Saturday, July 30, 2011
From: A Concerned Student To: Speaker Boehner
(This is a letter from http://anonitiger.blogspot.com/ and has been posted to this blog with permission from the author)
Dear Rep. Boehner (or rather the unfortunate intern who must first read this…),
I am not a member of the 8th district of Ohio, but I do reside only a few hundred yards south of I-275 and the line that divides your district from that of Rep. Chabot’s. Many of my closest friends and relatives are members of your district and voting constituents who are deeply concerned with the debt ceiling issue that is currently playing out on Capitol Hill. In writing this letter, I hope to voice their concerns and offer you a rational argument to resolve our current crisis. Moreover, I am providing you with a warning of what will happen to you if you refuse to listen to my reason.
First of all, I would like to express my frustration with the current membership of Congress on this impasse, which is rooted more on ideology and political bipartisanship than any actual attempt to resolve our financial crisis. Quite frankly, all of the plans that have been proposed by Congress so far will further our recession and damage our economic reputation. However, much more so than Senator Reid’s plan, the Republican proposals have been entrenched in flawed logic and political blackmailing. First of all, considering the original House bill “Cut, Cap, and Balance”, any reasonable person would consider this to be to be an immature and overly simplistic measure that assumes that it is possible to set spending limits as a percentage of GDP over the next 10 years with no consideration for the future economic and social landscape of our country. Moreover, forcing a “balanced budget” amendment to be passed with the stipulation that “tax increases be approved by a two-thirds vote in both Houses of Congress” [H.R. 2560, Title III, Sec. 301] is reckless and endangers the ability of the government to function during periods of necessary spending, which outside of wartime efforts, have occasionally arisen throughout US history. I am sure you realize the perils associated with this, which is why you have drafted your own bill modifying the balanced budget requirement but also putting into play a two-step approach that would require another evaluation of the debt ceiling and spending cuts in the near future. This bill is clearly politically charged, is not an honest effort to address our debt crisis, and, as S&P recently warned, may very well result in a downgrade on US credit ratings. Of course our country must strive towards a balanced budget, but trying to pass an amendment that requires it and doing it at this exact moment is irresponsible. Moreover, we both know that such amendments have been brought in front of Congress almost on a clockwork basis since the 1980s and never have there been, nor will there be in the near foreseeable future, the sufficient 2/3 votes to pass this to legislation. Stop pretending as if this is a viable solution to our economic woes when you are aware that it is simply a distraction for political gain. Furthermore, the stipulation that this must be a two-part measure is clearly a tool to hold our President hostage so that he appears weak and is held accountable for our country’s financial troubles through the next election. The Senate realizes this and that is why they have pledged to vote against this bill. The fact that it was scheduled to go to a vote in the House yesterday anyways is an indication that this was never a serious bill, but, rather, an attempt at offsetting blame if no agreement can be reached by the Treasury’s deadline. I find it reprehensible that you are wasting our time and lowering investor confidence in the market by pushing through a non-viable bill that, even if it were to pass, would do nothing to help our economy.
The critical flaw in the majority Republican approach is the assumption by many members of your party that cutting spending without any increased sort of revenue will somehow allow us to pay off our debt without causing a grave amount of damage to our economy. In the short term, it is clear that by cutting government spending, you are essentially taxing American families in the form of removing public services and public sector jobs, which are held by nearly 1 in 10 Americans. In theory, the private sector should absorb this shock over time by creating new jobs and services for these individuals, and lower tax rates on businesses and wealthy Americans should encourage job creation. However, there is very little evidence to prove that tax cuts or low tax rates encourage investment during a period of slow economic progress. If the market is stable and seeing steady growth, then it is possible to see some correlation, but only speculatively and assuming the initial top bracket tax rate was high to begin with (>50%). This is clearly not the case in our current economic situation. In fact, the single largest expenditure of the 2009 American Recovery and Reinvestment Act, which you and other Republicans so often claim “failed”, came in the form of $288 billion in tax breaks for most Americans and companies. If this measure did not serve its purpose, then why are we continuing these tax incentives? Moreover, the Bush-era tax cuts, which had been meant to stimulate the economy post-9/11, show very little evidence of producing any form of sustainable growth. The truth of the matter is that investors are not likely to move their assets in the market when it is unstable and volatile as it is today with the current political and social landscape, not just here in the US, but across the world. Unfortunately, no amount of tax incentives will correct this situation.
