I presented a Lecture at the Blue Ridge Community College, Flat Rock, NC on January 24, 2012.  The purpose of the lecture was to review the new book by Thomas Friedman and Michael Mandelbaum, That Used To Be Us, which chronicles how America has mouse-trapped itself and what it can do to restore its greatness.  I am including a transcript  of the lecture.

THE ROOTS OF NATIONAL DECLINE

LeRoy Goldman

Please visit CAPAU:  Videos

Time to perform or perish

Are we able to rise above our collective stupidity? It’s the question that I’ll come to at the end of this column. Let’s start where we all agree.

America’s not just on the wrong track, we’re on a trajectory that will put us on the wrong side of history. Stop and think. It makes no difference what major issue you pick: jobs, economic growth, debt and deficit, energy, education, or immigration. All of them grow worse as the politicians in Washington do nothing about them but blame one another.

It’s been this way for decades. It doesn’t make any difference which party controls the White House or the Congress. America is in decline.

When a pitcher can’t get the ball over the plate the manager yanks him. When an employee can’t or won’t do his job the employer fires him. It’s the American way. It’s free enterprise and capitalism. It is the way America has reinvented itself for over 200 years. Perform or perish is as American as apple pie.

We all know that the problems that are crushing American can be solved. We also know that the solutions will be painful, but not as painful as pretending that everything is OK, while the American Dream becomes a nightmare.

But it’s undeniably clear that Congress won’t fix the mess. Why? The answer is simple and in that answer we can find what we must do. Congress won’t act because they all fear that making tough decisions will put their jobs at risk.

So they all have figured out a way to accomplish the one thing that Republicans, Conservatives, Democrats, and Liberals all agree upon — getting reelected. And they have stacked the deck so they win and America loses. House seats are gerrymandered so that only one party can win in most of them. The Senate has perverted the use of the Filibuster Rule so that it paralyzes everything. And all of them have prostituted themselves by taking so much PAC money from corporations and labor unions.

And it works. They get reelected. But America gets screwed. They won’t change. But we can change them. All we have to do is to rise above our collective stupidity that Congress counts on.

If we start this November, in four to six years we will have revolutionized Washington. Vote to oust every incumbent. Take away the one thing they really care about — their job. And send the message to those who replace them that they must come to grips with our national problems or they too will only have one term in office.

They will quickly learn that to keep their job they must do their job. All we have to do is wise up.

Please visit:  http://capau.org

Romney Still Carries Baggage

Unlike four years ago, Mitt Romney has won in both Iowa and New Hampshire. It now appears that the GOP nomination is his to lose, and it’s hard to imagine how that could happen. He’s got money and momentum.

But with all the excitement and hoopla now surrounding the Romney campaign, it’s important to not lose sight of the baggage he still carries, the incredible weakness of the opponents he is dispatching with ease, and how difficult defeating President Obama will be.

Mitt Romney has never been able to excite the electorate. He's wooden and aloof as a campaigner. He is vulnerable to the charge that he's unprincipled and a flip-flopper, a case that his GOP primary opponents are making in a way that Obama will savagely exploit in the fall campaign.

To put it bluntly, it is not clear if Romney stands for anything other than getting elected on Nov. 6, 2012. And he's prone to gaffes. His comment a few days ago that he likes to be able to fire people pushes political stupidity beyond the breaking point. It's devastating because it implies a sort of heartlessness that most Americans abhor.

And, while it is the case that Romney appears to be well on his way to being the last GOP aspirant left standing, it's the case that his opponents are a joke — a veritable cavalcade of clowns. Thus, Romney appears to be a giant but only when compared to the dwarfs who oppose him.

With the exception of moderate conservative and thoughtful, Jon Huntsman, who bet everything on New Hampshire and lost badly, the rest of Romney's opponents have caused the Economist Magazine to recently opine, “something has gone badly wrong with the party of Abraham Lincoln, Theodore Roosevelt, and Ronald Reagan.”

Over the past few years the Republican party has lurched far to the right. And those who have opposed Romney in Iowa and New Hampshire are extremists who are obsessed with issues like abortion, gay marriage and gun control. In addition, they hold views on immigration, taxation, energy, the debt and deficit, global warming and foreign policy that a substantial majority of the American people find to be looney.

That is why Obama leads all Republican challengers in current polling. It’s extraordinary when you think about it. Under normal circumstances a president with an economy in the toilet stands no chance of reelection.

Whether Mitt Romney can reconstruct the Republican Humpty-Dumpty remains to be seen.

Please visit:  http://capau.org

THE DARK MARE

Incumbent Presidents are usually strongly positioned for reelection.  Look at FDR, IKE, LBJ (for JFK), NIXON, REAGAN, CLINTON, and BUSH 43.

And history teaches us that a challenge to a sitting President from within his own party usually divides the party and dooms it to defeat in the general election.  That’s what Senator Kennedy’s ill-fated challenge to President Carter did in 1980.  

Thus, it is not at all surprising that no challenge from within the Democratic Party has emerged to President Obama.  And I suppose the conventional wisdom will prevail and no such challenge will occur.

But 2012 is an unconventional year and perhaps it’s worth thinking some unconventional thoughts.  America faces enormous problems, and they are growing worse. Moreover, the American people know this, even if the political class denies it.  America is in decline.  That’s the heart of the message in Friedman and Mandelbaum’s book, That Used To Be Us, which I have begun to write about.

Large majorities of Democrats, Republicans, and Independents know that the nation is not headed in the right direction.

That’s why the emerging contours of the 2012 Presidential contest are unconventional. One would expect that President Obama would by now be the underdog for reelection.  But, while his poll numbers are down, he still appears to have a better than even chance to win reelection.  And this is because the GOP appears likely to nominate a candidate incapable of defeating a President who has demonstrated that he can’t do the job.  There may be some who believe that President Obama, or Governor Perry, or former Governor Romney can get us out of the mess we’re in.  But most of us don’t. 

And that’s what makes 2012 an unconventional year.  So here’s an alternative.  For the record, it’s not one I like, but that’s no matter.

Think back to 2008.  There seemed to be little doubt that Senator Clinton had a clear path to the Democratic nomination and the White House.  Surely the upstart effort of Barack Obama posed no serious threat.  But Hillary’s hubris, coupled with her strategic error of ignoring the states that held caucuses rather than primaries, put her campaign in a hole from which she could not escape.

