The Solution to the Debt Crisis is an Easy One.

Respectfully submitted by Lawrence Rafferty-Guest Blogger

I have a slightly different take on the debt ceiling discussion started by Mike Appleton earlier.  The Debt ceiling issue is on every cable and broadcast TV channel and on just about every website and blog including here on Prof. Turley’s blog. The debt limit and its feared default has controlled the airwaves for weeks now, and it isn’t going to end soon if the news reports are to believed. The Democrats want increased revenue and the Republicans want cuts only to spending in order to convince both sides to do something that was done about 19 times during the preceding administration without much fanfare from either side. No matter who you support there is an easy solution to the problem and the majority of Americans agree with it. The Hill

A very easy solution to the U.S. Debt problem is to simply tax the wealthy and corporations at 1960 levels and according to one source, the debt would be erased within a decade. “Some numbers — from an Institute for Policy Studies report released this past spring — can help us better visualize just how monumental this political failure has been. If corporations and households taking in $1 million or more in income each year were now paying taxes at the same annual rates as they did back in 1961, the IPS researchers found, the federal treasury would be collecting an extra $716 billion a year. In other words, if the federal government started taxing the wealthy and their corporations at the same rates in effect a half-century ago, the federal debt to investors would almost totally vanish over the next decade.” Our Future

The Center for American Progress has provided additional evidence that corporations in the United States are taxed at a low rate when compared to other nations. I know we keep hearing about that corporations are over taxed and if we keep taxing them they will move their jobs out of the country. Here is a link to a series of charts that proves that US corporations are paying lower taxes than some would admit to.  American  

‘ “Conservatives like to claim that our budget deficits are purely a “spending problem.” Said Senate Minority Leader Mitch McConnell (R-KY): “We don’t have this problem because we tax too little. We have it because we spent too much.” ‘ It’s a popular talking point, but it simply isn’t true. Deficits do not stem from spending levels alone. They are the product of a mismatch between spending and revenue. And when revenue is as low as ours is, you end up with big deficits.”  American Progress

Now, it may sound trite or sarcastic, but the facts are clear that our so-called debt problems would be solved very easily without any draconian cuts to socially important programs important to the Left, and without deep cuts to the military budget that the Right wants to avoid. So why is it so difficult to reach this seemingly obvious solution? Why do the wealthy and Corporations have such a tight wrap on the DC regulars on both sides of the aisle? Could the answer be that both the wealthy and large Corporations have the funds to buy or at least ‘rent” Congress and convince Senators and Representatives to look the other way on tax increases?

It couldn’t be the money, could it? And all this time I thought that Gordon Gecko was a fictional character!

Respectfully submitted by Lawrence Rafferty-Guest Blogger.

135 thoughts on “The Solution to the Debt Crisis is an Easy One.”

  1. I just finished watching the President. My initial reaction is that he did more than I expected he would do. He called out the Rethugs for sure. Quoting Regan was great, pointing out the fact that others have raised the debt ceiling without all of this fanfare, derailing how we got into this mess, providing details regarding the two plans under consideration, outlining the consequences of default on both rich and poor alike sealed the deal, and urging the American people to contact their congressional reps regarding which plan they support was a slam dunk. I am on the phone first thing in the morning. Cynicism in retreat.

  2. In 2004, spending per capita was less than $8000.

    If this was recycled, there would be a budget surplus even if this year’s revenues are the same as last year’s revenues.

  3. Elaine,
    I can’t see Warren as a Presidential candidate, yet, but I like her as a candidate for the Senate.

  4. Swarthmore mom, Blouise, & rafflaw,

    Scott Brown Taps Wall Street For Cash In Advance Of Possible Elizabeth Warren Challenge
    By Amanda Terkel
    First Posted: 7/21/11 05:35

    WASHINGTON — As Democrats urge Elizabeth Warren, one of Wall Street’s most public foes, to seek a U.S. Senate seat in Massachusetts next year, the financial industry is already throwing its support behind the seat’s current occupant, Sen. Scott Brown (R), giving him nearly $315,000 in the most recent fundraising quarter.

    The contributions from people and interests associated with the financial industry represented nearly 16 percent of the approximately $2 million Brown raised in the second quarter, according to his filings with the Federal Elections Commission. $48,000 of the financial contributions came from political action committees.

