Ignoring the National Debt Endangers Our Country

 

Here is the preliminary version of my campaign announcement, now scheduled for Wednesday, January 24, for the Nebraska Republican Primary for U.S. Senate:

“This may sound overly dramatic but if we ignore the debt much longer, it will endanger the future of our country.

This is exactly what the new tax law does, in spite of its otherwise good features, by increasing the debt by $1 trillion over the next decade.  And 51 Republican Senators voted for this new law, including Nebraska’s Deb Fischer who is running for reelection this year.  I am running for her seat to challenge her about our ballooning debt because she is doing nothing about it and has just voted to make it worse!

First of all, the chart below shows why our debt situation is so serious. It now sits at 77% of GDP (for the public part on which we pay interest), the highest since WWII, and is predicted by the Congressional Budget Office to keep getting steadily worse, hitting almost 100% of GDP by 2027.


Right now interest rates are so low, less than 2%, that our debt is almost “free” money.  But this cannot and will not last much longer.  Inflation has already started to increase and the Federal Reserve has started to raise interest rates.

Rising interest rates mean much higher interest payments on our debt. This will put an enormous strain on the federal budget, choking off spending for many of the things such as education, scientific and medical research, infrastructure and social programs which so enhance our quality of life.

And furthermore, these much higher interest payments on the debt will continue, and even grow worse, indefinitely into the future, placing a huge burden on future generations, our children and grandchildren.

The solution is to shrink our annual deficits ($668 billion in FY2017 and likely over $700 billion for 2018) down to a much more manageable level so that our debt will also shrink as a percentage of GDP.

I emphasize that this can be done in a sensible, non-disruptive way by simply curtailing spending increases in most government programs without actual budget cuts, and thereby reducing our huge annual deficits over a period of several years.

The Affordable Care Act expands access to healthcare (which is good!) but does nothing to control cost (which is bad!).  American healthcare needs major changes.  One way to do this is to abolish the employer mandate and migrate from employer provided health insurance to personal insurance with age-based, instead of income based, tax credits.  Medicaid can move to the same age-based (refundable) tax credit system. Also fix Medicare by making Medical Savings Accounts readily available for Medicare Advantage plans and then encouraging migration from regular Medicare to Medicare Advantage.

Such major changes as I have proposed above likely will be considered controversial.  However, which is better, to implement major changes in a rational, careful manner while there is time or rather to wait for a new fiscal crisis, much worse than the Financial Crisis of 2008, which will inevitably occur down the road if we continue to ignore the debt?

Summary. The U.S. has a horrendous debt problem which is getting worse all the time.  We badly need representatives in Congress who will stop ignoring our debt and make reducing it a very top priority.  This is why I am challenging Deb Fischer as she runs for reelection. “

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Donald Trump’s First Year as President

 

As I gear up to enter the 2018 Nebraska Republican Primary for U.S. Senate, see here  and here, I am focusing on what I consider to be the overwhelmingly most critical and urgent issue facing our country: our rapidly growing national debt, now 77% of GDP (for the public part on which we pay interest), and steadily getting much worse. Nevertheless, just over a year ago an unexpected political earthquake shook the country as Donald Trump was elected President.  As I become a candidate myself for national office, I need to make clear what I think about Mr. Trump.  I will start out by saying that I did not vote for him because of his sleazy behavior towards women.
I will try to be objective about his accomplishments in office, both positive and negative.
On the positive side:

  • He is standing tough on North Korea, working with the U.N., China and other Asian countries to impose strong sanctions on the North Korean economy. He is upgrading U.S. missile defense, as a smart precaution against a North Korean attack on the U.S.

  • He has worked with many other countries to eliminate the ISIS physical caliphate.
  • He has cajoled NATO members into contributing an additional $12 billion towards our collective security.
  • The economy is now growing at a 3% annual rate thanks (at least in part) to his efforts at regulatory reform.

