BESTIAL POLITICS AND AMERICAN DREAMERS

The avoidance of taxes is the only intellectual pursuit

that carries any reward. ~ John Maynard Keynes

The Democrats will never ever be able to convince voters that increasing their taxes will lead to their or the public's benefit. The Republicans' decades-long push to lower taxes has simply been too successful and too resonant. Despite their public bitching, moaning, and unseemly whining, the Dems' logic-based arguments to promote tax increases (pretty much exclusively focused on taxing rich folks) as a necessary item in the public sector's fiscal relief, is a doomed cause. Why? Because of the American Dream and the underlying motivations of many non-rich voters.

The disappearing "middle-class" voter may possibly understand that raising taxes on the rich could help him/her (by providing more government funding for programs that they benefit from), but these same voters hold more dear their strong belief/faith that they are part of the "American Dream," and in due course they themselves can become "rich" if only allowed to by getting the government off their backs. They don't want tax increases because they eventually would have to pay them when they become rich and because all government programs are wastes of money.

The Dems have never bothered to mount an effective counter to this underlying, powerful motivator of the anti-tax movement. The Dems rightly argue that in general government programs are needed, necessary and are in the public interest, and these programs require funding from tax revenues. That's quite true. But the Repubs' on-going "starve the beast" tirade (with specific, but in reality exceptional, examples of waste and mismanagement) against Big Government is far more emotionally stirring – the Repubs exceptional examples prove the rule for why a faithful American Dream voter should always vote against tax increases, even if it's not in the voter's current self-interest. Other than emotion, how else can you explain the illogic of proto-typical American Dreamers shouting, "Get the government out of my Social Security?"

When it comes to a political third-rail of asking people to pay more taxes, specificity (and emotion) always trumps generality (and logic). Is the Repub argument duplicitous and hypocritical? Absolutely. Oh well, but anti-tax voting remains emotionally satisfying to folks who desperately wish they too will somehow, sometime achieve the American Dream and become rich – just like The Donald. Unless the Dems come up with a simple, unified, emotionally-resonant counter-argument against "starve the beast," they will never overcome the anti-taxers' broad appeal.

What could the Dems do? They could be as extreme as the Repubs by taking long, deep breath, swallow hard and say, OK we "see the light," let's agree to starve the beast, and publicly give the Republicans absolutely 100% of the credit for undertaking sweepingly harsh cuts to government expenditures and see how popular that really will be. This dramatic approach is mentioned in Adam Nagourney's New York Times Magazine article about California Gov. Jerry Brown; "… the only way a majority of Americans might reconsider [increased] taxes is if they experience the full brunt of spending cuts, not only in California but also in Washington.'People have never experienced cutting like that before,' Brown told me. 'That will create turbulence.' What Brown is proposing is to demonstrate just how disruptive a radically smaller government would be.”

I believe fully implementing the Repubs' all-cuts, "beast" strategy would not only be turbulent; it also would be painfully disruptive. The pain would have to be felt by citizens over an extended time period (not just 1 or 2 years) to cause significant change in voting patterns.

And pain would be felt because of the "We'll show those ungrateful voters something…" response by public decision-makers. When faced with voter disapproval about existing govt budget priorities (e.g., refusals to increase taxes), each and every govt "decision-maker" and/or bureaucrat always follows up and creates the most pain by making cuts to "vital" services (e.g., library hours, police and fire services on the local level, education spending on the state level, or health program spending – including the pittance spent on Planned Parenthood - on the federal level) rather than undertake a small amount of thinking and actually reduce waste and bureaucracy connected with non-vital public payrolls and programs that account for far more money than the "vital" ones they're all too ready to cut.

The Dems would have to uncharacteristically espouse a completely unified message that the affected voters' personal hurt (principally the so-called "lower 90" – meaning families outside of the top 10% of income/wealth holders) is completely due to the Repubs. This could be a challenge, since the Repubs are quite experienced at being deceitful and would surely portray the public tumult as being caused by the Dems.

Would the tumult be worth it for the Dems? Impossible to say, but based on the unyielding fiscal intransience of the Repubs (and Dems to a lesser extent), it may be worth serious consideration. If raising taxes is impossible, change the political game by declaring a victory and see what happens.

