Warren Buffett Deficit Plan

I saw a meme going around the internet, with an idea purported to come from Warren Buffett. It says that the way to end or limit federal deficits is when the deficit exceeds 3% of GDP, no member of Congress is eligible for reelection.

Sounds clever, but is deficit reduction the only thing important for Congress to do? Are there not other priorities which may outweigh deficit reduction? What if the US is threatened and has to go to war? In every major war for 150 years or more, the federal government ran higher deficits than this cap, in order to meet the expenditures required by the war. Do we say that we can’t afford the war – even if we are attacked? Admittedly that would have kept us out of Iraq, which arguably might have been a good thing.

What happens when you hit an economic recession, like we had at the end of the Bush administration? You force Congress to be counter-cyclical and slash budgets at the time when the country needs deficits to turn the economy around. We have a consumer based economy. When people lose their jobs, they lose their ability to spend. If enough people lose their jobs, there is not enough demand to put people back to work quickly. As it was, in the last recession the small stimulus only barely changed the direction of the economy, and it took far longer to get things moving again than it should have. This proposal would force the austerity that has kept much of Europe still in an economic slowdown.

Congress has no guts and also only wants to keep their jobs. If they lose their jobs any time the deficit exceeds a certain percentage, they will not exceed that percentage. The problem is that sometimes the country needs higher deficit spending, which it can pay back as things turn around. The idea seems clever, but in truth is profoundly stupid. It can be bad for the economy and bad for the country.

There is no doubt that at times Congress has run up the deficit recklessly and needlessly. To me, the Bush tax cuts are one example. Put that on top of the Afghanistan and Iraq war expenditures, and we build a huge hulking deficit. Throw in an unfunded Medicare Part D, and it becomes outrageous. The issue will not be solved by this sort of simplistic solution however.

Jerusalem Synagogue Attack

I found myself arguing with an orthodox rabbi and some of his friends over the recent terrorist attack of worshippers in a Jerusalem synagogue. The rabbi in his comments said “May G-d avenge the blood of our brothers and sisters.”  I replied “Instead of speaking of vengeance, we need to pray for a path to lead us out of the cycle of violence which has entangled the Jewish and Palestinian peoples.”

I was accused of condoning and/or excusing the violence of the synagogue attack. I don’t condone or excuse any form of violence, especially attacks against innocent civilians. I recognize that the Palestinians have legitimate grievances against Israel, though that does not in any sense justify terrorism. The current Israeli government continues to extend the settlements, which in itself convinces many Palestinians that Israel is not serious about peace. They continue home demolitions even though the security officials in Israel have found those do nothing to deter terrorism. Extremist Palestinians continue terrorism attacks which convince Israelis that the Palestinians are not serious about peace.

It is a particularly nasty and vicious cycle. The standard response from many Jews, and from the rabbi in question is that building in settlements is quite different from the taking of a human life. I would certainly agree, but when you look at statistics from B’tselem, an Israeli NGO which has a peace advocacy, you find that Israel kills 4 to 6 times as many Palestinians as the number of Jews killed in terrorism attacks. There are various rationales for the deaths of the Palestinians, but the people are dead nonetheless.

Again, I neither condone nor excuse the terrorist attacks on Israeli civilians, but where 5 people, including a Druse (Muslim) police officer were killed in that attack, Baruch Goldstein killed 29 people and wounded 125 when he opened fire in a Hebron mosque on people at a prayer service. Some of my Jewish critics spoke of Palestinians celebrating the terrorist attacks, which some may have, but some Israelis have made a hero out of Baruch Goldstein.

I am not trying to weigh deaths or to keep score, and am reminded of the saying attributed to Gandhi: “An eye for an eye leaves the whole world blind.” Demonizing the other side makes it easier to justify any cruelties perpetrated on them. That goes for any side in any conflict, including both the Jews and Palestinians. When we do so, it perpetuates the kind of cycle of conflict and violence that we see in the Middle East. We can only begin to find peace when we find a way to end that cycle of violence.

Some of my fellow Jews, who contributed comments to that discussion seem at best to consider me naïve. One of them said that explicitly. I wish I saw another good solution, and indeed none of them had anything resembling a solution. Some Jews call for driving the Palestinians out of the West Bank, which fuels the fears and fury of the Palestinians. Those Palestinians who call for driving the Jews out of Israel fuel the paranoia of the Israelis and other Jews. So long as the rhetoric is heated on both sides, few people can see clearly. The biggest problem is that the rhetoric can seem to justify reprisals. The few sane people seem to be drowned out by the screaming mobs on both sides.

In quantum physics, it seems that what you look for is what you find. When you look to see if light is a particle, it is a particle. When you look to see if it is a wave, it is a wave. The real world is often much the same way. When one looks for hatred, one finds hatred. When one looks for love, one can find love. We need to shift our vision so that what we seek is what we truly want to find, while still not allowing ourselves to be caught up in wishful thinking.

In the final analysis, the question is what we shall live for. I choose to live in pursuit of peace, justice, and non-violence. So long as people demonize their foes, and try to wreak vengeance upon them, we will never end the cycle of violence. Not everyone I deal with will treat me as humanely as I try to treat them. But just as Gandhi pursued non-violence in the face of violent actions by the British in India, I also will push for those things which I feel make peace more likely, not less likely. If that makes me naive, then I will wear that badge with honor.

Tax Fairness & the Economy

Taxes consist of more than just federal income taxes. There are also payroll taxes, sales taxes, property taxes, and the like. The latter fall far more heavily on middle and lower income people than on the truly wealthy. There is an income cap on most payroll taxes, so no tax is paid on income above the cap. Sales taxes are based on consumption, and middle and lower income people consume most, if not all, of their income. When your income is lower, you have to spend it in order to survive. Property taxes again fall more heavily on middle and lower incomes. Property taxes are levied on real property, while the truly wealthy hold more of their assets in intangibles.

Even lower income people who may not own property effectively pay property taxes. When you rent, you are paying rental fees that cover the principle, interest, property taxes, and insurance or the owner, along with maintenance fees and a profit. I owned rental property, I know. Beyond that, income tax rates are highest on standard income, and far lower on capital gains and dividends, which are a far larger part of the income of the truly wealthy. Then there's the 'carried interest' loophole, which allows wealthy hedge fund managers to be taxed at capital gains rates even when they have no money at risk, and even when their salaries are in the billions of dollars. Several studies of the fully loaded tax burden have found that the top income bracket has a tax rate below several of the lower brackets.

As to job creation, corporate profits are at an all time high. That has NOT led to increased job creation. Decreasing taxes on the corporations and wealthy individuals also will not lead to job creation. Those companies and individuals are already rolling in money. Jobs will be created by companies only when there is sufficient demand for the products of that company. There cannot be increased demand until or unless income increases for middle and lower income workers. An increase in the minimum wage would put more money in the hands of poorer workers, who would in turn spend it, increasing overall demand in the economy. In multiple instances states or localities have increased the minimum wage, and have NOT suffered the job losses predicted by right wingers, but instead have often had higher economic growth than areas which did not increase wages.

Religious Intolerance?

I saw yet another meme which tried to show all religion as intolerant. My reply to such is that not all religions are dogmatic and inflexible. Extreme fundamentalists may be, but that does not incorporate the whole even of the Christian community, much less the entire religious community. Perhaps instead of trying to crap on religion, you should find commonality to include religious people in your struggles, though quite often many are already involved. If your dogma is wholly anti-religious, then you are no better than the extreme religious fundamentalists.