Avoiding Sequestration & The Fiscal Cliff: A Better Approach to Reducing Debt by $4 Trillion AND Creating a Stronger America

Avoiding Sequestration & The Fiscal Cliff: Centrist Approaches to Reducing The Debt by $4 Trillion AND Creating a Stronger America

In the scenario presented below, sequestration is avoided. There is no fiscal cliff. Good programs are minimally impacted. Bad programs see more dramatic cuts. Government begins to be right-sized in an sensible manner! The recovery begins. Here's how to do it. 

Let’s look at our  federal budget. Government revenues (e.g., taxes and other income generating sources) are estimated to be $2.6 trillion for 2012. Our 2012 budget was $3.7 trillion. This means that we spent $1.1 trillion more than we took in last year. That's how bad things have become, fellow Americans. 

HOW TO SENSIBLY REDUCE EXPENDITURES BY $2 TRILLION

We must lower the amount that government spends. The 2011 Budget Control Act (BCA), enacted after the August 2011 debt ceiling and subsequent Supercommittee debacles mandates that at least $1.233 trillion be cut from the budget over the next 10 years. If we don't agree to a plan for budget reductions of $1.2 trillion, cuts will automatically take effect.

"Sequestration" means an across-the-board cut in all programs (other than federally mandated programs such as Social Security). Sequestration will make all government programs equally smaller. Sounds good to some, but that is actually a very bad thing. It means that better run, more efficient and effective programs are cut at the exact same level (4%) as poorly administered, ineffective programs. In this scenario, successful programs lose critical funding, improving programs cease their forward momentum, and and the worse programs, well, just get worse.

Reducing the size of the federal government in a rational, sensible fashion should be the principle focus of conversation in Washington DC. Once we devise this method, the markets will react highly favorably, seeing sensible government right-sizing, bipartisan resolve, and presidential (and congressional) leadership, which will lead to increased revenues and reduced budget deficits.

Here's a simple way for the President to lead the effort to reduce the size of government in a rational way that will be agreeable to both sides. The President should order his department Secretaries (e.g., Department of Defense, Energy, Treasury, EPA, etc.) to designate each program within the department with one of three priority ratings: 

- "A" priority programs (receive the lowest required percentage reduction - if any - in their budget);

- "B" priority programs (receive a higher percentage reduction than "A" priority programs)

- "C" priority programs (lowest priority programs receiving the steepest reductions).

In this scenario, each department program must be given an A/B/C priority designation. The A, B, and C programs must be proportionally equal in total size (funding dollars). In other words, one-third of the DOE programs from a funding perspective would be designated "A" priorities, while one-third would be designated "B" priorities, and a final one-third, "C" priorities. The president must direct his department secretaries to "make it happen."

The president can make adjustments as he sees fit. Should he do so, the political theatre would be truly wonderful, and productive for America. Should he adjust some A priority program funding upward he would then need to make proportional adjustments from a "B" or "C" priority programs further downward, to keep the one-third funding allotments equal.

Again, President Obama must reduce government expenditures by at least $1.233 trillion - he has no other choice. He might, however, propose to reduce the size of government even further, perhaps because he sees as many Centrists do that it is the right thing to do for future generations, or perhaps because he is forced to play this hand through negotiations with the House. He might for instance agree to 10 year reductions of $2 trillion. Think that's painful? Look to the EU to see real pain.

Regardless, President Obama in this scenario must (1) determine the total amount of cuts through negotiations with Congress ($1.233 trillion? $2 trillion?); (2) provide the ABC priority list given to him by his department secretaries, and (3) provide guidance on the percentage changes for A, B, and C priority groups to the Office of Management and Budget. OMB would  then determine the exact budget reduction amounts that A, B, and C programs would receive (assuming each class of program is actually reduced; for instance, the president could decide that "A" programs should receive an increase in funding) to meet the budget reduction goal, whether it be the $1.233 trillion budget reduction requirement mandated, or a higher goal, such as $2 trillion. Once the percentage reductions are determined, the President will require the A, B, and C priority programs within the respective departments to alter their budgets by the percentage amount identified for the coming fiscal year for each program.

And so, sequestration is avoided. There is no fiscal cliff. Good programs are minimally impacted. Bad programs see more dramatic cuts. Government begins to be right-sized in an sensible manner!