DOD RE-SIZING

When I think about improving the effectiveness of federal government spending, I first think about the Department of Expense, er, Defense (DOD). DOD expenditures accounted for 21% of total Federal government spending (and 53% of "discretionary" Federal spending) in FY2010. In addition, US defense expenditures represented 43% of total global military spending in 2009; in 2011 US DOD spending will be greater than the combined sum of the next 6 largest nations' defense expenditures (China, India, Russia, Saudi Arabia, France and the UK). In 2011, DOD's total budget is $741.2 billion. [By design, this number isn't completely "transparent", unlike other federal agencies. Wikipedia cites the DOD budget as $663.7B, others state it as high as I've cited above – what's $77.5B among friends.] That's an astonishing amount in both absolute and relative terms.

Who's kidding whom, this astounding sum can surely be cut by at least 10-15% without much real consequence – say in 4 ways: by stopping all vainglorious weapons' development and purchase to conduct future wars against past enemies that no longer exist, e.g., the USSR; by reducing 10-15% of all active-duty and reserve military personnel – including top brass – (across each of the services); by eliminating 10-15% of all active military bases; and by unifying the Army, Navy, Marines and Air Force into a single force (just like Canada successfully did years ago). Such re-sizing will undoubtedly produce huge howling by people with much brass and ribbons on their chests. Oh well, if they didn't howl, I'd assume the re-sizing wasn't big enough.

Do I think we should get rid of the DOD? No; a properly-functioning, responsive, non-omnipotent, non-omnipresent DOD is an essential part of our government.

However, I believe that the astronomical size of DOD spending is ultimately not in our nation's interest. Because of its size, the US has effectively (almost necessarily) adopted an all-war all the time foreign policy – how else to justify this huge expenditure. Why, because the DOD is large enough to do it. Like sheep, the public passively consents when the generals and admirals (G&As) say, "OMG, here's another pre-eminent threat we now need to destroy (the latest being Libya's madman president) to preserve our national security; and not to worry, we'll get it done quickly. By the way, since we're now fighting 3 (count 'em) wars, we need more money, not just the $700+ billion we got this year." Of course, that "quickly" will turn out to be just as quick as Iraq and Afghanistan.

The only way to stop this damaging, not-so-pseudo imperialism is to meaningfully cut the DOD's resources – by that I mean cut not only its budget and the number of worldwide bases, but more importantly also reduce the number of men and women (and G&As) in uniform; there are 2,278,895 people (including reserves) in the US armed forces. These cuts will have the benefit that we can't even feasibly contemplate fighting multiple wars at the same time all the time, which is a national policy strategy that endangers our international relations, reputation and political and fiscal future.

The military-industrial complex isn't really so complex. Our top-to-bottom increasingly disconnected all-volunteer professional military (as contrasted to a military mostly comprised of draftee citizens that was the norm until post-Vietnam) sees unending fighting as its only viable and natural function (other than defending its political position and budget) and its justification for existence. Thus, that's what the G&As do with increasing impunity – they advocate for continuous armed conflict. As Jonathan Stevenson in the May issue of Harper's puts it, "The United States has moved toward a quasi-imperial model of security, whereby open-ended military deployments keep the homeland [allegedly] safe by effectively pushing its boarders outward." Stevenson contends that because of its size and influence, the military has in effect co-opted President (and Commander in Chief) Obama's power to exercise civilian control over strategic/military policy. His article is entitled, "Owned by the Army."

Should this re-sizing of DOD resources be undertaken? Absolutely, if for no other reason than to benefit the 99.3% of US citizens who aren't wearing a military uniform. Realistically however, can the DOD budget and seemingly unlimited mission be significantly reduced and narrowed? Regrettably, it's very unlikely, mostly because DOD has emerged over the years since its costly Vietnam fiasco as the core determinant of US international policy, despite what the Secretary of State might say. [The State Dept's FY2010 budget was less than 8% of DODs.] Somehow the costly Iraq and Afghanistan fiascos don't yet count as negatives (for those of us who live in the 50 US states anyway). Very few politicians want to be labeled as an anti-American coward whose interest is in weakening the USofA. Tragic, because the DOD is unjustifiably big, and failing in its principal mission of defending our nation from real foes by continuing to conjure up more-or-less phantom ones (e.g., the Russian "missile gap") they need to confront to justify the military's too large existence.

