For the second time in two years the U.S. has stepped back from the precipice of default.Common and Uncommon Ground
In January, absent agreement to the contrary, a second sequestration will go in effect and on February 7, 2014 the nation would face yet another debt ceiling crisis. The inability of the so-called supercommittee to reach a compromise when given a similar task in 2011 is enough reason for pessimism.
A long-term solution requires that no one come into the talks with preconditions and that everything be on the table. One sign that a successful accord has been reached is that no one walk away from the table completely happy. It is necessary. The time has come.
I am not in complete agreement with everything my life-long friend says. For starters, I disagree with his stance that a default would have been catastrophic.
That's a moot point however, and cannot be proven either way because the precipice was essentially an illusion. We may have been on the edge, but there was approximately a zero percent chance of falling off.
Those small differences aside, I wholeheartedly agree with the three key ideas in Wise's article.
- We need to fix the budget problem
- Everything should be on the table
- No one should walk away completely happy
Compromise Misery Needed
In regards to point number 3, Wise did not go far enough. I propose what's needed is for Democrats and Republicans alike to both walk away from the table, not only unhappy, but downright miserable. Here are my proposals for mutual misery.
Democrat Misery
- Huge reductions in entitlement spending
- End collective bargaining of public unions
- Scrap Davis Bacon and all prevailing wage laws
- Increase Social Security Retirement Age
- Food Stamp Reform along the lines I suggested in Treasury Secretary Pleads for Higher Taxes, More Government Spending, Big Farm Bill, No Cuts in Food Stamps
- Stop disability fraud&
In return for the above much needed Democrat misery, I would be willing to accept a modest increase in taxes. Of course that would make Republicans unhappy. But unhappiness is not what we need, we need outright misery as follows.
Republican Misery
- Modest tax hikes
- Huge decreases in military spending
- All US troops on foreign soil come home within three years
- Huge reductions in military spending
Some issues are non-partisan. For example food crop supports are promoted by farm-state Republicans and Democrats. Drug imports fall along similar lines. Thus we need to spread the misery.
Non-Partisan Misery
- Elimination of all tariffs
- Elimination of all crop supports
- Drug imports from Canada and foreign countries
Food Stamp Misery
To get people off welfare and on to workfare, we need to reduce the incentives to collect welfare. This is what I suggested earlier.
- Prohibit food stamp purchases of potato chips, snacks, soft drinks, candy, pizza, frozen foods of any kind except juice.
- Limit food stamp users to generic (store brand vs. name brand) dried beans, rice, peanut butter, pasta, fresh vegetables, fresh fruit, frozen (not bottled) juice, canned vegetables, canned soup, soda crackers, poultry, ground beef, bread, cheese, powdered milk, eggs, margarine, and general baking goods (flour, sugar, spices).
- Calculate a healthy diet based on current prices, number in the family, ages of recipients, and base food stamps allotments on that diet.
- In the interest of health and cleanliness, expand the food stamp program to include generic soap and laundry products.
My proposal would do something positive for food stamp recipients' health and the budget.
And what better way to make people miserable than to make them eat healthy? Hopefully, miserable enough to seek a job.
I am open to still more misery, as much as it takes, on each side, to balance the budget and lay a foundation for growth.
Make All the Politicians and Lobbyists Miserable
I nearly missed this key point: We need to make all of the politicians, public union advocates, and lobbyists on both sides of the aisle completely miserable. The way to do that is institute serious campaign finance reform.
Vote buying and political pandering on both sides of the aisle are key reasons we are in this fiscal mess in the first place.
To date, the word "compromise" means both sides get all the spending they want, deficit be damned. Worse yet, politicians are all too happy to let lobbyists write the legislation in return for donations. The result is the worst legislation money can buy.
Footnote
I revised the ending paragraphs with some small changes regarding food stamps, and more importantly to include campaign finance reform, vote buying, and the current meaning of compromise.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