Since then, she has ably served as Secretary of State, a position that has isolated her from the economic and domestic mess that the rest of the Obama Administration has served up.

You can be certain that the BILLARIES, whose political ambitions have no end, are seeing an opening here, an opening created by a President who can’t do the job, and a set of Republican adversaries who can’t either. 

The question for the BILLARIES, and it’s a daunting question, is how to thread the eye of this needle. If the DARK MARE sticks her nose out of the barn, it will change everything.

LeRoy Goldman

September 23, 2011

Please visit:  http://capau.org

IN THE HUNT(sman)

Most Americans now believe the American Dream is slipping away. And while we know that the nation is not headed in a direction that gives hope to our children, most of us have failed to recognize that our own sloth and greed lie at the core of the problem.  Once a proud nation of savers and investors, America has become a complaining nation of spenders and debtors.

Thus, we should not be surprised that our political leaders have become a reflection of our own self-indulgent excesses.

If President Obama wins a second term, and he remains the favorite, he’ll have nobody to thank more for it than the Republicans. And for us it will be condign punishment indeed.

The GOP contest thus far is a grotesque caricature of Baskin Robbins “flavor of the month”.  The parade of GOP hopefuls who have melted over the past months is nothing short of laughable.

Palin, Bachmann, Perry, Cain, and now Gingrich all have a couple of things in common.  None of them is qualified to be President of the United States, and, if nominated, none of them is electable. But their ephemeral popularity is significant in that it illuminates the GOP’s visceral distrust of their presumptive nominee, Mitt Romney.

And while it is a shame that far more qualified Republicans like Governors Christie, Daniels, and Bush have stayed on the sidelines, there remains one person in the GOP field who is qualified and, if nominated, could win—Jon Huntsman.

Jon Huntsman is smart, serious, wealthy, youthful, and politically skilled.  He has ably served four Presidents, including President Reagan, Presidents George H. W. and George W. Bush, and was nominated and served as Ambassador to China by President Obama.  Huntsman was twice elected Governor of Utah in 2004 and 2008.  He is a right-center, Republican who is articulate, but unlike his flavor-of-the-month opponents, he’s not a “Foam at the Mouth”, Wingnut.

Yet thus far his candidacy has gone nowhere.  He’s been lucky to capture more than 3% in the polling of the GOP aspirants over the past several months. Most of the media and the political class in Washington have written him off.

Maybe so, but I don’t buy it. His newly released financial reform plan is a breath of fresh air when contrasted to the pandering from his GOP rivals and President Obama.  Huntsman would end Too Big To Fail on Wall Street, mandate transparency in derivative trading, end Wall Street’s reliance on excessive short-term leverage, repeal the incomprehensible Dodd-Frank legislation, and shut down Fannie Mae and Freddie Mac.

If Huntsman breaks through in the New Hampshire primary, watch out.

LeRoy Goldman

December 2, 2011

Please visit:  http://capau.org

  

That Used To Be Us

Friedman and Mandelbaum in their book, That Used To Be Us, are convinced that, as the Baby Boomer Generation supplanted the Greatest Generation, America began to suffer from an insidious erosion of our values.  Because that erosion of values happened incrementally, we did not appreciate its corrosive effects until the housing bubble burst in 2008.

The authors believe that America has come unstuck from its core values.  We have forsaken long-term investment and delayed gratification for a get-it-now-while-you-can lifestyle.  We have lost confidence in the authority of the institutions in our society that have previously been our leaders, especially in enabling us to take collective action in the face of huge challenges, and finally they believe that the nation is losing its sense of shared national purpose.

The United States used to be the best nation in the world for business of any type.  Our open markets, legal system, property rights, financial system, and robust investment in research and development made us the envy of the world.  But now the American people in ever-larger numbers believe that is all slipping away.

American Exceptionalism is under assault.  Simply asserting our supremacy does not sustain it.  The inadequacy of our ability to meet the four challenges that Friedman and Mandelbaum describe, globalization, the IT revolution, our debt and deficit, and our appetite for fossil fuels, paint a bleak portrait indeed.  The authors argue that, “not enough Americans seem to understand the first two and too many want to deny the necessity of addressing the second two”.

All of this is made significantly worse by the fact that our political system has broken down.  It’s paralyzed in partisan rancor.  Our two political parties are both deeply and closely divided.  Because of that reality we are caught in a cul-de-sac in which we bounce back and forth between the extreme positions of both the Democrats and the Republicans.  It used to be the case that “wave” elections where one party annihilated the other were infrequent.  Not so, any more. The Democrats pounded the Republicans in 2006 and 2008.  The GOP returned the favor in 2010.  And now it looks like both parties may be in for a shellacking in 2012.

But the only way to address the problems we face, reining in our exploding debt, creating an educational system that equips our young people with the tools that will enable them to compete and lead in the 21^st century, drilling for more oil and gas while imposing a carbon tax, and reforming the tax code and raising the taxes that will be required to restore our supremacy, can only be accomplished by combining the best of both the Left and the Right.

Friedman and Mandelbaum believe that one way or another America is going to be shocked into this painful and sacrificial reality.  They believe that either world markets or Mother Nature will administer the shock in a brutal and unpredictable way or it will come from the middle of the American political spectrum.  They hope it will be the latter.  So should we all.

LeRoy Goldman

October 6, 2011

Please visit:  http://capau.org

Borrowing instead of reform sinking America

Friedman and Mandelbaum’s powerful new book, That Used To Be Us, tells us that the nation has blundered badly with respect to our ballooning deficit and our energy crisis.

Regarding deficits they tell us that either we will cut spending, increase taxes, and start investing in our economic future all at the same time or we will lose our supremacy, transfer crushing debt to our children and grandchildren, and literally mortgage our future.

Seventy-seven million baby boomers have begun to retire.  Without reform of both Social Security and Medicare the costs of those two entitlement programs are on course to rise by 70% and 79% respectively by 2020.  These growth rates will kill our economy.  They will kill the American dream.  They will kill hope.   

But instead of facing the necessity of entitlement reform the nation has chosen to adopt a course of action that invites catastrophe—borrowing from countries like China.   That perilous strategy has enabled America to overborrow and China to overconsume.  Friedman and Mandelbuam state that, “we’re like two drunks leaning on each other without a lamppost”.

