Budget Cuts Conundrum

G-d Over Money.jpeg

So I’m hearing two opposing themes about the proposed federal budget cuts:


1) It’s horrible because we are cutting into the bone and this is going to really hurt a lot of important government programs.


2) It’s great because we have been spending money that we don’t really have, and we need to finally reign it in. 


Let’s face it, we’ll never get such drastic cuts across the civilian government unless this country goes into severe crisis mode–which never happens until it’s too late and something terrible has happened. 


If we even got half the cuts being proposed–which most people don’t seem to believe will even happen–that would be significant and painful itself. 


The truth of the matter is that we are facing enormous danger on both the national security and financial fronts!


– Militarily–Russia, China, Iran, North Korea pose huge threats including those involving weapons of mass destruction. 


– Financially–We have a serious national debt to the tune of $20 trillion, an annual trade deficit of half a trillion dollars, and social security and medicare trust funds that are going bankrupt. 


If we let these threats run their course, we will eventually have a crisis that will be truly nationally catastrophic. 


So what’s it gonna be–guns or butter–or national bankruptcy. 😉


(Source Photo: Andy Blumenthal)

Advertisements

Have It When You Need it

Candy_machine

At an event that I attended recently, I heard a young woman explain her philosophy on life.

She said, her grandmother taught her: “Better to have it and not need it, than need it and not have it.”

Thinking about it at the time, it seemed pretty wise–because you never want to be without something you really need. 

And good planning and survival skills say to always be prepared–you never know what happens. 

But then with the fiscal cliff and all the talk about social entitlements, I started to think about this some more. 

In a sense, as a society, we have come to think of social entitlements as something that we better have in case we need it–Unemployment Insurance, Medicare, Social Security, Medicaid and more. 

You never know when it’s your turn to get laid off, sick, old, or needy. 

And isn’t that what’s it for–it’s a safety net–these are like personal insurance and you never want to need the coverage and not have it. 

But as we should know by now, having it–doesn’t come for free. 

So the question is how much social entitlements or insurance do you need–and part of the answer is how much can you afford. 

So is it really better to have it and not need it, than need it and not have it–if you can’t afford what you’re buying?  

In this case, our grandparents and parents having it and not really needing all of it–may mean that we and our children will not be able to have it when we do need it. 

To have social entitlements, we need to be able to pay into the system for it or borrow to finance it. 

Unfortunately, as a nation we have been doing more borrowing, because we have spent beyond our national means–we have even raided our very own social entitlement programs that we hold so dear, to pay for other things–maybe that’s why they call it a trust fund, because you really do have to trust, almost blindly, that there will be something there, when it’s your time to need it. 

It’s great to have it, but if we are gluttons and don’t responsibly plan for genuine needs–then as a nation, we really will be left needing and not having it when the time comes.

In short, spend all your money to soon, and tragically, there won’t be any candy later. 😉

(Source Photo: Andy Blumenthal)

Resilience In The Face Of Disaster

Statue_of_liberty

This year when ball drops in Time Square next week to usher in the New Year, it will be a little different than in prior years, because rather than blanket cheer, there will be a good amount of consternation as we hit the debt limit of $16.4 trillion as well as the Fiscal Cliff where broad spending cuts and tax increases are to go into effect (whether in full, partial with some sort of deal, or in deferral).

Like the statue pictured here, the strength and resilience of the American people will be tested and we will need to stand tall and strong. 

In this context, it was interesting to read in Wired Magazine (January 2013) a interview with Andrew Zolli, the author of Resilience: Why Things Bounce Back, an exploration of the importance of resilience in the face of adversity. 

Whether in response to natural disaster like Hurricane Sandy or man-made ones like the financial crisis and terrorism, we need to be prepared to adapt to disaster, respond and continue operations, and recover quickly to rebuild and grow. 

According to Zolli, we need shock absorbers for our social systems that can “anticipate events…sense their own state…and can reorganize to maintain their core purpose amid disruption.”

