Raise the Debt Ceiling Now

Letter to Congressman and Senators:

Right now I feel that there are only two people in Washington who have my best interests at heart, as a middle class citizen -- Elizabeth Warren and Ben Bernanke.

The fact that big business is so opposed to Elizabeth Warren indicates to me that she must be doing something right for average citizens. Normally, Ben Bernanke, as the head of the Fed would be the tool of big business interests, but I think he is genuinely concerned about average people, too. His low interest rates and QE2 are boons to big business, especially big banks, but they are the only tool he has. I think he really is trying to pursue policies that trickle down to ordinary people, even if most of the benefits go to big banks and industries.

If Congress were serious, it would raise the debt ceiling now, if only by a small amount. The fact that it is playing chicken with the debt ceiling indicates that it does not have the best interests of the United States at heart. Failure to put the full faith and credit of the United States behind our bonds will mean higher interest rates for everybody and probably a return to a deep recession. Conservatives, playing the hand of big business and big banks, will use the crisis to get spending cuts without tax increases, generally hurting average people, and particularly benefiting the very rich.

To reduce the problem with the national debt and the fiscal deficit, I would propose to cut all Federal salaries by 10 percent (including yours) and all Federal pensions (including mine) by 10 percent. Perhaps you could cut all Social Security pensions by 10% above a certain level, say $1,500 per month. For Medicare and Medicaid, perhaps you could cut payments by 10% for all procedures that cost more than $1,500.

I would propose removing the mortgage interest deduction as a start for raising tax revenues. This deduction had a very perverse effect during the housing crisis. Before sub-prime mortgages, when people still had to make a large down payment, the deduction was not so bad. But with no down payment and mortgages allowing interest-only payments for the first few years, buyers basically became renters, who are now walking away from their homes. Real renters got no deduction, but sub-prime buyers had a big Federal subsidy. It was not fair, and it encouraged an unsustainable housing bubble. It's bad policy which creates economic dislocation. Get rid of it. You could start off limiting the deduction to $10,000, and then reduce it $1,000 per year.

I don't really expect anything to happen. This government is dysfunctional. I lived in Brazil for several years as an American diplomat during its bad years, and saw people who wallpapered some rooms with the old Cruzeiro currency. That's where the dollar is heading. Brazil shows that you can recover from that, but only if you get serious. The US is not serious, yet. People used to say that Brazil was not a serious country. Now that epithet applies to the United States. After the game of chicken we just played on shutting the government down, the new game of chicken on the debt ceiling, and the decision during the Congressional lame-duck session not to raise taxes on anyone, especially the very rich, I have become one of those in the recent poll who has a very dark view of the American economy and even of America in general. As a Vietnam veteran, a retired Foreign Service officer, and a former attorney for the Veterans Administration, totalling nearly 30 years of government service, I am very disappointed in where the US is heading.

People Who Walk Away from Their Houses

The Washington Post reports a new trend of people walking away from houses that they own. It misses the whole point, however. The problem is that these people paid little or no money down. Their mortgage payments were just rent payments, and unlike real rent payments, these were subsidized by the US government in the form of the mortgage interest tax deduction. People didn't do this years ago because they had skin in the game, starting out with about a $30,000 loss for walking away from a $150,000 home. Now they have nothing to lose except their credit rating for a year or two. They'll go from owning a four bedroom single family house to renting a two bedroom apartment that they can afford. No big deal, except for the banks that made these stupid mortgages and the investors who bought them. The heads of these banks, like Jamie Dimon at JP Morgan-Chase, are either very stupid or crooks. I don't think they are very stupid. But it's good when you can bribe (lobby) the lawmakers to make your immoral shenanigans legal.

I still think Tim Geithner, Hank Paulson and company deserve a lot of credit for avoiding another Depression, but now I think Geithner, who was head of the New York Fed, is too close to his old buddies whom he bailed out. Wall Street is evil. It almost destroyed America and much of the rest of the world with it. Somebody needs to pay for what they did.

MTCR 2011 Meeting

I look at the Missile Technology Control Regime (MTCR) as sort of my legacy from my days at the State Department. I was one of the main links between the idea to create a missile non-proliferation regime during the Carter presidency, and its actually coming into existence under Reagan.

So, I'm happy to see that it still exists and is functioning, as reported by this press release from its 2011 meeting.

Libya and Israel

The New York Times reported that Bernard-Henri Levy takes credit for persuading French President Sarkozy to enter the Libyan civil war on the side of the rebels. So how did that happen?

Part of the answer is what has been discussed in the press: The West -- particularly Hillary Clinton, Susan Rice, and Smantha Power -- felt guilty about how long it took for the US to interview in the genocide in Bosnia and Rwanda. They didn't want more genocide on their watch. Sarkozy is politically weak at home in France; some saber rattling would probably increase his favorability rating. I'm guessing Britain just went along with the US and France, and probably had some concerns of its own about genocide.

But I think there is more.

Levy is Jewish and proud of it. Sarkozy is something like one-quarter Jewish. The US is always under heavy pressure from Jewish lobbying. Israel would like to see instability in the Middle East countries that give it a hard time. Leading this category are Syria and Iran. Egypt and Mubarek, whom Israel liked, had already gone down the tubes. When Libya and Bahrain stood up to their protesters, it looked like the Middle Eastern spring opening might be in danger of being stopped before it could spread to countries where Israel wanted to see it overthrow the rulers, like Syria. So Israel encouraged the West through people like Levy and Sarkozy to stop Libya from putting down the protests there.

The NYT says that Levy was visiting Egypt and decided to go to Libya. Why? I think it's likely that the Mossad suggested he go, and set up the trip for him, which ultimately led to his meeting with Sarkozy, which led to the NATO/UN/West decision to support the rebels.

It's working. Protests are going strong in Syria, although the government continues to try to stop them. Assad may or may not survive. Not much has happened in Iran, but the protests throughout the Middle East put some pressure on it. It's not clear what effect the continuing civil war in Libya will have on Jordan and Bahrain, but they are lower priorities for Israel. Thus, to some extent, I think we are fighting (or giving air cover or whatever we're doing in Libya) for Israel. I think to a similar extent we partially fought the war in Iraq for Israel. Iraq with Scud missiles and possible WMDs was much more of a threat to Israel than to the US.