The authors tell us that America must reduce our use of fossil fuels significantly and rapidly. They also tell us that rather than debating HOW to do this, we are mindlessly debating WHETHER to do it.  Rather than accepting the reality of settled science, we are denying the fact that our addiction to fossil fuels harms our economy, our air, and our national security.

They believe that clean energy will follow information technology as the next industry upon which economic growth will depend.  And in this respect China is already far ahead of the United States.  They have made huge investments in solar energy, have surpassed us as the largest builder and installer of wind turbines, and are building more nuclear power plants than the rest of the world combined.

The authors believe that we have no choice but to put a price on carbon—that’s right, Cap and Trade.  Did you know that Cap and Trade was introduced by President George H. W. Bush in 1989? That’s right, a Republican, introduced Cap and Trade!

But since then we’ve gone backwards.  Pricing carbon has been held hostage to the politics of paralysis that dominate Washington. For example, 70% of Tea Party Republicans believe there is no solid evidence of global warming.  And, according to the authors, with the 2012 election approaching, President Obama “chose to read the polls, not try to change them” on this issue.

We need to price carbon, increase energy efficiency standards, and raise the tax on gasoline.  Doing those things will create the conditions in the private marketplace that will enable the United States to lead in the creation of the world’s next major industry—clean energy.  And that creates jobs—lots of jobs.

Instead, according to Friedman and Mandelbaum, “the Democrats were cowardly, and the Republicans were crazy.”  They’re right.

LeRoy Goldman

September 30, 2011

Please visit:  http://capau.org

America has fallen asleep at the switch

America has fallen asleep at the switch, and Friedman and Mandelbaum in their book, That Used To Be Us, make clear that it’s because that we have not grasped the significance of the merger between globalization and the Information Technology revolution.  There are 6.8 billion people in the world and two thirds of them now have cell phones.  The authors argue that the world has become hyper-connected and that has profound implications.  They tell us that this turning point in communications, innovation, and commerce is nothing less than the revolution brought about by the Guttenberg printing press in 1440.  To succeed a company must now source, manufacture and sell everywhere.  A CEO’s office has become his iPad!

In other words everything has changed. That’s why corporate profits and productivity have risen and so has unemployment.  The old jobs that have been lost are forever lost.  America didn’t realize how fast the world was changing.  But when the housing and credit bubbles exploded a few years ago, the carnage was plainly visible. 

The new labor market is one that places a premium on workers with college and graduate level degrees.  Forget blue-collar/white-collar, the authors argue, the new paradigm has become one of creators/servers.  To succeed we need to train a nation of creators.  Summing it up, the authors give us Carlson’s Law, from Curtis Carlson, the CEO of SRI International:  “Innovation that happens from the top down tends to be orderly but dumb.  Innovation that happens from the bottom up tends to be chaotic but smart”.  And that shines a bright light on the inadequacies of our educational system.

Because of globalization and the IT revolution, raising math, science, reading and creativity in ALL American schools is a must.  Education, Friedman and Mandelbaum insist, has become a matter of economic survival.  All of us need more education AND better education.  They state, “We need to lift the bottom faster and the top higher.”

They give us a new definition of stress:  It’s what you’ll feel when you can’t understand the Chinese accent of your first boss out of college.  The point they are making is that we need to realize that we can no longer maintain our economic supremacy by simply attempting to maintain traditional blue and white collar jobs in today’s hyper-connected world.  To grow and prosper in the new world order we have no choice but to educate our citizens to hold jobs that don’t exist yet.  In addition, we have to equip our young people to invent those jobs. If we don’t, other nations will fill that vacuum.

And so they see a world divided between “high-imagination-enabling countries and low-imagination-enabling countries.” Only the former gets us to decent paying jobs going forward.  Friedman and Mandelbaum have put a warning shot across America’s bow. We will heed its warning or pay a terrible price.

LeRoy Goldman

September 27, 2011

Please visit:  http://capau.org

  

Shared sacrifices inevitable

Friedman and Mandelbaum’s remarkable diagnosis of America’s decline in, That Used To Be Us, opens at the World Economic Forum in Tianjin, China in 2010.  It was held in the sparkling new Tianjin Convention Center, a center of over 2.5 million square feet that was constructed in eight months.  The authors contrast that accomplishment with the inability of Washington’s Metrorail authority to repair broken escalators in its Bethesda station. 

To drive the point home the authors state, “ We are nearly complete in our evolution from Lewis and Clark into Elmer Fudd and Yosemite Sam”.  Many Americans believe that the 21^st century will belong to the Chinese.  And, thus, our job is to imitate them.  Right?  No, say Friedman and Mandelbaum. They believe what we must to do is recapture our ability to take large actions on a collective scale.

They believe that America’s slow-motion decline has four root causes:  We have lost sight of how the world has changed and how we must adapt to that change, we have failed to address education, debt, and energy and climate change, we have stopped investing in our nation’s formula for greatness, and we now have a political system that is paralyzed.

In other words we have lost our self-confidence and we’ve gotten lazy. 

When we won the Cold War twenty years ago we wrongly assumed that the clear and present danger to our supremacy was gone.  We were wrong.  We’ve missed how rapidly the world was about to change as billions of people began to practice capitalism.  A worldwide explosion of pent up aspiration for prosperity replaced the demise of the communist threat.  Missing that reality was a colossal American blunder.

Friedman and Mandelbaum believe that the new world in which we live poses four central challenges:  globalization, the Information Technology revolution, our massive national debt, and the threat of our reliance on fossil fuels. The authors state that we have responded to these four challenges “with the vigor and determination of a lollipop”.

There is no way that we can respond to these challenges without collective sacrifice.  For example, the debt can’t be reduced without our being willing to accept reduced benefits AND paying higher taxes. In addition, as unpleasant as it is to accept, we will also have to realize that higher fuel bills will be GOOD for America. 

Thus, national sacrifice is inevitable.  The debate will be about how it is to be shared.

That debate, the authors believe, should focus upon America’s five pillars of prosperity, all of which involve partnership between government and the private sector.  They are:  our inadequate system of public education, our crumbling infrastructure, our counterproductive immigration policy, our inadequate support for research and development, and our unwillingness to properly regulate private economic activity.

Either we will rise to these challenges, or it’s curtains for America.

To be continued.