Adaptability is important, so that we can continue to operate in an emergency, but also vital is “self-repair” so we can “bounce back.”

These concepts for resiliency in emergency management are similar to how Government Computer News (December 2012) describes the desire for building autonomous self-healing computer systems that can defend and recover from attacks. 

The notion is that when our computer systems are under cyber attack, we need to be able to defend them in an automated way to counter the threats in a timely fashion. 

Thus, acccording to GCN, we need IT systems that have situational monitoring for self awareness, real-time identification of an attack, continuous learning to adapt and defend againt changing attack patterns, and self-healing to recover from them. 

Thus, bouncing back from social and cyber disasters really requires similar resilience, and for some challenges, it may be sooner than later that we are tested. 😉

(Source Photo: Minna Blumenthal)

Building Happiness, One Contribution At A Time

Dirty_hands

There was an interesting editorial in the Wall Street Journal(20 December 2012) comparing people who the [Powerball] lottery to those on social entitlements.

The author, Arthur Brooks stipulates that money unearned–“untethered from hard work and merit”–does not make people happy.

Brooks states that “Above basic subsistence, happiness comes not from money per se, but from the value creation it is rewarding.”

And this seems to jive with the concept that the greatest producer of happiness aside from social relationships is doing meaningful and productive work (and generally good deeds), not having lots of money and things!

In terms of winning the lottery (big) and not finding happiness, there was another article to this effect in Bloomberg BusinessWeek (13 December 2012), about someone who won the $314 million Powerball jackpot and had at one time been the largest lottery winner in history–but in the end, he found nothing but misery (lost his granddaughter, wife, money, and ended up a substance abuser) and wished he had never seen that “winning” ticket. Instead, he appreciated his previous life when he was known for his “good works,” and not just his money!

According to Brooks, “While earned success facilitates the pursuit of happiness, unearned transfers generally impede it.” And CNN reports that now more than 100 million Americans are on welfare, and that “does not include those who only receive Social Security or Medicare.”

The result as Brooks states is the fear is that we are becoming an ‘entitlement state,” and that it is bankrupting the country and “impoverishing” the lives of millions by creating a state of dependency, rather than self-sufficiency.

So are social entitlements really the same thing?

No. because without doubt, there are times when people need a safety net and it is imperative that we be there to help people who are in need–this is not the same as someone winning the lottery, but rather this is genuinely doing the right thing to help people!

At the same time, everyone, who can, must do their part to contribute to society–this means hard work and a fair day’s pay.

However, With the National Debt about to go thermonuclear, and the fiscal cliff (in whatever form it finally takes) coming ever closer to pocketbook reality, the country is on verge on confronting itself–warts and all.

We all woke up this morning, and the world was still here–despite the Mayans foretelling of the end of the world today. Perhaps, the end was never meant as a hard and fast moment, but rather the beginning of an end, where we must confront our spendthrift ways and historical social inequities.

While we cannot erase decades of mismanagement, what we can do is continue the march to genuinely embrace diversity, invest in education and research, help those who cannot help themselves, work hard and contribute, and build a country that our grandparents dreamed of–one that is paved in opportunity for everyone!

Let us pray that we are successful–for our survival, prosperity, and genuine happiness. 😉

(Source Photo: here with attribution to Brother Magneto)

An Immigrant’s Message

It was interesting getting out of Washington D.C. this week and talking to people outside the Capital about what they were thinking.
During Presidential campaigns and debates, I always hear the candidates say, “And let me tell me about (whoever) that I met from (wherever) and they told me (whatever).”Usually, when I hear these anecdotes, I wonder what the real meaning of these are, given that they are hand-selected by the candidates to prove their points of view.So I tried it myself in Florida this week to see what people where thinking about Washington and our national predicament—I asked, “What do you think?”Well let me start by saying that I didn’t talk to as many people as a presidential candidate does—that’s for sure—but I also wasn’t looking a tag line for my next rally or speech.