This method enables the department Secretaries themselves to rightsize their organizations to the realities of the day.  It is a simple and effective way to reduce the size of government based on the knowledge and expertise of the various department leaders, themselves.They know best where the fat is. 

RAISING REVENUES BY $2 TRILLION

So much for the expense side. On the revenue side, things are even more difficult. Unfortunately, class warfare has been waged from the Left against the Right, and Right against the Left, with President Obama refusing tax increases on the middle class, and partisan Republican leaders bitterly protecting the most wealthy among us. The result of this continued posturing will likely lead to bad legislation that will further divide an already splintering America.

The most sensible approach is to enact Bowles Simpson.  This  bipartisan solution makes the most sense. Legislators who do not favor this plan should be held to account for their inaction by their constituents. Assuming, however, that this does not occur, we must find other ways to reduce cost and increase revenue.

An alternative approach might be one that avoids class warfare by spreading the pain across all income categories, including the wealthy, middle class and the lower income earners among us, corporations, and supplemented by a broad excise tax, while granting allowances for citizens who have been underemployed or unemployed during the fiscal year.

A reasonable and responsible goal might be to generate at least $1.0 trillion in revenue increases, or a 2:1 ratio of reductions to revenues. This can be done in the following manner:

1. Across the board 2.5 percent tax hikes on all wage earners (result: $650 billion over 10 years).
Keep the same tax system that we have today for the present time (since Washington can't agree on anything right now). Add 2.5% on top of the total tax found on line 60 of the 1040 income tax form. Same for corporations.

2. A 10-year one percent Federal Value Added Tax (VAT) levied on individual item goods and services purchased having a price of $100.00 or more, each year for 10 years. The VAT could exclude certain items, such as food, tuition and related education and job training costs, and medical services, for instance. VATs are utilized in over 130 countries around the world as revenue generators. Proceeds from the VAT would go toward deficit reduction only. The federal VAT would generate approximately $450 billion in revenue over 10 years. 
This is not pain and will not cause unrest! If you want to see pain, and unrest, look to Greece, Spain, Portugal, or England, or France...

As we begin to get our fiscal house in order in such a sensible manner, the markets will respond favorably. Market risk and uncertainty will be reduced. Companies will invest in new plants, new markets, new equipment and new jobs. The unemployment rate will finally drop. Revenue will increase, generating additional revenues to pay down our debt further still. Our bond rating will return to where it belongs. Your retirement vehicles and other investments will show far more favorable returns. America will lead the world away from the cliff and to better times for all nations and peoples. 

$1.2 trillion reduction in spending and $2 trillion increases in revenues means that we are still $800 billion short of our $4 trillion goal. To reach that goal, we must either enact legislation reducing entitlement programs, or further reduce the size of federal government programs in ABC approach proposed above.

We might suggest splitting the difference, and reducing long term entitlements such as Social Security and other programs by $400 billion over the next 10 years, and hacking an additional $400 billion from federal programs using the A/B/C approach. Entitlement program reduction can be done in sensible fashions.

Painful? If you want to see painful, look to Greece, Spain, Italy or Portugal.

Quit bickering. Quit the self-interest. Get your head out of the sand. Do your part. 

What do you think? Let us know.

Email your ideas to  ideas@americancentrist.us.  

Want to know more? Go to www.AmercanCentrist.US

Please follow us on Twitter @ CentristsUnite

AmericanCentrist.US Endorses Scott Brown In Massachusetts US Senate Race

The politicians and pundits have convinced themselves and America that the biggest issue of the 2012 elections should be the economy. And so it has been! How can one argue with that? After all, what the hell else could it be?

Well, they’ve been wrong all this time. The economy should not have been the Big Issue, because there is a more fundamental root cause for our economic condition: Political Gridlock. Gridlock – and how to end it - should have been the Big Issue all along. You see, Gridlock has been the guarantor of enormous economic uncertainty. Uncertainty at such high levels, as any economist will tell you, stops recovery dead in its tracks.

