Economy & Budget

Prevention is cheaper than cure

Next week, a general debate is likely to begin on the “minibus” package that includes the Senate’s State and Foreign Operations Appropriations Bill. In the midst of a fiscal atmosphere that presses for cuts wherever possible, the bill’s accounts are increasingly vulnerable to spending sacrifices that favor military over civilian approaches to foreign policy.

While slashing budgets remains tempting when it comes to decreasing our deficit, legislators would do well to consider investing in what will make our foreign policy most cost-effective (in fact, 60 times more cost-effective) in the long-term. 


The Greek bailout referendum: Will it lead to a comprehensive restructuring?

Greek Prime Minister George Papandreou’s decision to ask for a referendum on the "Greek bailout" increases the uncertainty surrounding the eurozone debt crisis.  As Greece burns, is Prime Minister Papandreou looking for political cover? Or, is he taking a calculated risk, attempting to do away with short term fixes and replace them with a comprehensive restructuring that will fix the crisis?
Greece is engaged in a restructuring process.  Restructuring negotiations are always complex and involve brinkmanship.  The parties involved attempt to assert the leverage they have to get what they want.  Debtors want to fix their capital structures and operations to put themselves in a situation to compete and grow over the long term.  Creditors want to maximize their recoveries.  And investors want to pay as little as possible for the biggest stake.  The restructuring negotiations with Greece are no different.  Greece wants to reduce its debt and grow its economy.  The banks want to take as small of a haircut as possible, and the Troika wants to “invest” the smallest amount of cash necessary to avoid a massive default and contagion.  The restructuring negotiations related to Greece are more complex than most because they involve the politics of 17 member states.  And politics may be the card Prime Minister Papandreou is playing, using Greek voters’ sentiments against a bailout and more austerity as bargaining leverage. His political cover, however, may look ingenious at the end of the day if it leads to a comprehensive restructuring plan.
What do I mean?


Sorry, Secretary Panetta: DOD must cut more than you’re offering

In a mid-October speech at the Woodrow Wilson Center in Washington, new Secretary of Defense Leon Panetta lamented that under his watch, the Pentagon would have to make “some very hard choices... to reduce its projected spending by more than $450 billion” over the next ten years.

Sorry Mr. Secretary, the country needs just a little more than you're offering. Then again, you're not off by much: The worst outcome is if the Congressional “supercommittee”, given a mandate to negotiate a grand bargain to get our national finances on track, fails. Without bipartisan compromise by the new year, Congress has pre-approved a “sequester” option that would be automatically triggered and slash $850 billion-$1 trillion from DOD's budget as part of across-the-board spending cuts.


Investing in America's families,communities, and economy

Growing up in the borough of Queens in New York City, our idea of a park was a concrete pad where we played stickball with our friends. My mother and father, however, understood the importance of connecting my brother and me to nature. So every year, even though they couldn’t afford it, they would send us to a summer camp in upstate New York or in Maine. That was where I developed my love for the great outdoors – a place to escape, to appreciate the environmental wonders that surround us, and to play in a natural way.
My experience is not unique. Through the work of our family foundation, I’ve witnessed the benefits of protecting community parks and ensuring children and families have safe, close-to-home places to play. At a time when so many of our youth are facing health risks and other challenges associated with a sedentary lifestyle, parks can contribute to a healthy future for our families. These places also offer protections for our drinking water, clean air and wildlife habitat, and enhance the economic viability of rural and urban communities.


Debunking three myths about the debt deal

Defenders of wasteful Department of Defense (DoD) spending launched an all-out assault on the truth this week. They claim the debt deal has already reduced DoD spending by $450 billion, and if spending is cut any further, a million jobs will be lost and the U.S. military will soon be no match for the unstoppable Chinese military.

Unfortunately for those spouting this “doomsday” rhetoric, the facts tell a very different story, and, as John Adams said, “Facts are stubborn things.”


