Old Math, New Math, Washington Math…2+2 Should Still = 4

A Financial Commentary by George Cappannelli

Our nation is in the middle of what has been described as one of the most fiscally challenging periods in its history and clearly we are not alone.  Countries around the globe are being seriously challenged to find solutions to their financial conundrums and their efforts run the gamut from a continuing commitment to the Keynesian School’s belief in deficit spending to what some are calling draconian budget reductions and a reliance on Milton Friedman’s ‘free market economy’ to get them out of this muddle.

Unfortunately, no one, no matter how much they pretend and posture, knows whether either of these directions will ultimately ensure that we come out the other side of this tunnel with a better, more prosperous and conscious world. And all but the most headstrong and self focused admit that the consequences of a misstep at this time can be enormous.

Still at this moment an increasing number of leaders and political parties (Osborn in England, Sakozy in France, Papandreau in Greece, and conservative Republicans in the U.S). are leaning strongly in Friedman’s direction suggesting that too many countries, including our own, appear “to have made financial commitments that are significantly greater than their fiscal capacities.”  I stress the word ‘appear’ because although anyone who has ever done a budget understands that when expenditures exceed income debt results, no one knows – at least from the perspective of the well being of the planet and of the species that reside here – whether debt and what amount of it is a good or bad thing.  This is especially true at this time when we are being confronted with a new and confounding set of conditions – an interdependent global economy; dramatic shifts in the location of manufacturing centers; a significantly aging world population with increasing longevity, decreasing birthrates and a shrinking tax base; a dwindling supply of oil; increasing, some believe, irreversible gaps between the haves and the have-nots; and more.

Of course, it is as natural as it is regrettable that at times like these emotions to run high, fears and concerns mount and political predators play on these fears in an effort to gain advantage.  It is also natural and regrettable that under these conditions we, as citizens, often become impatient and frustrated, as we did recently in the U.S. mid-term elections, and reject solutions that have not yet produced immediate enough results.

Unfortunately, as anyone who has ever steered even a rowboat knows, rapid and frequent changes of course, especially when emotions are high and there is no clear agreement on destination can result in a number of undesirable things: wasted fuel and energy, loss of time, substantial disharmony among the passengers, missed opportunities to find safe harbor and, eventually, the very real danger of being lost at sea or running aground.

From my perspective, during the last several decades as acrimony and divisiveness between our political parties and between special interest groups and the people have grown our nation has fallen victim to this kind of erratic, some might even say intentionally malevolent, form of steering.  As a result truth and common sense seem to have been lost and runaway emotions, fears and concerns and political manipulation and gamesmanship have gained center stage.  The result is a condition that is highly toxic, debilitating and very dangerous to the well being of our democracy.

So at this moment when the Congress, the President and his National Commission on Fiscal Responsibility and Reform, thousands of private and public special interest groups and millions of individual citizens struggle to make sense of our challenges it seems that the first, best and most effective thing any and all of us can do is to stop this headlong rush in search of temporary or partial solutions. Instead we would be wise to take some very long and deep breaths, call upon whatever vestiges of patience we have left and, above all, look to our common sense to guide us.  In this way we will hopefully avoid doing what may seem expedient, but will, in all probability, end up causing us to sail around in circles desperately trying to catch a wind, any wind no matter where it might lead us.

So as counterintuitive as it may seem to some, I believe we should do something that is long overdue, something that has not, in fact, been done in over 234 years since our forefathers had the courage to do it the first time.  I believe we should treat this moment as a valuable opportunity rather than a crisis, set aside our incessant and petty arguing, restrain our obsessive need to act impetuously, and allow the programs and approaches that are now in place (a combination of deficit spending and budget reduction) to stay in place while we begin the very essential and vital process of revisiting our national vision.

As part of this process we should examine and, if necessary, redefine our core values, articulate new our goals and priorities, clarify the roles and responsibilities for all of the stakeholders (including our own as citizens), and ensure that our systems, policies and procedures are both effective and productive.  In short we need to consciously decide what kind of nation we want America to be so that we can then decide how to make this re-envisioned nation a reality. And, of course, a critical part of this undertaking must include our practicing and modeling mature and intelligent forms of behavior that actually support rather than obstruct our ability to revisit our vision, priorities and values.

In this way and only in this way will we arrive on ground that is solid enough to allow us to make intelligent and effective decisions about what our national economic policies and priorities should be.   For in the final analysis, the real challenge we face is not an economic one, it is spiritual, intellectual and ethical one.  Indeed, at the heart of our dilemma is not whether to choose government stimulus and deficit spending over the budget cuts and the free market economy, the real question is whether we want to abandon this unique experiment in conscious democracy initiated by our founding fathers 230 odd years ago which elevates the needs and will of the majority above the desires of the few or whether we want to allow others to choose different forms – oligarchy, monarchy, dictatorship, or corporatocracy – that clearly champion the well being of the few over that of the many?

