#8: Micro-Suggestions about the economic crisis

The new Congress will gather on January 6 and immediately set to work in a two-week whirlwind, hoping to get something cogent and useful on President Obama’s desk, for him to sign as soon as the Innauguration festivities are over.  Meanwhile, with a month to go until a change of administrations, the outgoing Congress is working hard with Bush officials to enact interim measures.

While we can take some pride in this flurry of urgent action, there are also causes for concern.

1) Current Secretary of the Treasury Paulson, having blown through the first 350 billion dollars of $700B emergency TARP funding, is now asking the outgoing legislature to release the second lump.  Congress must not do this. Not without a steep price.

That price should be early installation of Obama’s own tean in offices just down the hall from Paulson at Treasury and at every other economic agency, with informal but decisively effective veto power over all future expenditure of TARP funds.  The reason is simple.  We the People have a right to protection from seeing this treasure trove distributed willy-nilly by -- at best -- self-admitted incompetents.  At worst, by leaders of a clade that seems deeply untrustworthy.

2) A further price.  Demand equity and restitution. Use TARP to buy only items that might offer good returns, when things turn around.

Those who long howled that “government should be run like a business” have no right to complain when the United States takes advantage of an opportunity to buy, low, in order to sell high later on. Whiners who don’t like this are hypocrites .

 Note that the Big Three automakers qualify under this condition, while distressed derivative wagers, held by foolish aristocrats, do not.

3) Require that beneficiary companies make good faith efforts toward reclaiming unfair and absurd executive compensation.  In fact, all future aided companies that have experienced outrageous executive compensation should be asked to file a lawsuit against those past executives, at least on a pro forma basis, in order to establish a legal basis for discovery processes.

Similar principles should guide the new economic stimulus plan, involving up to $850B that soon-to-be President Obama and Congressional leaders plan to spend, largely on public infrastructure projects.  Among the guiding principles ought to be:

* Spend quickly, so that a maximum number of unemployed get to work... but...

* Spend in ways that also maximize national benefit -- the purpose of concentrating on infrastructure.

* Do not stimulate with tax or other changes that will be hard to rescind, once the crisis is over. (Unless this is part of an overall plan, e.g. reducing FICA payroll taxes in exchange for a permanent percentage based fuels tax or a windfall bonus tax.)

* Do not fall for “emergency” scams that favor specific companies, cronies or Congressional districts. (This was done by the Bush Group, using 9/11 and Iraq as excuses to sign “emergency” bypasses to contracting laws, favoring pals to the tune of tens or even hundreds of billions of dollars.  This is, in fact, history’s largest loophole-for-theft, and it’s gon unmentioned in the press.)

* Establish a principle that no region of the country will benefit more than 10% more than the tax-proportion they contribute. Yes, Red America will howl, and Obama might have to back down on this one.  But even broaching it would be a great way to make a political point:-- to drill into peoples’ minds how hypocritical it has been to bash the blue zones, while they have been carrying more than their fair share of the burden.  Ironically, this could help ease “culture war” by making clear where Red America’s self interest lies... in toning down the bitterness.

----------

Finally, I feel I really need to reiterate my assertion that any bailout of the Big Three U.S. automakers ought to entail a imaginative compromise deal with the workers.

Neither side has been either up-front, or right, in the tussle over further UAW concessions.  The Unions must realize that their present deal is archaic, brittle and contributing to the collapse of a U.S. motor industry.  On the other hand, those troglodyte Southern senators who demanded concessions simply in the form of across the board pay and benefits cuts are at-best waging civil war on behalf of the South and Toyota and the horrifically stupid managerial caste that ran Detroit into the ground.

Common sense demands that the workers accept that a third or more of their rigid wages and benefits should change its form... but not necessarily go away!  It is time for labor and pensioners to accept the blatantly obvious, that their enforceable obligations make them the top creditors of Ford, GM and Chrysler.

For once George W. Bush said something right. Treat this as a bankruptcy!  With present shareholders and management dropping to the bottom of priority, that would leave the workers and pensioners - effectively - the owners of the Big Three. 

Live with it.  Yes, both labor and management have struggled desperately, for decades, to avoid facing this inevitable day.  But the era employee ownership has arrived. 
 So?  Turn lemons into lemonade.

Show what you are made of, by turning these companies profitable!  And then pass out those profits to member owners.  That ought to make up for bringing formal, line wages down to competitive levels.  Think about it.  As both workers and owners, UAW folk ought to come out ahead!  That is, if they believe in themselves and in their products and potential.


