Wednesday, January 27, 2010

My Letter to the President

Well, I've been meaning to reanimate this blog (again), and today's news that Barack Obama plans to announce a multiyear freeze on much of the discretionary federal budget has sufficiently pissed me off to finally prompt a new entry. Actually, it prompted me to write a letter to the White House, already delivered through the online system, with a signed paper copy going in Wednesday's mail. Rather than reinvent the wheel, let me just tell you what I told the president:

Dear Mr. President:

My name is Bill Dauphin, and I’m proud to be your constituent and your supporter. You called the nation to hope, and I responded with time and treasure, phonebanking and canvassing for you in the Hartford, Connecticut, area during both the primary and general election campaigns. When I stood on the Mall, just over a year ago, and watched you sworn into office, it was one of the proudest moments of my nearly 50 years of life.

In today’s news comes word that you plan to announce a long-term freeze on discretionary nondefense federal spending. As I write this, of course, you have not yet given your State of the Union Address or announced the details of your proposal; perhaps the final plan will not terrify and disappoint me as much as what I have heard today does. But for today, I am both disappointed and terrified: At a time when we desperately need a robust government, acting in meaningful and sustained ways to reform our healthcare system, create new jobs, develop new green energy technologies, address climate change, rebuild our infrastructure, reform public education, end our wars and bring our troops home, and rebuild the shattered trust of the world… at a time when we so urgently need to move forward on all of that, an a priori promise to freeze the budget seems instead like a retreat into the pernicious Reagan-era falsehood that “government is not the solution to our problem; government is the problem.”

I beg you, sir: don’t give in. I know the American people seem angry, but surely you realize much of that anger is born of manufactured fear, the result of deliberate and cynical manipulation on the part of the enemies of progress. You must not let your policies mirror the people’s fear: This is a moment instead for leadership. Where federal programs are truly ineffective or wasteful, by all means you must cut them. But you also know that much of what the government does, it does better, and more efficiently, than the private sector can, and much more of what government does is that which the free market would never provide at any price. To accomplish the things you dared us all to hope for will require investment, not parsimony. Raise taxes if you must – raise my taxes – but do not abandon our nation’s future, my daughter’s future, for the sake of a superficial veneer of “fiscal responsibility” and a brief moment of political calm.

You called your book The Audacity of Hope. Well, we’ve had the hope; it’s time for the audacity.
As I say in the letter, maybe it'll all look better after the big speech... but frankly, I ain't waitin' underwater. For all that some have been frustrated with him, Obama represents the best combination of intelligence, progressive ideals, and political pragmatism we've had since the 60s; if he can't outwit, outlast, or outplay the lies and fearmongering of the nattering antigoverenment mob, we are well and truly hosed.

Anybody know if they sell a Rosetta Stone program for New Zealandish?

9 comments:

negentropyeater said...

As you well know, I'm all for a robust government that does all the things you've cited. But I'm afraid the need to reduce public deficit is not just for the sake of, as you write, "a veneer of fiscal responsibility".

If Obama can't convince potential investors in Government debt that he can get the deficit under control, either interest rates will have to rise, which will cause the deficit to rise even more, or the Fed will have to monetize even more public debt which will cause the dollar to fall even more. And there will come a breaking point.
The financial situation of the governments of most large advanced economies is becoming critical and there is a competition for funds going on. In this, the US Govt is critically dependent on foreign institutional investors having one of the largest current account deficit (% wise)and is also one of those that has the smallest tax revenues (% wise).

Some people like to give the example of Japan over the last two decades to support the notion that the US government could well carry a much larger debt. But Japan was in a relatively unique position then, and the worldwide economy was booming. Plus Japan never had to deal with large current account deficits and was not so critically dependent on foreign investors.

So I'm afraid Obama has no choice. Raising public revenues seems politically impossible in the USA, and controling public deficits is not just a "nice to have" but a necessity called for by the Chinese government and other large foreign investors.

Bill Dauphin said...

Neg:

I'm certainly not an economist, so my ability to argue your points directly is limited... but I have yet to see comments from any reputable economist who has voice support for the idea of a freeze.

Honestly, though, it's the long-term politics of this that scares me far more than the economics: It's been three full decades now since Reagan's anti-government ideology became the mantra of American politics (and BTW, we pulled ourselves out of the Great Depression in less than half that span, though we did have help from Hitler on that one). In the interim, we've had two Democratic presidents, both brilliant and well educated and rhetorically gifted and deeply humane, and yet we're still mired in the right-wing death-spiral of the public sector. If Obama can't break the cycle, I fear nobody ever will, and it will mean quite literally the end of my country as I know it.

That scares me far more than any economic calamity you can wave at me... and yet Obama seems poised to accept precisely that outcome, for the sake of economics.

Well, maybe things will look better after the speech tonight; I don't see how they could look worse.

negentropyeater said...

Bill,

a sovereign debt crisis for the US would have much larger consequences for the USA (and the rest of the world) than you can ever imagine. See the Weimar republic or Argentina as examples.

You simply can't have the cake and eat it too. You can't have a larger and more robust government, a wellfare state, if you can't raise much larger public revenues. This is both an economic problem and a political one.
In the US, federal income tax represents 18% of GDP, other federal revenues (corporate taxes and social) 7%. This is only about half of what government revenues represent in France or Germany. Here we have large taxes on gasoline, value added taxes, much larger social security taxes. I see no evidence whatsoever that any of this is politically implementable for now in the USA, even by Obama. It's impossible, as long as you have an opposition party, the GOP, that will succesfully convince a majority of Americans that they really don't want it. The only thing that ever seems on the table in the US is increasing income tax revenues on the wealthy, but that won't be nearly as sufficient to get to where you'd like to be.

