Category Archives: Congress

Looking for Help!

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America is in a tough position at the present time, both economically and fiscally.  Our economy is stuck in a slow growth mode of 2% per year, ever since the end of the recession four years ago.  The unemployment rate, now 7.6%, is dropping only very slowly which means many millions of people are either unemployed or underemployed.  Our national debt, now almost $17 trillion, is still growing rapidly.  As interest rates increase and return to normal levels, as they may be starting to do already, just paying the interest on this enormous debt load will take an increasingly large portion of government revenues in the years ahead.  At the same time entitlement spending, on Social Security, Medicare and Medicaid, is also increasing rapidly.  It is absolutely essential for our national leaders to strongly focus on finding solutions for these escalating problems and only a few of them, but not nearly enough, are making a concerted effort to do this.
I am trying to do something about these critical and urgent problems.  First of all, I challenged the incumbent Congressman for Nebraska’s Second District, Lee Terry, in the Republican Primary in May 2012, but to no avail as he was easily re-nominated and then re-elected in November 2012.
After the 2012 elections I set up a blog: https://itdoesnotaddup.com/ to address these critical national issues and to propose ways of addressing them.  There are over fifty individual posts by now which go into much detail on possible actions that could be taken at the national level to make more progress on all of these matters.  But I need to reach a wider audience and to create a greater sense of the eminent danger we are in if we don’t take our current situation more seriously.
I have employed a graphic designer to come up with a new and more exciting logo and website to hopefully create more visibility for what I am doing.  Take a look: http://thebudgetjack.com/.  I am also looking for one or more people to help out with new content for the new website.  Perhaps it could be authoring a separate but related series of blog posts on these same issues.  Or perhaps by contributing a new feature to the website which would never occur to me on my own.
If you have any ideas about any of these things, please let me know.  I am easy to reach at jackheidel@yahoo.com. I look forward to hearing from you!

Should Nebraska Adopt the Common Core Standards?

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Yesterday’s New York Times has an article by Andrew Hacker and Claudia Dreifus “Who’s Minding the Schools?”, which makes a strong case against the so called Common Core education standards already adopted by 45 states.  Their argument is that the standards are a “one-size-fits-all pathway governed by abstract academic content” which will primarily benefit the affluent middle class students who have strong parental support and who will go on to attend selective colleges.
About a year ago Mr. Hacker wrote another NYT article “Is Algebra Necessary?”, pointing out all the grief resulting from requiring high school students to learn algebra.  The Common Core standards have a strong algebra component and so they will tend to solidify the expectation that all high school students study algebra and learn it well.  This is an especially big challenge for low income and minority students who have the least academic success in high school and are the most likely to drop out before graduation.
Both the U.S. Senate and the House are currently considering legislation to renew No Child Left Behind by giving states more flexibility in figuring out how to increase educational success for their own students.  This makes a lot of sense and should make it possible to cut back substantially on the approximately $100 billion per year spent by the federal Department of Education on grants to the various states.  In other words, for various reasons there is currently taking place a shift in educational policy to give more control and responsibility back to the states.  The Common Core standards are attempting to move things towards more federal control and therefore are likely to face very strong headwinds.

After the Crisis: The Power Inversion and What It Means

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In today’s New York Times David Brooks has a column “The Power Inversion”  describing a shift of economic and political power from the federal government to municipal governments.  Of course, the rural to urban population migration has been taking place for many years.  But now the financial crisis and resulting political stalemate in Washington is causing civic leaders to take more initiative in addressing economic problems.  The Brooking Institution’s Bruce Katz gives many specific examples of such initiatives in a recent speech “After the Crisis: The Metropolitan Revolution”.
This shift of power away from Washington and back to local government could have big ramifications for the federal budget which, as almost everyone knows, is currently running huge deficits.  Here is a good example to start with.  The U.S. Senate is about to take up revision of the No Child Left Behind law which expired several years ago.  A bill, Strengthening America’s Schools, has been introduced by the Democratic majority for this purpose.  It allows states to create their own education reform plans and sets testing and performance standards for all states to follow.  It is much more flexible than NCLB.
Congress should take this opportunity to reorganize the federal Department of Education by greatly consolidating its huge number of individual programs (over 100 separate programs in K-12 education alone).  Support for state education programs could be given in much larger chunks thereby giving states and school districts more leeway in figuring out the best way to divide up and allocate their education dollars.  The total federal budget for education could be significantly reduced in this way and the states will, at the same time, be able to do a better job with fewer dollars because there will be fewer strings attached.
This is a smart way to shrink the federal deficit and we should take advantage of it!