Continue to Suggestion #9: Act swiftly to restore the Army, the Reserves and the National Guard..

Part of a 12/08 series of “unusual suggestions for America and the Obama Administration.”


Part 1: Unusual Suggestions for an American Undergoing Change
Part 2: The Horn of Africa
Part 3: Radical Transparency
Part 4: Watch out for a supra-national Aristocracy
Part 5: Avoid a crisis caused by "just-in-time"
Part 6: Repair the U.S. Civil Service
Part 7: Free the Inspectors General!
Part 8: Micro-Suggestions about the Economic Crisis
Part 9: Restore the Army, the Reserves and the National Guard
Part 10: Enhance our nation's (and civilization's) overall resilience
Part 11: Control the borders
Part 12: Investigate Wartime Contracts
Part 13: Restore Independent Advisory Agencies for Science and Technology
Part 14: Insure the kids
Part 15: Truth and Reconciliation 
Part 16: More Truth and Reconciliation: bring crooks to justice
   Part 16b: Truth and Reconciliation Addendum
Part 17: Political Matters
Part 18: Time to do something about Gerrymandering

David Brin

http://www.davidbrin.com

Twitter                Facebook

Unusual Suggestions for an America Undergoing Change (An ongoing series)

It seems that everybody is writing memos to Barack Obama.  Missives about “what I’d do if I were president” pour forth from columnists, political-sages, bloggers and citizens.  The official transition team has even set up an online suggestion box to sample this eager tidal wave of participatory democracy.

Of course, any tsunami is mostly water and air, with only a small amount of material that’s surprising or unique.  Likewise, most of the recommendations for the coming administration are pretty predictable.  Fix health care. Get us out of Iraq. Create jobs. Prosecute some of the klepto-thieves who turned the first decade of the 21st Century into the Naughtie Oughties.  These unsurprising exhortations do help measure public concern - or outrage - but they won’t fire off many new light bulbs the minds of Team Obama

Or take Discover Magazine’s recent feature "Advice for the Next President."  I was asked to opine alongside Edward O. Wilson, Steven Weinberg, Jack Horner, C. Everett Koop, Danny Hillis and others about ways to restore America’s position as world leader in science and technology.  Several of us urged that science education should get top priority, and that Congress restore the independent advisory commissions that Republicans demolished, so that policy deliberations can be based on facts, rather than stories.

Important?  Sure.  But also pretty obvious.

And so, I refrained for a month, browsing what everyone else was saying, winnowing my own list down to only items that are different, unconventional... perhaps even a bit contrary.

Oh, I won’t claim total originality. A few of my suggestions may have appeared elsewhere -- just not to my knowledge.  They range from slightly-skewed perspectives, to some that may seem arcane, or even bizarre. From nonpartisan and pragmatic to a few that are fiercely partisan.  But when it comes to saving the Republic, can the earnest folk in the new government afford to overlook anything?

Let’s start with the economic mess. Then we’ll continue - bit by bit - to defense, foreign affairs, domestic policy, politics and, finally, some ideas that are really out there, on the fringe.

==THIS ECONOMIC CRISIS... AND THE NEXT ONE==

1) Offer a fresh deal to labor and management

It’s a new century and time to chuck some obsolete ways of thinking.  Take this bemusing realization. On paper, the sum of all obligations owed to union workers, company health plans and pension funds would make organized labor by far the biggest net owner of capital in the United States.  

By some ways of reckoning, the workers already own the means of production. This was actually foreseen a long time ago.

Indeed, for decades, both labor and management have sought ways to avoid confronting this fact - for example, by separating off pension funds to be controlled by neutral specialists.  Labor leaders are comfortable with an old-fashioned, adversarial relationship toward management. The idea of sharing some hybrid role terrifies them.  Moreover, a few experiments in worker-ownership - such as United Airlines - seemed to prove it a bad idea. (These were contrived-to-fail.)

But there may be no avoiding this issue, any longer.  With unfunded obligations adding up to hundreds of billions, the pension plans need to start getting imaginative, or taxpayers will be stuck with that bill, in addition to all the others that are piling up.  In striving to preserve an illusion, labor may risk losing everything.  Meanwhile, American car companies with UAW contracts suffer a crippling competitive disadvantage against foreign automakers who pay far less for non-union labor, just a few states away.  A situation exacerbated by the blatant, greedy corporate vampirism of a dullard, parasitical managerial caste.