Yes, I know, my suggestion will be called impractical and ridiculous by some, especially those who are desperate for immediate relief or who have other, less obvious and more selfish motives.  But in defense of my position, I offer a few pieces of ‘common sense.’   The first is the old carpenter’s rule that reminds us that in order to avoid a workshop floor covered with wasted pieces wood it is advisable ‘to measure twice and cut once.’ The second piece of advice comes from the Roman Seneca who is reputed to have said,

“If you don’t know the harbor you are heading for, no wind is the right wind.” And the third from an unknown source who certainly agreed with Seneca when he suggested that, “if you don’t know where you are going you are likely to end up there.”

In addition to this sound advice I believe other nods to common sense are worth remembering at this challenging time in our history.  Let me restate them.

View This As A Valuable Opportunity Not A Crisis

If we and our leaders are truly wise and committed to finding a way out of our current conundrum, we will stop yelling ‘fire’ and stop erratically changing the course of our Ship of State until we take time for a time of national re-visioning. Indeed, we should hold fast to our current course (making moderate and periodic adjustments) until we come to agreement on our vision, values, goals, roles, policies and the norms of behavior that support them.  It is the only way we will be able to make intelligent, achievable and coherent choices.  In short, investment in our recrafting our vision today will create a dividend of enormous value for many generations to come.

Agree That 2+2 Must Equal 4

Let us remember to apply our common sense and remember that new math or old, Washington or Main Street math 2+2 must equal 4.  Programs, policies and allocations that benefit the few to the detriment of the many and that do not meet this common sense test should be denied.  For example, large subsidies to giant agribusinesses that do not farm their land, special tax incentives to businesses that send jobs to other countries and who do not pay their fair share of taxes; tax breaks to oil and gas companies who are making record profits and who are endangering our environment, defense allocations for programs that are outmoded before they even get to the pilot stage simply do not make sense.

Keep Asking Until Things Make Sense.

Another adage can guide us in this troubling time.  “You can never con an honest man.” On first hearing this statement a number of years ago I did not appreciate its full significance.  But the longer I live the more I come to understand that the reason you cannot con an honest person is that an honest person is not afraid to admit what he or she does not know.  They, unlike majority of us who are so desperately seeking approval, are not concerned what other people think of them.   Instead they continue to ask for clarity on those things they do not understand like children doggedly following a trail of breadcrumbs until they understand how all (and not just some) of the dots are connected.

For example, if there is an particular appropriation in our budget that is does not make sense an honest person would want to know exactly what that appropriation is paying for, what benefits are supposed to result from it, who (specifically) is being benefitted by it, how this program has performed in the past (if funds have been appropriated before), what milestones and measures will be used to determine its effectiveness going forward and what we are going to do and if it is not effective.

Yes, as we enter the next stage of this debate over what to do about our fiscal challenges we would all be wise to behave like honest men and women.  Let us take all of the time needed to understand the issues.  Let us reject all attempts to make things overly complex and, above all, let’s be absolutely certain that 2+2 = 4.

Do Not Allow Buffoons To Take Control of The Dialogue

By ‘buffoons’ I mean those who seek to participate in the conversation, but who only want to pander to our fears through pontification and criticism.  Clearly in a democracy it is necessary and valuable to disagree, present contrary points of view, and point out flaws or inadequacies of a particular method or approach.  But in the interest of intelligent debate this kind of analysis must be accompanied by the advance of alternative ideas and methods that can lead to genuine solution.  So the time for partisan backbiting and the blatant manipulation of the fears and concerns of our citizens for the personal or special interest gain of the manipulators should be declared over.   Indeed, this is a time to either put up or shut up!

Identify and Authorize Expenditures That Support Our Vision

Once we are clear on our course heading and our destination, we will be able to evaluate each appropriation’s contribution (or projected contribution) to it.  We will also be able to evaluate if it demonstrates our core values and contributes to our goals in the most effective manner.   As an example, if we know that our children are falling behind children in most other industrial countries in educational standards cutting our education budget certainly would not be the smartest thing to do.  However that also doesn’t mean we should throw money foolishly at the challenge.  Instead we would be a wise to define what we mean by education and then look at the way our current education budget is being spent to ensure that each and every program it supports is effective and contributing to the improvement of our educational system.
Another example concerns our elders. Most elders do not have the means of earning additional income so decisions to cut their benefits will not only be inhumane, they will be counterproductive.  Eventually the bill for their care will be come due anyway and if we have forced them to chose between food and medicine, or condemned them to substandard living conditions that produce depression, melancholy and eventually more ‘dis-ease’ the ultimate cost and human toll will be astronomical.  It simply makes sense to look to the factors that are currently at the base of the problem disproportionate and out of control pharmaceutical and health care costs in a system that has no business being profit based?