What is America’s Biggest Problem?

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I’d like to do things differently on Memorial Day and ask you to say what you think our biggest national problem is at the present time.  If you have been following this blog for a while, you can probably guess what my own answer is.  But I will not answer directly, at least not yet.   However I will respond to your comments and give you my take on your answer.  Later on I’ll give you my own answer to the question. I hope to hear back from you!

Is Emphasis on Deficit Reduction Impeding Recovery?

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The New York Times reported on May 9, 2013 that “Emphasis on Deficit Reduction
Is Seen by Economists as Impeding Recovery”.  According to the reporter, “Tax increases and especially spending cuts, the critics say, take money from an economy that still needs stimulus now, and is getting it only through the expansionary
monetary policy of the Federal Reserve.  … In all of this time, the president has fought unsuccessfully to combine deficit reduction, including spending cuts and tax increases, with spending increases and targeted tax cuts for job-creation initiatives in areas like
infrastructure, manufacturing, research and education.”
The $845 billion deficit for the current year, as estimated by the Congressional Budget Office, hardly represents austerity, and is in fact a massive stimulus.  The president says that he wants “sensible” deficit reduction, but simply offsetting sequester
spending cuts and higher taxes on the wealthy with other spending increases and
targeted tax cuts as above, really amounts to no deficit reduction at all.
Most observers agree that it is entitlement spending, especially for Medicare and Medicaid, which is the main driver of the national debt.  Serious deficit reduction will not be achieved by further whittling away at discretionary spending, as wasteful as
some of it is.  The president has proposed changing the way the Consumer Price Index is computed, by switching to a “chained CPI” which will save the federal government about $30 billion per year.  This is a worthwhile change to make but represents a relatively modest savings by itself.
If the Democrats want to spend more money on “investments” and other forms of
fiscal stimulus, to try to speed up the recovery, they will have to get on board with serious reform of health entitlements.  The rapidly exploding national debt is a far too serious and urgent problem to ignore any longer.  The president might say that it should be addressed in a sensible manner, but postponement is no longer a sensible option.

Why is American Health Care So Expensive?

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In the May 5, 2013, New York Times columnist Ross Douthat “What Health Insurance Doesn’t Do”, discusses a recent Oregon Medicaid experiment which shows that the Medicaid program improves health outcomes only slightly even though it does help people avoid huge medical bills.  As Mr. Douthat goes on to explain, the Oregon result offers a valuable suggestion for how to make American health care overall much more efficient and less costly.
The problem is that our health insurance system does not function like any other type of insurance.  All other types of insurance such as for house or car protect only against actual disasters like a house burning down and not routine maintenance repairs which affect all of us on a regular basis.  In other words, health insurance could and should be restricted to very expensive treatments such as for cancer, for example.  Routine health problems, which affect everyone over a lifetime, even including end of life care, can and should be paid for with mechanisms such as health savings accounts, which can be rolled over from one year to the next.
A more elaborate discussion of the inefficiency of American health insurance, and how to fix it, is provided by David Goldhill in the NYT on February 17, 2013 “The Health Benefits that Cut Your Pay”, and also in his new book on health care referenced therein.
Clearly the cost of health care is a huge fiscal and economic issue for our country.  Health care entitlements, such as Medicare and Medicaid, are the main drivers of the national debt.  The rapidly growing cost of Medicaid is also a huge problem at the state level because it is crowding out support for other essential major programs such as education and infrastructure improvements.  The cost of private health care paid by employers holds back wage gains and is a major factor in the growing income inequality in American society.
It is time for Americans to demand action on health care costs from our national political leaders.  It is a problem which affects almost all of us and therefore should be amenable to a bipartisan solution in Congress.  We need to get this message out much more strongly!

Whither the American Economy?

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Paul Krugman, writing in today’s New York Times, ”The Story of our Time”, says that “this is a time for above-normal government spending, to sustain the economy until the private sector is willing to spend again”.  On the other hand, Bill McNabb, the Chairman and CEO of the Vanguard Group, writing in today’s Wall Street Journal, “Uncertainty is the Enemy of Recovery”, says that “there is…most significantly, uncertainty about U.S. fiscal policy and the national debt.  Until a sensible plan is created to address the debt, America will not fulfill its economic potential”.
So there you have it, our country’s two premier outlets for news and opinion putting forward contrasting views of what needs to be done to restore vitality to the world’s leading economy.  Do we ramp up government spending indefinitely in order to increase demand, paying little if any attention to the size of the national debt, until hopefully, before too long, private industry is willing to increase spending and investing for the future?  Or do we instead concentrate on establishing those policies which will directly and immediately give business leaders confidence that political leaders are willing to make the tough decisions needed to get our fiscal house in order?
This question is indeed the story of our time.  Getting the answer right will determine our country’s (and the whole world’s) fate for many years to come.