Is the solution yet another a mammoth federal rescue plan? Not without a stiff price, please!  There has to be a meeting of the minds, to thrash out an entirely new deal.

Everybody may have to give up something.  Stockholders, much of their delusional equity.  Managers, most of their recent crony-voted bonuses, even digging back some years.  Unions, their illusions. And non-union states, their unfair intra-national advantage in cheap labor laws.  Workers in Michigan might have to get NewGM or NewChrysler shares, in lieu of a third of their wages.  Workers at a Honda plant in Kentucky may have to get used to becoming union men and women.

In fact, just after I wrote this in first draft, the United Auto Workers announced (December 3) that it is willing to change its contracts with U.S. automakers and accept delayed payments of billions of dollars to a union-run health care trust to do its part to help the struggling companies secure $34 billion in government loans.

That’s fine.  We’re negotiating at last.  But it still reflects a desperate will to avoid facing the obvious.

The unions and pensions funds should “defer” nothing.  They should instead accept payment in the form of preferred, convertible stock in completely re-shaped and renewed companies.  And if worker-ownership hasn’t worked in the past, then it is high time that due attention is paid to making it work.

What should not be accepted any longer is the illusion that stockholder equity in GM etc is sacrosanct.  This is a bankruptcy reorganization, accept it.  Get past it.

On a broader scale, this notion of holding a grand conference, at which everybody sits and everything is on the table, will be raised again, and again.  After twenty years of partisan intransigence, we can no longer afford ideological impracticality.  All parties, from environmentalists to free-traders, all the way to xenophobes, will have to gather up a new maturity and go back to the old, American genius at negotiating for the best deal -- the best positive sum game -- trading away a little, in order to get a little.  So that we all can move forward.

More about this, soon.

Continue to the next posting in this series...

THIS IS PART OF AN ONGOING SERIES: Suggestions to the new administration

Part 1: Unusual Suggestions for an American Undergoing Change
Part 2: The Horn of Africa
Part 3: Radical Transparency
Part 4: Watch out for a supra-national Aristocracy
Part 5: Avoid a crisis caused by "just-in-time"
Part 6: Repair the U.S. Civil Service
Part 7: Free the Inspectors General!
Part 8: Micro-Suggestions about the Economic Crisis
Part 9: Restore the Army, the Reserves and the National Guard
Part 10: Enhance our nation's (and civilization's) overall resilience
Part 11: Control the borders
Part 12: Investigate Wartime Contracts
Part 13: Restore Independent Advisory Agencies for Science and Technology
Part 14: Insure the kids
Part 15: Truth and Reconciliation 
Part 16: More Truth and Reconciliation: bring crooks to justice
   Part 16b: Truth and Reconciliation Addendum
Part 17: Political Matters
Part 18: Time to do something about Gerrymandering
Part 19: Consider a few Crackpot items
Part 20: Seek Ways to End Culture War

David Brin

http://www.davidbrin.com

Twitter                Facebook

Now Lets Move on to Laws! - Part one: The Inspector General of the United States

In the first three of these post-election explorations, I was bold enough to suggest a few valuable measures that the House of Representatives might take in coming months, even if they are blocked from passing laws by presidential vetoes.

Some of these measures are win-win-win propositions, letting Democrats be seen taking the high road, while achieving much good for the republic, while additionally helping to drive a corrupt GOP deeper into the wilderness. Where - one hopes - they might commence a regime of fasting and meditation, in order to re-commune with a better brand of conservatism.


Now I’d like to turn to more ambitious agenda items -- actual bills worth turning into laws. Some will strike the public as so needed and fair that the GOP won’t dare interfere.

But first, in fairness, let us start by looking at what the Democratic Senate and House leaders already say they want. One of my best- respected interlocutors, Marty Krasney, supplied some summaries:

Speaker Pelosi’s legislative priorities for a Democratic House:
Increase the minimum wage (within first 24 hours)
Overhaul House lobbying rules (I have already mentioned this)
Enact recommendations of 9/11 Commission
Cut student loan interest rates
Lower Medicare drug costs
Broaden stem-cell research
Reform education funding
Pass labor reform legislation (Employee Free Choice Act)

Over a longer time frame, Democrats have floated numerous policy proposals in some key areas:
Budget/Taxes
Trade
Finance
Energy
Environment
Health Care
Workforce/Education
Telecommunications
Agriculture
National Security/Defense
Judiciary

I won’t examine all of these in detail, but take just one of these categories: Budget/Taxes: For example, Democrats pledge they will “seek” return to balanced budgets. Well, almost. And, these days, almost sure is a big improvement!