GO AHEAD, SHUT IT DOWN

Time is an illusion, lunchtime doubly so. ~ Douglas Adams

Reality is merely an illusion, albeit a very persistent one. ~ Albert Einstein

So here we are edging ever-closer to yet another fiscal confrontation for the Federal government. You remember, a week ago we were told that unless the Republicans and Democrats agreed to a budget for the current fiscal year (that started on Oct 1^st, 2010) the government would stop functioning at midnight Mar 4^th. Well, that date has come and gone with no shutdown because the politicians unsurprisingly agreed to a temporary postponement in the form of a continuing Federal budget for the next two weeks. This agreement was labeled by the media as a "win" for the Republicans for reasons obscure to those of us who live beyond the Washington, D.C. beltway. Are we supposed to be happy the politicos managed to keep the government operating for all of two more weeks? I think not.

It's not a win at all. It's an all too solid example of how NOT to run a government. Here we are 19 weeks into the government's fiscal year, and Congress still hasn't passed a budget. [President Obama recently submitted his proposed budget on schedule for the next fiscal year, starting Oct 1^st, 2011 for Congress' consideration.] Given the level of fiscal malfeasance that Republicans, Democrats and every other form of politician (at every level of government) have perpetrated over the past decades, it's a wonder why we public citizens let them keep playing us as pawns while at the same time hugely benefiting the kings and queens of narrow, private interests.

The wonder might be explained as a five-star example of fiscal illusion, a macroeconomic term that describes people being not as "aware" of government tax revenues as they are of government expenditures, since many voters visibly benefit from government expenditure programs (funded by "hidden" revenues). People don't (or can't) link these benefits to the taxes they pay. Thus, fiscal illusion makes the cost of government appear less expensive, especially when financed by deficits, than it actually is. This has provided incentives to politicians of both parties to expand government expenditures but not raise revenues to pay for them. In this sense, we citizens share in the responsibility for our nation's fiscal calamities. In a general sense we continue to want a level and range of government-funded programs that we're not willing to completely pay for. "Shared sacrifice" is an alien concept that doesn't need to apply to me, only others.

These folks who we've voted into office have so often kicked the fiscal can down the road and played off competing interests by saying that someone else wants your piece of the remaining economic pie, they really have no sense of adopting an alternative approach. That's as outrageous as it is depressing. And these familiar fiscal tactics – tactics that got us into this mess – are now again being displayed and discussed in Washington and elsewhere. An apt characterization of them is attributed to Jennifer Brunner, a former Ohio secretary of state: "A dozen cookies are put down in front of a CEO, a union member and a tea-partier. The CEO takes 11, and then says to the tea-partier, 'That union guy wants yours.' "

Given that politicians are going to use only politics not rational thought to decide what programs should be cut and what taxes should be increased, what should we do? Begin by recognizing that neither party has any incentive to truly put all options on the negotiating table that actually could resolve much fiscal difficulty. Considering entitlement reductions (a heresy for Democrats), tax increases (an apostasy for Republicans) and defense cuts (similar for both Republicans and many Democrats) pale in political importance when compared to promising cuts in public broadcasting, planned parenthood and faith-based programs. Next, we should acknowledge that neither political party will be willing to seek and support meaningful fiscal solutions as long as political campaigning is happening – and there is always campaigning occurring. Sub-standard, short-term solutions from conventional fiscal politics have shackled the nation and thus require us to seek other answers.

Given that politics cannot be cast aside, I'm now in favor of moving "out of the fiscal box" and just shut down the government and end the charade that a meaningful fiscal resolution will be enacted by politicians. Fiscal illusion rests on the presumption that government expenditures/programs are more visible than the taxes that finance them. Let's see what happens when government programs disappear. Perhaps naively, a shutdown might be scandalous enough to clear the mindset of both Congress and the President so they can start using reason and logic. Better late than never, but given what happened on Mar 4^th, the Democrats more likely will simply fall on their shrinking sword and let the Republicans define the terms. As shocking as shutting the government down might be, it will pale in comparison to what the US will need to do if our politicians can't soundly resolve our longer-term fiscal problems. When (not if) this happens, global bond markets will start telling the Treasury Dept that US government bonds will need to carry a much higher yield –not has high as Greek 10-yr bonds' 12% yield today (after Moody's downgraded Greek debt), but likely higher than the current Treasury Note yield of 3.4% This avoidable eventuality will ultimately cost every citizen more fiscal pain, even if it's illusory to most.

