Fiscal Policy A Shambles

American fiscal policy is in total disarray. Taxes are too low; spending is too high. Spending should be more stimulative and less for old people. Social Security and Medicare need to be reformed, in particular to be more to incomes, both on the taxing and paying ends. Rich people pay a much smaller amount of their earnings into Social Security and end up getting too much when they retire. Medicare takes care of the elderly, but until the recent health care reform, there was no general program to take care of workers. Congress is totally ignoring this problem. They pat themselves on the back if they cut a million dollars from education or the Pentagon budget.

Meanwhile, the Fed is pursuing a serious monetary policy with no help from Congress. Congress just criticizes the Fed's quantitative easing program (QE2), while doing nothing itself. If we get out of this recession it will be largely thanks to the Fed. Ironically, the Fed, which is usually seen to be the friend of the big banks, has turned out to be much more of a friend to ordinary people than Congress has.

Companies, Not Fed to Blame

On Bloomberg, David Malpass says the Fed is failing because the Fed in giving money to US business by keeping interest rates low, but US business is investing in Asia. So, the Fed is just giving American money to Asia. Although there is truth in this, I would say the problem is American business that doesn't support America. CEOs and other senior executives of “American” companies outsource American jobs to China and India. The CEOs get rich by destroying American workers.

Impolite Politicians

Political discourse has become so bitter, it's hard to see how anyone can remain civil.

Last night I was shocked at how impolite Sen. Orrin Hatch was to Judy Woodruff on PBS' Newshour. He insulted HHS Secretary Sebelius, saying, "She just doesn't know what she's talking about." He was sarcastic, responding to one of Judy Woodruff's questions with, "Oh, isn't that wonderful?" And, "That's what I call bull corn." And later, "I see a middle ground.... They ought to trash the bill and get rid of it."

Interestingly, the New York Times had a tongue-in-cheek op-ed today on a civility course on Arizona. If there were such a thing, Sen. Hatch and his colleagues should enroll in it.

Government Shutdown Coming?

The NYT reports that talk on Capitol Hill is increasing the odds of a government shutdown. This brings back some bad memories of my experience in Poland, when the Republicans shut down the government on the day I was being transferred to Italy, leaving me stranded with no place to live and no income.

I wonder what the reaction will be to a government shutdown. Perhaps people will welcome it. I won't because I think there is a better way to resolve these problems of the deficit and the debt. The Congress and the administration should work out some sort of a compromise, either temporary or permanent, without shutting down the government.