    The donations, which came in between April and the end of June, were just below what Brown took in during the first quarter of 2012. Between January and the end of March, Brown raised $404,206 from the financial industry. During the first quarter, he received the third-highest amount of money from this sector of any senator or senatorial candidate.

    This week, President Obama announced that he would not be nominating Warren to head the Consumer Financial Protection Bureau (CFPB), freeing her up for a possible Senate run. Warren, a law professor at Harvard University, has lived in Massachusetts since the 1990s.

    Brown’s fundraising obviously came before Obama made his announcement, but Democrats have been floating her as their ideal candidate for months.

    On Monday, Massachusetts Democrats said they would be “thrilled” if she were to be on the ticket in 2012. The Progressive Change Campaign Committee launched a petition to draft her and is already fundraising on her behalf.

    Warren’s work was the inspiration for the CFPB, and progressives view her as one of their strongest advocates for working families and financial regulations. At the same time, congressional Republicans and many Wall Street entities have fiercely opposed her, with GOP senators saying they would block her nomination to head the CFPB at all costs.

    “Scott Brown is Wall Street’s favorite — and for good reason,” said Democratic Senatorial Campaign Committee spokesman Matt Canter. “He did their bidding behind closed doors during financial reform and he looks out for their interests every day, voting nearly 90 percent of the time with Mitch McConnell.”

  5. Swarthmore mom,

    “Elaine, Do you think Elizabeth Warren could beat Brown in 2012?”

    I don’t know. I’d definitely work for her. She’d certainly be a breath of fresh air in the Senate–in addition to Bernie Sanders of Vermont who is one of the only politicians in Washington who is working for us average folks.


    From Matt Taibbi
    October 2009
    Elizabeth Warren for President

    “Beyond monitoring how the government is mopping up after the financial crisis, Warren is pushing a proposal that could help prevent the next one: creating a Financial Product Safety Commission to protect consumers from abusive lenders. Mortgages and credit cards, she wrote in a 2007 journal article about the proposal, “should be subject to the same routine safety screening that now governs the sale of every toaster, washing machine, and child’s car seat.”Straightforward as that sounds, it would represent a fundamental shift. “Regulating financial products based on fairness, simplicity, and appropriate risk is an entirely new paradigm,” notes Reid Cramer, director of the New America Foundation’s asset building program. In the wake of the financial meltdown, the idea has gained traction in Washington, thanks in part to Warren’s plainspoken advocacy. “Almost unique among people with deep financial insight, Professor Warren speaks a language that ordinary people can easily comprehend,” says Laurence Tribe, a colleague at Harvard Law. For example, when testifying before a congressional committee in June, Warren summed up the shift in banking this way: “Today’s business model is about making money through tricks and traps.”

    via Bank Buster: Elizabeth Warren is Wall Street’s Worst Nightmare, Mother Jones (via

    We’re coming up on the one- year anniversary of Barack Obama’s election. I think it’s maybe time that we asked ourselves how he’s doing.

    He didn’t close Guantanamo Bay, and not only didn’t reject the idea of pre-emptive detention but added spice to his own new version of pre-crime prosecution, “prolonged detention.” He promised health care reform and campaigned on a public option, and we all know how that is going to turn out.

    But most importantly, he came into office amidst sweeping crises in the financial sector and did not do what needed to be done, and what had been done the last time the U.S. was sent careening into a depression because of Wall Street: he failed to push for tough financial reforms. Barack Obama needed to be the FDR figure who remade the American capital markets and made them fair again, and he barely laid a finger on the whole scene.

    Instead, he put the people who created the problem in charge of fixing the mess, and ended up bailing them out instead of the rest of the country, at huge current and (presumably) future cost.The total bill for the Bush-Obama bailout is certainly above ten trillion at this point — Inspector General Neil Barofsky thinks it might hit nearly $24 trillion ultimately — and this went through without much fanfare. Meanwhile, the congress is stuck in the mud, panicked at the thought of paying three or four trillion over a decade or so for a health care program.

    None of this is new news. What is new is the question of what to do about it. I’m personally of the opinion that our main problem lay with the fact that the Democratic Party as currently constituted is more afraid of losing the financial support of Wall Street and the health insurance industry and the pharmaceutical industry than it is of losing progressive voters. In fact, I think I’ve put that wrong, because it implies that the Democratic Party pushes the agenda of industry insiders out of fear. That is a misread of the situation, I think.