THE REPUBLICANS DESERVE 2 OSCARS or THE CASE OF POLITICAL AND SOCIETAL SCHIZOPHRENIA ON THE RISE

Penny-wise is often pound-foolish ~ 17^th century English proverb



The Republicans deserve 2 special-category Oscars at tonight's Academy Awards show. One for patently false proselytizing (aka, acting) and the second for fully-erroneous (screen) writing. To some degree all politicians are impostors, but the Republicans' continuing charade qualifies them for this rare, double Oscar award. The Academy Awards would thus expose the Republicans for what they are, political and economic charlatans.

I had a breakthrough today. As you've seen if you've read my blog, I've been increasingly dismayed at the growing disconnect between economic reality (at least as I interpret it) and how others, especially those of a politically conservative nature see it (including those who now have the authority to change economic policy). Republicans are closet plutocrats. How can such a fundamental disconnect have occurred and can anything be done about it?

My insight is we are suffering from an oozing, collective case of schizophrenia. Not medical schizophrenia, but a percolating spread of economic and political schizophrenia. [The Mayo Clinic states schizophrenia is a group of severe brain disorders in which people interpret reality abnormally. And that Schizophrenia may result in some combination of hallucinations, delusions and disordered thinking and behavior.]

I think this diagnosis fits the Republican view of what is "reality" to a T. The Republicans' perception of reality is definitely "abnormal", "delusional", and "disordered" to say the least. They propose to fix our economic problems with policies that are either misguided, have failed in the past, or will cause significant future damage.

Republicans in Congress and state/local governments haven't gotten to this elevated state of schizophrenia (and plutocracy) without help. No, many others have assisted, including the much-ballyhooed "grass-roots" tea-partiers. The TP'ers are just as schizoid as their leaders. In spite of the tea-party's alleged "populist" aims, Republican economic policy has been laser-like in focusing on benefiting broad corporate interests and those of the top one to two percent of income-earners and wealth-holders. Republicans' latest fights against unions' collective-bargaining rights are yet another example in a long line of narrow, self-serving policy proscriptions. This all too successful false acting and writing merits the Republicans' Oscars tonight.

This really isn't "news" since corporate and Republican interests have gone hand-in-glove for decades. The surprise is that so many small-timers (including TP'ers) seem to mistakenly believe the Republicans will help them out. How these folks actually believe their economic lives will be improved after the Republicans privatize Social Security and Medicare, eliminate regulatory oversight and decimate "wasteful" government programs can only be explained medically, not rationally. Republicans have been saying they want to do this since Regan, but to date have only managed to vastly increase the public deficit and benefit the rich.

What can we do about this? This is a problem because it's unlikely Republicans would knowingly agree to a regime of antipsychotic drugs such as Thorozine, Clozapine or Ativan that medical doctors can proscribe for schizophrenics. Without such drugs, I think we can only hope the more rational, non-schizophrenic Democrats will more actively and effectively fight for the well-being of the "bottom 99%" of the public. Unfortunately, it's a faint hope. And this means the Democrats can't give away the store before the political negotiations commence.

You remember the "checks and balances" we dutifully learned in school that serve as a keystone to our democratic form of government. Where is it when we need it? Because the Democrats have time and again proven too timid and unfocused, we've become all too unchecked and unbalanced. Here's but one example. I just read Jeffrey Toobin's book about our Supreme Court, The Nine. He documents the clear shift over the past six years to a conservative majority on the Court that will have legal, economic and political implications for years to come. (Chief Justice John Roberts is 56 years old.) To regain effective checks and balances, we need the Democrats to stop being shrinking violets and uniformly and publicly protect our national strengths such as a vibrant middle class and educational infrastructure.

Given the Democrats recent track record, I'm not overly confident this will happen. Ultimately, the Democrats need to reassert their role as active, united checkers and balancers against the Republican onslaught. I'm dismayed that President Obama's tactics to get something done have made him stray way too far from the hopes he engendered during his campaign. After all, he told us he would create "Change We Can Believe In." When I voted for him, I thought I was voting for responsible progress for more than the top 1% of Americans. So far, the change he's created is mere pennies on the dollar.

