Funding the Feds

FUNDING THE FEDS....Via Matt, Pete Davis reports on a lunch talk yesterday from spending guru Alice Rivlin:

Her most striking remarks were how forcefully she warned that we should undertake long-term deficit reduction measures now. Without them we will face rising interest rates before the economy has enough time to recover as foreign purchasers of U.S. Treasury debt balk at buying a lot more of it. She boldly asserted "Now is an excellent time to fix Social Security and Medicare."

....Rivlin predicted we will need a new revenue source to cope with our long-run deficit problem, a value-added tax. I'm biased on this subject. I formulated House Ways and Means Chair Al Ullman's VAT proposal in 1979. There's no way to protect the poor and the elderly from such a tax, and it could become quite a money machine for a lot of government spending I would prefer to avoid. Rivlin has promoted a VAT for a long time because it is a more efficient tax and because it would harmonize our trade with the rest of the world, almost all of which has a VAT.

I have a lot of sympathy for Rivlin's view. Here are a few random comments to add to what she says:

  • I'm all for fixing Social Security now if it will get the issue off the table once and for all. It's a distraction. What's more, the fixes needed are fairly minor and doing it while Democrats have a big majority is good timing. But — although the fixes can be legislated now, they should be scheduled to phase in slowly starting around ten years from now. The last thing we should be doing is pouring more money into the trust fund right now.

  • If we're looking for a new revenue source that won't hit us in the pocketbook immediately (while we're in a recession), but will provide a medium and long-term funding source, how about passing cap-and-trade? Even if we move full speed ahead, the machinery takes a while to implement, which means it won't start up until 2012 or so. And even if part of the revenue is rebated to low-income families, it still provides a steady and growing revenue stream after that.

    Oh, and it helps to keep us from destroying our planet, too. Just a little side benefit.

  • I'm a big fan of using a VAT (in addition to the payroll tax and other existing funding) to fund national healthcare. Economically, it's a pretty good tax; it can be made progressive if it's properly implemented; and it's a universal tax for a universal program. More details here.

  • I am, oddly enough, not really in favor of vastly increased funding for other social programs. Some increased funding is OK, but it should be kept under pretty strict scrutiny — and not just on the generic grounds that all spending ought to be monitored carefully to make sure it's effective and pruned away when it's not.

    Here's why. I'm obviously more open to high government spending than most conservatives, but even liberals think there's a limit to how much of the economy ought to be under government control. Speaking for myself, I'd put that limit at 40-45% of GDP. Somewhere in the low 40s, anyway. Currently, total government spending (state/local/federal) is in the low 30s, which means we can afford to increase spending by about 10% of GDP. I figure that changes to Social Security will eat up about 2% of GDP and funding a true national healthcare plan will eat up around 7-8%. That doesn't leave room for very much more, and even reductions in defense spending only give us another point or so to work with. So we should be pretty careful with other long-term spending commitments.

That's my take, anyway. This is a pretty good time to be talking about these changes, even if they don't get phased in immediately. We desperately need credible plans for future reductions of our current account deficit (which is tied to the federal deficit), and this is a good time to do it even if the plans don't get phased in immediately. I expect Obama to kick off a rollicking discussion of this stuff later this year.

Beta Testing MoJo

BETA TESTING MOJO....Next week (we hope!) we'll be relaunching MotherJones.com. Gone will be the cluttered layout that you see here and the clunky code that we deal with. If you'd like to take a sneak peek, and along the way help us with load testing and bug targeting, go to http://www.motherjones.com. The login is mojo and the password is fearless (all lower case). Once you're in the site, you can read about why we did what we did, poke around, register and pimp out your profile, etc. Please bear in mind, however, that:

  1. Your username will stay valid after the new site launches, so choose wisely....

  2. The content is several weeks old and is there for testing purposes only. Don't worry, we'll get the latest articles and all the comments moved over when we launch.

  3. Comments you leave on the beta site will be overwritten when we switch over. Please do leave comments and try out the discussion system, just remember that if you've written any great pearls of wisdom, you should save a copy elsewhere.

  4. Any questions, bug reports, or general input about the site, please leave a comment on our inaugural blog post, or email us at web-feedback@motherjones.com.

We're eager to hear what you have to say. (And yes, we know it's slow, we're running compression programs....)

Obama Splits From Bush, Slams Wall Street

Wall Street is slowly learning that it's a new era in Washington.

