Our Own Facts

Author: Gary Hart

The late Senator Daniel Patrick Moynihan was fond of the well-known quote: We are all entitled to our own opinions, but not to our own facts.  This comes to mind in trying to figure out the kind of government economic policies that might stabilize the financial system, create jobs, encourage investment, and reduce deficits.

Right now we have federal loans to prevent domino-like collapses of large investment banks, job-creation pump-priming, and rising deficits.  Significant numbers of people object to the bail-out of the banks, but do not seem to care if the complex financial structure collapses.  Too bad for the greed-guys.  They should get what’s coming to them.  What about a financial collapse that causes a long-term deep depression?  The protesters seem to think that will not happen.  Every economic expert we have heard from disagrees.  The facts are that these policies were adopted well before the last election.

“Do something about jobs,” the protesters say, “but don’t increase the federal deficit.”  No one has offered facts or theories on how to do that.  Corporations are unwilling to invest their own money in creating new jobs.  They are waiting for the economy to improve, that is for people to go back to work and buy things.  So, as in past recessions and depressions, the government pays construction companies to build bridges and necessary public works and those companies hire people.  Those people buy things with their wages and other people get hired.  But, guess what, the deficit goes up.  This is an unavoidable fact.

“Balance the budget; cut spending”, many demand.  Even those of us who are not economists accept the principle that cutting spending and balancing the budget in times of recession is guaranteed to make things worse.  The facts are that we cannot balance the budget, let the banks collapse, refuse to invest in job creation, and have a healthy economy.  If these facts are wrong, where are the facts that disprove them?  No one in either political party has produced a comprehensive alternative economic plan and the facts to back it up.

Simply waving signs accusing the president of being a socialist, or clamoring for dismantling the national government, or claiming our present predicament began after the last election neglects common sense, history, standard economic policies long pursued by both parties, and the facts.

The real question is whether we will all learn enough from this avoidable experience to adopt polices to prevent it from happening again, particularly sane financial regulatory policies to prevent fraud and abuse in the private financial sector.  These facts we should all agree on.

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15 Responses to “Our Own Facts”

  1. Dave Paulson Says:

    Truer words were never said. But the problem is that the truth seems to have less and less relevance in the political debate. The current political landscape in Washington is better represented with an M.C. Escher drawing than a logic diagram. And while fear mongering still seems to be the sole domain of the right, the left too has its share of blame in the war of half-truths: http://www.thinkersjam.com/the-whole-truth-and-nothing-but-the-truth/.

    Real solutions to the myriad issues now confronting our nation will require honest debate. Priorities must be decided and sacrifices made, and if the goal is a prosperous future for America, the discussion must be based on the truth, not self-serving distortions. So, the multi-trillion dollar question is: how do we find the path to real dialog based on facts?

    The future of America hangs in the answer.

  2. H. Rex Greene, MD Says:

    Something remarkable has happened to older white males. They are fearful, seized with anomie. The world no longer makes sense so they shout empty slogans, fuming at non-existent injustices while simultaneously demanding more and less of the federal government. They may be educated, but they are not grounded in the facts of history, the US Constitution or even the federal budget structure. Sadly, they are ego bound to perpetuate their ignorance, listening only to public demagogues and vested in returning to a nation that never existed beyond the television shows of their youth. What will save America is its amazing diversity. Cantankerous old white men will become a tiny sliver of the populace. Indeed, they know this as they rage against the president, the most powerful symbol of this transformation.

  3. Bette S Baysinger Says:

    As my then 9 year-old daughter said, what good is money, you can’t eat it. We need a resource economy and a release from the religion of greed America is based on.

  4. Susan Reiter Says:

    Strongly agree. The subject of deficits during an economic downturn is absurd and will only cause further collapse. This is not the time to be a deficit hawk.
    Avoiding a similar meltdown is of utmost importance and we could take a lesson from India there. By requiring significant cash reserves, there was little appeal in the derivatives that drove the US off the financial cliff.

  5. Darrel Kent Says:

    Much obliged for your post on Huffington. I always read your posts when I see them. They tend to eliminate and/or debunk all the hyperbole, reflecting a sane mind amongst the many insane ones on the political pundit stage today.

