This is something I would like to see happen. It appears unrealistic. It very well may be a passing fantasy.
In my estimation, the United States is simply pulling money out of thin air, with calculable damage to the dollar as an exchange mechanism, to confidence in the American economy, and to the idea of a fiscally solvent future. We appear to be charging up all available lines of credit (that being, faith in the U.S. economy) with incredible speed (Iraq, Afghanistan, Hurricanes, Tax Cuts, Detroit bailouts, AIG bailout, Fannie Mae, Freddie Mac, All of Wall Street). We are so hellbent on delaying a recession that the fundamental stability of our way of life seems at risk. We could be one unforeseen disaster away from a worldwide sell-off of American debt (it being rendered worse than worthless). Should that happen, the subsequent collapse of the dollar would wreck our economy and take most of the global economy with it. I could be wrong, of course. But I just do not think our current fiscal policy has any semblance to reality. Every dollar we spend today is a dollar that will demand interest service tomorrow. These trillions of dollars are adding up. We keep flinging money at our creditors like this won't have an impact on the underlying structure. America is investing heavily in debt. The return on this, of course, is more debt (in the form of interest, depressed activity, weakened exchange rates).
We are probably riding this rocket right off the fucking launchpad and into a spectacular explosion. I could be wrong. Right now, I just don't see how we're gonna magically extricate ourselves from the hole that has been dug. The way things are will not work. This is my premise.
My proposal is to tap into the last remaining avenue of income available to our government and turn that income into an investment: a Sovereign Wealth Fund that takes the current Social Security surplus (that is being used to cover the federal deficit) and plows that money back into the American economy in a very direct fashion: Infrastructure, Energy, Healthcare. Rather than invest this money into chronic budget deficits, we could invest this money back into America, thereby generating new wealth, expanding economies and creating jobs. I believe that it will take a seismic shift in the way our fiscal accounting is handled in order to save this country from relentless debt. Fucking with taxes and cutting spending really isn't going to do the job. We could cut every single federal earmark tomorrow and still be no closer to confronting this issue.
The proposed Investment Fund would do more than re-invest Social Security payments into changing the American economy [critics will be quick to point out that I am actually proposing re-distributing Social Security taxes; of course I am, I would rather see this money put back into America than into foreign held debt]. By taking Social Security off the Federal Governments ledger (and ultimately Medicare and Medicaid), future 'unfunded liabilities' will suddenly look a lot less intimidating. This will strengthen the dollar and potentially allow us to renegotiate much of our debt. The 'unfunded liabilities' that threaten to wreck any sort of balanced budget proposal would become leveraged against a massive - and increasing- investment in an alternative energy grid, a transnational commercial shipping network, new road construction and, most importantly, a National Health Care Service. The savings generated by bringing all American health care consumers on an equal footing with health care providers would be enormous (as it is, insurance companies and HMOs cannibalize customer investment; the United States negotiates health care prices that are an astonishing fraction of the prices negotiated by private insurers - look it up). Future health care costs would be leveraged against present health care savings. The Investment Fund would represent every American, soak up the debt present in 'unfunded liabilities', and exist as a parallel debt vehicle for American securities. But instead of continually adding to existing debt (as every dollar thrown at the deficit does today), the Investment Fund would generate huge capital (in the form of massive national projects like roads, alternative energy farms, a unified National Health Care Insurance Pool). We could make money (and create jobs and tax bases) by transferring income from debt expenditure to national investment. Instead of the speculative gain made in the dotcom bubble and the mortgage clusterfuck (the profits of which went to private investors, and the consequences of which were picked up by the taxpayer at large), this would be tangible gain based on genuine production. The world markets would react, the American economy would react. Quickly. American citizens and corporations (really the same thing) would be eager to invest in such an expansive, massive entity. James Madison concluded that American Liberty could only be secured by a continental empire, so vast as to be unshakable. I propose that American Prosperity can only be secured by a national investment, so ambitious as to restore confidence in the American economy, in the dollar, and in the country. This argument has effectively been presented once before, by Alexander Hamilton, who proposed that the states' debts be subsumed into a national debt as the mechanism of engaging future prosperity. I am confident that the challenges of today require an equally radical, equally bold measure. My proposal is to extricate the responsibility of social security from a bloated and sinking federal debt and channel that income into a new institution, one owned by the American people, serving the American interest through continual investment. Of course, we own the current budgetary mess as well, but so long as the New Deal/Great Society 'unfunded liabilities' lurk in the background, any progress made in dealing with that mess will be piecemeal and ineffectual. We can elect a fiscal conservative to office, and let the GOP savage these institutions with their long-desired 'budget reform.' I will hold not hope in a Republican Administration delivering a balanced budget: they have only dug the hole deeper, faster. A better promise would be to forge an alliance with the fiscal conservative wing of the GOP, carefully present the requirement of the shared task at hand, and splinter them away from the social conservative base. This will never happen so long as the only solutions presented are half-step budget cuts and 'targeted' tax raises. A radical solution is necessary.