And so, gridlock in Washington DC, caused equally by farther Right and farther Left interests, is the reason why we have found no sensible, strategic approaches to balancing our federal budget and solving our debt crisis. It is the reason why unemployment remains so high; why industry hoards its cash rather than investing trillions in new plants, new equipment and more and better jobs. It’s why the middle class has been hit so hard; why we see class warfare from both presidential candidates; why America is not leading the world out of recession, and why America approaches a fiscal cliff early in 2013, as Washington fails to gain mandatory consensus in dealing with our budget and debt crises.

Senate Majority Leader Reid (D) and Minority Leader McConnell (R); House Majority Leader Kantor (R) and Minority Leader Pelosi (D), their like-minded followers on the farther Right and farther Left quadrants of the political spectrum - and others who put preservation of this dysfunctional status quo above the common good – are the root cause of America’ economic troubles. The only true litmus test for true leadership and good governance must be a willingness to collaborate. Sensible, centered Americans understand that to achieve truly great things, people and groups must come together, bound by a greater purpose and vision, and unbound from the evils of self-interest.

Scott Brown’s record in Washington DC is one of independent thinking. He’s a proven collaborator. He will continue to bring Republicans and Democrats together to support good legislation that moves our country forward. He personifies good governance perhaps more than any other politician in Washington today. His opponent has taken up the gauntlet of the farther Left. Representing the farther Left, or the farther Right, exacerbates the very problem that we must overcome. The only litmus test for good governance should be bipartisan instinct. That’s simply not Elizabeth Warren's platform.

We must not lose the strong Centrist voice of Senator Scott Brown. His voice needs to be heard, perhaps more loudly and courageously than any other voice in America. All other single issues pale in comparison to the dire need in Washington DC to support and advance bipartisan approaches to solving our most pressing issues. Massachusetts voters who see themselves as somewhat Left of Center or somewhat Right of Center must do the right thing and vote for Scott Brown – regardless of party affiliation.

Romney's Problems (And What He Can Do About Them)

Two Big Problems; One Solution

As the self-proclaimed “severely conservative” former governor of Massachusetts moves through some tough primaries to ultimately win the republican nomination for President, candidate Romney will find that two issues will come back to dog him that will grow in importance to moderate voters.

The first is his proclamation that this election is about the very “soul” of America, and how exactly he defines our “soul.”  The second relates to the business experience that he claims as demonstrates why he is best equipped to be President. Many Americans will question this assertion in a new way.  

Things won’t look good, on either front. But, there is a way to overcome what will become strong negatives to moderates:  The winning strategy lies in the decision of which camp Mr. Romney will ultimately pitch his tent permanently - with the far right, or, with the center and center right.  America is coming to understand that the only litmus test for good governance is collaboration. Center left and center right will reward those who have the courage to compromise, and vote against those who don't.   

The Soul of America? Really?

Souls don’t change too much, now do they? When he was on top of the polls and ready to “win” the Iowa caucuses, candidate Romney called the 2012 presidential election a battle for the “soul of America.”  


That really caught my attention. Soul. That’s a serious word if there ever was one. When you hear the word “soul” what do you think of? 

Mitt Romney defined America’s soul in economic terms: free enterprise and capitalism. I've spent my entire career in free enterprise, including start-ups and more established mid-sized firms. I get it. He says that the soul of America is that spirit of free enterprise. OK, then. That’s his take.

To create a stark contrast for America, candidate Romney claimed President Obama to be the flag bearer of the clearly failed European "socialist" model, that of bloated government spending out of control, overregulation and excess taxation, where government’s resulting obligations have brought the European Community to the brink of economic catastrophe. Sounds really bad,  and, it is. So the contrast is created; the bed is made. 

It seems to me that candidate Romney has had a real hard time connecting with America. One wonders why. He appears eminently qualified to lead a great organization. His business acumen seems without peer.  He has state-level executive experience. He saved the Olympics. His father was a two-time governor and member of President Johnson’s cabinet. He is wealthy almost beyond measure. Great credentials. But attempts at true connection feel strained. Few Americans begrudge candidate Romney for his wealth. It’s his heart - his soul - that we just can’t seem to figure out.

