Monday, July 18, 2011
Place your bets (on our fiscal future)
Today I love this quilt by dellastella; first because I'm shooting for a dimensional effect in my next bed quilt (of which more later) and second because the image of blocks falling out of the sky and piling up uncontrollably (at least, that's what happens when I play Tetris) seems like a perfect metaphor for our financial dilemma.
Normally I don't say much about economic issues, because they're big and complicated and I'm not an economist. But after reading the last week of pronouncements from pundits, I'm not so sure they understand economics any better than I do. I've read all of the following predictions and probably some more that I've forgotten:
1) There will be no debt ceiling raise, old people and military families will starve, the credit rating of the US will crash, Armageddon is coming and it's all the fault of the Republicans for refusing to raise taxes. (The default Democratic position.)
2) Ditto, ditto, ditto, ditto and it's all the fault of Obama and the Democrats for not putting forth any budget at all, let alone agreeing to spending cuts. (The default Republican position, except they usually leave out the part about starving Grandma.)
3) Ditto, but it's no big deal because the government has plenty of money coming in to pay interest on the debt, Social Security, and military pay; we'll just have to immediately cut almost all other spending. (Sounds to me like, "I've maxed out my credit cards but it's no big deal because I can pay the interest and the rent on my apartment as long as I quit using electricity and eat only once a day.")
4)Even if the debt ceiling is raised, our credit rating is going to crash because we have a ginormous debt and a humongous deficit and no credible plans for dealing with either. (Standard and Poor's position, I think.)
5) The economy will be saved by a flat tax and spending cuts, but we're not going to fight very hard because we're afraid nobody will love us. (Republicans)
6) The economy would be destroyed by a flat tax and spending cuts, so we're absolutely not going to agree to anything along those lines. (Democrats)
7) Look, we've agreed to compromise and allow some spending cuts, why won't you cooperate? (Democrats)
8)You say "everything is on the table," but won't say what, specifically, that means; we're not going to sign on to vague generalities. (Republicans)
9) Eric Cantor is childish and a lousy negotiator (Democrats)
10) Oooh, look, Obama just banged his sippy cup and threw his strained peas all over the room (Republicans)
Now why would I think that none of the pundits have a clue? One thing for sure - they can't all be right.
I am somewhat annoyed that we're sinking into a bottomless sea of debt and the folks on Capitol Hill seem to be interested in pointing to the other guy and shouting, "It's his fault! Look, people. If I'm about to drown, how about you stop arguing about who pushed me overboard and somebody throw out a life preserver?
I do notice a couple of things that would seem to weaken the Democrats' position (but then I would, wouldn't I?)
1) We've been told and told and told that Social Security funds really do exist, inside a sacred lockbox that is never ever opened for any other purpose. Now Obama says we may not have funds to cover Social Security in August. I wonder who's lying?
2) Historically, tax revenues have hovered at around 20% of GDP. So I'm not at all sure that tax increases would produce more tax revenues. Eliminating, say, the Department of Education would certainly result in less spending.
Not that it matters, because Armageddon is coming on August 2... or is it? Faites vos jeux!