“We all have a set of mutual obligations towards each other — we are our brother’s keeper, we are our sister’s keeper — and that those mutual obligations have to express themselves through government policies,” – US Senate Candidate Barack Obama in 2004
Although many hope members of the super committee will reach an 11th hour deal on spending cuts before the November 23 deadline, New York Times columnist David Brooks doubts that any deal will ever be reached, now or in the future. Brooks suspects that the United States is headed toward a fiscal crisis much like that of Greece.
On Friday night’s broadcast of PBS’s “NewsHour,” Brooks said that despite the best possible groundwork being laid to reach a deal, a deal still couldn’t be made.
“Yes, I mean, I’m hearing the exact same thing,” Brooks said. “I think the tragedy of it is, if it was ever going to work, it was going to work under these circumstances. The rules were rigged to make a deal as possible as possible as possible, which is to say there was going to be a clean vote on the House. They were going to meet in private. They had this sword of Damocles hanging over them. And they still couldn’t reach a deal.”
According to Brooks, with this missed opportunity and other missed opportunities over the years – it doesn’t bode well for any deal in the future. And that he says means the United States will eventually face a Greek-like situation.
“And still – and so it’s a history of really 10 or 15 years of potential moments where we could have – somebody could have made a deal with doing some spending cuts, some tax increases, jam it all together in whatever form you want to do,” he continued. “And every think tank has their own version. But the two sides are just too far apart. And as Mark [Shields] says, there is no center. And so, you know, they hope the election will solve it. That is what everybody is saying on the Hill. I’m a little dubious the election – why should this election solve it, when all the other elections haven’t solved hit. So the short answer is, welcome, Greece. We’re going to be Greece.”
And we all know the punchline here: “It’s the Republican’s Fault!!”
Not both of them. Entrenched in their ideological warfare. Democrats unable to cut spending and wanting to raise taxes on “the rich”. The Republicans not wanting to raise taxes and wanting to cut spending (but not nearly enough).
So we have fire and water and all we get is a lot of heated steam.
Neither will give an inch because of the 2012 campaign. Compromise is what the other guy does to let you do whatever YOU WANT to do.
Rock Meet Hard Place.
It’s not like it wasn’t predictable.
From a blog I wrote May 10, 2010: https://indyfromaz.wordpress.com/2010/05/10/greece-ing-the-skids/
They are angry because for years they have been encouraged to live beyond their means, taking advantage of the cheap credit on offer since Greece joined the euro in 2001. Now, the rug is being pulled from under their feet. People who have taken out mortgages to buy homes, loans to purchase cars and credit cards to pay for overpriced basic goods are being asked to meet all these commitments with a much lower income than they had budgeted for.
Fannie and Freddie anyone??
UK Guardian: Saddled with burgeoning public sectors (which help sustain muscular trade unions)– SEIU, UAW, NEA anyone?
This is not what angers Greeks most, though. What you will hear time after time, both at the protests and at workplaces and cafes, is that this crisis confirms the failure of the country’s political system. In other words, that for years politicians have been bleeding the country dry, looking after themselves and their friends and failing to build a robust economy and a country equipped to deal with the challenges of the 21st century.
There is anger at the pervasive, high-level corruption for which no politician is ever punished. People are also furious that no government has ever tackled influence-peddling in the public sector. The Greek branch of Transparency International estimated that Greeks paid almost euro800 million ($1 billion) in bribes last year. This is another drain on household budgets but more importantly it creates a sense of injustice, a sense that to get anything done you have to play by the system’s warped rules.
This feeling of unfairness is compounded when tax evasion also goes unpunished.
“Turbo Tax” Geithner anyone? Barney Frank? Charlie Rangel?? Jeffrey Imhelt?
Salaried professionals and civil servants have their wages taxed at source but many Greeks do not. And, what they declare often bears no resemblance to what they actually earn. The government believes that tax evasion could be worth up to euro30 billion ($38 billion) a year, or 12 percent of the country’s GDP. Allowing one part of the population to consistently get away without paying while Greece’s public finances are propped up by the same people all the time creates incredible resentment. That’s why you hear many Greeks say they will put up with the austerity measures if the government ensures that everybody pays their fair share. If people believe that the usual suspects, who in many cases are wealthy businessmen, doctors and lawyers, are allowed to get away with it, then the level of anger will go up several notches.
47% of all Americans pay NO TAXES whatsover!
Union workers and civil servant can make more in retirement than on the job.
But we aren’t going down that road…oh no…the Nazi, Racist, Violent Tea Baggers are just wrong.
Some of the measures imposed on Greece by the EU in order to bail them out (BBC):
The plans hope to achieve budget cuts of 30bn euros over three years – with the goal of cutting Greece’s public deficit to less than 3% of GDP by 2014. It currently stands at 13.6%. (in 2010)
The government is planning a freeze pay for all public sector workers.
Some pay cuts will also be implemented, and public sector contract workers are set to lose their jobs.
This follows several years of continuous increases in pay, with salaries rising by an average of 30% since 2006.
Annual bonus payments – paid as 13th and 14th month salaries – will also be scrapped for high earners and capped for lower earners.
Other bonuses will be scrapped.
In the private sector, the legal maximum number of people companies can lay off each month will be doubled from 2% of personnel to 4%.