    Kind regards,
    Darrel Kent
    Thornton, CO

  6. Clarc King Says:

    Granted, the citizen is confused and our political leadership does little to alleviate their anxiety. No nat5ion can escape the unrelenting, accelerating, collapsing, operation of the international monetary financier debt based market system. Unsustainable usury and speculation in every sector of the population’s physical economy has wrecked the national economy. It can’t be regulated, reformed, bailed-out, whatever; it is a killing machine. Until our elected representatives see the crisis in precisely these terms, our nation is doomed.

    Economy formation measures must be implemented now, or the U.S. economy will stop functioning. Hope will not change this situation. Market forces demand the expansion of hunger, homelessness, foreclosures, bankruptcies, chronic unemployment, etc. Whatever the Administration and the loyal opposition is doing, it is not enough and probably counterproductive to the necessary change. Clearly the bailouts have not activated economic recovery.

    Great and monumental feats of brains and brawn have lifted this nation and or its; regions when properly created, activated and directed. The Manhattan project, the Tennessee River Valley Project, The Apollo Mission, Etc. This focus, energy, drive, and commitment is obviously missing. Instead the citizenry is treated to a chaos operation.

    Statecraft demands the termination of the monetary financier system: put the FED into bankruptcy protection, recover the bailout trillions, banks that qualify will join the U.S. National Bank under Glass-Steagall standards. Assert the national authority and create the long-term debt capital that refinances industry. Counterattack market forces: credits and currency will be issued into the population’s physical economy. The attendant job mobilization and infrastructure projects will activate actual economic recovery.

    Terminate the Perpetual War Policy. Termination would deliver a tremendous amount of good in the stabilization of world events. The United States is being lead unwittingly into a Global chaos operation.

    The world is depending on the United States to lead and cooperate with other nations in reorganizing the economic and financial systems through a Global Glass-Steagall standard. The survival of humanity is dependant on the certain realization of the facts and the activation of such measures.

  7. Rudy2shoes Says:

    Nice try. Yes, attacking deficits is not the answer=econ 101. But where the deficits come from is another matter. Bailing out corporations in the early going makes sense too but the real issue, the one that always spells depression is still unaddressed. Income tax on incomes under $100 K need to be eliminated. That single action could provide the most significant bost to the economy. It is the job of the people to stimulate the economy and it is time for corporations, banks and the wealthy to pay taxes for a change.

  8. Michael Says:

    “Corporations are unwilling to invest their own money in creating new jobs. They are waiting for the economy to improve, that is for people to go back to work and buy things.”

    Thank you, Senator Hart, for those words. They reveal the poverty of Republican and neocon philosophy, which claims that it’s good for the country to have obscenely wealthy people and corporations, because excess wealth is what creates jobs.

    The truth is that demand creates jobs. People working to get money to buy things creates jobs. This insane redistribution of wealth and income to an ever-smaller pool of sociopaths is what is destroying our jobs, our self-respect, and our nation.

  9. Jeff Simpson Says:

    The outcome of the battle that is raging over the interpretation of our current predicament, its provenance, and how best to proceed, will play a pivotal role in determining the trajectory of our country and economy.

    I fault the pure capitalists for gross hypocrisy for their “profits privatized, losses socialized” mentality. If we lack the resolve to harvest the bitter fruit sown by Reagan’s down-sized government regulatory environment, then we need to find an alternative economic philosophy by which to operate.

    What is perhaps most disingenuous coming from the GOP is their illusory notion that we can cut taxes and grow our way back to fiscal solvency. In the limit of zero tax rates, the tax revenue must necessarily be zero.

    When Reagan embarked on tax cuts with his Strategic Defense Initiative and when he built up his 600 ship navy, he failed to muster the political capital to make commensurate cuts on the domestic spending side and so the deficit grew. A lot. As long as foreign powers were willing to buy our bonds it was at least metastable. W embraced this operating philosophy, caring more about waging his unilateral preemption than in practicing the fiscal conservatism to which he paid lip service.

    Lowering taxes will not take us back to the heyday of our post-cold-war, pre-9/11 world. That world is not there, but the misty-eyed promise lingers just beyond the depth covered in the soundbites and white boards.