THE TIN CUP HALF EMPTY

We've now seen the President's FY2012 proposed budget and heard the Republican's misguided response. It's thoroughly depressing. Why? Because the political blather from the Republicans and Democrats who will be making fiscal decisions on next year's budget (and this year's, since the Congress ineptly hasn't even passed a budget for this fiscal year that began Oct 1^st, 2010) have vacuously promised to "reduce the deficit" without continuing to deal with the simple fact there's 9% unemployment or taking any consequential action on the main causes of the long-term (structural) deficit – the relentless growth of entitlements like Social Security, Medicare, Medicaid and of defense spending.

How can they get away with it? Because US citizens are too unknowing (a polite way of saying too dim) about what really ails us fiscally speaking. We may say we want the government to cut expenditures and to get "more efficient," but we really don't know what benefit this will produce or why it matters at all – except facetiously expecting our taxes to be reduced. We seem to think that cutting foreign aid or community development grants (which together account for about a tenth of 1% of total spending) will somehow make a momentous difference for our Federal deficit. It won't.

Realistically, the US public doesn't want the Federal deficit reduced. We want to continue enjoying the personal advantages of receiving our Social Security, our Medicare and other deficit-financed benefits without worrying about the tomorrows, especially if those tomorrows involve making any sort of financial sacrifice personally or collectively. In this sense, we're too selfish to care about the future. We want our government's largesse to continue, but don't want to pay for much of it. We talk about the future meaning something, but we don't act that way at all. We want our government to continue living beyond its means, and instead let our kids pay for our deficits.

As usual, and with the public's encouragement, politicians are aiming their fiscal guns at the wrong targets. The only way to meaningfully reduce our long-term deficit is to significantly cut mandated entitlements spending and security-defense spending that the military-industrial complex has all too successfully made most of us believe is "required" spending (which together account for an astonishing 80% of Federal government expenditures; and over 100% of government revenues). Security-defense spending has roughly doubled in real terms since 2001, to over $870 billion in FY2011. Has any politician walked the political plank and said we need to meaningfully reduce mandated spending? No; because they see no benefit in making such truthful statements; they want to stay in office. They only feel safe talking about cutting really minor amounts of discretionary spending that will have no effect in remedying our long-term structural deficit or focusing on ancillary issues like public pensions (a state or local issue, not a federal one).

As a consequence we, the allegedly strongest nation on Earth, will continue to pass our fiscal tin cup around the world's capital markets in search of investors to finance our ever-increasing deficits. The Chinese and others have been obliging in the recent past. Will they in the future? Hard to say, but just like Greece and Ireland, sooner or later such investors will demand more return (higher interest rates on US bonds) from a nation that does not have its longer-term fiscal house in order. When they do, overdue painful changes will be required.

How Recessions, Together with Contractionary Fiscal Policy, Can Be Green

Are Republicans closet environmentalists? Perhaps. Will they admit it? Probably not.

This brief assessment shows how contractionary fiscal policy (such as that espoused by Republicans) can have significant positive environmental consequences. It is yet another illustration of how inter-connected everything is. After looking at some of the latest available data on the US's production of greenhouse gases (GHG), it occurred to me I had not fully considered how macroeconomic policies – principally fiscal policies (government expenditure and tax procedures enacted by Congress and the President) – can directly affect our environment. Matthew Wald's Jan 16th New York Times article also examined this relationship. Here is what I found.

Greenhouse gas (GHG) emissions have been steadily and, from my perspective, all too rapidly growing for a long time, as fossil-fueled economic production has increased. Worldwide, atmospheric carbon has increased 23.8% over the last 60 years. In 2008, total U.S. greenhouse gas emissions were 6,956.8 million metric tons (CO2 Equivalent). However, since 2008 the rate of increase has dropped, as the nation's growth of fossil-fuel usage has diminished, directly due to the effects of our enduring "Great Recession."

Thus, our recession has provided an unexpected and important benefit – a cleaner environment. This reduction in national output, combined with increased use of more energy- and environmentally-efficient technologies, and increased use of natural gas (the cleanest fossil fuel – much more so than coal) can have a positive effect in mitigating atmospheric emissions. The Dept. of Energy's "Reference Case" shows carbon and nitrogen emissions in 2025 to be lower than in 2008.