I know that the common argument for lower taxes producing growth in the private sector is based on the economic success of Reagan’s policies in the 1980s. However, you cannot separate the policies from their historical context. Please let me provide you with a brief economic history lesson to show you that, during a period of recession or slow growth, any plan that decreases spending without offsetting the effects through revenue, or vice-versa, is destined to fail. When Reagan first took office in 1981, the world was still suffering from the effects of the oil crisis of 1979. It had been the worst period of recession since the Great Depression and soaring interest rates were beginning to place many nations across the world in debt. In the US, however, domestic oil reserves and the deregulation of oil prices in 1981 gave us a buffer that helped to curb inflation and lower interest rates. Reagan’s famous tax reforms came in the way of lowering the top bracket tax rate, which had been 70%, to 50% through the Economic Recovery Tax Act of 1981. After a period of increasing debt and no end to the recession, however, he offset these lower tax rates by increasing taxes elsewhere, in the Tax Equity and Fiscal Responsibility Act of 1982 which closed tax cuts and loopholes and, according to former Reagan advisor Bruce Bartlett, is effectively “the largest peacetime tax increase in American history." In doing so, Reagan kept the effective revenue from taxes consistently around 18% of GDP throughout his presidency. Therefore, the illusion of tax cuts had much more to do with raising confidence in the market than any actual cuts in revenue. Moreover, the 1980s saw the weakening of the Soviet Union, the beginnings of the modern technology age, and neoliberal economic reforms in many developing nations that increasingly provided the US with new raw materials and opened up new markets. All of these things did a lot more to reassure investors and provide financial growth and stability than any effective tax cuts. Furthermore, although he enacted cuts to many social programs, Reagan actually increased government spending, with the public debt effectively doubling during his tenure as President, mostly due to defense spending. In so doing, he stimulated the economy in the classic Keynesian sense. But even if I am unable to convince you that Reagan’s tax cuts were not effective to the extent that most people think, then maybe Reagan’s own economic model can convince you that lower taxes are not always the best solution to economic problems. Based around the ideas of economist Arthur Laffer, Reagan triumphed the Laffer curve, despite having no mathematical basis, as being the motivation behind his tax policies. However, the only thing that the Laffer curve does is exemplify that there exists a maximum utility due to tax rate elasticity and, therefore, there should exist some effective tax rate that maximizes government revenue. This tax rate is not specified though and could be greater or lower than our current rate, so there does exist a theoretical justification to raise taxes in Reaganomics.
I understand that you are opposed to Keynesian economic theory on the grounds that the free market and unrestricted trade will resolve the market. However, lower tax rates can in fact be extremely harmful. It is the same mistake made by Hoover’s Treasury Secretary, Andrew Mellon, in the 1920s, when lower tax rates did not lead to expected economic growth. Rather, when the stock market crashed, these low tax rates intensified the effects of the Great Depression and led to huge deficits. Near the end of his presidency, the Congress under Hoover changed courses and enacted the Revenue Act of 1932, which raised the top tax bracket rate from 25% to 63%, the largest peacetime income tax increase in history. Soon thereafter, Roosevelt became President and enacted New Deal expenditures that turned around unemployment and boosted private sector confidence. Unfortunately, the crashing of the US stock market had such far-reaching ramifications that, despite signs of a recovery, it was almost inevitable to avoid the greatest war and the greatest tragedy in human history. I do not want to have to ever live through such a period in my lifetime. This is why I ask that you be reasonable and not make our current situation worse. In both Reagan’s approach and FDR’s policies, government spending grew and deficits rose before there was any effective drop in unemployment and a reversal in economic trends. In general, I do believe that, during periods of economic security, government spending can and should be reduced, there should be a nearly balanced budget that allows for some growth, and deficits should be effectively paid off. However, during periods of economic uncertainty, government expenditure is necessary to keep panic from setting in while people regain confidence and can sustain growth. This is the basic premise behind the Keynesian approach. Whether you agree with that premise or not, one thing does seem clear from history, cutting taxes and cutting government spending freezes growth and is not an effective solution to a sluggish economy. If you disagree with me, then I ask you to give me just one historical example where this approach has worked and I will reconsider my point of view. If you are unable to find one, then I urge you to reconsider yours.