    The bearer of the bad news will not likely be especially popular. The GOP appears intent on lowering taxes and regulation to rekindle the economic furnace. Ultimately, we need to pay for the services we get.

    The way out is this: We need to add value, which means inventing, creating, manufacturing. Service jobs do not help this nation: We do not export hospitality, manicured grounds, or cleanliness.

    Clearly there is some value to money, but naked short-selling and many other fiscal operations need to cease or at least be excised from the operations of regular depositor-and-lending banking (as opposed to investment banking). The cost of capital needs to be nominal, moderate, and reasonable, and we need to educate our young people on the pernicious and corrosive nature of interest. Wages earned in a regular job should be taxed at a far lower rate than interest earnings which require no exertion. This goes against those that advocate a zero percent capital gains tax.

    We, as a society, need to save and invest in project that will create real and tangible things. We need to live within our means, we need to acknowledge that social programs are needed to protect the most vulnerable members of our society. If we scrap social security (or privatize it) we will return to having to watch some of our veterans and seniors starving in the streets, and it will be ugly. We will recoil in horror and ask how that could be allowed to come to pass. This is the logical conclusion of what will happen if we allow the right to undo the New Deal, to pare down the federal budget to homeland security, defense, and debt servicing.

    Apologies for the enormous scope and rambling qualities.

  10. Michael Califra Says:

    Now why can’t President Obama go before the nation in one of his “teachable moments” and explain the economic realities as clearly and concisely as Senator Hart did in this piece? Instead, he did what Democrats always do these days: co-opt a Republican position – in this case a meaningless deficit commission — as a way of blunting attacks from the Right.

  11. Gary Hart Says:

    As before, I thank all commentors for their thoughtful observations and responses. I do not see the the resistance to fact-based arguments and policies to be attributable to only one party or faction. It is more a sign of our troubled times. But, those who think an economy of our size and complexity can be left to rise or fall on its own and devil-take-the-hindmost, without even greater damage being done to everyday Americans, simply are not living in the real world. Markets are dynamic. But, they have proved over and over again that, left without rules, they go wildly off the track.

  12. Jeff Simpson Says:

    Here is a chicken-versus-egg question? Do politicians change their positions (and the ‘facts’ that they cite) in response to their big corporate donors, or are those politicians whose viewpoints are most in line with corporate interests simply the ones that receive the most corporate support?

  13. Gary Hart Says:

    I’m afraid these days it’s a combination of both, Jeff. Candidates for office too often find their “facts” lining up with special interests who contribute the most.

  14. Luis Fulkar Says:

    Because of this, maybe now is a good to begin using students loans to gain value.I need to do the honorable thing. I can’t believe that we missed that before,

  15. Neal Taslitz, Esq. Says:

    I wonder if J.P Morgan, the owner of the Titanic, the White Star Line, and the International Mercantile Marine consortium of shipping companies, which funded the construction of the Titanic, knew that there were only only 1,178 life boat seats for the 2,228 passengers and crew aboard, even though the number of lifeboats and seats exceeded the requirements on the regulations at the time the ship left Southhanmpton on April 10, 1912.

    Maybe Mr. Morgan knew that only 16 lifeboats were enough to satisfy the deficient Board of Trade regulations and was more intereted in showing off the teak decks that were imported from Siam.

    Maybe he thought that the the exisiting lifeboat seating regulations, which the Titanic exceeded by 17%, despite the fact that if filled to capacity had only the capacity for less than half the 3,547 passengers and crew the Titanic was designed to carry, was just a good business decision, sort of like moving coal is thought to trump coal mine safety regulations.

    Whatever Mr. Morgan and the rest of the team that built and ran the Titanic thought, they were dead wrong, and they certainly would not have been given a second chance to try again, if they had survived. (Although, Mr. Morgan skipped the chance to take a ride on his ship due to other business he had to do.)

    Those who do not understand how to count, or understand the basics of economics 101, or the need to error on the side of safety, should not be allowed a second chance to influence those who know how to protect the lives of those who rely on them for their protection and security, in the finacial markets as well as safety for employees and the public.

    It is time for financial, job and public safety regulations to be implemented and adequately enforced and funded by those who do not have any conflicts of interest.

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