LeRoy Goldman

September 19, 2010

Please visit:  http://capau.org

My solutions to America's decline

Over the past several years I have argued that America is in decline.  Some of you have reacted to this by challenging me to propose a solution.  I’ve heard that criticism and have been looking for one that makes sense.  And now I’ve found it.

It’s contained in a brilliant book by Thomas Friedman and Michael Mandelbaum that has just been published, entitled, THAT USED TO BE US. Their diagnosis of our national travail and their prescription for its remedy are nothing short of remarkable. The basis for their central thesis and its supporting arguments are thoroughly and carefully sourced. 

It should also be noted that they state that they do not know whether their conclusion is fiction or nonfiction.  That, they point out, will be determined by all of us—by the collective actions that we do or do not take.

This column, and those that follow it, will summarize Friedman and Mandelbaum’s thinking.  Let’s start with a selection of some of the trends that disturb them:

25% of high school students drop out condemning them to a life of poverty and social failure.  69% of public school students are taught math by a teacher without a math degree.  75% of young Americans between the ages of 17-24 are rejected by the military because they didn’t graduate from high school, have a criminal record, or are physically unfit. College entrance exams show that only 25% of graduating seniors are ready for college.

In the 1950s and 60s the unemployment rate for men was 9%.  In the recession of the early 80s it was 15%.  Today it’s more than 18%.

In 2001 our national debt was $5.6 trillion.  Now it’s $14 trillion, which is equal to our nation’s Gross Domestic Product.

In 1982 the average household saved 11% of its disposable income.  Today it’s less than 1%.

In the 1950s spending for health care was 4% of GDP.  Today it’s 17% and on a trajectory to hit 30% by 2030.

In 2009 the United States spent more on potato chips, $7.1 billion, than it did on energy research and development, $5.1 billion.

The annual federal spending in research in mathematics, the physical sciences, and engineering is equal to the increase in our health costs every nine weeks.

Thirty years ago 10% of California’s spending went to higher education and 3% to prisons.  Today 11% goes to prisons and 8% to higher education.

The top 1% of Americans now controls 25% of our total income and 40% of our national wealth.  Twenty-five years ago the numbers were 12% and 33%.

We used to be a nation of savers and investors.  We’ve become a nation of spenders and borrowers.

There you have it, a nation in decline and denial.  The columns to follow will tell you how Friedman and Mandelbaum believe we got into this rut and how we can get out of it.

LeRoy Goldman

September 13, 2011

Please visit:  http://capau.org

CONGRESS OF BABOONS

We all know that a group of sheep is a flock, and fish, a school.  But what is a group of baboons?  It’s a congress!  You see where I’m going with this.

We now know what was a virtual certainty last summer when Congress created the Super Committee.  Its job was to do what by that time the President and the Congress would not do—enact deficit reduction measures and raise additional revenue over the next decade to put our economy back on track.

The co-chairs of the Super Committee were Republican Congressman Jeb Hensarling from Texas and Democratic Senator Patty Murray from Washington.  Hensarling has a two-word vocabulary—cut taxes.  And Murray has been known for years as The Queen Of Pork.

Back in December of 2010 the Bowles-Simpson Commission that President Obama created charted the course that we needed to follow. They told President Obama, Congress, and us that it would be necessary to cut about $4 trillion dollars over the next decade.  They told us doing that would require significant reductions in discretionary Government spending; cuts in entitlement programs; cuts in Defense spending; AND; tax increases.

But President Obama immediately fled the field of battle.  As soon as he went missing, the Congress of Baboons ran for the hills too.

The Red Baboons insisted that no taxes could be raised.  And the Blue Baboons insisted that no entitlement programs could be cut.  Of course, that guaranteed the impasse that occurred last summer and resulted in the creation of the Committee of super Baboons.  And now they have failed.

Now the Red Baboons will run home and blame it on the Blues.  And the Blue Baboons will run home and blame it on the Reds.

Isn’t it about time that we wised up?  Who put these baboons in their high priced cage on Capitol Hill?  We did.

If you really want to fix this problem, there’s a way to do it.  And it can only be done by us.  Basically it comes down to whether we are smarter than the baboons or not.

The name of their game is getting reelected.  That is why they won’t grapple with these tough issues that are killing America.  What we’ve got to realize is that these Red and Blue Baboons have their most important interest in common—getting reelected.

And up until now we have been stupid enough to accommodate them.  That is what we must change.  What the American people need to do is to rise up and DEFEAT FOR REELECTION EVERY INCUMBENT BABOON THAT RUNS IN 2012.    

If we do that, change will occur.  If we don’t, we lose, the baboons win, and we deserve our fate.

LeRoy Goldman

November 21, 2011

Please visit:  http://capau.org

Game Of Clowns

In 1953 the Washington Generals basketball team was formed.  From 1953 through 1995 the Generals played more than 13,000 exhibition games against the Harlem Globetrotters. They won 6 games and lost 12,994.  It’s abundantly clear that the Generals need new blood.  And here they are:  at center, Barack Obama, at forward, John Boehner and Harry Reid, and at guard, Mitch McConnell and Nancy Pelosi.

These clowns will enable the Washington Generals to lose every game.  But what will be different will be their ability to claim credit for having failed.  Look at how pleased they all are with their effort to avert default on the full faith and credit of the United States.  Look more carefully at how long they have labored and how little they have produced.

The Debt legislation that the President signed into law August 2nd makes a mockery of what needed to be done.  It does not include entitlement reform.  It does not include tax reform.  It does not include any increased revenue. It does not remove the uncertainty in the business community about Government policy that is required before businesses will begin to invest the $2 trillion dollars that sits on their balance sheets.  It does not mandate at least $4 trillion dollars in savings over the coming decade that is the minimum necessary to convince the world that America will deal with its debt and deficit crisis. And now S&P has downgraded the nation’s credit rating from AAA to AA+, and is threatening to further reduce it early next year.

Instead the new law creates a new Congressional Committee that’s supposed to do what neither the President nor the leaders of Congress could do after months of tortured and ridiculous bargaining. It’s a gimmick for the election campaigns next year.

In the meantime it’s clear that our economy is on the verge of plunging back into recession.  Economic growth is stagnant.  Unemployment is over 9%. The stock market is plummeting.  And the Obama Administration, the Congress, and the FED have squandered their opportunities to intervene in an effective manner.