    I think they prefer those people to their voters. I think they feel more comfortable with them. I heard a story recently from a Democratic Party operative who tells me that certain members of one of the president’s cabinet departments only got wind of how hard it is out there for ordinary people to pay their bills when they invited in a major corporation to give them a presentation about their financial outlook for the holiday season — and through that report found out that this company’s prospective customers were spending less because large numbers of them had been laid off, or had huge medical bills, or had maxed out their credit, and so on.

    Letters from customers, survey answers and such, were read to the cabinet group. And they were shocked. This is how they find out about the economic reality of this country — accidentally, from a major campaign contributor! That’s how out of touch these people are.

    On these financial issues, not just the issue of financial regulation on Wall Street but the larger issue of income distribution and what kind of country we want to be — the Democratic Party no longer has a policy that makes any sense. They do not seem to understand or even recognize that real wages in this country have not grown for most people for decades. Or if they do understand, they refuse to imagine any solutions that are not in some way a compromise with their major campaign contributors. They talk about closing tax loopholes and phony corporate addresses in the Caribbean as solutions to economic problems, policy initiatives as absurd and inconsequential as then-comic Al Franken’s fictional decision (in the novel Why Not Me?) to run on a campaign promise of “ending ATM fees.”

    This is all a long-winded way of saying that we have problems whose solutions involve taking on powerful interests, political challenges that will necessarily involve prolonged and hard-fought conflicts, but what we have in the Democratic Party is an organization dedicated to avoiding such conflicts and resolving issues in the manner of a corporate board, in closed meetings with the chief cardholders where things get hashed out to the satisfaction of everyone present.

    The problem from the standpoint of the typical voter is that he is not terribly present in those discussions. When Rahm Emmanuel met with Billy Tauzin and Merck and Pfizer in the Roosevelt Room (how ironic!) of the White House earlier this summer to work out the details of exactly how much of a bite the new health bill was going to take out of the pharmaceutical industry — the answer turned out to be none, and all the insane subsidies of big Pharma are going to remain in the final bill — were you there? Was anyone representing you there?

    The Democrats feel safe in leaving you and me out of that room for two big reasons. One, our main electoral alternative is the party that put George W. Bush in office. Two, the last time significant quantities of Democrats decided to buck and send the party a message, they helped get George Bush elected by giving Ralph Nader the deciding votes of what turned out to be the tightest of elections. Or at least that’s the storyline that’s been popular since that incident. The Nader “debacle” forever closed the notion of third-party progressive challenges to mainstream Democrats, at least in the minds of the Democratic Party bigwigs, anyway.

    It seems to me then that the only hope of getting any of these problems is to get ourselves a national candidate who on the one hand is a mainstream politician and on the other is willing to embrace the notion of an open protest against the Democratic Party doctrine. We need for someone who has some legitimacy with both the media and the Democratic Party constituents themselves to come out and publicly campaign to re-seize the Party from the Wall Street interests that have come to dominate it. We need someone who understands the finance stuff (which automatically reduces the pool of possible applicants to a small handful), will know the difference between real regulatory reform and a dog-and-pony show, and will not be likely to fill a cabinet with bankers from Goldman Sachs and Morgan Stanley.

    The question I have lately is, why not draft Elizabeth Warren to run for president? And I don’t mean in 2016, I mean in 2012.

    This sounds like a crazy idea for a couple of big reasons. One, a primary challenge to Barack Obama will almost certainly fail and may hurt Obama enough to get a Republican elected to the presidency. The other is that if this is done as a third-party run, it’ll probably achieve the same thing.

    That all might be true. And it may, indeed, be a terrible idea. If it is, I’m genuinely open to hearing the reasons why, and I’m sure it’s a long list.

    But I’d like to see it get talked about anyway. The way I look at it, the problem with the Democratic Party is not the voters, it’s the 19 or 20 people who are paying for the campaigns and sitting in at those meetings with Rahm and Billy Tauzin. We have to get rid of those people, herd them all to the edge of a very tall cliff and push them off and be done with it. I think this can be done by electoral referendum if we actually put it all on the table openly and let people decide for themselves. And maybe it takes an electoral cycle or two to get it done, but it has to get done. This stuff won’t get fixed otherwise.