In the wake of a report showing $18.4 billion in bonuses will be paid to Wall Street employees this year, President Obama slammed the behavior of the financial industry as the "height of irresponsibility" on Thursday. The $18.4 billion figure is down by almost half from last year, but still represents the sixth-highest bonus total on record. The bonuses were granted despite the fact that Obama just went to Congress to beg for the second $350 billion installation in TARP funding that will be used to bail out Wall Street.

In a move the previous administration never would have dreamed of, the President lit into Wall Street when asked for comment:

Economic Update

ECONOMIC UPDATE....You will be unsurprised to learn that the fourth quarter of last year sucked:

The U.S. economy shriveled at the end of 2008, shrinking by the most in 26 years....Gross domestic product fell at a seasonally adjusted 3.8% annual rate October through December, the Commerce Department said Friday in the first estimate of fourth-quarter GDP.

....Federal government spending helped the economy....Also preventing the economy from sinking further were inventories, which rose at the end of 2008. On a down note, the inventory increase was likely unintended — the result of companies getting stuck with unwanted merchandise because demand has tailed off in the recession....Inventories increased by $6.2 billion, after going down $29.6 billion in the third quarter and $50.6 billion in the second quarter. Inventories added 1.32 percentage points to GDP in the fourth quarter.

In other words, if not for the unwanted inventory buildup, GDP would have shrunk something like 5.1% or more. Yuck.

Obama Weighs In On Super Bowl

superbowl-43-logo.jpg To follow up on my post arguing that all good liberals ought to support the Steelers this Sunday, I thought I'd bring you the President's thoughts. From a press appearance Thursday:

Q: The Steelers or Cardinals, sir?
THE PRESIDENT: I have to say, you know, I wish the Cardinals the best. Kurt Warner is a great story and he's closer to my age than anybody else on the field, but I am a long-time Steelers fan. Mr. Rooney, the owner, was just an extraordinary supporter during the course of the campaign. Franco Harris was campaigning for me in Pittsburgh. So --
THE VICE PRESIDENT: Coach signed up with you, too.
THE PRESIDENT: Right, Coach Tomlin was a supporter. So I -- you know, I wish the best to the Cardinals. They've been long-suffering; it's a great Cinderella story. But other than the Bears, the Steelers are probably the team that's closest to my heart.

Our President, by his own admission, doesn't get too high for things. But from what I can tell, the man has Steelers fever. My prediction: Steelers 20, Cardinals 13. (This is your final Super Bowl-related post, I promise. Unless they win, in which case the blog will be covered in drunken exultations. Stillllers Win!!!!1!11)

Army Suicides Reach Historic High

The US Army has announced that the soldier suicide rate has reached an all-time high, surpassing the civilian suicide rate for the first time. At least 128 soldiers—and perhaps as many as 143—took their own lives in 2008. The Associated Press puts this into perspective:

The new suicide figure compares with 115 in 2007 and 102 in 2006 and is the highest since current record-keeping began in 1980. Officials expect the deaths to amount to a rate of 20.2 per 100,000 soldiers, which is higher than the civilian rate — when adjusted to reflect the Army's younger and male-heavy demographics — for the first time in the same period of record-keeping...
Yearly increases in suicides have been recorded since 2004, when there were 64 — only about half the number now. Officials said they found that the most common factors were soldiers suffering problems with their personal relationships, legal or financial issues and problems on the job.

Army Secretary Peter Geren declined to characterize reasons underlying the growing number of suicides, but assured reporters that "we're committed to doing everything we can to address the problem." Along those lines, the Army is actively recruiting psychologists and psychiatrists to treat soldiers for symptoms associated with severe brain injuries and Post-Traumatic Stress Disorder (PTSD), "the defining injuries of this generation of servicemen," says Bill White, president of the Intrepid Fallen Heroes Fund, a non-profit dedicated to improving care for wounded soldiers.

Heather Havrilesky: Our Crush Is Officially Over!

In Salon this week, my FORMER crush, Heather Havrilesky, pushes me too far in the 'who's more screwed and, therefore, more powerful' debate.

It's on, bee-yotch!

