In Debt We Trust

How do we avoid default at this stage as a nation? Can the two parties arrive at a reasonable solution that not only gets us past this crisis but also leaves us with a better balance sheet than before?

I just read an interview over at Global Post[1] that makes a lot of sense. Unfortunately, it does sound like a two phase solution would be most fruitful at this stage since tempers are so high after weeks of negotiating. The current proposals by Senator Reid and Speaker Boehner are farther from the compromise solutions than is resolvable in the time we have before default. The markets are already reacting and are likely to continue suffering so long as no clear path emerges.

One proposal I've read about is a clean bill including nothing but a debt limit increase. At this point, there would still likely be bipartisan support for such a bill and it would buy time to continue negotiating the finer points of deficit reduction without the stress of a looming deadline. Is this workable? Perhaps, though as the ratings agencies stated it might still result in a rate reduction and thus higher cost for future borrowing.

[1]Debt Crisis interview

Ready to debtonate

Have you heard of the debt ceiling debates? Yes? Okay - skip to paragraph two. So there's this limit called the "debt ceiling" that defines how much money the treasury can borrow via bond and similar instruments to pay for the programs and spending authorized by congress and signed into law by the president. We keep having to raise this limit because we're spending money faster than we're taking it in. On or around August 2nd we will reach the current limit and then be able to pay for about half of the stuff that we're currently doing without any new borrowing.

The debate has faltered numerous times over the last few months. There are several sticking points, or lines in the sand. Most revolve around a strong desire to reform our country's financial situation as a stipulation for raising this debt ceiling. Here are the two main issues I see at the moment:

1. Tea Party Republicans insist the limit be raised only with spending cuts attached, not with any increased tax revenue from current levels
2. President Obama, Senator Reid, and now Representative Pelosi, among others, want the limit raised enough that we won't have to debate this again before the 2012 election

The first has been a major problem for negotiations. Both the President's commission on the deficit and the recent "Gang of Six" proposal formed by three senators from each of the major parties includes additional tax revenue. When you have a cash flow problem, there are two options - reduce outflows and increase inflows. You can do one, the other, or both.

The second issue means that the volume of the money being discussed is very large, potentially up to $4 trillion over the next ten years. The driving force behind this requirement could be political - not wanting to have this issue come up again closer to the election. It could also be an efficiency argument - why have the same debate multiple times? Perhaps it's also tending on the perfectionist side - let's get the right answer rather than the quick one. In any case, I do believe that it is in the country's best interests to have a broader solution than a hack job, but the partial step is better than nothing at this stage.

In the case of a balance sheet as large as our nations, it's very difficult to choose only one of revenue or spending cuts without significantly changing the playing field. Rather, making smaller changes to both outflows and inflows helps keep the system more predictable and allows us time to see the impact of the changes. Several polls have shown that the majority of U.S. citizens favor a compromise that includes some of both. It really depends on the wording of the question, of course.[1] Still, the polls I've checked have shown that Democrats and independents are largely agree that tax increases should be part of the package. Republiicans are generally more in favor of cut only, but not by a large margin.[2]

How will this play out? In one scenario we could get a debt limit increase with only minimal cuts and some ongoing debate on the overall debt. In another, the negotiations that have been underway somehow reach a compromise in time for a vote before the deadline. It's also possible that the limit isn't raised in time and some payments stop going out. The investment world is getting more and more worried about this third option if quotes from economists and fund managers are any indication. Legislators are scrambling over the weekend to come up with something solid to avoid a massive negative market on Monday.

Can they do it? We've seen eleventh hour deals already this year and might be able to get one again. Still, you won't find me playing Russian roullette any time soon.[3]

[1]Poll divide

[2]CNN/ORC July 18-21 poll

[3] "The Tea Party is effectively playing Russian roulette with the bond market and they will, with certainty, lose," said Christian Cooper, head of U.S. dollar derivatives trading in New York at Jefferies & Co. Jefferies is one of 20 primary dealers that trade with the U.S. Federal Reserve.

A perspective on death

I'm guessing you've heard that Osama bin Laden is dead. What does this mean? What comes next? How do we react?

As we just celebrated the Jewish holiday of Passover, a quotation comes to mind. After Pharoah's army was drowned in the Red Sea, the angels began to rejoice. The Almighty chided them, saying, "My creatures are dying and you're singing songs!"

Note, though, that this reprimand is not directed at the Jews who are also celebrating on the far side of the banks. I see this as a distinction in what is being celebrated. On the one hand, the angels have the perspective to see the event from an uninvolved position. It is their responsibility to take the good of all into account. The Jews, on the other hand, are celebrating their freedom and the inability of their former masters to take it away from them.

So - are we the angels or the Jews in this story? Or are we some of both?

As for how the world will respond, I predict this will make the odds of a Republican presidential candidate beating President Obama nearly insurmountable, barring an event of the magnitude of Katrina or a double-dip Great Recession. I also predict a small contingent of conspiracy theorists who will be reported on, of course, since they make the event seem controversial in a way that makes modern media salivate.