What is less clear is the linkage between our faltering economy and the continuing death spiral of the debt and the deficit.  We have no chance to fix the former without being willing to pay the terrible price to fix the latter. 

But the Washington Generals have proven they won’t do the job.  In December of 2009 I wrote in this space, “How sad it has become to face into the reality that we’ve sent a rookie to do a pro’s job”.  The Obama Administration is failing the nation and the antics among the Republicans who wish to replace the President offer no reason to believe that they would be any better—different, but no better.

America desperately needs a third alternative to these warring clowns.  Stay tuned.

LeRoy Goldman

August 6, 2011

Please visit:  http://capau.org

  

We are being led by warring clowns

Remember when the kids in the backseat would say, “are we there yet”?  Well, we’re there.  Both the President and House Speaker Boehner announced our arrival on television just the other night.  Its destination deadlock—toxic, dysfunctional deadlock.

It hasn’t made a dimes worth of difference whether it’s Obama or Bush in the White House, or Pelosi or Boehner as Speaker, or Reid or McConnell as Senate Majority Leader.  All of them have had their chance.  All of them have failed.  Sadly, while they would have us believe how different they are from one another, the hard fact of the matter is that they all have the same genetic defect.

What they all share is a preeminent preoccupation for the salvation of their own political hides.  It’s an obsession that makes starkly clear their willingness to sacrifice America’s economy, its unique position as the leader of the Free World, and our cherished freedoms on the altar of political expediency.

Last December the President’s Debt and Deficit Commission, co-chaired by Democrat Erskine Bowles and Republican Alan Simpson, presented the President with a roadmap of urgently necessary national sacrifice to avert onrushing fiscal and economic Armageddon.

President Obama did nothing to move it forward.  The Republicans in the House and the Democrats in the Senate also ran for the tall grass.  When the President delivered his State of the Union Address and his budget to Congress in January he again ignored his Commission.

Ever since, as our economy has sputtered with millions of Americans out of work, the political class in Washington has spent their time attempting to out flank one another for the 2012 election.

Their obsequious behavior has taken the nation to the brink of default.  More threatening is the fact that, even if they agree to a short-term increase in the debt ceiling, it’s entirely possible that rating agencies like Moody will soon downgrade the credit worthiness of the United States.  Such an unprecedented action is likely to roil the world’s financial markets in ways that no one can predict. It’s called kick the country down the road again!

The question is whether the American people, angered to the core over this 20+ year descent of our Government into darkness and chaos, can figure out that simply trading one of these dysfunctional political parties for the other won’t work.

We need a new path forward, an Independent path forward.  And here it is:  Erskine Bowles for President and Alan Simpson for Vice President in 2012.

It’s the Independent combination of competent bipartisanship that we desperately need.  Are we smart enough to pull back from the abyss of dysfunctional same old, same old, or will we continue to be accomplices in our national destruction?

LeRoy Goldman

July 26, 2011

Please visit:  http://capau.org

Opportunities for bold actions just keep passing by

We all know that the date is fast approaching when the United States will default on its obligations, if Congress does not raise the debt limit.  And we all know that the Democrats and the Republicans can’t find a way to agree.

Most Democrats are unwilling to make the painful choices that are necessary to save the major entitlement programs, Medicare, Medicaid, and Social Security.  And most Republicans are unwilling to accept any tax increases, like the ones on the wealthy, that the President is proposing.

The President to his credit has said that he’s willing to entertain entitlement reform if, and only if, the Republicans will meet him in the middle, and that means agreeing to tax hikes on the wealthy.

But the Republican Speaker of the House, John Boehner, won’t take the tax hike step.  And, thus, the negotiations are deadlocked.  Finding a way to break the logjam requires that we understand clearly why Speaker Boehner is paralyzed on the tax issue.

He’s paralyzed because most of the Republican Caucus is adamantly opposed to any tax increase.  Thus, if Boehner agrees with the President on a deal that includes tax increases, the House Republicans will likely reject the plan and Boehner as their Speaker.

Why is there no wiggle room among the House Republicans on any tax hike?  Here’s the two-word answer:  Grover Norquist.

Norquist is the founder of the organization, Americans For Tax Reform. The organization opposes all tax increases as a matter of principle.  And the organization has skillfully persuaded 236 House members and 41 Senate members to sign their Taxpayer Protection Pledge.  Most House Republicans have signed on the dotted line.  And there’s more.  These Republicans know that, if they to break their pledge, Norquist’s organization would likely attempt to defeat them by supporting someone else in the next primary election.

So the real question is how can this lock be picked.  The key that will open the lock is corporate tax reform—radical corporate tax reform. 

All Americans want job creation.  And we know that job creation isn’t happening.  We also know that American corporations are sitting on $1-2 trillion that they are unwilling to invest in the present state of economic uncertainty. Were American firms to invest this capital it would be an enormous job creator.

President Obama should break the budget impasse by proposing a radical reduction in the corporate tax rate from its current level of 35% to 5%.  Corporate America would love it, and so would the labor unions.  It would give American businesses and their employees a huge competitive advantage in the world market.

Moreover, business and labor would lobby Congress to pass a budget deal with this bonanza in it.  And guess who the business community lobbies the most effectively—the Republicans.

And there you have it.  The Democrats are forced to agree to entitlement reform, the Republicans are forced to agree to tax hikes on the wealthy, and it’s all because business and labor are pushing both sides to agree so that corporate taxes go down, business begin investing again, and jobs, lots of jobs, are created.

It’s called—WIN—WIN.

LeRoy Goldman

July 12, 2011

Please visit:  http://capau.org

Boehner almost compromises...then turns tail and runs

House Speaker John Boehner and President Obama have been meeting in an attempt to forge the Grand Bargain—a budget deal that would at long last reverse the nation’s terrifying trajectory toward economic oblivion.

But on July 9^th, Boehner pulled the plug on the talks.  He abandoned the high ground that could have led to the kind of a budget deal with the President that is so desperately necessary.  Instead he capitulated to those in the Tea Party whose idea of how to move America forward is so simplistically ignorant as to not be worthy of serious discussion.

Be careful before you rush to the barricades in fury or to the ramparts in exultation.  Those who read this space regularly know well that I am no Obama booster, including the way in which he initially ignored the report of his own Debt and Deficit Commission chaired by Erskine Bowles and Alan Simpson. 