    We need someone in there who is willing to run one this one issue: who owns the Democratic Party? Is it the voters, or is it Goldman Sachs and Morgan Stanley and United Health Care? There are plenty of candidates out there who’d fit — Toledo’s Marcy Kaptur got a nice bounce from the Michael Moore movie, and Jan Schakowsky is another who comes to mind — but Warren to me makes the most sense for the simple reason that it will be virtually impossible for the Democratic Party hacks to dismiss her as a fringe character, given that they themselves gave her such a big public position as chief of the Congressional Oversight Panel.

    This is a woman who understands the finance issues as well as we can hope to expect from any politician and moreover seems to connect the dots when it comes to dissecting the problems on Wall Street:

    I just don’t think we could talk yet in terms of a recovery. I think the right way to understand this is that we stabilized the patient. No one goes to bed at night wondering when you wake up in the morning and will this financial system have collapsed. We clearly are past that point, but we have to remember the way we stabilized it. We stabilized it by saying the American government is going to put its money, its guarantees, the taxpayers’ money behind our financial system to hold it up…

    And that may have given, you know, some cheery news to investors in the stock market who say I want to invest in some of those companies that have those sorts of government guarantees to back them up, but it doesn’t tell us that the economy itself is turning around. It doesn’t tell us that there are good jobs out there or even that we’re starting to build the infrastructure that’s going to produce those good jobs.

    I think someone needs to put a scare into the Democratic Party leaders. Someone needs to make it clear that the progressives in the House might really kill the Health Care bill if it comes out of the Reid-Pelosi consult sucking as much as we expect it to, but even more importantly, someone needs to let Barack Obama know that someone else’s face is going to start being silk-screened on t-shirts at political rallies if he doesn’t get real on the finance stuff.

  6. blouise, You are right again. Heard of a poll where Brown is trouncing her.

  7. Swarthmore,
    You may be right about Warren and Cordray, but some fights need to be fought, even if you do lose. The vacancy in the OLC is a glaring example of that.
    I have read differing reviews of Clinton’s suggestion, but Prof. Tribe just came out in favor of its legitimacy.

  8. SwM,

    Elizabeth Warren isn’t a proven campaigner and I’m not at all sure she’d do well against Brown in Mass. … perhaps if she waited for the possibility of Kerry’s seat opening up if he is picked to replace Clinton.

    She’d make a hell of a senator for some lucky state.

  9. Let’s just raise the ceiling to 1 quadrillion “dollars” and revisit when we reach the limit in 2028.

  10. Curt–A government official or Wall Street person, I forget which, suggested that we eliminate the debt ceiling about two weeks ago (no other country has this) and no one paid any attention to him. This entire display shows how broken our government is. I think the President needs to follow Pres. Clinton’s advise on this one. Simply raise the debt ceiling and let the Rethugs take him to court.

    Elaine–The article you posted is just not practical. The wealthy, America’s true Welfare Queen, are going to go into convulsions if they have to pay taxes. Since both parties are in their pockets, this is just not going to happen. The American experiment is a failure.

    For those of us who can stomach it, we will have to wait and see what the President says tonight. I am not at all hopeful though. Oh boy, my cynicism has fully returned.

  11. Curt Sjostrand:

    Your question is perfectly legitimate. In my opinion eliminating the debt ceiling entirely would have absolutely no practical consequences. First, it is not a limit on debt to begin with. Debt is a function of the spending authorized in the first instance by Congress. The so-called “debt ceiling” is really a limit on the borrowing authority of the government.

  12. Forgive me if I sound too simplistic but I wonder what would happen if we just elimnated the debt ceiling altogehter? I’m not necessarily suggesting that, but is the amount that government spends based in any way to what
    the debt ceiling is?

  13. SOME TIMES I SAY…Lord please why doesnt this man just say this is this one this is that one case closed,,,,wunder what makes people so complicated!

  14. Left out of the debate are hidden “Taxes”. No one seems to remind people that when the price of my vehicle registration or Drivers license goes up that is a a “tax”.

  15. Warren was not going to get confirmed. Probably Cordray won’t be either. The republicans don’t want that position to even exist. Warren is better off running for the senate.

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