Pakistan will face many questions, some insightful and some downright silly, over how bin Laden could have be hiding so close to a training base. My coworker rightly points out that, perhaps, there are a great many fortified mansions in Pakistan given the tribal war lords common in politics of the region. Perhaps the Pakistani intelligence even provided critical assistance in the gathering of knowledge and planning that led to the raid. We as civilians will likely never know the truth.

In the meantime, let us not rejoice in death but rather in a respite from the slavery of hatred. Perhaps it will be short lived though I hope it will lead to an end to hostilities on all sides.

In peace,
Adam

Marriage equality

As you're likely well aware, there have been several recent developments in the marriage equality arena. Iowa's supreme court unanimously legalized same sex marriage, Vermont's legislature overturned the governor's veto to legalize same sex marriage, and New York's governor revived a same sex marriage bill in his state.

Still, with the spectre of Proposition 8 in California and the state's supreme court unlikely to overturn it, not to mention the federal Defense of Marriage Act, same sex marriage in the U.S. seems to be years from widespread acceptance.

Where does that leave currently married or civily united same sex couples? Apparently in dire straights with no rights. For example, Janice Langbehn was denied access to her partner of 17 years despite having a legal advance directive that was provided to the hospital. I find this unconsciounable and, frankly, heartless. Yes, it's important to ensure only those the patient would want to have access and make medical decisions should be allowed to do so, but clearly the intent of the directive was that Janice should have access and not just make the medical decisions.

A proposal on Marriage

As you may have read on DailyKos, there's a movement to separate marriage from civil unions. Marriage would be a strictly religious observance while civil unions would be granted by the state.

When my wife and I were married last year, we filled out two separate contracts. One was the North Carolina issued forms and entailed the legal benefits and responsibilities of our union. The other was a contract known as a "ketubbah" that is signed by husband and wife in the Jewish tradition and indicated our spiritual bond. Our wedding was performed by a rabbi, but she had to be licensed by the state to do so as well.

From our experience, it already seems to be that there are two separate institutions. Why not make it official? Churches and other houses of worship would not be forced to issue their religious marriages to anyone (e.g. a Catholic church would likely have refused to marry me and my wife), and civil unions will be available to any pair of consenting adults not already civilly united with someone else. Problem solved, marriage is saved, and everyone is treated equally under the letter of the law and our nation's constitution.

I'm considering crafting a petition to this effect, but don't know who to send it to, how to get signatures, and what other organizations to involve. I'm already a member of HRC and recently joined straight FOR equality, but don't know if there's a better place to start than with them. If you have ideas or would like to help out, please contact me. Let's make the world a better place together.

Obama's first 100 days

Here is what I would like to see Obama and the new congress focus on during the first 100 days after they're sworn in next year:

1. Get his tax policy onto the floor of congress and passed so we can start working our way back toward a surplus a.s.a.p.
2. Work with Congress, the governors, and state legislatures to redefine marriage as a strictly religious institution. The government will instead issue Civil Unions to each pair of consenting adults with all the current benefits.
3. Begin troop draw down in Iraq, increase presence in Afghanistan. Ideally, capture bin Laden.
4. Meet with G[7/8], NAFTA, and appropriate U.N. councils to:
   1. Define worldwide emissions standards and get them onto the floor of congress to be passed a.s.a.p.
   2. Get Russia out of Georgia, replace their troops with U.N. peacekeepers.
   3. Expedite and improve aid to African Union troops in Darfur.
5. Revive the SCHIP coverage debate and get that back on the floor of congress so he can sign it into law.
6. Implement strict restrictions on line item vetoes to avoid their abuse by any future president.

The future of the GOP

With President-elect Obama's major victory and the Democratic gains in House and Senate, we will likely see a shake-up in the Republican party as they work to appeal to a larger portion of the electorate.

Here's my prediction- the Republican party will swing back towards the causes championed by the fiscal conservatives rather than the social conservatives, thus drawing back in a portion of the Libertarian vote (Ron Paul will have a hand in this, or at least be a target for assimilation by the Republican leadership even if he doesn't take part). A portion of the religious right will be so put out by being sidelined that they'll either form their own party or join another one as appropriate. Some of the evangelical leaders will even as independents, though this will be about as effective as the Green Party has been on a national level.

Two years from now: Democrats will retain a majority in house and senate, losses will be minimal if they exist at all. Republicans may make gains on the state level in several places across the country. Evangelical split will be beginning- at least two high profile races tracked by the networks will include one of the religious right candidates in addition to a Democrat and a Republican.

Four years from now: The Social/Fiscal conservative split will be well under way - Palin will be with the socials, of course. She will have a "party position", though likely not the candidate for president even though she'll run for it. Some other figure from the religious right will win their support and get approximately 5% of the popular vote in the general election. This will be enough to give Obama a second term as it eats into the base for the Republican candidate. Democrats will lose a few seats in the senate and house but retain a majority.