But at last, at long last, President Obama has come to the party.  His talks with Speaker Boehner were intended to do what needs to be done, if America is to avert economic Armageddon.  They were attempting to agree on a ten-year program to cut $4 trillion out of Government expenditures.  It’s what Bowles/Simpson had recommended.

The only way to do that responsibly is to cut spending, reform the major entitlement programs including Social Security, Medicare, and Medicaid, reduce Defense Spending, reform and rewrite the income tax code for individuals and corporation AND increase taxes.  Did you note the word, “AND”?

This prescription creates political pain for everybody—Democrats, Republicans, Independents, and the erstwhile Tea Party. That pain is the inevitable cost of decades of their having kicked the can down the road, using our addictive acquiescence as their excuse.

But now Boehner has cut and run.  He’s turned his back on the nation’s urgent need for what he wrongly believes is political advantage.  He’s chosen to protect his backside and his job as Speaker rather than do what’s right for the nation.  It’s clear that the Tea party folks believe this issue will oust Obama and propel them to victory in 2012.  They’re wrong.

When the Grand Bargain that the President and he were attempting to create fails as a consequence of Boehner’s cowardice, the President and the Democrats will ride that horse to victory in 2012.  They will do it by turning out their base and winning most of the crucial block of Independent voters who are appalled at the intransigence and naiveté of the Tea Party.

And the talk’s collapse could have been avoided.  The Grand Bargain covers ten years. Both sides could have agreed to delay the tax increases and the entitlement reductions, which are the incendiary portions of the deal, until the economy had emerged from its doldrums.  This could have been accomplished with “triggers” in the agreement based on the timing of economic recovery.

There are times when patriotism and selflessness require one to put their own and their Party’s hide on the line.  When that time came for Speaker Boehner, he turned tail and ran. 

LeRoy Goldman       

July 11, 2011

Please visit:  http://capau.org

Social Security and Medicare can be saved

This year Social Security will pay out more than it receives in payroll taxes.  Moreover, spending on Social Security, Medicare and Medicaid is utterly out of control.  In another twenty- five years these three programs alone will consume nearly the entire portion of the economy we spend on government.  Health care and retirement spending is going to swallow the entire Federal Government.

And here’s the main reason why that this sorry state of skyrocketing debt will grow much worse. The 77 million Baby Boomers, born between 1946 and 1964, will begin to reach age 65 next year.  Add them to the Medicare and Social Security rolls and you get Armageddon.

But the politics of dealing with these programs in a constructive and fiscally sound way has been radioactive for decades.  And, while it is the case that both political parties are at fault, the hard fact of the matter is that the Democrats deserve more of the blame for the paralysis.

They are the ones who figured out decades ago that they could lock down the votes of seniors by terrifying them.  They did it by saying that the Republicans were out to destroy Medicare and Social Security.  Seniors bought the big lie hook, line, and sinker.  That is why today millions of seniors oppose any change to either program.

Make no changes in Medicare or Social Security and only one thing is certain— Medicare will go belly up in 2017 and by 2037 all of Social Security’s reserves will have been drained and the income flowing into the program will only be enough to pay 75% of the scheduled benefits. Did you hear that senior citizens?  You’ve been sold snake oil.  Your self-interest and the nation’s self interest require the reform of both of these programs in order to preserve them.

And here’s some good news.  It’s possible to fix both of these programs without imposing the necessary pain on current recipients.  Did you hear that seniors? 

Maybe the Chairmen of the President’s Commission on Fiscal Responsibility and Reform, Erskine Bowles and Alan Simpson, think their work is about finished now that they have come forward with their bold and urgently necessary recommendations.  Wrong.

What they need to do during the next two years is to take their Report on the road all across America.  They need to hold public hearings to educate the nation on why these changes must be made.

You probably don’t know much about Bowles and Simpson.  Know this.  One is a Democrat and the other is a Republican.  Both are smart, reasonable, and tough.  Each knows that he must have the trust and cooperation of the other in order to succeed.  Both are honest.  And both are patriots first and politicians second.

LeRoy Goldman

November 19, 2010

Please visit:  http://capau.org

Greece and Europe: Lessons for America

The opening of a new Tom Hanks movie this past weekend got me to thinking how Forrest Gump would analyze the current Debt Crisis in Greece and what it portends for the United States. Gump, you’ll recall, could get right to the essence of life.

The Greek citizenry is in the streets of Athens armed with Molotov Cocktails.  They don’t understand and virulently oppose the austerity measures that the Greek Parliament just imposed. Greece teeters on the brink of economic collapse.  Its banks will soon fail in the absence of an enormous injection of cash from the European Union and the International Monetary Fund.  And the EU and the IMF will not come to the rescue unless Greece imposes severe austerity measures.

Income, property, and excise taxes will be increased by billions of euros.  Public sector wages will be cut by 15%. Social Security will be cut, means tested, and the retirement age increased by four years.  Health spending will be cut by 2 billion euros by 2015.  Only one in ten retiring civil servants will be replaced.  And the Government will be forced to raise additional money by selling some it its prized national assets such as its gambling monopoly, its stake in Athens Water and Hellenic Petroleum, as well as ports, airports, mining rights, state lands and pristine beaches.

It ain’t a pretty picture.  And the Greek people, long in denial, are coming to the party long after it’s too late to forestall Armageddon.  Forrest Gump would look at this and say, “Stupid is as stupid does.”

In case you haven’t noticed Greece is not alone.  Sovereign debt crises have also infected Spain, Portugal, Ireland and England. And the banks that are the most exposed to the risk of a Greek default are in France and Germany.

Any chance the contagion could come to America?   From late 2007 until well into 2009 the United States experienced a punishing recession.  Credit markets froze up, housing collapsed, unemployment skyrocketed, the FED had to inject over a trillion dollars that we didn’t have into Wall Street banks, more than $14 trillion in personal wealth vanished, and the stock market tanked.

Today the nation is more than $14 trillion dollars in debt and by August 2^nd the full faith and credit of the Government will be breached.

But not to worry.  The President won’t risk a second term by proposing cutting Medicare or Social Security, while the Republicans and the Tea Party won’t permit any increase in taxation.  They are able to get away with what amounts to treason because we permit it. Thus, we need a gimmick in order to continue our destructive national denial.