So if you can't raise more revenues, the only thing you can do is increase deficit spending. But even the US Government, like any other business, can't go on forever with such a strategy. That leads irremediably to a sovereign debt crisis that will have extremely dire consequences.

Bill Dauphin said...

Neg:

a sovereign debt crisis for the US would have much larger consequences for the USA (and the rest of the world) than you can ever imagine.

I don't doubt that's true... but so far, you're the only I've heard suggest one might be in the offing; short of such a crisis, I really do worry more about the politics than the economics.

I see no evidence whatsoever that any of this [i.e., European-style taxation] is politically implementable for now in the USA, even by Obama.

I agree... and that's precisely what I'm worried about. Significantly higher taxes aren't available currently in the U.S. because of 30+ years of political "teaching" that government is ineffective, if not outright evil, and therefore taxes are inherently confiscatory and wasteful. You know that's not true, because you're living what is true... but the American people have been consistently and effectively lied to on the point for a generation and a half.

If we don't reverse this anti-government orthodoxy, it will eventually mean the destruction of our nation (and I mean that literally and permanently). But responding to shortfalls by promising a "freeze" reinforces the underlying ideological problem, rather than attacking it.

I have no problem with financial responsibility; I do have a problem with framing it in a way that seems to confirm the notion that reducing government is the answer to every crisis. (BTW, I'm far from the only one who interpreted the announcement that way [see also Paul Krugman].)

This shit flows downhill, too: My town is on the verge of cutting $1.5 million from the professional salaries account (i.e., teachers and paraprofessionals) of a school system that's already failing specifically because it's too difficult, politically, to ask the taxpayer to pay the fucking freight. We have got to change this culture, and Obama's bully pulpit is our best foreseeable hope.

All that said, the speech was better than I feared: I still hate the concept of a "freeze," but in context it seemed like less of a full-on retreat from government than the advance notices appeared to be. We'll see what happens....

negentropyeater said...

but so far, you're the only I've heard suggest one might be in the offing

Here's just one example, out of many :
http://www.youtube.com/watch?v=i9CSbUXTYqI

Many of the financial and economics blogs are discussing the rapidly rising risks of a cascading sovereign debt crisis.

The US Govt ALREADY can't find enough investors to finance its debt. That's why the Fed was forced to monetize more than 1.2 trillion of that debt just last year. That means printing fresh dollars to buy that debt. That's more printing in a year than in the previous 100 years of the Fed's history. And the situation is only going to get worse.

I have no problem with financial responsibility; I do have a problem with framing it in a way that seems to confirm the notion that reducing government is the answer to every crisis.

Being financially responsible means balancing revenues and soures of funds with expenditures. Nothing more. Obama must demonstrate that he can get there. He has no other choice. Otherwise, US Govt bonds will find even less buyers at the current rates, the Fed will have to monetize even more, investors will lose confidence in US debt, and this will start a hyper-inflationary death spiral.
That's why Obama is forced to talk of a freeze.

We have got to change this culture and Obama's bully pulpit is our best foreseeable hope.


I agree, but it's a very thin hope. It seems unlikely that he'll be able to do much in the comming two years about a problem that has taken 3 decades to build.
And then, what's next ?

I'll sound defaitist, but I think we're fucked whatever Obama does. The only thing he can do is kick the can as far as possible down the road and hope it doesn't explode whilst he's in charge.

negentropyeater said...

btw Bill, just finished watching a programme from Davos on the risks for the worldwide economy in 2010. Guess which one was identified by a large audience of business, financial, political and academic leaders, as the biggest one ?

The risk of sovereign debt crisis in the developped world.

As you can see, I'm far from being the only one suggesting that we might be in the offing.

SpriteSuzi said...

Bill,
I finally clicked your name/link on Pharyngula. I've been lurking there, rarely posting, for a while now. I haven't seen an NZ Rosetta Stone, but I (and a lot of other Pharyngulites) do live in New Zealand. What are you trying to translate?

Bill Dauphin said...

SpriteSuzi:

Sorry, just a little joke on my part, about the possibility that I might need to emigrate if things go too badly here. I know NZ speaks English (and I wouldn't expect to find a Rosetta Stone program for Maori!); just a bit of snark.

And I'm feeling calmer now, anyway, so I think I'll stick around in the U.S., just to see how the story ends!

SpriteSuzi said...

Bill,
No worries (good NZ/Australian expression!)

We emigrated from California 4 years ago, and I have frequently wished that there was a US/NZ English dictionary! AltaVista doesn't even do US/UK English. Sounds silly, but there are a lot of words that are different that you don't expect. I'm still learning.

Yesterday I figured out that what is called oatmeal here is what I would call oat flour. I knew that what the US calls oatmeal is porridge here; I didn't know they used the word oatmeal at all.

The worst was when I publicly used a word I thought I understood, and turned out it wasn't just snarky, it was obscene...I was so embarrassed I've blocked what I said, so I don't remember the word!

If USian things take a turn for the worse again, NZ isn't a bad place to be, all things considered...

Good luck with the politics. Frustration with the status quo was a large part of why we left the country.

Take care,
Suzi