The solution to our economic problem is to raise confidence amongst the American people, which is nearly impossible for Washington to legislate and depends much more on the natural development of affairs. This must come from the American people themselves and private enterprise. There are some measures that can be taken that may help boost confidence, raise revenue, and reduce spending, some of which have been proposed by Republicans, some by Democrats, and, many, have not been proposed at all probably due the risk of political outfall. In order to truly address this country’s financial concerns and even have a chance at reducing the deficit, you must look beyond party lines and, in some cases, even public opinion, and consider the problem from a utilitarian point of view to at least understand the causes and effects. Whether to act on these principles, however, is a completely different matter. I could go into these ideas quite extensively, but in the interest of space, I will not get into it here. If you would like to hear my opinions and suggestions, I would be glad to explain them to you in another letter.
However, to my main point, much more so than any measure Congress can pass to restore the economy, you are much more capable of wreaking havoc on financial markets and sending us back into a recession by destroying confidence amongst American and foreign investors. If the market volatility in recent days is any indication, a major fallout could be only days away. You know this is the case and yet you continue to try to appease ignorant members of your party. The fact that you can not even get them to vote for your plan just proves that the majority of them are not fit to be in Congress. To be honest, I am very much disappointed with the Republican Party at the moment. The current Republican Presidential nominees that I have seen so far, save Ron Paul, are completely inept in logic and some of the most disingenuous hypocrites I have ever seen. Almost any of them as President would be incompetent at the position and, in some cases, I would argue that it could be dangerous. I am quite certain that even you are aware of this. Where are the morally upstanding and sincere Republicans of a previous generation? I am sure that some of them are still out there, but they will likely not run in this election because they realize that they do not have any solutions to our economic situation and they do not want to inherit the problems that President Obama now has to deal with. Rather, they will wait until the country stabilizes to run in a future cycle. As a senior member of the Republican Party, you should be outraged and appalled by the conduct we have seen so far in Washington. As a leader within this Party, you should not bend to their will, but, rather, stand as a symbol for what Republicans once stood for not too long ago. Even George W. Bush, whom I disagree with on most issues, I think was a sincere man that attempted to do what he thought was right for this country and, for that, he does earn my respect. However, I can hardly respect many of the current members of Congress. They constantly misrepresent facts, slander their fellow Congressmen and the President, breed a rhetoric of hate and isolationism, are inconsistent in their arguments, and do not recognize their own ignorance. All of these things only help to demoralize Americans and breed an aura of mistrust across our nation. When people are unable to trust one another, confidence is low and individuals will not be prone to making investments, so the economy will continue to sag. The ideology of these members of Congress and the way that they choose to express themselves is causing irreparable damage to our country. I am sure that almost any informed citizen recognizes this. Unless you are somehow not aware of the world outside of Washington, the Republican Party is quickly losing credibility amongst the American citizens. I can almost assure you that this whole affair in raising the debt ceiling has sealed the fate of the Republican Party in 2012. If you want to save your political party and even have a chance in 2016, I urge you to distance yourself from this insanity. Rebuke this irresponsible and ignorant ideology of no compromise and sticking firm to party lines. The whole idea of bipartisanship is outdated and, as our current situation shows, a clear obstruction to the public well-being. You should vote on what is best for our nation, not what is best for yourself. You know that Senator Reid’s current plan has met with all of your demands of no tax hikes and severe spending cuts, yet, you refuse to accept it because it did not originate from a Republican member and does not appease a great deal of the members in the House. I know that you are afraid that by giving in to this plan, the Republican Party will come out looking weak. However, at the moment, it is quite clear that the Republican Party is weak. Be a leader and renounce your fellow Congressmen for being an obstruction to government and an impediment to making our nation stronger. Yes, your Party will be divided and you will lose the next presidential election, but you will save this country from a catastrophe and restore faith in Republicans.