So here are a few things I heard from everyday people, most of them immigrants or children of immigrants.

One person I spoke to was from Haiti and had settled in Florida.  So I asked what his concerns were.  He told me about the suffering back in Haiti after the earthquake in 2010 and how so little (relatively-speaking) had been rebuilt.  So far, I wasn’t really shocked at anything he said.  But then he went on to tell me how people in the Haitian community believed that the cause of the catastrophe was (no, not mother nature, but rather) that the U.S. government was testing new weapons in the Caribbean (from underwater submarines) and that this (accidentally) triggered the devastating earthquake in Haiti.

I asked what made them think this, and he told me how the people back in Haiti had witnessed U.S. response efforts and how zones were “mysteriously closed off” and the event was handled in tremendous stealth.  I asked was it just him whom thought this?  And he told me that this was a widely held belief by the people there.

Well, this was not like anything I had heard in the any of the candidate speeches during the election.  Maybe this guy was just an oddball, crazy, and telling wives tales about the going-ons in the Beltway, and everyone else was just feeling rosy.

So I spoke to someone else, a cabdriver from Romania living here for nearly 30 years – old enough to remember his country of birth but experienced enough to compare life there and here. He told me that he felt the people in Washington D.C. did not really care about him or others in the country. I asked what he meant by that.  He questioned our leaders of many decades (with the exception of two in the last 40 years—which I won’t name to protect the others), and he said that the others are basically just in it for themselves.

With regards to the “fiscal cliff,” he said, “No one is willing to make the real decisions that the country needs.”  He went on to add, “Unfortunately, politics has become just a profession.” Moreover, he said that “People aren’t even thinking short-term [let alone long-term], they’re just not thinking at all!”

This immigrant said he was worried generally about the future of the country and warned of what he believed was civil unrest to come, because he felt nobody was really dealing with our serious financial problems. He said that he had lived through a thousand-percent inflation back in his home country, literally, and that he felt we were going down the same road. Matter-of-factly he said, “Washington has bankrupted this country.”

Again, this was very different from the spin on most of the news shows these days, where the real estate recovery (however slight), consumer confidence (rising but on the edge with the rest of “the cliff”), and healthy personal and corporate balance sheets are all the rave. “What, me worry?” is the dominant attitude, not only about the “fiscal cliff” and the well known $16 trillion deficit, but also the other $86.8 trillion in national debt for entitlements, which according to the Wall Street Journal (27 November 2012) is not readily discussed.

My wife spent time talking to a woman less about politics, but more about her life predicament. Her husband passed away after 27 years of marriage, and she was just eking out a living primarily on the survivor benefits. She was living in a trailer, and having trouble finding a job. (“There is a lot of age discrimination out there,” she said.) She said she was lonely, despite her boyfriend, and that what mattered to her was just having some nice people in her life to talk with.  Her current plans were to continue monitoring her boyfriend’s activities on dating sites—he didn’t realize she could do that – and visit Bulgaria. There, she would meet the family of her late father, who unbeknownst to her had a child with a mistress that she only learned about upon his passing. She was angry at the doctor who prescribed her hormones, which she is certain gave her breast cancer, and she indicated that if she could do it over again she wouldn’t have listened so unquestioningly to what he said. For her, alternative healing such as attending a “drumming circle” was helpful, especially in calming all “the chatter “and worry on her mind.

While she didn’t talk about the country per se, this lady was clearly having a tough time in life and although she smiled frequently, the pain she felt was clear not only by the stories she told, but by the look on her face.

So, these were some stories that I heard—a little different from campaign fodder—but very telling in a way about what REAL people out there are thinking and feeling—versus the sound bites.

