

England and France joined forces to attack United States cities from the sea.

Tuesday, February 22, 2011

Short Post on Public Sector Unions

In regards to my last post:  Lest we forget, public sector unions use taxpayer money to lobby the government for taxpayer money, and use taxpayer money to bargain contracts for more taxpayer money.  Limits on this by government are perfectly reasonable.

Sunday, February 20, 2011

Public Sector Unions, Liberals, and Shared Sacrifice

Every time governments run into budget crises and cuts have to be made, liberals start talking about the need for shared sacrifice.  The idea is instead of cutting every government worker necessary to balance the budget, you cut some people to make up some of the shortfall, asking the remaining workers to take a cut to make up some of the shortfall, and raising taxes to make up the remainder.  The theory is that everyone shares in the pain.  This is all well and good, but when public sector unions get involved, one of those options is taken off the table.  The current situation in Wisconsin is emblematic of this.  Governor Scott Walker has a plan where no public sector workers would have to be laid off, and no taxes would have to be raised, if state and local workers just agree to contribute a reasonable amount to their generous pensions and healthcare.  If these reasonable cuts are not made, 6000 state and local workers will have to be laid off.  The unions have said that they would prefer the layoffs to having to take any cuts.  In states like California, where Governor Gray Davis was strongly supported by public sector unions, the budget gaps are almost all going to be made up layoffs.  Shared sacrifice be damned.

Saturday, January 8, 2011

The Mandate of the 112th Congress

This week, a new Congress has been sworn in (well, mostly), with higher expectations by conservatives than any Congress in at least 2 years.  And the first week has been full of a couple of  good things, and a lot of good symbolism.  One of the first things to happen was a reading of the Constitution on the floor of the House.  One of the first bills that the House will pass is a repeal of Obamacare.  A new House rule will require every bill to refer to the part of the Constitution where they were authorized, and other House rules will open up debate on amendments and expand floor debate in general.  I support all of these things, but I don't care that much.  While they are either small positive steps or good symbolism, they don't mean that much. 

We have a $14 Trillion national debt, and a $1.3 Trillion national deficit.  Japan and China, our two major creditors, are fighting their own fiscal issues, and have been unwilling or unable to buy very many of our bonds.  The deficit has been financed by major US banks buying Treasury bonds, with money borrowed from the Fed at 0.25% interest rate, and the Quantitative Easing by the Fed itself.  Both of these are inflationary measures with slow effects, because the money goes to the Government first.  The debt and the deficit is doing major harm to the economy.  Republicans have promised to cut $100 Billion in discretionary spending. Let's say that they do, and that the economy really starts to pick up steam, and grows by 3% in 2010 (increases tax receipts by about $65 Billion).  And lets say that Obama has a rare fit of sanity and brings all the troops home from Iraq and Afghanistan (saves $100 Billion).  Even with all of that, and the wailing and gnashing of teeth from the media about lost medical science grants and bridges falling down and dumb children who can't learn without grants from the Department of Education, we'd still have $1 Trillion deficit.

And you can't solve the problem with taxes either.  It is unlikely that the new Congress will recommend any tax increases (even those that involve lower, simpler tax rates, like Reagan signed into law), but even if so, the historical revenue limit says that would be limited to about 19% of GDP, and they're about 17% of GDP now.  So the maximum increase in tax receipts would be about $300 Billion.  If they did all of that, plus the reductions in spending mentioned above, there's still a $700 Billion deficit, and it's getting worse with every retired baby boomer.  A country with a $14 Trillion debt and a $700 Billion deficit is in better shape than one with a $1.3 Trillion deficit, but it is still headed for default.

The new Republican-led house must pass major reforms to get the country's checkbook in order.  They must get Social Security and especially Medicare on the table.  They must start talking about things like Medicare vouchers, and admitting to baby boomers that they won't be able to give them what was promised.  This won't be easy, but with everyone from Ron Paul to Paul Ryan to Paul Volcker talking about the dire situation of the national debt (in Paul Krugman bizarroland, we need a bigger deficit and I don't know what RuPaul thinks), it is possible.  It will take compromise, but any compromise must still lead to financial solvency. 

To the 112th Congress, I must say that I like the talk so far, and I like the symbolism.  But if the American people wanted great talk and symbolism, we would have elected Glenn Beck and Lee Greenwood.  Let's see some results.