Trickle down tax cuts: A broken record

I’m one of those “job creators” members of Congress profess to admire so much. Thirty-two years ago, my partner and I started a small business with $300 worth of old records and a booth at the local farmers market. We’re now the biggest independent music store in St. Louis and employ 22 people. Our annual revenue is around $2 million. We’re a classic American success story.
Our incomes are typical for small business owners, which means we’re not in the top tax brackets. We’ve always been at or below the 25 percent tax bracket. So we’re trying to figure out how the new tax proposal from Rep. Dave Camp (R-Mich.), chairman of the House Ways and Means Committee, is supposed to help small businesses like ours create jobs.
Rep. Camp wants to cut top individual and corporate tax rates from 35 percent to 25 percent. He would reward U.S. multinational corporations that have gamed the system with a 5.25 percent tax rate on U.S. profits they have disguised as “foreign” earnings. All this will be great for gigantic multinational corporations, Wall Street and the fat cats who attend those $1,000-a-plate and up political fundraisers. It will be great for the corporate lobbyists gaming our political system every day.
It won’t help small business, and it won’t help America.


U.S. sugar policy: The real scary story

Each October, children and families across the country engage in the time-honored tradition of knocking on neighbors’ doors and asking for candy. But do consumers really know about the tricks that are causing their treats to cost more than they should? The truth is downright frightening.
One of our nation’s oldest agriculture policies – the U.S. sugar program – is an outdated and tightly controlled government program that is long overdue for reform. We are glad to see that a growing number of our colleagues, including Democrats and Republicans from both the House and Senate, are working to enact a bipartisan, comprehensive reform of U.S. sugar policy.

The best forum for this much-needed debate is the Farm Bill that Congress will write next year. At the same time, several sugar reform proposals have been put before the “Super Committee,” which is charged with producing major deficit reduction by November 23. It’s not clear this panel will have the time needed to discuss sugar policy, but if the “Super Committee” does take up sugar subsidies, it is vital that they be thoroughly reformed.


Wishful American thinking about faltering chinese competitiveness

With a bill to combat China’s currency manipulation still before Congress, opponents have increasingly peddled a seductive counter-argument:  The legislation, which broadens Washington’s scope to tariff artificially cheap Chinese imports that reduce American output and employment, will not only antagonize China.  It will do so unnecessarily, because China is already steadily losing competitiveness versus America in the manufactured goods that dominate its sales in the United States.      

The case for such confidence looks impressive, and includes reports of skyrocketing Chinese wages, data showing soaring overall Chinese inflation, and Beijing’s decision to let its tightly controlled currency rise in value against the U.S. dollar for most of the last half decade – which should make all Chinese-produced goods more expensive relative to U.S.-made goods.


Seaport infrastructure improvements are critical to economic recovery

For centuries, seaports and waterways have served as a vital economic lifeline by bringing goods and services to people around the world. In 2010, America’s seaports supported an estimated 9.2 million jobs and handled 99 percent of our country’s overseas cargo – that’s more than $5.5 billion worth of goods each day, or a quarter of our country’s GDP.

As the House Transportation and Infrastructure Committee discusses the economic importance of seaports and policymakers look at creating jobs for the millions of Americans who are out of work, the need to make long-term investments that address future realities is critical. Seaports are one of our country’s oldest and largest economic drivers but they have been largely ignored. 


Investing in America's next success story

The U.S. economy is in a prolonged slump and Americans are understandably worried. What will it take to get us out of this mess? The answer is job creation. Companies must be empowered to grow and therefore hire more people, which in turn generates more economic activity, investing, and ultimately more government revenue. Our best hope for an improved economy lies not with complex government plans, but with your average small business owner.
American small businesses are the true engine of economic growth in this country. According to the U.S. Small Business Administration, small businesses create two of every three new jobs. Over the past 15 years, small businesses have created nearly 65 percent of the net new private sector jobs. More than half of working Americans either own or work for a small business.