I don't pretend my proposal is that solution. I cannot honestly say it is even feasible. How would the federal deficit be handled after we divert the Social Security surplus it has become addicted to? How much capital could realistically be raised for an American Investment Fund with only the SS surplus as realized? (I would argue quite a bit, but who knows) How much investment would have to be made before the requisite and absolutely necessary returns are realized? How can we mollify the AARP (presumably the single largest obstacle to doing anything with social security)?
Therefore, I present this proposal not as a solution, but as an opportunity to ask the demanding question of our generation: how are we going to pay for all this shit? You want tax cuts, fine, pay for them. You want clean energy, awesome, pay for it. You want Universal Health Care, let's pay for it. New Infrastructure, new roads, new schools? I contend that simply issuing more debt will not pay for any of this; indeed, every dollar borne out of debt is a disinvestment in a fiscally solvent American Future. Something has to be done, but no one is talking about it.
Bailing out Wall Street won't fix anything. The economy will never grow fast enough to expand our way out of this problem.
Either the economy will shrink to a more balanced size (wrecked by foreign debt, a weak dollar, budget deficits and unfunded liabilities) through recession and then depression. Or we will come up with a better way.
Any suggestions?
In my estimation, the United States is simply pulling money out of thin air, with calculable damage to the dollar as an exchange mechanism, to confidence in the American economy, and to the idea of a fiscally solvent future. We appear to be charging up all available lines of credit (that being, faith in the U.S. economy) with incredible speed (Iraq, Afghanistan, Hurricanes, Tax Cuts, Detroit bailouts, AIG bailout, Fannie Mae, Freddie Mac, All of Wall Street). We are so hellbent on delaying a recession that the fundamental stability of our way of life seems at risk. We could be one unforeseen disaster away from a worldwide sell-off of American debt (it being rendered worse than worthless). Should that happen, the subsequent collapse of the dollar would wreck our economy and take most of the global economy with it. I could be wrong, of course. But I just do not think our current fiscal policy has any semblance to reality. Every dollar we spend today is a dollar that will demand interest service tomorrow. These trillions of dollars are adding up. We keep flinging money at our creditors like this won't have an impact on the underlying structure. America is investing heavily in debt. The return on this, of course, is more debt (in the form of interest, depressed activity, weakened exchange rates).
We are probably riding this rocket right off the fucking launchpad and into a spectacular explosion. I could be wrong. Right now, I just don't see how we're gonna magically extricate ourselves from the hole that has been dug. The way things are will not work. This is my premise.
My proposal is to tap into the last remaining avenue of income available to our government and turn that income into an investment: a Sovereign Wealth Fund that takes the current Social Security surplus (that is being used to cover the federal deficit) and plows that money back into the American economy in a very direct fashion: Infrastructure, Energy, Healthcare. Rather than invest this money into chronic budget deficits, we could invest this money back into America, thereby generating new wealth, expanding economies and creating jobs. I believe that it will take a seismic shift in the way our fiscal accounting is handled in order to save this country from relentless debt. Fucking with taxes and cutting spending really isn't going to do the job. We could cut every single federal earmark tomorrow and still be no closer to confronting this issue.