What's her pitiful argument for 'her' team?:

President Obama has chosen a sharp and able-bodied team to head his administration, but if he really wants to yank the country out of its dismal state, I suggest he enlist the help of some expectant mothers, preferably in their third trimester of pregnancy.
Because while Obama may have selected an experienced and savvy collection of specialists to lead this nation out of its hard times, no one on Earth has the ability to tackle big, unwieldy problems quite like a woman in the home stretch of pregnancy. In addition to manufacturing a brand-new human being, a feat of nearly supernatural proportions in and of itself, pregnant women also have an uncanny knack for grabbing the most daunting task by the throat, wrestling it to the floor and smashing its face into the carpet until it yells "Mother!"
Take it from me, now seven months pregnant with my second child. Despite my growing resemblance to Jabba the Hutt, I've entered a frenzied state of activity, conquering every task I encounter, big or small, with the focus and determination of a speed-addled jihadist. Each day, I find myself interrupting my furious scrubbing of the stovetop to empty out the fridge, call the plumber, e-mail my boss and complete a 2,000-word treatise on the use of fashion to highlight socioeconomic differences on "Gossip Girl." Those who know me well are astounded by my sudden transformation from sullen sloth to Highly Effective Person. Instead of daydreaming or procrastinating or turning the screw (some favorite hobbies during non-gestational periods), I'm in a constant state of getting things done, whether it's trawling eBay for a replica of the 18-year-old teddy bear my husband lost on an errand with my 2-year-old daughter ("Some guy kidnap Andy the Bear!"—those plaintive words haunt my vivid, pregnant-lady dreams each night) or typing out a five-page letter to my local congresswoman regarding the inefficient traffic patterns in my neighborhood."

Husband? Did that heifer say "husband?" In conjunction with "running an errand?"

Those of us who are parenting alone, for whatever reason, and for however long, might just beg to differ with her 'most powerful' choice.

Dick Armey Proves Feminism Is Dead

Man, how right is his first name?

Check out his exchange with Joan Walsh (an old pal and former boss).

Last year, I wrote an article explaining how former Republican Senator Phil Gramm had helped grease the way to the subprime meltdown in 2000 when he was chairman of the Senate Banking Committee. Gramm wouldn't talk to me for the article. At the time, he was a close adviser to presidential candidate John McCain, and his past support of financial deregulation and his subsequent work as a lobbyist for UBS, the Swiss banking giant, became a campaign issue. Neither McCain nor Gramm addressd these matters publicly. And then Gramm generated further controversy when he dismissed Americans worried about the economy as "whiners." After that, McCain distanced himself from Gramm, who faded from the campaign trail.

Now, Gramm is back--at least to defend himself. Last week, he spoke at the American Enterprise Institute in Washington. The subject of his talk: was deregulation responsible for the current financial disaster? The real subject: was Gramm responsible for the current financial disaster? Mother Jones and the American News Project filmed Gramm, and I was able to pose a couple of questions to him. See what happened below in a video that was edited by Tay Wiles.

Paul McCartney to Headline Coachella

mojo-photo-coachellamccartney.jpg

Hey, look at that, Goldenvoice has finally announced the lineup for America's Favorite Music Festival and Hipster Haircut Showcase, and it turns out all these random rumors about Britney Spears and Katy Perry were just red herrings (thank God) since all the while they were negotiating with none other than Sir Paul. The former Beatle will headline Friday night at the 3-day event set for April 17-19, and he told the LA Times that he's "really excited to get out there and rock." Neat, but the Times seems a little skeptical about the whole idea, saying it's a bit of a gamble:

Booking the former Beatle, who is listed in the record books as the most successful musician in pop history, would be the safest choice imaginable for most music festivals. But the internationally respected Coachella festival, which is set for April 17-19, has been pulling in crowds of more than 140,000 fans by taking an edgier path with alt-rock heroes you would hear on a college town's pirate radio station. … What remains to be seen is whether the choice will cost the festival credibility with its core clientele: young fans who are more likely to listen to the White Stripes than the "White Album" and who are far more familiar with Rage Against the Machine than "Band on the Run."

Hey, actually, some of us not-so-young fans were really annoyed with the Rage crowd too. Also on the bill are a couple festival veterans, including The Cure (2004), The Killers (2004) and Morrissey (1999), as well as the finally-reunited My Bloody Valentine (on Cure day, natch). Your ridiculously-named DJ is especially excited about Buraka Som Sistema, TV on the Radio, Friendly Fires, Leonard Cohen, and having margaritas in the hot tub. Full lineup after the jump.