However, on the negative side:

  • The new tax law, which he signed, is likely to kick off higher inflation with the trillion dollar artificial stimulus from increased debt. This will lead to much higher interest rates which will make our huge debt far more costly.
  • His noxious tweets undermine his presidency, by overshadowing his achievements. His personal popularity has dropped from 46% right after the election to 35% today.

Conclusion. The best way for a member of Congress (or candidate for same) to respond to President Trump’s erratic behavior is by being objective, agreeing with him if possible and not hesitating to call him out when necessary. This is what I will try to do.

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Shall I Enter the Nebraska Republican Primary for U.S. Senate?

 

The tax bill was signed by President Trump on Friday and is now law. In spite of many good individual features, including the reduction of the corporate tax rate from 35% to 21%, it has the overall negative effect of adding $1 trillion to the national debt over the next decade, and this is after allowing for new growth.
Every Republican Senator voted for this new law.  That means every single one of them is responsible for increasing our debt by $1 trillion.  This includes Nebraska Senator Deb Fischer, who is up for reelection in 2018.  She needs to be chastised for voting for this atrocious law.
I am seriously thinking of entering the Republican Primary against her, if there is sufficient support for my candidacy.  Here is a summary of my views on the most important issues.  Roughly in order of importance:

  • Debt. Now worse than ever with the new tax law, we will soon be back to trillion dollar annual deficits.  The only real solution is to curtail the growth (no actual cuts needed!) of entitlement spending.  Otherwise a new fiscal crisis will soon occur.

  • Global Warming. The evidence for man-made global warming is overwhelming,  including warmer and more acidic oceans, shrinking artic sea ice, and rising sea levels. The best solution is to impose a (refundable!) carbon tax to replace all sorts of ad hoc and arbitrary regulations.
  • Economic growth. The U.S. is the most prosperous large country in the world and prosperity equates to economic growth. But our economy is now growing at a 3% annual clip and the new tax law is likely to overheat it and cause inflation to take off.  This will force interest rates up prematurely.
  • Trade Policy. Withdrawing from NAFTA would be a disaster for the whole country and especially Nebraska with its export based ag economy. It is China’s mercantilist policies, restricting imports from other countries, which need to be opposed.
  • Immigration Reform. With a national unemployment rate of 4.1% (2.7% in Nebraska), a severe labor shortage is developing. The solution is to establish an adequate guest worker visa program so that employers can be assured of having the employees they need.

Conclusion.  Senator Deb Fischer is simply unwilling to make the tough decisions necessary to shrink annual deficits and thereby control our burgeoning debt.  I would be a sensible replacement for her.  Will you support me if I run?  Let me know at jackheidel@yahoo.com.

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Senator Fischer, if You Vote for the Awful Tax Bill, There Will Be Political Consequences!

 

Congressional Republicans have agreed on a compromise tax bill, details to be released soon. After scoring by the Joint Committee on Taxation, it will be voted on separately by the House and Senate, sometime next week.  It is likely to reach the President, and be signed into law, before Christmas.


As I have previously discussed at great length, this is a very bad bill for the following reasons:

  • Lowering the corporate tax rate to 21% is actually a good idea because it will encourage U.S. multinational companies to bring their foreign profits back home for reinvestment as well as encouraging foreign companies to set up shop in the U.S.
  • Adding $1 trillion to the debt over ten years, as previously scored by JCT and likely on rescoring, is what is so awful about the tax plan. It is also sad because this could be avoided.  Our debt (the public part on which we pay interest) is already, at 77% of GDP, the highest it has been since right after WWII, and is predicted by the Congressional Budget Office to keep getting worse without major changes in current policy.
  • As interest rates rise, interest payments on the debt will grow dramatically (right now our debt is almost “free” money). Eventually this will lead to a new financial crisis, much worse than in 2008.
  • Overheating the economy, now growing at 3% per year for the last two quarters, makes the tax bill even worse. The last thing our economy needs right now is a trillion dollars of artificial stimulation. This will force the Federal Reserve to raise interest rates faster than it would otherwise.
  • Nebraska Senator Deb Fischer, who is up for reelection in 2018, voted for the Senate version of the tax plan. She should reconsider for the final combined bill and vote no.

