海角大神

Being a pragmatist in this day and age is pretty difficult in light of the fact that there simply aren't any answers to the most pressing issues of our time.

No, really, there are precisely zero solutions.

Let's take our deficit and national debt issues - they are different but also they go hand in hand.聽 Now it's very obvious that defense spending and health care costs are crushing us.聽 Social security and unemployment benefits aren't doing us any favors either.聽 And it's not just the static amounts of these debts, it's the upward trajectory with no end in sight that's really the most vexing part of it all.

But these are protected budgets for political reasons and quite frankly, the time to slash this spending is when you can (in a good economy), certainly not now when to do so would cripple what's left of the recovery.聽 And so you hit on another solution - raise revenue.聽 Obviously no one can do that with the middle class because everyone thinks they are in the middle class and a pol can't do the type of 11-months-a-year fundraising he or she must with a middle class tax hike on their record.聽 You can't raise taxes on the low income earners because they can't (and don't) pay any taxes to begin with.

Which brings us to the Bush tax cuts which are set to expire anyway beginning in January.聽 They were a scam from day one and did nothing of lasting import for the economy other than shift more wealth upward to where it wasn't needed anyway.聽 The whole reason these cuts are sunsetting to begin with is because of the way they were passed, by Parliamentary trick (reconciliation) rather than by legitimate congressional ascent.聽 Please don't take my word for it,聽listen to Paul O'Neill, Bush's SecTreas at the time of their passage:

But there are two problems with these tax cuts sunsetting - to paraphrase a popular song lyric from 1956's聽My Fair Lady, we've grown accustomed to their face.聽 Allowing these tax cuts to fade all at once could be catastrophic for spending, capital formation and markets, etc.

And besides, the idea that we can simply take more from the rich might be socially satisfying in such a lopsided economy, but it doesn't actually solve the original problem of debt and deficit anyway.

Here's聽TaxBytes (IPI):

And so the pragmatist comes back around to the fact that we probably need a combined effort to cut wasteful spending, raise tax rates on the wealthy in a modest way, make hoarding and saving even more uncomfortable and avoid giant budget cuts until we're out of stall speed and on a sustainable growth track.聽 This is easier said than done, politically speaking.聽 There's also the fact that austerity and growth do not actually ever co-exist in real life.聽聽 When you hear a politician, like Geithner, talk about growing through shrinking, you know he is either lying or naive.

Intellectually speaking, the most logical approach might be to allow the "system to clear" and let the chips fall where they may.聽 But in actual practice that is really the ugliest option and perhaps the most unrealistic - everyone has too much invested in the current world, the post-apocalyptic world on the other side of economic purging is not something most would like to explore.

There are indeed no answers, only incremental opportunities to make things less bad along a bumpy road.聽 There will be near misses and scares and moments of chaos ahead, balanced out by the fact that the Fed is willing to go the distance with interest rates.聽 I'm not sure I like it, but I don't know what I would alternative I would like any better.

So we learn to live with it, the problem with zero solutions.聽 We invest around it and work around it and get up each morning to get the kids fed and dressed and out the door.聽 And keep the faith that time - and only time - will provide an answer eventually.