The reforms seek to prevent early retirement. Currently the average age of retirement in Greece is 61, though it is not uncommon for public sector workers to retire in their 50s.
Under the planned changes, the retirement age, which is currently 65 years for men and 60 years for women, will be linked to average life expectancy.
In addition, the minimum number of years someone will have had to have worked to qualify for a full pension will rise to 40 years from 37.
Pensions will also be reduced so that they reflect a worker’s average working pay rather than their final salary.
VAT will be increased to 23% from 21% – just the latest in a series of recent increases.
Indirect taxes – including those on alcohol, fuel and cigarettes – will see a 10% rise.
There will also be a clamp-down on tax evasion – widely regarded as a big problem in Greece – and on untaxed illegal construction.
Tax-evasion alone is estimated to cost the Greek government at least 20bn euros a year.
In the longer-term, the government will look to reduce the reliance of the Greek economy on the public sector, reducing the number of people on the public payroll.
This will require growth in the private sector, and possible privatisation of some industries.
Getting eerily uncomfortable I hope.
See our future if Obama and The Democrats (and Republicans too) are not stopped.
According to a December report from the BLS, state and local government employers spent an average of $39.83 per hour worked ($26.24 for wages and $13.60 for benefits) for total employee compensation in September 2009. Total employer compensation costs for private industry workers averaged $27.49 per hour ($19.45 for wages and $8.05 for benefits), see chart above. In other words, government employees make 45% more on average than private sector employees.
According to an analysis by USAToday (thanks to Michael Jahr for the pointer), “The number of federal workers earning six-figure salaries has exploded during the recession, according to an analysis of federal salary data.” For example, the number of federal employees making $100,000 or more has increased by 120,595, from 262,163 employees in December 2007 to 382,758 in June 2009, for a 46% increase. The number of federal workers making $150,000 or more has more than doubled since the recession started, from about 30,000 to more than 66,000 (see chart above).
The fire rate for government employees is .0055%. Their unemployment rate is 3%.
And do the Democrats look concerned?
Do the Republicans?
Now: And if want a perfect Greece model look at California sometime. It’s Greece, trust me.
Josh Barro writes for the Manhattan Institute about the “Two Americas” and the “sharp difference between two classes of employees: those who work in the private sector and those who work for the government. Workers in the public sector have experienced a very different recession from those in the private sector.”
So is this Greece-ing the skids for what the government knows is coming if things don’t change?
I think so.
“I firmly believe that. I think, in 10 years – I don’t know when it will happen, but I’m very pessimistic that we will actually have the sort of deal we need,” Brooks said. “And at some point, what is happening in the Europe will happen here.”(DC)
It’s Party Politics over the good of the country. On BOTH SIDES.
“It’s less than a week until the deadline, and no language has been made public, and the American people should be able to make their voice heard before the committee votes. Because the truth is, once that vote happens, there’ll be no opportunity to change their product,” <Senator> Sessions said.
“People will make many promises about what this deal will be about if it passes … hopefully they’ll reach an agreement that’s one that can be honestly defended and that we’ll all be happy to vote for,” he added.
“But what we’ve seen so far indicates that secret deals, while they remain secret, are promoted to be far better than they are when you begin to see what’s really in them. The devil will always be in the details,” Sessions said.
He pointed, for instance, to the budget plan proposed by President Barack Obama, which was advertised as not adding to the national debt, but, he said, would in fact double the debt over the next decase.
He picked out several gimmicks in particular for which congressmen should be on the look out.
For instance, he said, the super committee could set a cap on war spending that was less than the baseline set by the Congressional Budget Office, and in that way claim they were making spending cuts. But since it would be less than the CBO baseline, that money would never have been spent in the first place.
Another possible gimmick by which the super committee could claim money was saved, he said, would be a proposal of tax increases now, to be balanced by spending cuts in future years.
“The pattern around here is, that once a tax increase is passed, it’s there,” Sessions said. “But a promise of a spending cut in the future very often does not become a reality.”
He warned that the super committee could direct standing committees to make cuts in future years, for instance, reduce entitlement spending or find a way to raise revenue.
“These committees have not followed through on that in the past,” Sessions warned, “and the super committee’s directions to them, we have to know, are not likely to occur based on history around here.”
At times, Sessions cautioned, cuts to programs have been proposed that are “unrealistic” because they do not come along with the reform necessary to actually cut costs for that program. For instance, cuts to health care providers’ reimbursements are supposed to made each year, but that fact is consistently ignored, Sessions said.
Another possible gimmick would be to claim spending cuts based on assumptions that the CBO baseline will change in a way that is “unrealistic,” for instance, by being “overly optimistic” about future economic growth.
“More and more, we’re hearing that coming out of this recession is going to be a long, tough, slow slog,” Sessions said. To claim cuts based on an alternative vision, Sessions said, would be “phony accounting.”
Lastly, he warned of calling savings on interest, as a result of a debt lessened by tax increases, a spending cut, as no money would actually be saved — money would still be paid out, just less than the year before. (DC)
As if 1.5 Trillion over 10 years wasn’t a gimmick to begin with… Because it was.
Be Prepared to be GREECE-d.
But be comforted in the knowledge that when you are paying $400 hyper-inflated dollars for that loaf of bread and you can’t afford to drive your car, heat your home or watch “America’s Got Talent” because you can’t afford it…. it was the other guy’s fault!