Are Low Interest Rates Hurting the Economy?

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The former Chairwoman of the Federal Deposit Insurance Corporation, Sheila Bair, has recently stated that “Low interest rates are hurting, not helping, the economy”.  According to Ms. Bair, historically low interest rates have helped the housing market recover but are hindering business lending, which holds the key to the overall recovery.  “Very low interest rates on your (the banks) balance sheet … is not good for business lending”, says Bair.  She would like the Fed to start increasing rates in a gradual and methodical manner so that the market can adjust.
Even the WSJ’s conventional economics columnist, David Wessel, admits that “big companies continue to build an enormous cash hoard as if they are preparing for catastrophe”.  He says that “Ben Bernanke sees the exit, he just doesn’t know how to get there”.
Current policies for fixing the economy are clearly not working and may be doing grave damage.  There are lots of policy measures which might help, and certainly won’t hurt, such as broad-based tax reform, loosening regulation of small business, aggressively pursuing new trade agreements, visa reform, targeted job training, etc..  Concentrating on implementing such measures is what our national leaders should be doing!

Is Faster Growth Under Our Control?

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In today’s Wall Street Journal, columnist David Wessel declares that “Faster growth relies on a bump free road”.  Mr. Wessel cites a new forecast from the International Monetary Fund that sees a “three speed recovery” with the U.S. lagging behind emerging markets and developing economies but doing much better than the no-growth Euro zone.  According to Mr. Wessel our own economic growth is so closely tied in with the rest of the world, and especially Europe’s floundering economy, that the best we can do is to avoid “overly strong deficit reduction” and hope that there are no major bumps in the road.
It is pessimistic indeed to assume that there is little if anything we can do to boost economic output.  We can lower both individual and corporate tax rates, offset by eliminating deductions and closing loopholes, in order to stimulate more private investment.  We can help small businesses grow by removing the huge burden of having to provide health insurance to their employees (this can be accomplished by changing the tax treatment of health care insurance).  We can encourage more entrepreneurial activity with targeted (but temporary) tax exemptions. Immigration reform, hopefully now in the works, will boost the productivity of our 11,000,000 illegal immigrants by giving them more economic freedom.
Twenty million U.S. citizens are either unemployed or underemployed.  Our national leaders should consider it to be their moral duty to adopt measures to put more of them back to productive employment.  In addition, as the strongest economy in the world by far, we will boost the entire world economy if we can speed up our own growth.  The benefits of faster growth are so obvious that it should be the first priority of Congress and the President to work together to get this done!

How Can American Health Care be Reformed?

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The total cost of health care in the United States is roughly 18% of Gross Domestic Product, almost twice as much as for any other country in the world.  It is common knowledge that health care entitlements such as Medicare and Medicaid are huge budget busters for the federal government and are a big reason why it is so difficult to get government spending deficits under control.  But the cost of private health care is also increasing rapidly and is a big contributor to the stagnation of middle class income in recent years.  In other words, the exorbitant cost of health care has a negative effect on the entire American standard of living and the problem is just getting worse and worse.
Everyone who is concerned about this problem should read David Goldhill’s new book: “Catastrophic Care:  How American Health Care Killed my Father – And How We Can Fix It” and can start with his article in the September 2009 issue of the Atlantic Monthly. He has an approach which should appeal to liberals and conservatives alike.  All American citizens would be covered from cradle to grave but “health care is fundamentally best left to the market to maximize innovation, quality and efficiency”.  The basic principle is that insurance would only be used to cover real risk rather than the certainties of life such as routine illness and the infirmities of old age.
This ideal is accomplished with a “Balanced Health System: health accounts, health loans, and catastrophic insurance with a very high deductible”.  Of course it will be complicated to switch over an entire health care system to a new operating framework.  Of course there are thousands of details to work out.  Of course there will be strong criticism of any such concrete recommendation for radical change.
The point is that our current system is unsustainable.  Do we change it in a deliberate, rational manner or do we rather delay until a fiscal crisis of some sort occurs?  It is encouraging that our national leaders are working together on such issues as immigration reform and stricter gun control.  But our economic and fiscal problems are much worse and more urgent than these social issues.  We need leaders who have the vision and capability to move us forward on addressing our most fundamental problems.