To determine what the relationship has been between our deteriorated national economy and our relatively improved air quality, I created a variant of what New Zealand economist A.W. Phillips first examined in the late 1950s, showing how a nation's rate of unemployment was indirectly related to its inflation rate. This became known as the Phillips Curve. I easily commandeered a data series between 1991 and 2008 for the annual change in the US unemployment rate and for the annual change in GHG emissions . My chart, and its linear regression line, illustrates the expected indirect relationship between the change in GHG emissions and in the unemployment rate. [Sorry I couldn't just insert this chart in this blog - Blogspot seems only to allow insertion of image files, not Excel charts. To view it, go to the "chart" link.] Thus, as the unemployment rate is reduced (and more workers are employed), GHG emissions increase. I have immodestly called this the Smith Line.  

So, given the Smith Line, I might be more willing to applaud the Republicans' incessant (and ill-timed) demands for reducing the size of "the government" by drastically reducing government expenditures (their proposed $100B contractionary fiscal policy; contractionary macroeconomic policy is undertaken when the economy is growing too rapidly - hardly the case now), since it likely will further increase unemployment and thus improve our environment. Speaker of the House John Boehner turns out to be a closeted true-green environmentalist. Who'd of guessed? Could we suggest he change his name to "Bonair?"

MMXI's RESOLUTIONS

Hasty resolutions are of the nature of vows, and to be equally avoided. ~ William Penn

Greetings. Here are a dozen resolutions I'm making and recommend to improve my well-being and this nation's over the coming year. As you'll easily see, most are stunningly fantastic – meaning the chance of their being adopted is next to nil. So it goes... Numbers 1 and 12 are far more possible, personally speaking. However, one can always wish – and that's the power and pleasure of setting such vows on New Year's, whether they're hasty or not. Hope springs eternal, especially on Jan 1^st.

1.  Probably most relevant and important, I urge me and others, especially public commenters and decision-makers, to have more patience and perspective. Sure, 2011's media will allow anyone to instantaneously broadcast her/his opinion on anything. But I'd advise pausing, taking a few deep breaths and consider what's going on that you want to comment on before you opine. And yes, I admit being way too impatient about any number of things both personal and professional. My adopting additional patience and perspective will be a most positive advancement for me. Wish me luck. I think it will help other folks as well.

2.  The Senate will eliminate the all too pervasive use of the filibuster as a mechanism for the minority to assume virtual majority power. This alteration commences the first of many changes needed for our ramshackle Federal, state and local processes of governance to become more representative and responsive. The unwarranted overuse of the filibuster is a national embarrassment that should be brought to a halt in January. Our governance system has shown itself to be in serious need of improvement –it seems unaccountably intent on operating in the 21^st century by clinging to the 19^th.

3.  A comprehensive, systematic energy bill passes the Congress and the President signs it. This includes some of my old favorites like eliminating hugely inefficient subsidies for domestic petroleum/natural gas and ethanol production and distribution, removing tariffs on imported cane ethanol, increasing the Federal gasoline/diesel tax by a $1/gal, imposing a verifiable limit on national production of green-house gases, and last but by no means least, instituting a systematic, inclusive carbon tax on all forms of fossil energy consumption. Now we're talkin'.

4.  Institute a Federal law that decriminalizes the consumption and production of marijuana and retroactively release the thousands of non-violent prisoners incarcerated for small-time marijuana consumption. As long as I'm at this one, have the Feds declare the marijuana division of the "War on Drugs" officially completed. Have the perpetrators of this insane portion of the WoD declare a "victory" as a sop to whatever misguided public and private authorities who see black as white. And end all funding for marijuana-related enforcement at the Federal, State and local levels. Also, economic and personal hypocrisy, way too often publicly practiced by Republicans, will become a DEA Schedule I illegal drug.

5.  Simplify and change the Federal and state tax laws so several inter-related transformations occur: income-based taxes become (once again) progressive thereby eventually contributing to narrowing the all too substantial gap between the rich and the rest of us; eliminate the tax subsidies for borrowing by individuals (e.g., mortgages) and firms (e.g., debt-financing for M&A activities); make tax rules and regulations simpler, fairer and more equitable. Ideally, these transformations would be adopted by each of the G-20 nations so the effects on international capital flows are mitigated. If only.

6.  Reinstitute binding PAYGO standards for the Congress and the President beginning in January, and implemented by Sept 30^th. And I don't mean the voodoo magic version of PAYGO the House Republicans want to introduce this month, where revenues lost from tax cuts don't have to be accounted for; talk about needing perspective.

