The debt crisis and the other America

I'm getting a little tired of hearing how Bush has reduced the deficit to a smaller sliver of the country's GDP, even as the debt continues to grow to gargantuan proportions.  The New York Sun had such an editorial today. 

Apparently, the Sun has so given up on ever paying off the DEBT, that it has forgotten that the 9 trillion dollar debt (or 50 trillion if you count all future obligations) is the real issue, not the deificit.  True, we are digging ourselves into a hole more slowly, but the sides of the hole are even more unscalable.  Through a combination of smoke and mirror accounting that would make an Enron accountant blush, stary-eyed growth projections, and contradictory assumptions - like assuming the tax cuts will go away in 2010, thereby bringing in more revenue, while at the same time assuming they won't when campaigning for the dollars of deep-pocketed donors - the Bush administration has made it seem we can go on like this forever.  Oh, and I haven't even mentioned our practice of living off the kindness of foreigners to prop up our increasingly sagging dollar.  Well, the foreigners have about had it with that, and everything from middle east oil to China manufactured goods is headed up, in dollars at least.  At some point, those countries will start focusing more on their own internal demands and less on the needs and wants of the world's largest debtor nation: the United States.

I still remember when Conservative meant fiscal restraint, as in conserving dollars.  Now, it's appropriate to talk about no-tax-and-spend Republicans.  We are living off the success of the past and until we get a true pro-growth, pro-fiscal restraint administration who's willing to stand up to a pork-barreled Congress, we will continue to have more waste and fraud, as well as bridges to nowhere.  Oh, and simply slashing taxes on the rich and hoping for the best is not a fiscal policy either.  Leaders should lead, not just dole out money to whatever lobby has the most clout.  In today's era of unprecedented global growth, we need policies that get us to 6% growth, not half that.  We need policies to engage all our citizens as entrpreneurs and flexible and educated knowledge workers.  Think of what America would be like without the Bill Gates, Steve Jobs, and Jack Welches of our time; now think of what it could be if we could double the number of those kinds of people.  The real deficit is lack of brainpower, not lack of money.  We need more ROB - Return on Brainpower.  We need better schools - not necessarilly more expensive schools - that are evaluated by results, and shut down where appropriate, charter schools, heck, maybe even charter teachers!  We need classrooms that help kids develop their talents as much as possible, instead of channeling them into a uniform set of standards more designed to produce factory workers than today's knowledge workers - there's a reason Bill Gates dropped out of Harvard, after all.  How many other students are we losing to strait-jacketed schooling?

The Fed must be reformed as well, so that he/she stops trying to micromanage the economy.  Instead of rescuing the economy (maybe) at the last minute with a .50 basis point rate cut, the Fed should be tying interest rates to a point slightly above inflation at all times, and using their power to regulate margin rates and hold back the printing press on the dollar to keep inflation contained.  This would discourage excessive financial speculation, while still leaving the stock market - with its infinitely better judgement than a hedge fund manager to decide which companies deserve the benefit of its investments. 

We need green jobs - the kinds of energy producing, environmentally sound jobs that cannot be exported overseas, and that provide work for the other half of Americans who do not sit in front of a computer screen all day.

We need to get out of foreign wars that drain our youngest and best and our tax dollars, while enriching only a few defense contractors (full disclosure: I don't expect this to happen anytime soon, so I am still holding my defense stocks).

In the meantime, Bush shouldn't claim too much credit for a whooshing stock market that has made his deficit spending policies look sound for the moment.  Even with capital gains infused dollars, the deficit and the debt are both still growing, albeit more slowly.  When the music stops, we'll see the real folly to his policies.