Now, we need to figure out how to dispel the negativity out there and help people and the country get it together.  It’s not enough to bicker, but we need a grand vision, a genuine strategy to get there, and the ability to articulate it to the masses—sacrifice will be needed, it’s time to get down to it and be real for at least the third time in 2 generations. 😉

(Source Photo: Andy Blumenthal)

Either Way A Fiscal Cliff

Dirty_secret
Okay, so here’s the dirtly little secret…
The “Fiscal Cliff” that everyone is supposedly working on to avert–is really unavoidable!Yes, the Sequestration that was put in place that eliminates the broad-based tax cuts from a decade ago and reduces spending across military and domestic government spending–can be replaced by more surgical tax increases and spending cuts.But with a National Debt of more than $16 trillion dollars and one which has been trending up over a trillion dollars a year, we have gorged ourselves and spent beyond our means for too long–and the time to pay up is fast approaching.For example, critical entitlement programs likesocial security and medicare are running out of funds and will not be able to cover benefits by 2033 and 2024, respectively.

What is even worse though is that the money you have been paying into “the system” from yourpayroll taxes for decades hasn’t been put aside in trust for you, but has been spent on other things–sort of like robbing Peter to pay Paul. And now what?

At a time when national competitiveness is suffering, jobs are going overseas, test scores in science and math are trending down, and we have the lowest percentage of Americans working in 30 years, we are saying that we’ve essentially spent our last dime decades ago and have been doubling down with more and more borrowing–that we don’t really know if we can ever pay back.

While we would like to “grow” our way out, by having more people working, earning more, and paying more into the system, our growth projections of slightly more than 2% next year and a historical average from 1947-2012 of just 3.25%–this seems more than wishful thinking.

More likely, as the percent of our national debt to GDP continues to rise and our national credit ratings are are at risk of falling, interest rates will start to rise first slowly and then faster to elevated levels to compensate for the increased borrowing risks, and we will see inflation rear it’s ugly head–it is ugly because inflation will mean your savings are worth less or potentially even virtually worthless.

This will make the $16+ trillion deficit also worth less, so we pay it back through inflation as Germany did with hyperinflation after WWI, and the essential wiping out of our personal savings. Viola, deficit paid down, but pay attention to at what personal costs!

Unfortunately, the fiscal cliff is here and will happen whether spending is cut here or there and taxes go up on some or everyone. This is just the negotiation of how to spread the pain and spin the tale.

And either way the fiscal cliff is going to hurt, because you have to cut spending and increase taxes leaving people with even less money in their shrinking pocketbooks, and if you don’t, the credit agencies will continue cutting our national credit rating leading to higher interest rates on the debt and higher inflation–so either way, our creditors will get their pound of flesh.

In the E.U. now, we are seeing the effects with countries from Greece to Spain, Portugal, Italy, Ireland, and more reeling from the impact, but this is only the beginning, because the lending spigot instead of being turned off, has been opened up further to kick the can down the road. But who will be the lender of last resort, when there is no one that can reliably pay it back?

In the end, you can’t raises tax or cut your way out of decades of financial mismanagement, overnight. In the corporate sector, we say Chapter 11–what do you say for Western civilization? And what do we tell our children and grandchildren?

(Source Photo: Andy Blumenthal)

Ominous Sky

Ominous_skyline

This was the skyline in Washington D.C. this past week.

I have never seen anything quite like it.

You can clearly see the grey clouds forming overhead.

And the contrast with the clear sky off in the back.

The trees along the train tracks provide almost an end of days feel–just a few standing.

There is a guy on the train on the right with his head bowed back against the train doors–is he feeling sick, tired or just down with the weather.

This picture was taken one day before the second Presidential Debate, only weeks before the election, months before we come up on the “fiscal cliff,” and perhaps only a few seasons before as they say, Iran gets “the bomb.”

Where is this train taking us, what are we going to do to solve the sizable problems ahead, and will these dark cloud lift or settle in on us?

Hope and pray that G-d gives us the good fortune to succeed in these trying times and that the sun shines bright again for all of us soon.

(Source Photo: Andy Blumenthal)