Oh No.....its...THE DEFICIT!!!!

It sneaks in when nobody notices and steals your house, your job, your money, and...your dog (no....not Scruffy!). It will plague your children, kill your retirement and persuade us elect optometrists from Kansas to the Senate! Its...its...The DEFICIT!!!! (cue 1950s sci-fi music)

Well...maybe its not that bad. One this is for certain: we need to reduce it. Polls have shown that a small amount of people can represent the entire country. And, the general consensus in Congress is that people prefer spending cuts over tax increases. But, (as the article says) there is a lingering problem: which programs do we cut? And, will those cuts even affect our ballooning deficit? Here are some ideas that have been floated, and some suggestions that I think might work to cut down on this multi-trillion pound Gorilla:

1. Cut Major Entitlements (Social Security, Medicare, etc) - Political non-starter. With high unemployment and an aging baby-boom generation, the need for entitlements is higher than ever. And, remember those TEA party signs: Take your government hands off my Medicare. Idiocy aside, this shows that even the perception of cutting/rationing entitlements is the wrong thing to do. The only problem is that Social Security is running out of money. The Millennial Generation should care about this, if you can get them to.
Alternative(s): Cut waste in the system. Raise retirement age to 70.

2. Cut Earmarks - Had some support in Congress. But, earmarks represent less than 1% of the budget deficit. So, it would amount to a symbolic gesture...a very BAD symbolic gesture. Some of the small businesses and contract firms in states like California (unemployment at 12.4%) will lose funding and will be forced to lay off workers. Unless you like retrogressive economies, then you would be in favor of keeping earmarks. And, Senators and Reps are like to boast about the projects and jobs they have brought to their states through earmarks. Well...not John McCain (see "hypocrite" in the dictionary). Maybe he should take a hard look at the Central Arizona Project, the huge government funded infrastructure scheme that brings water from the Colorado River to Arizona. Nevermind.
Alternatives: Luckily this didn't pass the Senate.

3. Freeze Government Workers Pay - This idea of a 2-yr salary freeze for government workers has been floated by the administration. This would save about $5 billion. The current budget deficit is $1.3 trillion, and is expected to rise. With some calculations...that is about .385% of the current deficit or about 1/260. But, it is politically favorable. The idea that the government is willing to cut its spending on workers gives the impression that they are on their way to cutting their overall spending. I approve.

4. Bush Tax Cuts (this has subsections...ooohhhh)
a. Keep the tax cuts for all - Will add about $4 trillion to the deficit over the next 10 years. But, according to Republicans and some moderate Democrats, it will give businesses financial certainty, allowing them to start hiring. Once hiring picks up, the economy will recover more rapidly and more taxes will flow back to the government to cut down on the debt.
b. Keep for tax cuts for all...for 2 years - This might give businesses certainty about finances, while not adding significant amounts to the deficit. I approve.
c. Keep the tax cuts only for those making less than $250,000/yr - Will add $700 billion to the deficit over the next 10 years. But, it does not give an incentive for big companies to begin hiring. And, rich people will complain about their taxes (not like they don't already). But, it will help those hit hardest by the recession: the middle class. Individual and family incomes won't see a tax increase, and the tax increase to those making over $250,000 will add money to the coffers of the government, thereby possibly reducing some of the deficit effect.
d. Let them expire - Will avoid a substantial increase in the deficit. But, it will increase taxes across the income spectrum. This might create financial uncertainty for businesses, which might result in less hiring. This represents a longer term solution for debt reduction. But, it could possibly harm the fledgling recovery in the short term. The only reason I consider approval of this plan is because it sends a signal to the rest of the world that the U.S. is ready to get serious about debt reduction. This could give international investors more certainty and help the US economy recover in the long run.

5. Wild Card: Invest in Clean Energy and Domestic Energy Exploration - Currently, we send $2 billion/day (~$700 billion/yr) to regimes in South America and the Middle East for oil. Because we have no oversight over the funding, some of the money is invariably funneled to organizations that support terrorism. We also have no control over price, as the major oil supplier OPEC, is a cartel. So, if we were to invest in domestic energy sources like solar, wind, geothermal, tidal, hydro and nuclear (possibly not cost effective) we can offset OPEC oil demand. In the short term, we can use environmentally sound drilling methods to extract Natural Gas to replace oil. This will cut down on pollution, encourage the growth of the renewable energy sector, create jobs and significantly reduce the deficit. Win, win, win.

6. Cut Defense/Security Spending - There are aspects of this plan that are political "non-starters." These include: cutting pay of combat soldiers, cutting the pay of non-combat soldiers, cutting Homeland Security's budget, cutting counter-terrorism/intelligence and cutting equipment, recovery and/or personnel funding for the wars in Iraq and Afghanistan. But, do we need military bases all over the world? If we were to close non-essential military bases in places like Okinawa and Germany, we could have extra personnel on reserve and could cut costs. Although it is political poison, if the country is willing to get serious about debt reduction, it has to go through the defense budget with a fine tooth comb and take out the waste. This also should include reassessing the performance of, and instituting more oversight on, military contractors.

The main concerns of the Administration should be to reduce spending and create jobs. If Congress can rise above partisanship to complete these essential tasks, then the recovery, and our financial future will be less unstable. And, we will send a signal to the rest of the world that we are serious about debt reduction.

CA: No Way To Govern

The "Progressive Era" in U.S. history created a series of government reforms that were designed the cut down on corruption and make the process more transparent and democratic. These were the popular referendum, the initiative and the recall. California became the model state for the implementation of these policies. That was around 1900...

Now...the system has proven that a mixture of uninformed voters, limitless (and anonymous) campaign contributions and a state run by referendum lead to contradictory results. On Nov 2nd, the voters of California, a state practically run by popular referendum, voted on two seemingly contradictory propositions. Prop 23, which was rejected, sought to postpone California's Global Warming Initiative (AB32) until unemployment was at 5.5% for more than four quarters (practically impossible, even in a healthy CA economy). At the same time, they passed Prop 26, which would make any tax defined as a "tax" and not a "fee," which means that it needs a super-majority to pass.

Here is the contradiction (article): AB32 penalizes heavy polluters by levying a fee, which is used to support cleaner forms of electricity and conservation. California approves of environmental measures. But, Prop 26 makes it nearly impossible for the regulating body (California Air Resources Board) to implement those fees. Conclusion: People like the idea of cleaner technology, but they want to make it impossible to implement it.

And, they want to make it even more impossible to govern California. Some of the waste management and toxic substance prevention groups in the CA government are supported by fees from polluters. Important measures like the Oil Spill prevention fund is supported by a fee. The transportation tax money swap that supposed to inject $1 billion into the CA economy must now be subject to a 2/3 vote. A "green chemistry" initiative to keep toxic substances from labs out of landfills needs a 2/3 vote. Offshore drilling fees, alcohol fees, cigarette surcharges, pollution prevention fees - all need 2/3 vote. Now, the supporters of Prop 26 want it implemented at the local level. Its not surprising that some of those supporters include Chevron, Phillip Morris, Anheuser-Busch and the Chamber of Commerce.

What does this create? Legal and fiscal uncertainty. The CA budget shortfall was recently projected at a high $24.5 billion, prompting the governor to hold an emergency budget session.

This is what happens when you run a government by popular referendum. Its an excuse for the legislature to not do its job, and get paid for it. Its the result of people wanting a change, but not willing to do the work to make that change. My solutions: have a part time, unpaid legislature or rewrite the California Constitution.

I have a friend who voted against ALL propositions on the ballot this year because she adamantly believes that this is no way to run a government. I'm starting to agree with her...