I think that Mr. Romney is entirely wrong that our American soul is based on Free Enterprise. It’s not. The first word, "Free," or "Freedom," is certainly closer, but that's not it entirely, either. I think that the Moderate Middle Majority sees America’s soul as our shared experience and beliefs, made up of many things: shared experiences of immigration (most, not all); of hard work; of love of family; of freedom; of good governance by the people, for the people; of pride in a country that has saved the free world from tyranny and destruction several times in the last century; America as an example for the oppressed of other lands to rise up and be heard, as we ourselves first did several centuries ago; of religion that speaks less of “don’t tread on me” and more of “doing unto others what we would have them do unto us;” of religious tolerance; of fairness; of the spirit of free enterprise, of competition (with regulation in place to protect Americans from human frailties like dishonesty and greed); of hope, including hope for safe cities and towns; of equality; of social justice.

What do you feel constitutes America’s soul? What drives President Romney? He should speak to this. His answers should speak to America’s Moderate Middle Majority. If not, his bed is made.  

Candidate Romney's Business Experience, Dissected In A Different Way. 

Candidate Romney’s wealth is inspiring to me. I think that most Americans feel the same way. In the end, the problem with candidate Romney is not his wealth. Nor do I think that Mr. Romney will lose too many votes from those thousands of American jobs that Bain's companies cut through streamlining, squeezing suppliers, bankruptcy, technology innovations, or outsourcing jobs to other nations overseas. Face it: that’s business. He created thousands of jobs, too. 

He learned his trade at Harvard Business School. HBS follows the case study model of learning. The assignments were clear: come up with up with the best business decisions based on the facts of the case. I reveled in such case studies in my own business school experience. Believe me, the impact on workers, their families and communities in case studies we studied were seldom taken into account in our deliberations, either. It was more like playing Monopoly: do I mortgage my railroads to buy more hotels, or not. Miss the mark and you get a "C" grade. We considered the facts of the case, determined the best outcome for the organization, wrote it up, presented it, learned about the actual outcome, received our grade, and moved on to the next case.

The stakes were certainly higher at Bain. The companies were real. The money was real. Investor expectations were real. And, the consequences for the businesses acquired were real, too. The investors, wealthy individuals and institutions - his clients - saw excellent returns. Americans should applaud that. The issue will be that he was more like the puppet pulling the strings; seldom at ground level, in the trenches and working shoulder to shoulder with others building a dream. that's what most Americans can relate to.  Instead, he was two steps removed, deciding fates, based on numbers.

Since his days in leveraged buyouts and venture capital, candidate Romney has led an Olympics, ran for he US Senate, was elected governor of Massachusetts, and has been running for president for some time. He's seen more than his share of living rooms; shaken a million hands. But we still wonder how connected he is to real, ordinary people like you and me, the busy and trusting Moderate Middle Majority; the managers, workers and families who sacrifice their time, careers and energy into building their own, perhaps more modest dreams, hopeful that their elected officials do the right thing.

- - - - - - - 

Candidate Romney needs to bear his "soul" to America’s Moderate Middle Majority. For it is the center (center right and the center left) who will determine his fate, not the far right. He must govern from center, doing what's best for that widest of groupings of American citizens. It’s that simple. 


The sooner he moves to favor the center, the better are his chances in November. If that means giving his Republican primary opponent(s) more far right votes through Super Tuesday and beyond, then so be it. Risky? Yes. It is such defining moments, filled with risk and uncertainty, and led by the soul, not by the poll, that create the great leaders. Candidate Romney needs to pitch his tent near center, and stay. The battle will be fought, and the victory won, there. 

SC Moderates, Stand Up And Be Heard!

South Carolina moderates - Republicans, Democrats, independents - the evidence is clear that government led by the fringes (both the far left, and the far right) simply brings gridlock. We hope that you set a strong example for the rest of your country: move this great nation back to center, and away from the fringes. 

The "middle majority" has listened patiently to the loud, self-centered, and over-invested voices of the far right and the far left. They have achieved both great fame and power in our time. And, they are jointly and equally responsible for the dark place America finds itself in today. Both fringes’ stands have proven to be intractable. This is no way to govern responsibly.

Leaders from both sides will not share power unless forced - or emboldened - to go against strong, vested fringe interests through (a) the court of public opinion and (b) at the voting booth. The fringes do not want you, America’s moderate middle majority, to rise up and be heard, but rather rely on your continued silence.

