Obama - Is fiscal responsibility important?

On the site (Those Who Benefit Pay), one of the key values is personal responsibility as opposed to co-dependency and entitlement, as those latter two cause not only actual "seeable" problems but also psychological problems and lack of personal development.  And these, in turn, have effects on others.  If we all were more productive and responsible, the size of the pie would be much, much greater and we all would be better off.

Part of personal responsibility, of course, is being responsible about your money and your spending.
This applies to a person, a business, and a government.

And the lack of responsibility in many small things often add up to or are at least symptoms of overall irresponsibility.

With

1.  more than $50 trillion of National Debt plus unfunded liabilities to its citizens for Social Security and Medicare (See Deficits/Debt summary page for overview)
2.  $2 trillion of income
3.  Over $3 trillion of spending per year

there is obvious reason for concern.  (Imagine a person being in such financial shape.)

If we have a President who submits a budget that doesn't deal with it, and it is voted down 97-0 in the Senate, do we have an adult in the White House who is taking fiscal responsibility and/or has adequate financial knowledge?

If he has to be forced by the Republicans to address the debt and deficits and does nothing otherwise is this fiscal responsibility?

If he then mentions we have to fix Social Security but never does anything concrete about it, is this fiscal responsibility? (If he gives a "tax holiday" to taxpayers but doesn't see that that makes the fund be less funded, incurring more problems down the road then does he not understand tradeoffs and costs?)

When a President, without approval of Congress, lowers interest on student loans and makes them forgivable in 20 years, does he not realize that someone else has to pay for that?  Such as taxpayers ( because the government has less money coming into its coffers).

When a President, without approval of Congress, sets up a mortgage relief program where old mortgages can be replaced with new lower interest mortgages does not see that there is an additional loss incurred by Fannie Mae and Freddie Mac for each cancellation and replacement, we have a problem.   And later we'll have to add to the incredible bailout (so far over $180 billion, but expected to go above $500 billion) of those two government guaranteed agencies.

This may be politically good, as everyone likes to be given benefits and not pay for them.  Or it may, which is just as harmful, be financial naivete on the President's part, where he sees only how he is being charitable without seeing the greater harm that inevitably, cumulatively, will be wrought upon this nation.

Fiscal responsibility is absolutely mandatory.  And I hope we stop demonizing those who have made proposals for being more fiscally responsible - and just accept their ideas and modify them if needed.

Objectively, we cannot continue to have this fiscally irresponsible and/or naive President in office.  That sounds political, but all facts point to this.  He should be in a different job where his brilliance and leadership fit, but not in this job.  (See Evaluation Of The Obama Presidency.)

Submittted for your consideration and feedback, respectfully,

The Rational NonPolitician

The "Lie" about the Obama Jobs Plan, Student Loan Plan, and etc.

I am saddened to see non-complete, non-informative, non-truth rhetoric from the President.

He blames the Republicans for not wanting people to have jobs, which, is, of course, preposterous.  He fails to mention that the non-starter, which he knew was a fixed position, was the increase in taxes that the Republicans would not accept. 

Instead of funding the jobs bill with expenditure cuts elsewhere in order to keep balance, he chose the unworkable route of more taxes.  The effect of adding a 5.6% tax for the over million dollars a year group would be $45 billion a year, which, in the "new math", would amount to $450 billion over 10 years, which is the amount of the cost of the jobs bill.

So, this would mean the deficit is increased by $405 billion this year, since that amount will be coming in over the remaining nine years.  Undisclosed fact - and I am saddened by this modus operandi - not angered, but tremendously disappointed in the lack of true leadership, of which I think truth-telling is a major element.

His beneficence on shortening the time before student debts are forgiven simply allows for not having that money paid back to the federal government, which creates a hole that must be filled by passing the burden on to future taxpayers.  (See Student Loan discussion.)

His 'Mortgage Relief' beneficence in allowing people who are up to date on underwater mortgage loans passes a burden to taxpayers, as there is no free lunch.  This burden is not obvious, though it is logical.  To have a new lower interest loan an old loan must be cancelled, which causes a loss.  In this case, the loss is to Fannie Mae and Freddie Mac, which will result in adding to the bailout costs, largely not discussed, which are estimated to be the biggest of any in history.   The estimated costs will be between $450 billion to well over a trillion dollars.

When we relieve Americans of paying payroll taxes for Social Security, guess what happens.  The Social Security fund is then short by that amount.  And that means that future generations must make up the difference. 

And we don't see these discrepancies in the pitches that are being made, as they are being made without proper and complete disclosure.  The irony is that this government is pushing for better consumer disclosure and other disclosures - but it is being out of integrity with its own disclosures.

A culture of responsibility is the only solution, rather than a culture of sales pitches and being irresponsible for the consequences that will inevitably, predictably occur.  

And I am saddened and disappointed by all of this - and I stand for picking leaders who will face the responsibility with full integrity.  We do not have a leader who is doing that...

