“Have you ever heard the story ... of mister faded glory ... say that he that rides the pony must some ... day ... fall ...” -Mother Love Bone
You‘ve just got to shake your head and wonder these days. I mean, how does a supposedly astute financial behemoth like Lehman Brothers Holdings end up in Chapter 11 bankruptcy proceedings from its portfolios of MORTAGE LOANS? Lehman Brothers, a company founded by two cotton brokers in Montgomery, Ala., in 1850! Cripes, that‘s before the Civil War!
There‘s a couple of reasons I think we‘re racing pell mell over the edge of reason and financial ruin right now in the U.S. (the federal government just loaned American Insurance Group over $80 billion so it could stay in business - an INSURANCE company in need of a loan to stay afloat! There‘s some rich irony)
The main one is pretty simple, though: we‘ve forgotten what we‘re supposed to be doing in this great country of ours. We used to be a country that made things, both in terms of inventing and manufacturing a whole bevy of history-changing products (The Model T, the telephone, personal computers, air conditioning, and refrigeration systems) and scientific knowledge. People came from all over the world - and STILL do! - to learn and grow in our university system. Free top-notch education used to be a gold standard in this country - a public schooling system unrivaled by anyone. And we used to keep the nation‘s ledger book balanced, too.
Now look at us. For 42 of the last 47 years, we‘ve had federal deficits. Many of our schools are crummy - we spend billions to shore up the facilities, yet the kids learn squat. One L.A. high school is struggling with a 58% drop out rate. School systems across the nation have resorted to PAYING students (and parents) to GO TO SCHOOL and LEARN! Our most precious resource - the knowledge and works skills of our people - is dissipating before our eyes.
The financial pillars of our nation are crumbling, because the supposed “Wizards of Wall Street” are more interested in gaming the system for dollars than investing in innovation. Mortgage loans to people with poor to non-existent credit histories is a Finance 101 no-no. Just like Enron‘s balance book sleight of hand to hide red ink, recent commodity speculation, and the Internet investment bubble in the late 20th century, all were shell games played with retirement account monies, pension funds, etc. No one at all seems interested in Warren Buffet‘s solid strategy of investing long-term in companies that DO things, that MAKE things, that IMPROVE the world.
I mean we‘re bailing out financial schemers and insurance misers (the kind of companies that DON‘T pay out claims to folks who‘ve faithfully paid their premiums for years), yet I am sure we‘ll snub our own automakers and their request for $25 billion in loans. Now, sure the former “Big Three” - General Motors, Chrysler, and - all made HUGE mistakes in product planning and labor relations, but good lord, they MAKE things, and make them all over the world. State governments gave loads of tax breaks and incentives to Honda, Toyota, Mercedes Benz, and others to build car factories in the U.S. Why can‘t we help our OWN folks?
Finally, there‘s our larger fiscal mess - the nearly $10 trillion worth of federal debt, a current annual federal budget projected to be $500 BILLION in the red, and a general unwillingness among corporations and individual taxpayers to pay their fair share. We‘ve totally forgotten what we‘re doing here.
This is not a Democrat, Republican, Green, Purple, or whatever party problem - this is an EVERYONE problem. As I said before, for 42 of the last 47 years we‘ve had federal deficits - since 1961, our national government‘s books have only been in the black FIVE times. A lot of White House administrations and Congresses have come and gone over half a century, but NONE of them are addressing the big problems. Even saving $125 billion by winding down the Iraq war - a highly optimistic estimate, says noted Economist Robert J. Samuelson - wouldn‘t erase the deficit
Andrew Yarrow notes in his book “Forgive Us Our Debts” that outlays for Social Security, Medicare and Medicaid - which already totals nearly two-fifths of the federal government‘s $2.9 trillion spending this year - are ballooning rapidly. By 2030, federal taxes could rise 50 percent if all spending programs are kept on automatic pilot, he says.
“The mismatch between the government‘s existing spending commitments and the present tax base is so great that we cannot simply tinker a little with government,” says Samuelson in one of his columns. A frequent contributor to the Washington Post newspaper and Newsweek magazine, Samuelson pulls no punches.
“People complain about governmental gridlock. But what often obstructs constructive change is public opinion,” he said in a recent column. “We avoid messy problems; we embrace inconsistent and unrealistic ambitions. We want more health care and lower health costs; cheap energy and less dependence on foreign energy; more government spending and lower taxes. The more unattainable our goals, the more we blame ‘special interests,‘ ‘lobbyists‘ and other easy scapegoats.”
We need to look in the mirror a lot more if you ask me. I mean, our superb local radio news channel WTOP found that the 449,531 current and retired federal workers owed some $3.5 BILLION in unpaid taxes for JUST last year! The Smithsonian and Postal Service had the highest delinquency rates out of the bunch - 5.5% and 4.16%, respectively, according to data compiled by the Internal Revenue Service. Then there‘s the U.S. business community, which continues to hone its tax evasion skills into a fine art. Companies skipped out on $32 billion worth of taxes in 2001 alone, according to the IRS -- and as the agency only audits 1% of corporate returns, expect such shenanigans to rise.
Finally, we get to the presidential election this year - one with history in the making. Either the first African American ever will be president, or we‘ll elect the first former prisoner of war ever to the presidency, along with the very first female vice president. Yet both campaigns are ignoring the big issues - and this will cost all of us dearly.
“In this campaign, we have a candor gap,” says Samuelson. “By and large, Americans want to be told what government will do for them - as individuals, as families, and as consumers - and not what it will do for the country‘s long-term well-being, especially if that imposes some immediate cost or inconvenience. Grasping this, our leading politicians engage in a consensual censorship to skip issues that involve distasteful choices or that require deferred gratification. They prefer to assign blame and promise benefits. So elections come and go, there are winners and losers - and our problems fester.”
Let‘s hope, then, that we stop forgetting what we‘re supposed to be doing - then go do what needs to be done.