We need to learn from Greece. How about we sell the Los Alamos National Nuclear Laboratory to Iran in a Fire Sale?  They would and could pay our $4 trillion asking price.  And once they began to install it near Teheran, the Israelis would bomb Iran back into the Stone Age. The $4 trillion fixes our budget crisis and at last we’re rid of our real enemy in the Middle East.

Stupid is as stupid does.

LeRoy Goldman

June 30, 2011

Please visit:  http://capau.org

Obama response to Ryan Plan: Political gain only

At George Washington University April 13^th, President Obama laid out his proposal for dealing with the Federal Deficit and Debt crisis.  In so doing he broke his self-imposed silence on the subject and also ignited his campaign for reelection in 2012.

The President deserves belated credit for getting off the sidelines and getting onto the field of play.  He was missing in action last fall when his Debt and Deficit Commission laid down a broad set of proposals for solving America’s long-term fiscal crisis.  And he did not engage this matter in his State of the Union address or his Budget proposal for 2012. 

It’s reasonable to conclude that he would have continued to duck the issue had not Paul Ryan, the Republican Chairman of the House Budget Committee, put his proposal on the table first. 

But a careful reading of the President’s speech makes clear that it is more an effort to define this crisis in a way to enhance his reelection in 2012 than it is an attempt to build the bridges necessary to enact measures that would avert an economic meltdown.

President Obama used much of his speech to excoriate the Republicans and Congressman Ryan.  He basically called the Ryan approach un-American.  And he did so after having invited Congressman Ryan to attend the speech.

Although not unexpected, the President’s gambit was nonetheless an opportunity for leadership that he sacrificed on the altar of political expediency.  But it was political expediency too delicious for the President and his Campaign advisors to let pass.  After all, Democrats have successfully terrified seniors for decades by alleging that the Republicans were out to destroy Social Security and Medicare.  It’s a strategy that has worked in the past.  So why not trot it out one more time?

And the depressing truth is that those millions of seniors who insist that these programs not be changed are the ones who will be ravaged by their collapse.  Here’s a case where ignorance is not bliss.

So, where does that leave us?  Ryan’s plan is veto bait, and Obama’s plan will be dead on arrival in the House.  And the required vote on extending the debt ceiling is fast approaching.

That means that we’re at impasse or we must wait to see the whites of the eyes of the Senate’s Gang of Six. I believe that the Gang of Six, three Democrats and three Republicans, is actually attempting to do what neither Ryan or Obama did—propose a set of dramatic and painful legislative proposals, based on the recommendations of the Bowles-Simpson Commission, that would actually deal with the crisis and win enough bipartisan support to be enacted.

For the nation’s sake, I hope so.  And so should you.

LeRoy Goldman

April 14, 2011

Please visit:  http://capau.org

 

  

SAVING (CONGRESSMAN) RYAN

Republican Congressman Paul Ryan, the Chairman of the House Budget Committee, has had the temerity to do what no other member of Congress or President Obama has had the guts to do.  He has unveiled a thoughtful, comprehensive, yet inadequate proposal aimed at preventing the implosion of the American economy.

Ryan’s Plan is breathtakingly bold and filled with high stakes political risk for anyone who dares support it.  Here are its central elements:

Ryan’s Plan is  $6.2 trillion less than the budget that President Obama sent to the Hill in February. Those savings are achieved by wiping out funding for Obama’s health care reform legislation and ending Medicare as an unlimited entitlement for persons younger than age 55.  Instead they would qualify for what amounts to premium supports enabling them to purchase health insurance in the private market.

Medicaid, the federal health entitlement for the poor, would be reduced by over $700 billion over the coming decade.  It would be transformed into a block grant program to the states.

Over the decade the plan would reduce domestic discretionary spending by about $1.6 trillion.  This would take such spending back to 2008 levels.

Finally, Ryan’s plan would revamp the tax code for both individuals and corporations.  It would reduce the top marginal rate from 35% to 25% and eliminate unspecified deductions and loopholes.

Even with all of the above, Ryan’s plan would take 30 years to eliminate the budget deficit.  And those annual deficits will require more borrowing, borrowing that will increase the national debt over the next decade from $14.3 trillion to over $23 trillion.

And here’s what Ryan’s plan should have also proposed, but didn’t:

It doesn’t cross the bow of Social Security.  It doesn’t propose significant reductions at the Pentagon or Homeland Security.  And, true to Republican orthodoxy, it proposes no new taxes. 

His plan is painful, but not perfect.  But it is a legitimate starting point. 

For it to have any chance of success it will be essential for a competing plan to emerge from the Gang of Six in the Senate.  Led by Democrat Kent Conrad of North Dakota and Republican Tom Coburn of Oklahoma, the Gang of Six continues to work toward the development of a different, but equally bold plan to avert national economic Armageddon.

Meanwhile the Coward-In-Chief, who has no plan, is hunkered down in his bunker working on ways to savage the Republicans in his forthcoming campaign for a second term. 

The savagery has already begun in the media.  On the day that Ryan unveiled his plan, Chris Matthews, the host of Hardball, waved a copy of it in front of the camera and intoned, “this thing’s got a skull and crossbones on it—death for seniors and the poor”.

We certainly can’t expect Tom Hanks to try to save the modern day Ryan.  But maybe the Gang of Six will give him some much-needed cover.

LeRoy Goldman

April 6, 2011

Please visit:  http://capau.org

Obama punts on debt and deficit

Ever since the 112^th Congress convened in January the nation has been treated to futile shadow boxing between it and the President over the onrushing debt and deficit crisis.  With the possible exception of the Senate’s Gang of Six, none of those responsible for averting a national economic crisis has been willing to face into the painful decisions that must be taken.

While there is plenty of blame to go around, it is inescapably clear that the President’s unwillingness to engage these issue is at the heart of the problem.  Last December his National Commission on Fiscal Responsibility and Reform spoke the terrible truth.  They told him and us that by 2025 government revenue will only finance interest payments on the debt and Medicare, Medicaid, and Social Security.  Every other Government activity would have to be paid for with borrowed dollars.  By 2020 interest payments on our ballooning debt will reach $1 trillion.  By that time our accumulated debt will have put America at risk to foreign creditors who own one-half of our debt.