Details: More oversight and hearings; return to “pay as you go” budget enforcement rules; Comprehensive tax reform/simplification unlikely; Continuation of middle-income tax cuts (set to expire in 2010); alternative minimum tax reform; extension of some business-friendly provisions (e.g., research and development credit).

Also: may repeal/let expire other tax cuts geared toward wealthier tax payers (e.g., lower rates on capital gains and dividends) to pay for other priorities. Plus some targeted increase in domestic spending (e.g., health care, environment, education). An so on...

(A few comments. Raising fleet fuel efficiency standards would appear to be such a no-brainer that dozens of GOP Congressfolk are already crowding aboard the band wagon. (Indeed, no act of betrayal so clearly shows where Bush & co. loyalties actually lie, than their longstanding obstruction of this simple move toward energy independence.)

(Likewise, genuine funding for sustainable energy research will be most welcome. Along with an asserted effort to fund adequate science to finally settle the question of global climate change and (if justified) let us all dismiss the credibility of those shill-deniers.

(On a more amusing note, Dems will probably leave in place the fluke in the tax code that lets the Inheritance Tax go to zero in 2010 and then back to older rates thereafter. Making 2010 the year that elderly moguls hide from their heirs.


----- All Right, It’s My Turn ----

Clearly, the “policy wonks” have been very busy while they were in exile. You can bet they return filled with enthusiasm and with an almost-puritan work ethic! (The trait that probably makes GOP Congressional folk shudder most.)

Still, might there be room on the reformers’ plate for a few more good ideas? Over the next few days, I’ll offer some (including one or two that were mentioned here before).


My Top Proposal... Create the office of Inspector General of the United States...

... or IGUS, who will head a uniformed agency akin to the Public Health Service, charged with protecting the legal and ethical health of government.

No, I am not asking for yet another new bureaucracy! Ninety percent of this service exists today. Every major department or agency already has an internal Inspector General, charged with examining operations and giving warnings - when it comes to minor infractions - or else stepping in when things get out of hand.

The problem? Nearly all of these officials owe their jobs and paychecks to the very same secretaries and directors who head the agencies they must inspect! In some cases, they were old pals, ensuring partiality and conflict of interest.

Only now picture this. What if we made a very simple change, by appointing and assigning and paying all of the inspectors through a civil service unit completely separated from each department’s political chain of command? Indeed, separate from the legislative, executive and judicial branches?

A uniformed service, with its own elite career path like the Coast Guard and NOAA and the Public Health Service... so that the word “general” has real meaning, encouraging higher-than-normal traditions and standards of conduct.

Under this simple law (possibly it could fit on one page), IGUS will command a corps of trusted observers, cleared to go anywhere and see anything. And thereby assure the American people that the government is still theirs, to own and control. IGUS might be appointed by a commission consisting of all past presidents and retired justices of the US Supreme Court, plus other sages, with advice and consent of Congress.

One might imagine special rules requiring inspectors to stay mum when it comes to legal policy decisions that fall rightly in the political sphere, but giving them a range of options when they uncover violations of basic ethics and/or the law. These needn’t all entail immediate revelation or disciplinary action! One might even picture the Inspectorate as a way to provide basic rights to people who are being held under urgent “special circumstances” -- ensuring that those rare exceptions aren’t abused or over-used. And above all, that they are temporary.

Ponder this; the very act of establishing such a General Inspectorate would so clearly be neutral, offering no visible long term advantage to the Democratic Party, that this law would have immediate political effects, triggering so much public approval that (ironically) the Democrats who push this would certainly benefit!

Indeed - (and this will be important, in overcoming a Bush veto) - it is hard to imagine how the GOP (and President Bus) could dare to oppose it.

Consider: there are those who want us to immediately emulate the loony era of Ken Starr, loosing bloody-minded attack dogs across the land in order to ferret out vastly worse and more numerous dastards than ever were seen in the Clinton Era. Part of me wants this, too. But...

...but, in fact, who needs a special prosecutor? We need to uncover truth while MINIMIZING the appearance of petty, immature vengefulness. What better way than to remove impediments that have prevented "the system" from working, all by itself?

When every agency already contains the pieces that we’d need -- all of the right parts in order to create an ideal force for accountability -- how about simply lining those parts up, so that they slip into gear?

Let us first unleash a professional service that serves the people and the republic and the cause of honest government.


==Next time: A series of capsule suggestions.

or see my Suggestions to a New Congress