Yours for rational choices,

The Rational NonPolitician

Financial Integrity Versus Jobs

An interesting dilemma - the Republicans are trying to cut the budget but, unremarkably enough, the media reports that would cause a reduction in jobs - 400,000 jobs if there is a cut of $100 billion.

When asked about this, Boehner says "so be it" - and he sounds uncaring, but I think he met that was a reality that had to be incurred.

Rick Scott, the governor of Florida, turned down $2.4 billion for a high speed train - reporting that the current rail system only gets fares that cover 1/6 of the costs!  Plus he expects that Florida would be responsible for all overruns on the construction.  He is not willing to do that to his state even though obviously the state will not get the benefit of the jobs for building the train.

So, should we "buy" more jobs by spending more and have it not be economical or should we be fiscally responsible?  The latter, of course, works out best for the long term, where financial losses are avoided..

How far should we go to buy jobs - we could spend a trillion more dollars to try to solve our unemployment problem, which could produce 2 million to 4 million jobs (per old estimates) - but we'll have to pay for it later with more taxes.   2,000,000 jobs at an average of, say, $40,000 each equals $80 billion dollars - if average taxes were at 20%, we would have $16 billion back toward the deficit.  That doesn't quite work, even if you add back potential savings in unemployment payments or using an economic "multiplier". 

Of course, there is human welfare at stake in avoiding people being unemployed, but where is the limit?

A tough decision - but it would appear that long term integrity will work out the best - and, as always, decisions have costs to them.

What do you think?  (Include specifics and numbers where possible)

The Non-Politician .

See also Is The Wisconsin Governor Justified In Busting The Union? (under Unions).

HIDDEN EXTRA DEBT: $2.5 TRILLION

If a corporation promised a future retiree a pension, the corporation would have to record that amount as a liability and then note it down as an expense of doing business during the year the liability was incurred. 

The US government does not do this basic required accounting.

So, we think the deficit is "only" $1.6 trillion this year, but it is actually MORE if we consider our unpaid  future extra liabilities we incurred this year.  

Congressmen, and maybe even the President, do not understand this.  Harry Reid and Barbara Boxer have said "There is no problem with social security.  We have a huge surplus" - But, with thinking and an analysis and understanding of the facts and factors involved,  I declare those are "unknowledgeable" statements, completely incorrect and misunderstood.  (I am not optimistic about our legislature adequately dealing with what is needed!!!!)

Medicare is behind $36.3 trillion, considering all that we've promised in the future (minus what will be paid).
Social Security is behind $7 trillion.  (And those are the low estimates.) 

I hope the congressmen, and perhaps the reader, reads, on the related site:

The Unfunded Liabilities Explanation (kind of an Accounting 101)
Social Security - What is the real liability?
Medicare - This is a bigger problem.  Get the whole perspective.

The problem is solvable if we do the practice of "handling a problem while it is little so that it does not get big" - except it is already very, very big, but we can prevent being run over by a big freight train, if we anticipate - and use our reasoning power, with the facts and consulting the true experts.

Will we face the biggest problem of our era?  Will Congressmen learn and then deal with it? 

I certainly hope so!!!

The NonPolitician

As always, corrections, additions, and feedback are always welcome.

Obama And The Great Tax Compromise

Obama recognized the needs to stabilize the economy, to settle uncertainty.  He also cleverly worked in some stimulative monies plus covering the unemployed for an extended period.  Though raising the amount of debt is counter to one of our key priorities, his attempt at stimulative spending seems to be wise, as it is imperative that the economy grow and stabilize, so that there is a sufficiently large pie to make things work and to pay down the debt.  Allowing the economy to go down is something we cannot afford.  Hats off to Obama for this part.

However, calling the Republicans "hostage takers" (in a victimlike manner) and saying he will "fight" causes me, using the criteria for rating on a previous post, to lower his rating, as adversarial behavior is not productive (unless in actual war). 

The Republicans, no matter how justified their position, needed to propose less than a $5 million dollar exemption for estate tax, at a 35% rate above that.   Continuing it at the current exemption in 2010 might be reasonable, but to overextend beyond that is counterproductive - and it has resulted in extreme opposition.
The Dems might consider, however, that this is a very small portion of revenue involved and definitely not worth doing harm in a bigger way overall.

Most of the Dems appear to be violating all the criteria for rating of leaders (see rating post), reacting in anger and dug in heels, offended because they weren't include earlier (ego getting in the way of the greater good) - all behavior that is counterproductive.  In caucus, they even went into a chant of "just say no" - productive adult behavior? 

It's sad.  We should be able to have a "grown up conversation" if we want to have a greater overall solution.

Is such behavior productive (which is our criteria)?  Other suggestions?  (Hopefully, all comments would be based on reasoning, facts, and productiveness and not anger and labeling or immediate prejudice and being closed.)

The Rational Problem Solver