7.  A compulsory national Legislative and Executive Plan for Long-term Deficit Reduction (LEPLDR – Not too catchy is it? Perhaps you can come up with a better acronym.) will be passed by the Congress and signed by the President by June 1^st with an explicit, binding timetable, so our strategically-important structural budget deficit will be reduced over time. This plan will necessarily involve substantial expenditure cuts to heretofore "sacred" programs like entitlements and defense, as well as tax increases (see #5). Try to balance the budget yourself using the NYTimes' clever, interactive budget puzzle. 

8.  China will meaningfully appreciate their Renminbi by April 1^st. The Renminbi appreciation will help the US some, but won't by itself solve our balance of trade nor our other international economic issues. In tandem with China's currency revaluation, Congress and the President will cease and desist all statements that accuse China and other foreign nations of "stealing our jobs," and recognize that national job trends are subject to many divergent, long-running forces. Over the past half-century, the US has gained far, far more jobs internationally through immigration and exports than we've lost during the past decade. Perspective helps here.

9.  We need to modify our spending and saving behavior, starting with the folks at the top. Enforce a protocol that every publicly-elected official – from the local city council members and State legislators/governors to Federal Congress-people and the President – must emphatically state (again and again) that individual citizens' economic behavior is perhaps the most important means of making our nation a better place for all to live. Every publicly-elected official will be required to make a personal statement by February 1^st how they individually will be changing their behavior to be consistent with the 3 principles shown below, including what personal sacrifices they have already made for the greater good. In other words, we recognize and agree that "there's no longer a free lunch that someone else will pay for at some point." Our economic behavior needs to change in several key ways:

a.       Stop blaming others for the consequences of our own misbehavior – in my mind, this means each of us needs to abide by the following standard, "I'm responsible for my own actions and mistakes and don't expect others to bail me out." Victimization will cease to be a national preoccupation of blame and irresponsibility. Mittens will be required to be worn at all times so finger-pointing becomes impossible.

b.      Recognize that shared sacrifice is a non-negotiable, necessary part to getting this nation back on track. Each of us will need to "pay" in some fashion for our individual and collective profligacy and mistakes. No one wears a white hat in this.

c.       Start behaving as if the future really matters. Don't keep "kicking the economic problems down the road" (for our children and grandchildren to face). In purely arcane, economic terms, our social discount rate needs to fall significantly, unless we want our kids and their kids to enjoy a lower standard of living. Do we? I hope not.

10.  Recognize that "too big to fail" is itself a first-order policy failure that has understandably alienated citizens and continues to cause substantial economic harm for everyone. No private firm is too big to fail. The unanswered question is: At some distant point in the past the banks and financial sector have transformed from being considered the lubrication system for the engine of our economy to being treated as the engine itself. How did this happen? It must stop, now. The banks create nothing permanent, yet they siphon off significant amounts of undistributed wealth. So, my wish is that the Federal Trade Commission and Dept. of Justice actually start enforcing current law – say the antitrust laws for a start – and reign in the hugely disproportionate influence the financial sector has on our economy. While they're breaking up the BofA, Citibank and Wells Fargo to make the financial services sector more competitive and responsive to actual people's needs, why not aim for the fences and have the FTC and DOJ also go after other huge firms like Exxon-Mobil, AT&T, Wal-Mart, Chevron, United Health, Blue Cross and Humana, just to mention a few. Where's Sen. John Sherman (R-Ohio), the father of the 1890 Sherman Antitrust Act, when we need him?

11.  Commit to making significant private and public investments in 3 strengths that have afforded our success so far: technological innovation, strengthening our physical and human capital, and harnessing our diverse talents and effort towards future achievement.

12.  Finally, I recommend everyone perform what I call the "glass half-full minute" at least once a day. Focus on something that you personally believe is a good (and perhaps new) thing for you, or something you've taken for granted that's nevertheless important for you. Savor the thought for a minute. The benefit of this minute is derived from gaining patience and perspective. It's healthy to remember that we American citizens, despite all the commentary and criticism, reside in the best nation around. We have benefited for a long time from a multitude of great strengths, springing from our neighbors, friends and many, many others in this country. When nurtured, these strengths can found our continued success. With any luck, performing the glass half-full minute won't be too challenging and will offer a small step for subsequent achievements and better times in the future.

Happy New Year!