Require Everyone To Pay Their Fair Share of Taxes & Some Even More

The sixth thing I think we need to remember is that everyone needs to pay their fair share of the cost of running America.  In short, there is no reason whatsoever for any company (U.S. or foreign) that makes a profit in American to be allowed to avoid paying their fair share of taxes. In addition, companies that are not paying their full and fair share of taxes should ineligible for tax subsidiaries or incentives that are underwritten by American who do pay their fair share.

For example, the average corporation at the beginning of Ronald Reagan’s first term paid around 26% in taxes.  Today the average corporation pays somewhere between 7% and 9% and in some instances they pay no taxes at all. Instead they funnel their profits into foreign bank accounts and offshore subsidiaries, continue to look for ways to decimate our manufacturing base and place an increasingly larger burden on smaller workforces at lower pay levels so that they can take larger profits.

The same is true for the wealthiest Americans.  As a result of what are euphemistically called, ‘The Bush Tax Cuts’, the richest Americans have been given a very significant reduction in the amount of taxes they have paid for the last 10 years.  The justification for this is referred to as ‘the trickled down effect.’ In short, the reasoning here is that by giving tax breaks to the richest Americans and to our most powerful corporations more jobs will be created and greater economic stimulation will occur.  This justification presupposes, of course, an ethical commitment on the part of these rich Americans and most powerful corporations to the well being of this country, but based on current data this simply is not the case.  There has not been a ‘trickle down’ effect, but there has been a giant “a sucking up’ that has resulted in a dramatic and unconscionable increase in the percentage of wealth accumulated by an increasingly small number of Americans and this increase undermines our democracy.

So as this national debate heats us I invite you to remember some of these nods to common sense.  I also ask you to remember that unless we revisit our national vision with sufficient depth and in a genuine spirit of integrity, we will continue to lack a clear yardstick against which to measure whether the financial choices we make are based on short term, special interest gain or the long term national good.

I realize, of course, that I have presented what is a complex and challenging topic in rather simplistic terms, but maybe that’s not such a bad thing considering the amount of doubletalk, hype and spin that is normally applied to this topic.   I would, of course, appreciate your feedback and comments on all of this.  After all, truth is not, at least from my perspective, a relative thing and it should certainly not be determined by those who have the most money to spend distorting it.  Truth is a domain that belongs to all of us.

Below you will find a table with other suggestions you may want to consider as we enter this very critical conversation about our future – and please remember that it is our future.  It does not belong exclusively to Congress, to the President or to his appointees and committees, to special interest groups or to large corporations.  The future belongs to those of us who have the courage, willingness, commitment to the common good, intellectual honesty and the integrity to claim it.

This table has been created by two groups, The National Tax Payers Union and the US Public Interest Research Group.  Both groups are progressive and while those who hold other political perspectives might be inclined to turn away, I invite you to apply the common sense rule in your evaluation of this material.  Indeed, consider it on the basis of its merit and not its source.

As you review it and as you participate in this growing national debate, I also invite you to remember another well known quote that may serve us well during this time:

“Know the truth and the truth shall set you free.”

For the record and for those who might be inclined stop before viewing the whole chart, the budget cuts recommended in the chart show an estimated 600 billion in savings as opposed to the recommendations by the President’s National Commission on Fiscal Responsibility and Reform which only reduces the deficit by $200 million and places a very substantial burden on the dwindling middle class and elders for those cuts.

Numbers not included in these charts are the funds that would become available to pay down our debt if the Bush Tax cuts for the wealthiest Americans were allowed to expire and if every corporation (domestic or foreign) was once again required to pay their fair share.  It is my belief that these two factors alone, plus some cuts in our bloated defense budget would not only pass the common sense test but they would significantly reduce or eliminate the need for cuts to any and all essential and vital programs that support the well being of this democracy.

Chart Prepared By:

The National Tax Payers Union and the US Public Interest Research Group.


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One Response to Old Math, New Math, Washington Math…2+2 Should Still = 4

  1. John Wasko says:

    Just read this over again in light of the country’s current fiscal doldrums.

    2 + 2 = ? or so the politicians seem to have their own fuzzy math.


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