  

The fringes will continue to fight for their issues on their terms for as long as we will allow them, keeping progress from our reach and assuring a splintered center devoid of form or purpose.  The usually silent middle majority - those who see themselves somewhat left or right of center and away of either fringe - needs to speak plainly. Have you not been spoken to plainly by the fringes for years now, while observing divisive stands supported by faulty logic? The eyes of the nation are now upon South Carolina. Bring your demands for bipartisanship and leadership from the center to the candidates, and to all Americans through the media. Question faulty logic. Stand up for your convictions (which are right and proper). Show your conviction with your vote. This will embolden all candidates to move to the middle, and that is what American government and politics needs most. 

Which Republican candidate do you think will govern from the center? Here is what Centrists - Democrats, Republicans, unaffiliated - might often feel about what is fast becoming the most important issue of our time: governance. Good governance. Note: only when good governance (emanating from both sides of the aisle) returns to Washington D.C. will America's economy dramatically improve, bringing new jobs and improved market conditions for all. Until then, we will tread water. We hope that you vote for the candidates (presidential, congressional) who you believe most identify with often held Centrist beliefs:

• We understand that single-issue litmus testing is often the weapon of the self-interested, the often over-invested. We see a bigger picture. We connect things. Broad, not linear thinking, is essential in good governing. 

• We do not fear the future. We learn from the past but do not yearn for it. Instead, we are inspired by the promise of tomorrow.

• We understand that moving to a better tomorrow requires compromise during the process. That way, more can participate in building that better tomorrow. (If you do not believe in compromise, you are plainly not counted among us.)

• We want debate, not to win, but rather to find best ideas and solutions, often formed through spirited conversations that inter-mingle issues and ideas from many sides, that when brought together, create better solutions.

• We do not serve to glorify ourselves, our name, our family, our business, or our own personal legacy. We serve our country, all its citizens, and respect its institutions.

• We support candidates based on their demonstrated good character, and rational, collaborative approaches to solving society’s greatest issues. Such rational approaches must include effective listening and even compromise during debate. Inability to compromise stalls forward movement, harming all, the antithesis of good governing.

• We dare to envision a profoundly different and better world for all. We believe that great change can occur. Great changes have occurred throughout time. We seek to bring about great change in this, our time; not to stand still or step backward.

• We believe America to be that greatest beacon of liberty, of human rights, of cooperative government and goodness. 

• All people, regardless of country, color or creed, want these things of which America is so proud - freedom, liberty, opportunity, hope. America’s promise has made it harder and harder for the cruel, the ruthless, the narcissists, the treacherous, to rule. The Soviet bloc is long dead. The Great Spring is upon the Middle East. The days of the ruthless are numbered. Our beacon of liberty and goodness must continue to brightly shine to show the way for all nations.

• We understand that change is constant. Our world, our institutions, our thinking, must evolve - in positive, not radical, or reactionary - ways. The voices of reason must be loudest of all. These voices must lead change. 

We must fight back and overwhelm the fringes by November. The fight must be launched from the middle, outward. We must demand, event protest for bipartisanship and governing from the center. That is what our families and our financial markets seek.  Good government led from the center will reduce market uncertainty and increase consumer and business confidence. Greater confidence in our society, government institutions and market outlook will result in sustained private sector growth and expansion, new jobs, and an improved housing market, leading to increased revenue for a much smaller, more streamlined government. 

Hardened positions, however courageous and righteous they might appear, have brought us to this dark place. We must be as aggressive and just as righteous in demanding bipartisanship behavior from both sides. This will give great strength, form and purpose to the center, enabling progress on the important issues of the day. Bipartisanship forces compromise. Our leaders must have the courage to compromise.

For more information, go to www.americancentrist.us. Download our 20 page booklet “An Urgent Call” at the web site, or email us for your own printed copy(ies). Register and stay updated at http://TheCenterIsNotTheProblem.blogspot.com. Follow this movement on Twitter @CentristsUnite 

Forward this link to your friends and colleagues. Thank you. 

NH Voters - Start Moving America Back To Center!

New Hampshire Voters - Republican, Democrat, unaffiliated - the evidence is clear that government led by the fringes (far left, far right) simply brings gridlock. We hope that you set the example for the rest of your country: move this great nation back to center, and away from the fringes. 

The "middle majority" has listened patiently to the loud, self-centered, and over-invested voices of the far right and the far left. They have achieved both great fame and power in our time. And, they are jointly and equally responsible for the dark place America finds itself in today. Both fringes’ stands have proven to be intractable. This is no way to govern responsibly.

