Even though I once studied political science, even holding a degree in the discipline from the #1 Public School in New England, I readily admit that I do not care much for the discipline anymore. Part of this reason is because of what has become of “politics” in this country. The recent debt ceiling problem is a fine example of this, with many from the Tea Party-branch of the Republican Party participating in the politicalization (is that a word?) of something that had not been an issue over the past century or so. The debt ceiling has always been raised as needed, which, while not the best solution, helped maintain the credit integrity of our country. However, with the S&P downgrading the US credit rating, we no longer have our AAA rating. What this means for most people will probably not be known for a while, but for those invested in US Treasuries, the repercussions will be felt nearly immediately, especially for people whose bonds mature during the upcoming week.
I don’t claim to be an expert on anything yet. I am trying to learn more about how the market reacts and how investors should through my current employment at The Motley Fool. I fully expect the market to be crazy on Monday, with individual investors trying to sell to prevent further losses as the Dow will fall close to 10,000 points. I have seen estimates as low as 7,300, and depending on your position in the market, this could be good or bad. People looking to invest will find prices cheaper than they have been since the banking meltdown in 2008. For those who speculate in the market and try to time it, there will be massive losses. I have a feeling that if this market tumble comes to pass, the people that weren’t scared out in 2008 will finally walk away never to go back, willing to place their money in low yielding savings accounts and other non-liquid investments, such as gold or other precious metals. If you were to take my amateur advice, I would say pick a point to reenter the market and do it, but only with money that you do not need within the next five years. Historically, the market has returned around 9% annually, so even in tough times it is a good investment, at least in the long run.
The main point of this post is to openly think about political options going forward in this country. In my humble opinion, there are a few things that the United States could do to fix themselves for future generations. These things probably cannot begin to happen in the current environment, but it might be possible within a few election cycles.
- Impose term limits on Congress through Constitutional Amendment: The longest serving Senator was first elected in 1963, and the longest serving Representative in 1955. I am not alone in the thought that we should not have career politicians, and one way to fix this is to impose term limits on our Legislative Branch. If a president can only serve a max of eight years, why not do the same for our Congressmen? I would be willing to go a bit further, allowing senators to be elected no more than twice, with a max service time of 15 years. Representatives could be elected a max of five times, with a max service time of 12 years. The max service time is to prevent special appointments to get around the election count limit. If this was law by the 2012 election, 228 current Representatives would not be allowed to run again, many for the first time since the early 1990s. The Senate would have to replace at least 40 senators, which is merely an account of the Senators first elected in the 2000 election or earlier. Not only would this keep “fresh blood” moving into Congress, it might actually make it easier for every day Americans to be elected to Congress, unlike the Millionaires’ Club it has become recently. Which leads me to…
- Make it easier for third parties to succeed: One of the easiest ways to help third parties in this country is to totally revamp the political contribution machine, which allows for special interest groups to simply buy their way into the political process in this country. The Republicans and the Democrats raise millions of dollars through these groups, making it next to impossible for the smaller parties to compete, even down to the local level. If more of the party “elite” were retired on a regular basis due to term limits, there simply wouldn’t be a “name” on the ballot for most voters to choose from, making elections more about the person than the party. I touched on this a bit here, so feel free to go read that too.
- Make a Balanced Budget Amendment a reality: As part of a balanced budget amendment, reform the income tax code. One easy way to do it would be to impose a flat tax on everyone. Regardless of how much income you have, you would pay the same percentage of it as everyone else. It would also make it easy to budget if you had a reliable estimate of what tax revenues would be every year. Along with a balanced budget, there would truly have to be some work done with the largest part of our budget: Medicare and Social Security. With the wars of GWB now drawing to a close, the defense budget can be trimmed a bit, even though it is not the largest part of the budget. But raising social security taxes or modifying how new benefits are paid will lower the cost of running the program, or at least allow the government to spend money on other things, like education or infrastructure improvements. Some of the greatest growth in the last 25 years occurred when Bill Clinton was president, the last time that this country every ran a budget surplus.
I still have faith in America as a whole, but if its people continue to elect folks like the ones that can’t help but fight like children, things will get worse before they get better. I won’t even mention the housing market because we are probably still two years away from the bottom of that fiasco. However, if things don’t begin to change, if we can’t find politicians to represent us with our best interests in mind, we run the risk of truly losing this century to China and whatever other country decides to emerge with them.
Until next time…
2 thoughts on “Budget Crisis Redux”
I have to agree that the latest actions in Congress don't inspire confidence in the political system. I don't expect the current class of officials to accomplish anything worthwhile.I don't, however think a balanced budget amendment is a solution. There are times when the government running a deficit is worthwhile, and a balanced budget amendment would prevent that.A lot of what you complain of here could be addressed through public financing of elections. Politicians would be less beholden to the lobbyists and donors who finance their campaigns today. They would be more responsive to their constituents. As long as they continue to represent the views of their districts in Congress, they continue to get elected. But when they fail in voters' eyes, they lose election. Campaign finance reform also helps third parties by leveling the playing field. The result: the best ideas would win elections, not the biggest bank accounts.tions in Congress don't inspire confidence in the political system. I don't expect the current class of officials to accomplish anything worthwhile.I don't, however think a balanced budget amendment is a solution. There are times when the government running a deficit is worthwhile, and a balanced budget amendment would prevent that.A lot of what you complain of here could be addressed through public financing of elections. Politicians would be less beholden to the lobbyists and donors who finance their campaigns today. They would be more responsive to their constituents. As long as they continue to represent the views of their districts in Congress, they continue to get elected. But when they fail in voters' eyes, they lose election. Campaign finance reform also helps third parties by leveling the playing field. The result: the best ideas would win elections, not the biggest bank accounts.
I did not consider public financing of elections which makes a lot of sense. The biggest problem is how far the citizenry is removed from the people they elect. I would agree, in part, about the balanced budget thing too. Something needs to be done so that the politicians cannot spend money without the revenue. Maybe that is not the same thing, but we definitely can't continue this way much longer.