I am going to hold you accountable for your actions. So if there is no agreement on this issue come August 2nd, or if the agreement that is eventually brought to pass is clearly a tool for political leverage that was unjustly passed, I will do everything within my power to make certain that you will not be elected to office next year as, in my opinion, you are incompetent to lead. If you do not think I am capable of this, I will provide a brief synopsis of my plan so that you take me seriously. First of all, apart from directly sending you this letter with all of my contact information, I am anonymously distributing it to various media outlets so that people become aware of this pledge and you are pressed to arrive at a decision. If you fail to do so, I will make my identity known publicly and I will start a campaign against you. First, I will use my connections at many of the local universities (UC, Xavier, UD, Wright State, Miami) to rally students to my cause, which should be fairly easy to do seeing as my generation is the one that could suffer the most knowing that our futures are on the line. Organizing through facebook and college e-mail lists, I will set up rallies to meet these students and teach them the facts of this situation along with a little bit of basic macroeconomic theory. Once I garner sufficient support and feel as if this base is well informed, we will start canvassing the neighborhoods of your district to try to sit down and talk with individual constituents. Judging from a quick glance at the 2010 census, I estimate that there are about 250,000 homes in your district. Over the span of a year, I am fairly certain that we could reach out to at least 100,000 of these households on a personal basis. Obviously, we will attract the attention of the media, so my message will be widespread and I am certain that almost all of your constituents will at least be familiar with my agenda. I realize that you have had support in the 8th district since 1991 and have always, save twice, won by an overwhelming two-thirds majority. This may give you some comfort that the majority of your constituents will never elect a Democrat. In this respect, you may be right, but I do not plan on endorsing a Democrat, or any other candidate for that matter. Rather, my hope and the advice that I will give your constituents will be to nominate and vote for an independent or, rather, another similarly aligned Republican, but at least a person of higher moral caliber who will do the right thing when our country needs it. As mostly moderate individuals with socially conservative view points, these constituents will see through the deceit, ignorance, and self-serving attitude that has caused this mess and will be more than inclined to throw you out of office. Of course, this does not have to be the case and you still have time to prove that you are capable of acting responsibly in the next few days. I strongly urge you not to test my resolve on this matter.
Honestly, I do not want to do this or waste my time on politics. But when the actions of Congress are endangering the livelihoods of every American, it is my duty to act on the behalf of my friends and family. Please do the right thing. You claim to be a Catholic and, as a Xavier grad, you should be familiar with the Jesuit dogma of service for others that highlight the principles of Jesus’ teachings. Now is the time to act in the best interests of your fellow Americans and leave party lines aside for the greater good. I implore you to ask yourself whether or not your actions are motivated mostly by the outside pressure of special interest groups and your fellow congressmen or whether you are acting out of your own moral sense of duty. I believe that, deep down, you are a good man and you know right from wrong. About a month ago, I heard you speak at the Ohio State graduation. I thought you gave a great speech and embodied the spirit of hard work and cool headedness that has been the classic staple of Republicanism since the days of Lincoln. A few nights ago, I saw you speak following President Obama’s address to the nation. Your speech had no substance, misrepresented facts, and was clearly pandering to certain members of your political base. I understand that you are under extreme pressure from some of your fellow Republicans and many Americans to unwaveringly hold fast to certain ideals. If you are to distance yourself from these certain members of your party and, as Senator McConnell and other Republican senators have noted that they may be willing to do, side with Senator Reid’s plan, you will likely get a lot of flak from your fellow members of the House and many people will call you a coward and a disgrace, but you can rest assured that you have proven to be the decent man, and, as such, the mostly moderate, reasonable members of the 8th district of Ohio will understand your actions and will reward you in the next election. If you stand your ground and the US credit is downgraded, you, as a representative of your fellow Republicans in the House, will go down in history as being the root cause of a double dip recession, or, worse, a depression, that may well last another decade or more. You know the responsible thing to do, so now is the time to do it.
I hope to never have to write to you again.
Thank you for your time,
A concerned college student
7/29/11, 8:50 AM