Treasury earns $7 Billion on Citigroup

It looks like the Treasury is making about a $7 Billion profit from bailing out CitiGroup. Now if they only do something useful with the gains like pay down the debt...

The odds favor they'll use it on something stupid.

Back to 40 : Thinking and promoting long-term policy

The United States faces multiple long term crises.

• Health care, which we've finally started to address
• The Economy, the Budget, and the National Debt
  
• Environment, which we're still effectively ignoring
  

Obviously these are joined at the hip. They also face the same fundamental problem - we don't have any long-term strategy for any of them.

If we don't start creating long-term policies to solve these issues now the crises in the long term will be unimaginable. Health care costs are continuing to rise and will only be worse as the Baby Boomer effect gets more steam. The environmental issues are already facing a point of no-return according to many sources.
In a recent posting by Donald Marron, former CBO director and former economic advisor to President George W. Bush, suggested a multi-decade approach that focused on reducing our debt-to-GDP ratio (which on its current trajectory will reach 85% by 2020) to first 70% (by 2018), then 60%, then graduating down to 40%.

He suggested that we're going to have to go for the triple montage of:

1. Reducing spending - this is the number one priority - at least reducing the growth rate of spending, which is completely out of control. Reducing spending would have a more positive effect on the economy than increasing taxes.
   
2. Increasing taxes - A lower flat tax would widen the tax base (Gerry Brown, Attorney General, D-CA is running for Governor of California again - he proposed a flat tax when he ran for President in 1992) and a VAT tax (national sales tax) would eliminate a lot of the pain of increasing our already broken income tax system.
   
3. Promoting growth - We have to continue promoting growth, including increasing it areas that are going to further other goals like R&D in Health Care and Energy (like the National Ignition Facility's fusion reactor that finally seems like it's going to reach parity next month)
   

His essay points out - correctly in my opinion - that no single one of these is sufficient to achieve any significant reduction in the debt.

The budget issue is the easiest and most immediately critical of these issues. If we don't have the money or leverage, we can't do much about the other two. We'll be looking at a national collapse in more ways than one.

Imagine if you made $100,000 per year but had credit card debt of $80,000 (an 80% Debt-to-GDP ratio). Depending on your rate you would be paying over $1,000 a month just in interest on $8,333 in pre-tax income. If you had to go buy another car, no one is going to give you a loan. If you had a financial emergency, you'd be out of options. What happens if you get a pay cut (the economy hits a bump and tax revenues drop)? With that kind of debt load you wouldn't have much in savings or investments or retirement funds. Even credit card debt of $60,000 (a 60% Debt-GDP ratio) would be well beyond your means.

Politically, this is going to be a tough sell. We need to start thinking beyond the next quarter and the next election. As Americans we need to support the politicians who are willing to push for this kind of long-term strategy.

AN IRISH FRIENDSHIP WISH

May there always be work for your hands to do;
May your purse always hold a coin or two;

May the sun always shine on your windowpane;
May a rainbow be certain to follow each rain;

May the hand of a friend always be near you;
May God fill your heart with gladness to cheer you.

Salvaging Health Care Reform

I laughed this morning when I heard Senate Minority Leader Mitch McConnell (R-KY) say this morning that (because the Democrats now only have a 59-41 lead in the Senate) they're in the driver's seat. I laughed at first because it demonstrated how delusional folks in Washington are that they can't do simple math. Then I realized sardonically that he may be right. With the massive all-or-nothing approach to health care it's pretty easy to get senators together to filibuster.

We need health care reform, but did we need it to be such a massively stupid bill that it took over a year to pull together? Couldn't we have had smaller, more manageable bills that are easier to negotiate? Easier to have up/down votes on?

If the Democrats want a strategy to pass health care reform, break it into those manageable chunks. Maybe 4 separate pieces - one for the controls including not denying people with existing coverage, one for the national exchange, and one for the public option. Present them individually. If the Republicans want to filibuster each and every one, they'll be globally viewed as the obstructionists they've been all year. In the mid-terms they'll be slaughtered.

Democrats and Republicans: Time for a reboot

For the last decade, Hollywood has been doing a lot of "reboots" where venerable series like Batman and James Bond have either gotten so silly or their roots are so far in the past that they need to go back to the beginning of the series and tell it from scratch. They need to get back to their roots.

The special election in Massachusetts yesterday was proof that both Republicans and Democrats need to reboot their own parties. I've been a centrist Democrat all my life - I'm just not sure I know what that means anymore. Maybe I'm just a centrist. My fellow Republicans are in the same boat. No one knows what it means to be a Republican anymore. The Democrats may be dazed and confused, but they have a platform. They're fragmented over the details, but they have a platform. The Republican party has ideals - somewhere - but they have no platform. They've been the party of "No" all year.

So now we're faced with two parties running the country that don't know what they want to be when they grow up. Maybe they even have an idea, but they definitely have no plan to get there.

We could always follow George Washington's idea - first things first, let's get rid of all the parties and vote on individual issues.