The proposed Investment Fund would do more than re-invest Social Security payments into changing the American economy [critics will be quick to point out that I am actually proposing re-distributing Social Security taxes; of course I am, I would rather see this money put back into America than into foreign held debt]. By taking Social Security off the Federal Governments ledger (and ultimately Medicare and Medicaid), future 'unfunded liabilities' will suddenly look a lot less intimidating. This will strengthen the dollar and potentially allow us to renegotiate much of our debt. The 'unfunded liabilities' that threaten to wreck any sort of balanced budget proposal would become leveraged against a massive - and increasing- investment in an alternative energy grid, a transnational commercial shipping network, new road construction and, most importantly, a National Health Care Service. The savings generated by bringing all American health care consumers on an equal footing with health care providers would be enormous (as it is, insurance companies and HMOs cannibalize customer investment; the United States negotiates health care prices that are an astonishing fraction of the prices negotiated by private insurers - look it up). Future health care costs would be leveraged against present health care savings. The Investment Fund would represent every American, soak up the debt present in 'unfunded liabilities', and exist as a parallel debt vehicle for American securities. But instead of continually adding to existing debt (as every dollar thrown at the deficit does today), the Investment Fund would generate huge capital (in the form of massive national projects like roads, alternative energy farms, a unified National Health Care Insurance Pool). We could make money (and create jobs and tax bases) by transferring income from debt expenditure to national investment. Instead of the speculative gain made in the dotcom bubble and the mortgage clusterfuck (the profits of which went to private investors, and the consequences of which were picked up by the taxpayer at large), this would be tangible gain based on genuine production. The world markets would react, the American economy would react. Quickly. American citizens and corporations (really the same thing) would be eager to invest in such an expansive, massive entity. James Madison concluded that American Liberty could only be secured by a continental empire, so vast as to be unshakable. I propose that American Prosperity can only be secured by a national investment, so ambitious as to restore confidence in the American economy, in the dollar, and in the country. This argument has effectively been presented once before, by Alexander Hamilton, who proposed that the states' debts be subsumed into a national debt as the mechanism of engaging future prosperity. I am confident that the challenges of today require an equally radical, equally bold measure. My proposal is to extricate the responsibility of social security from a bloated and sinking federal debt and channel that income into a new institution, one owned by the American people, serving the American interest through continual investment. Of course, we own the current budgetary mess as well, but so long as the New Deal/Great Society 'unfunded liabilities' lurk in the background, any progress made in dealing with that mess will be piecemeal and ineffectual. We can elect a fiscal conservative to office, and let the GOP savage these institutions with their long-desired 'budget reform.' I will hold not hope in a Republican Administration delivering a balanced budget: they have only dug the hole deeper, faster. A better promise would be to forge an alliance with the fiscal conservative wing of the GOP, carefully present the requirement of the shared task at hand, and splinter them away from the social conservative base. This will never happen so long as the only solutions presented are half-step budget cuts and 'targeted' tax raises. A radical solution is necessary.
I don't pretend my proposal is that solution. I cannot honestly say it is even feasible. How would the federal deficit be handled after we divert the Social Security surplus it has become addicted to? How much capital could realistically be raised for an American Investment Fund with only the SS surplus as realized? (I would argue quite a bit, but who knows) How much investment would have to be made before the requisite and absolutely necessary returns are realized? How can we mollify the AARP (presumably the single largest obstacle to doing anything with social security)?
Therefore, I present this proposal not as a solution, but as an opportunity to ask the demanding question of our generation: how are we going to pay for all this shit? You want tax cuts, fine, pay for them. You want clean energy, awesome, pay for it. You want Universal Health Care, let's pay for it. New Infrastructure, new roads, new schools? I contend that simply issuing more debt will not pay for any of this; indeed, every dollar borne out of debt is a disinvestment in a fiscally solvent American Future. Something has to be done, but no one is talking about it.
Bailing out Wall Street won't fix anything. The economy will never grow fast enough to expand our way out of this problem.
Either the economy will shrink to a more balanced size (wrecked by foreign debt, a weak dollar, budget deficits and unfunded liabilities) through recession and then depression. Or we will come up with a better way.
Any suggestions?