But in his State of the Union address and in his budget for fiscal year 2012 the President punted.  He has refused to employ the leadership that only the President possesses to come to grips with this crisis.  The problem has been made worse by the fact that the Republicans, who control the House of Representatives, have not stepped up to the plate either.  Led by the Freshmen class of Tea Party ideologues, the House GOP has proposed to slash discretionary spending, while being unwilling to address the real problem: the three big entitlement programs—Medicare, Medicaid, and Social Security.

Soon now all of these feckless politicians are going to have their bluff called.  Sometime between the end of this month and mid May the United States will reach the statutory debt limit.  If Congress does not raise the limit, the result will be default by the Government of the United States.  Its consequences will be catastrophic.

Breaching the debt limit would mean that the Treasury could not borrow in order to pay its obligations, and the full faith and credit of the United States would be violated. In a letter to Congress in January Treasury Secretary Geithner outlined the consequences of such a breach.  Interest rates on the American people and business would rise sharply.  Equity prices and home values would decline. Unemployment would increase and businesses would fail.  The nation’s preeminent position in the international financial system would be compromised.

Geithner concludes by stating that the consequences of default would cause damage to the economy that could be, “potentially much more harmful than the effects of the financial crisis of 2008 and 2009.”

If all of this is too dense for you, rent the action movie, Unstoppable, starring Denzel Washington and Chris Pine.  Obama and Boehner would do well to watch it too.  Maybe it would stiffen their spines.

LeRoy Goldman

March 23, 2011

Please visit:  http://capau.org

2012 budget continues America on deadly path

Now that we’ve seen the President’s budget for 2012, don’t be misled by its eye-popping numbers.  It proposes spending at $3.73 trillion.  It would run $1.65 trillion in red ink next year. And it would add just over $7 trillion to the debt over the next ten years.

By 2021 the President’s budget would increase our interest payments on the debt from $205 billion a year to a staggering $928 billion. This budget does not address in an honest and forthright manner the deficit and debt crisis the nation faces. 

And that’s a reality that can’t be cleverly denied or disguised.  The President appointed his National Commission on Fiscal Responsibility and Reform to chart a course out of the crisis we face.  Last July its co-chairs, Erskine Bowles and Alan Simpson, said that current budgetary trends are, “a cancer that will destroy the country from within.”  Their report, issued last December, describes the Moment of Truth we face.  The report concludes that, “America cannot be great if we go broke.” 

And by that they mean that we must reform the four components of the budget that account for the runaway spending—Social Security, Medicare, Medicaid and the Pentagon. 

And there’s the rub. The President’s Budget ignores that challenge. Obviously, the Administration’s political calculation assumes that the leadership on reforming entitlement spending and Defense spending must come from the other end of Pennsylvania Avenue.  But the hard fact of the matter is that it can only come from the President himself, and the President knows that, even though his “handlers” don’t.

Judd Gregg, a member of the Commission and a former Republican Senator from New Hampshire, has it right.  He described the President as walking away from the Report’s main findings.  He called on the President to either embrace the report or reject it.  He criticized the House Republicans for focusing on trying to solve this problem by just cutting discretionary spending.  And he called on the President to “call the bluff” of the House GOP.

Bowles, a Democrat and Co-Chair of the Commission, commented on the President’s budget by saying, “it goes nowhere near where they will have to go to resolve our fiscal nightmare.”

So we’re going nowhere fast.  And by the end of this year, it will be too late because the onrushing 2012 presidential campaign will have crushed any possibility of bipartisan compromise. And bipartisan compromise is the only way to get this job done.

The President needs some advice from outside his myopic “Bubble”.  So here’s the deal, Mr. President.  We’re both diehard White Sox fans.  The Sox open the home season on April 7th against the Rays.  I’ll meet you at U.S. Cellular Field.  You buy the tickets and throw out the first ball. I’ll buy the redhots and the beer.  More importantly, I’ll bet we can find a way to thread the eye of this needle before time runs out. 

LeRoy Goldman

February 15, 2011.

Please visit:  http://capau.org

America desperately needs modern Marshall Plan

At the end of World War II Europe lay in ruins, its economy shattered.  A war weary America was ready to turn its attention inward. But President Truman knew better.  He saw clearly the coming threat of Soviet expansionism and he knew that Europe had to be rebuilt. 

Truman boldly enunciated the Truman Doctrine and initiated the Marshall Plan.  That Plan, named after General George C. Marshall, who was then Truman’s Secretary of State, overcame the opposition of isolationists at home and was instrumental in rebuilding the economies of Western Europe, as the Cold War began.

Today we know that Harry Truman was a great president.  When this nation was at greater risk than most realized Truman’s instinct, common sense, and courage was exactly what was needed.

Today America faces new threats and the most significant one of them is one that most Americans and their elected leaders either deny or under appreciate. Our way of life, our democratic institutions, our national security, and our position as the world’s only superpower are all in danger of collapse as a consequence of our skyrocketing national debt.

Our main competitors on the world economic stage today are China and India.  And they are the nations that hold a disproportionately large amount of our $14 trillion dollar debt.  Were they to choose to demand payment, we are looking at Armageddon.

The President’s Commission on the Debt and the Deficit has laid out the scope and magnitude of this nightmare in stark detail.  The question is whether President Obama in his forthcoming State of the Union Message and in his budget for fiscal year 2012 will propose the painful steps to put America back on track before it’s too late.

At a minimum these steps will require restructuring Social Security, Medicare, and Medicaid.  They will require significant reductions in federal discretionary spending, including Defense and Homeland Security.   And they will require rewriting the income tax code and raising taxes on all of us. 

And all of this must be begun in the face of a jobless economic recovery.  Today the real rate of unemployment stands at almost 20%.

America needs a new Marshall Plan.  This Plan needs to rebuild the shattered American economy.  Its core should consist of two very different, but complementary, initiatives.  The first would entail a massive program to rebuild America’s crumbling infrastructure—roads, bridges, sewer systems, power plants, rail systems, airports, and power grids. The second would entail efforts to explosively grow American exports.  Both of these efforts will, by definition, create jobs—millions of them.

Wouldn’t it be fortuitous if we had a brilliant General of the Armed Forces who was also a skilled Secretary of State, like General George C. Marshall, to lead such a monumental national effort?

We do.  His name is Colin Powell.  Are you listening, Mr. President?

LeRoy Goldman

January 7, 2011

Please visit:  http://capau.org