Conclusion. If Senator Fischer votes for the final version of this bill, and if it passes and is signed into law by the President, then she is personally responsible for the devastation it will wreak on our economy. What can I as an individual Nebraskan do about this?  It should not be hard to figure out.  Stay tuned!

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Who Is Responsible for the Atrocious GOP Tax Bill?

 

I want to emphasize as strongly as possible that cutting the corporate tax rate from 35% to 20% is a very good idea. It makes the U.S. much more competitive with other developed countries and thereby encourages our multinational companies to bring their foreign profits back home for reinvestment in the U.S.  It will also encourage international companies from other countries to set up shop here and thereby contribute to more jobs and better paying jobs in the U.S.
As I pointed out in my last post, the tax plan needs to be revenue neutral to be beneficial.  Very unfortunately, the current plan adds $1 trillion to our already out-of-control debt over the next ten years.  Furthermore, our currently hot economy (3% growth for two quarters in a row) is likely to overheat from an artificial stimulus of $1 trillion.  This will cause inflation to speedup more quickly and force the Federal Reserve to raise interest rates precipitously to head it off.  This will lead to much higher interest payments on our debt which, in turn, will lead to a new and much worse fiscal crisis in the relatively near future.


I live in Omaha and most of my blog readers likewise live in Nebraska.  The Republicans hold a 52-48 majority in the Senate.  One Republican Senator, Bob Corker, from Tennessee, has already announced his opposition to the Tax Plan (now in Conference Committee) because he “will not vote to add even one more cent to the deficit.”  Thus the Republicans will not be able to pass this atrocious tax bill if they lose even two more votes (fifty votes needed with the VP able to break a tie).
If this awful legislation does become law, and Nebraska Senators Deb Fischer and Ben Sasse vote for it, we will be justified in holding each of them personally responsible.

Conclusion. The GOP is on the verge of making a very bad mistake. The party with a reputation for fiscal responsibility is on the verge of throwing it away for what will turn out to be a very short term gain.

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Should I Run for the U.S. Senate?

 

For the past almost five years, beginning in November 2012, I have been blogging about fiscal and economic issues facing the United States. With the unemployment rate now down to 4.3%, and the economy growing at 2% annually and likely to pick up speed, our biggest problem by far is an exploding national debt, currently 77% of GDP (for the public debt on which we pay interest), the highest since the end of WWII.
There are two announced candidates so far for the Nebraska Senate seat which becomes open in January 2019:

  • The incumbent, Senator Deb Fischer, a Republican
  • Jane Raybould, Lincoln City Councilwoman, a Democrat.

There is always enormous pressure on members of Congress to maintain or increase spending for popular projects and little pressure to cut anything. In general, Republicans deplore large deficits and debt but are ineffective in implementing fiscal restraint while Democrats simply don’t want to talk about the debt problem at all. I am a non-ideological (registered independent) fiscal conservative and social moderate, highly focused on substantially shrinking our annual deficits over a short time period.


Here are my options for the Senate race:

  • Enter the Republican Primary. I would get almost no traction running against the incumbent Republican in the Primary, even though she is a big spender, and I am antiabortion and support a national 20 week cutoff for most abortions.
  • Run as an independent. This is futile without huge name recognition or financial resources, of which I have neither.
  • Enter the Democratic Primary. The announced candidate has a strong party affiliation which I lack. But she has little chance of defeating Senator Fischer in the general election whereas I could by credibly hammering Fischer as a big spender.

Please respond! Please give me you input on this matter one way or another. My email address is jackheidel@yahoo.com.  Would you support me as a Senate candidate?  Congress badly needs more members who are serious about shrinking our debt and I am such a person.  More later!

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