Let’s talk about economics and the elections

I have been almost afraid to post lately because we all seem to have such passionate views in our two party system. Let me attempt to write dispassionately. and point out some of the things we may want to consider as we decide how to vote. First, many persons are disengaged. I personally find that terribly unfortunate. My strongest recommendation is not to vote how I would vote, but just to vote period.

That said, I believe it is commonly agreed that our country has spent too much money. There are many ways to word this concept. Among them are “printing money in the basement” and “deficit spending”. These terms are certainly correct, but we must consider the reality that all countries print money in the basement, and all governments need funding to operate. Examining the situation more closely we can discuss budgets. When we have a deficit or when we print money that is spent, we must later pay. Clinton had a balanced budget, so I can say with confidence that balancing a budget is possible and in fact necessary for our long term financial health. It has been accomplished under a Democrat most recently. I suggest balancing the budget, not recommending Democrats as an end point. It’s the balance I want, not any particular party.

Now, why did we print so much money, and how are we going to pay it back? We printed the money to fund some wars, and to bail out the banks when the housing bubble burst. That’s the easiest way to understand how and why we printed too much money. As we borrow money from ourselves or create deficits or spend or print money in the basement which is all a version of the same thing, we must simply ask ourselves, not how much credit we have generated, but rather ask ourselves what our priorities are in spending or investing that money. Currently we have shown a propensity to spend (invest) in our defense and military more than any other single category, then bailing out banks seems to have suddenly risen to the top of our choices in spending (investing), and then all the other things at a smaller rate. Things like healthcare, education, infrastructure, and all the other social welfare programs are not as nearly as large as the funding of the recent wars and the maintenance of the number one defense department in the entire world. Perhaps those are proper priorities, and perhaps not. Undeniably they demand our highest choices currently on how we spend our money. Then, once you exhaust spending (investing), it’s time to talk about building revenue (that ‘s also called taxes). When you spend or invest, then you have to raise revenue or tax. It’s really pretty simple.

The idea that you want to eliminate taxes only works if you eliminate spending and investing, and any business or government that stops investing (spending) dies off quickly. No government equals anarchy, so arguing for limited government is a fantastic idea depending on just how “limited” you want government. Currently, we have government wanting to not allow women choices over their bodies. Such interventions by government are generally seen as intrusive by those of the female gender. So less government would seem to argue for letting women and doctors decide what they want without government regulation. That brings into question regulations in finance and medical and other areas. Regulations purpose is to guarantee free and fair markets and encourage competition, not to impede business and create useless paperwork. I like the phrase “smart regulation” over more or less regulation.  It’s appropriate regulation to maintain competition, a regulation free market creates undue risk as happened in the housing bust, and leads to monopolies which eventually squelch out competition. That is the opposite of capitalism. It’s competition that brings about efficiencies and the best deal for the client not free markets. Free markets lead to monopolies and the loss of competition. So remember to talk about free and FAIR markets, not just free markets which squelch out capitalism and competition.

Obama (and Romney with his Romenycare) seems to want to move towards hybrid system of private and public or possibly a single payer system on health care, and that would seem to mimic countries that spend about half of what we spend as a portion of GDP on healthcare, but yet those countries have everyone covered in their populations, unlike here for now. Here, overall, we still spend twice as much and cover only half the population. That’s embarrassing. A for profit healthcare system has not brought about the efficiencies we see in other countries that do not choose the entirely for profit model in healthcare. The argument over the role of government in the health of its tax paying citizens is definitely on the dinner table each night for meaningful discussion. I like the idea of going with the systems similar to that in many other countries that have cost half as much and covered twice the number of people myself. I am open to hearing how this would be accomplished in a private sector only solution. I haven’t heard of one yet, and our current one is admittedly broken but getting better….as is evidenced by reforms put forward in both Obamacare and Romneycare. Ryan’s newer proposals seems to eliminate Medicare as we know it and slash Medicaid. The role of government is certainly the question here. I personally prefer healthcare covered by taxes over paying for that out of pocket.

If Medicare and Medicaid need funding, then fund them. Don’t eliminate them. Means testing social programs and removing the cap on Soc Sec taxes where earnings are concerned would easily solve the current lack of revenue and make these programs solvent forever, so there are ways to accomplish funding these programs that allow for a minimum level of dignity, and allow for a country to proudly show it does not engage in taxation without representation. That concept was essential to the founding of this nation. We could also discuss a VAT, but more subtle changes in the tax code could easily accommodate the additional revenues without crushing the middle and lower classes who work, and without crushing the earnings motivation for winners in the private sector who work hard for their success and deserve the reward of their efforts. One of the candidates for the Presidency in this country has voluntarily or been guilted into paying 14 percent federal income taxes for 2011, so we need to ask ourselves what an appropriate level of taxes looks like, even for the very successful.  These are the questions most important in my mind as I consider for whom to vote.

It’s ok to spend and invest, and it’ s ok to raise revenue and tax to pay for that. How much and for what? That’s the question. Regulations are good only when they are not too numerous and useless. They should only be used to guarantee fairness in the marketplace to avoid too much risk taken on by banks and increased (not decreased) competition. I generally see a return or reinstatement of Clinton tax levels as one sure fire way to help balance the budget and bring about a stronger economy sooner. Why? Because that has worked well in the past. The only way out of an overdrawn account is to spend less (on wars?) and raise more revenue (with a tax overhaul?). Both political parties agree on that with the exception of the fringe which thinks that if you eliminate all government and stop all spending and end all taxes that everything will be hunky dory. That’s irresponsible and dangerous wingnut talk. Embracing our responsibilities and paying our bills will restore us to the correct standing and leadership position we have enjoyed before and will again. Oh, that approach will also bring about a robust economy. I am optimistic.