Leaders from both sides  will not share power unless forced or emboldened to go against strong, vested fringe interests  through the court of public opinion and at the voting booth. The fringes do not want you, America’s middle majority, to rise up and be heard, but rather rely on your continued silence.  

The fringes will continue to fight for their issues on their terms for as long as we will allow them, keeping progress from our reach and assuring a splintered center devoid of form or purpose.  The usually silent middle majority - those who see themselves somewhat left or right of center and away of either fringe - needs to speak plainly. Have you not been spoken to plainly by the fringes for years now, while observing divisive stands supported by faulty logic? The eyes of the nation are now upon New Hampshire. Bring your demands for bipartisanship and leadership from the center to the candidates, and to all Americans through the media. Show your conviction with your vote. This will embolden all candidates to move to the middle, and that is what American government and politics needs most. 

Which Republican candidate do you think will govern from the center? Here is what Centrists - Democrats, Republicans, unaffiliated - might often feel about the most important issue of our day: governance. Note: only when good governance (emanating from both sides of the aisle) returns to Washington D.C. will America's economy dramatically improve, bringing new jobs and improved market conditions. We hope that you vote for the candidate who you believe most identifies with many of these characteristics of good goverenance.

• We understand that single-issue litmus testing is often the weapon of the self-interested, the often over-invested. We see a bigger picture. We connect things. Broad, not linear thinking, is essential in good governing. 

• We do not fear the future. We learn from the past but do not yearn for it. Instead, we are inspired by the promise of tomorrow.

• We understand that moving to a better tomorrow requires compromise during the process. That way, more can participate in building that better tomorrow. (If you do not believe in compromise, you are plainly not counted among us.)

• We want debate, not to win, but rather to find best ideas and solutions, often formed through spirited conversations that inter-mingle issues and ideas from many sides, that when brought together, create better solutions.

• We do not serve to glorify ourselves, our name, our family, our business, or our own personal legacy. We serve our country, all its citizens, and respect its institutions.

• We support candidates based on their demonstrated good character, and rational, collaborative approaches to solving society’s greatest issues. Such rational approaches must include effective listening and even compromise during debate. Inability to compromise stalls forward movement, harming all, the antithesis of good governing.

• We dare to envision a profoundly different and better world for all. We believe that great change can occur. Great changes have occurred throughout time. We seek to bring about great change in this, our time; not to stand still or step backward.

• We believe America to be that greatest beacon of liberty, of human rights, of cooperative government and goodness. 

• All people, regardless of country, color or creed, want these things of which America is so proud - freedom, liberty, opportunity, hope. America’s promise has made it harder and harder for the cruel, the ruthless, the narcissists, the treacherous, to rule. The Soviet bloc is long dead. The Great Spring is upon the Middle East. The days of the ruthless are numbered. Our beacon of liberty and goodness must continue to brightly shine to show the way for all nations.

• We understand that change is constant. Our world, our institutions, our thinking, must evolve - in positive, not radical, or reactionary - ways. The voices of reason must be loudest of all. These voices must lead change. 

We must fight back and overwhelm the fringes by November, beginning in New Hampshire on Tuesday. The fight must be launched from the middle, outward. We must demand, event protest for bipartisanship and governing from the center. That is what our families and our financial markets seek.  Good government led from the center will reduce market uncertainty and increase consumer and business confidence. Greater confidence in our society, government institutions and market outlook will result in sustained private sector growth and expansion, new jobs, and an improved housing market, leading to increased revenue for a much smaller, more streamlined government. 

Hardened positions, however courageous and righteous they might appear, have brought us to this dark place. We must be as aggressive and as self-righteous in demanding bipartisanship behavior from both sides. This will give great strength, form and purpose to the center, enabling progress on the important issues of the day. Bipartisanship forces compromise. Our leaders must have the courage to compromise.

For more information, go to www.americancentrist.us. Download our 20 page booklet “An Urgent Call” at the web site, or email us for your own printed copy(ies). Register and stay updated at http://TheCenterIsNotTheProblem.blogspot.com. Follow this movement on Twitter @CentristsUnite. 

Forward this link to your friends and colleagues. Thank you.