Eight years from now: The social and fiscal conservatives have tried to reconcile and made some limited success. Still the bruises and scabs from the hateful rhetoric of the past six to eight years will be difficult to fully heal from and the Democratic candidate will have an advantage going into the presidential election. Still, the pendulum will have started swinging back and it will be a tough fight. Some segment of the social conservatives will have splintered off and will be (pardon my French) absolutely bat-guana crazy. We'll all have a good laugh, though be scared at the same time.

I wouldn't bank money on this, and I haven't been around as long as other folks on this list probably have, certainly, but I think it's at least a reasonable starting prediction. Feel free to adapt and update based on the output from your crystal ball and tea leaf readings.

Tax plans

If you're interested in the differences between the tax plans Senator Obama and Senator McCain have proposed, you'll probably find the Washington Post's Obama and McCain Tax Proposals as informative as I did.

I'm particularly interested in the fact that McCain's tax break percentage increase as income increases while for Obama tax breaks increase and income decreases. Given the increasing disparity in wealth between the extremes, I believe Senator Obama's plan is the most equitable given this data.

One other fact I haven't been able to find yet is how Senator McCain plans to finance his tax cut. Folks used to complain about the "tax and spend liberals". I think it's time they started worrying about the "borrow and spend conservatives" who have driven up the debt and deficit over the past eight years.

Statistics and trends

I've taken to following as many of the daily polls and statistics tracking the upcoming election as I can. My cousin recommended the site FiveThirtyEight.com to my parents, who passed it along to me. It's hard to argue with cold mathematical prediction models or to skew them to your liking. The only thing you can affect is the questions asked, and with the slew of polls they track that noise is hopefully canceled out. I recommend taking a look if you don't feel you're getting your daily dose of campaign updates already. From their FAQ, here's a bit on their goal as a site:

What is the mission of this website? Most broadly, to accumulate and analyze polling and political data in way that is informed, accurate and attractive. Most narrowly, to give you the best possible objective assessment of the likely outcome of upcoming elections.

For the other end of the objectivity spectrum, there's the Washington Post, as discussed by Chris Bowers in his post "A 2.2% McCain lead is greater than a 13.8% Obama Lead."

I also took a look at the latest ABC/Post polling data and was intrigued by one of the results they called out:

                              Vote preference 
                            among likely voters 
 More important                Obama  McCain 
   Positions on issues (49%)    68%     29 
   Personal qualities  (39%)    34      61

As one of the 49% of folks who is more interested in the candidates' positions on the issues they'll face as leader of the free world, I may admittedly be a little bit biased here. However, it does strike me as telling that those who are more interested in the candidates' positions are overwhelmingly Obama supporters. We've already had one president that folks would like to have a beer with, and his approval rating is now lower than Richard Nixon's worst (also from the ABC/Post poll).

True, a president must be an able diplomat with foreign leaders, but only 2% of those polled said that foreign policy was the most important issue in choosing a president. True, a president needs to be able to broker deals with both house of congress, but Obama holds an edge as a "stronger leader", 54% to 40%. What personal qualities are those polled considering? I don't see the raw data for the question in the report broken down by candidate, so it's difficult to glean any more data here. If you have any insight, please do let me know!

On debating: Palin's tactics

In last night's debate, Governor Palin decided that she could take a lifeline out at any time by simply deciding not to address the questions posed to her. Toward the beginning of the debate, she said, "And I may not answer the questions that either the moderator or you want to hear, but I'm going to talk straight to the American people."[1]

That is no way to have a debate. I'm one of those American people you mentioned, Governor Palin, and I would have been very interested to hear you address the deregulation question Senator Biden was discussing before the above quote, as well as a dozen other questions you decided to simply ignore.

Let's be very clear - as leaders of the free world, the president and vice president do not get to decide what issues to address. They are responsible for all of them. Playing ostrich and dodging issues you don't like is exactly what got us into the economic mess we're in. Pundits were saying you merely had to hold your own last night, but I believe you had to show you were capable of governing a nation after having governed a state with a population lower than that over a dozen cities in the lower 48 states. In that respect, you have failed to convince me you are ready to serve as vice president of the United States.

Moreover, your broad interpretation of the powers and duties of the office of the vice president are frightening and dangerous. As previously mentioned in "Ongoing Investigations", you consider yourself to be above the law. No citizen of the country is ever above the law, and no citizen in their right mind wants a vice president who puts themselves above the law. To directly quote:

IFILL: Governor, you mentioned a moment ago the constitution might give the vice president more power than it has in the past. Do you believe as Vice President Cheney does, that the Executive Branch does not hold complete sway over the office of the vice presidency, that it it is also a member of the Legislative Branch?

PALIN: Well, our founding fathers were very wise there in allowing through the Constitution much flexibility there in the office of the vice president. And we will do what is best for the American people in tapping into that position and ushering in an agenda that is supportive and cooperative with the president's agenda in that position. Yeah, so I do agree with him that we have a lot of flexibility in there, and we'll do what we have to do to administer very appropriately the plans that are needed for this nation.[1]

I think not, Governor Palin. Please reread our Constitution.

[1] Transcript of Palin, Biden debate