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Longform on the Issues: Our Fiscal Future

Longform.org picks background reading on the issues

Monday, September 24, 2012 - 09:38 AM

WNYC asked Longform to pick great stories as background reading for our 30 Issues in 30 Days series. These are stories that help illuminate and humanize the important issues this election year. Part Two of 30 Issues looks at fiscal debt, infrastructure spending, and tax policy. See all the guides here.

For daily picks of new and classic nonfiction, check out Longform or follow @longform on Twitter. Have an iPad? Download Longform’s app to read the latest picks.

 

The Purpose of Spectacular Wealth, According to a Spectacularly Wealthy Guy

Adam Davidson | New York Times Magazine | May 2012

A defense of private equity and tax breaks for the rich from a former partner at Bain Capital.

At a nearby table we saw three young people with plaid shirts and floppy hair. For all we know, they may have been plotting the next generation’s Twitter, but Conard felt sure they were merely lounging on the sidelines. “What are they doing, sitting here, having a coffee at 2:30?” he asked. “I’m sure those guys are college-educated.” Conard, who occasionally flashed a mean streak during our talks, started calling the group “art-history majors,” his derisive term for pretty much anyone who was lucky enough to be born with the talent and opportunity to join the risk-taking, innovation-hunting mechanism but who chose instead a less competitive life. In Conard’s mind, this includes, surprisingly, people like lawyers, who opt for stable professions that don’t maximize their wealth-creating potential. He said the only way to persuade these “art-history majors” to join the fiercely competitive economic mechanism is to tempt them with extraordinary payoffs.

 

 

To Have Is To Owe

David Graeber | Triple Canopy | Dec 2010

An exploration of the 5,000 year history of debt from a radical economist -- and inspiration for the Occupy movement.

We hardly know what debt is. The very flexibility of the concept is the basis of its power, and of the moral confusion associated with it. Looking at the history of debt worldwide, one finds that most people have held that paying back money one has borrowed is a simple matter of morality and, contradictorily, that anyone in the habit of lending money is evil. Recently, the former position seems to have trumped the latter, owing to a persistent refusal to question our slavish devotion to creditors.

 

 

No Death, No Taxes

George Packer | The New Yorker | November 2011

A profile of eBay founder and libertarian futurist Peter Thiel.

Thiel’s venture-capital firm, Founders Fund, has an online manifesto about the future that begins with a complaint: “We wanted flying cars, instead we got 140 characters.” He believes that this failure of imagination explains many of the country’s problems—from the collapse in manufacturing to wage stagnation to the swelling of the financial sector. As he puts it, “You have dizzying change where there’s no progress.”

 

 

Broke Town, USA

Roger Lowenstein | New York Times Magazine | March 2011

The impact of the financial crisis and the erosion of municipal bonds: crushing debt, infrastructure decay, and the fraying of the social contract.

What if the burden of municipal woes falls elsewhere than on bondholders? Yes, cities and states have creditors. They also have citizens who rely on their services and who pay the taxes, and they have public employees who are dependent on stable public-sector jobs and often-ample benefits. There is a crisis in local government; the crisis is here. The question is, will it be articulated in terms of bond defaults or larger kindergarten classes — or no kindergarten classes at all?

 

 

Harrisburg's Failed Infrastructure Project

John Buntin | Governing | December 2010

A town invests in an expensive new incinerator. Then: bureaucratic incompetence, a recession, and all-out bankruptcy.

There’s nothing inherently wrong with borrowing money, particularly to build infrastructure. Done properly, it’s one of the best tools governments have to boost productivity and by extension, raise incomes. Done improperly, there’s no better way to destroy a balance sheet. And that’s where Harrisburg is today. Pennsylvania’s capital is teetering on the edge of bankruptcy, a prospect that has spooked bond markets and worried Gov. Ed Rendell, who recently warned that “If Harrisburg fails, every other municipality in Pennsylvania is in danger.”.

 

 

Obama vs. Boehner: Who Killed the Debt Deal?

Matt Bai | New York Times Magazine | March 2012

How politics and policy prevented a long-term solution.

At the end of this year, no matter how the presidential election turns out, the two parties will face yet another Armageddon moment in the fight over debt and spending; this time, if they don’t settle on a plan to rein in the nation’s nearly $16 trillion debt, then a series of onerous budget cuts — worth about $1.2 trillion over 10 years, divided between defense and other programs — will automatically go into effect. If we understand what really went on last July, then we’ll have a better sense of how difficult it will be for the two parties to stave off the coming political calamity and why, too, the situation may not be quite as hopeless as it seems.

 

Brian Lehrer Show producer Jody Avirgan is also a contributing editor to Longform.org. Is there a story that we missed? Comment below or .

And be sure to check out lots more great stories in the Longform archives.

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Comments [4]

Demographic "greying" can be solved by immigration from Soc Sec & Medicare are NOT at risk. Pls DISCUSS.


People often say that the ageing of the population
will cause a crisis in Social Security and Medicare.
They use this as an excuse to advocate for cuts.

If demographics really is considered a threat
this can be solved at any time by simply increasing
skilled immigration by people who are young.
Problem solved.

(Of course, other solutions like eliminating the
regressive cap on payroll taxes and applying it
to all income including capital gains - would
also readily solve the problem).

This is a manufactured crisis - designed to
create a pretext to cut and over time drastically
reduce one of our most important, humane and efficient
safety net programs.

Do not be fooled.

Please discuss.

Sep. 27 2012 12:50 PM
Imports should pay their share for infrastructure


Imports should pay for their share of infrastructure.

When goods are imported from abroad they still use
the US's infrastructure : ports, roads, rails, bridges,
tunnels, information and energy - but they do not pay
for their share.

Some might even argue that imports add substantial additional
costs to keep the sea lanes open (eg. some defense spending).

This is not a problem when trade is balanced, but it is when
countries continually run a substantial trade surplus.
Their surplus goods FREE-RIDE on our infrastructure.

Proposal : A 20 % tax on all bilateral trade SURPLUSES
paid by the country with the surplus to the
country with the bilateral deficit to pay
for the free ride on their infrastructure.

For most countries - bilaterally - the payment will be
minimal. For a few who abusively run continual surpluses,
it will level the playing field.

If countries don't pay their due, a unilateral punitive
VAT of 3 times the rate can be paid in subequent years until
the difference is paid with interest.

Sep. 27 2012 12:44 PM

The real debt problem is 30 years of off-shoring manufacturing jobs & the resulting trade deficits. Sending these jobs overseas has killed local economies & their tax bases.

Compared to the trade debt & the outstanding derivatives that darken big banks' outlooks, our budget debt is small.

Sep. 25 2012 10:07 AM
Rishi from New York

The argument that the last 30 years and especially the last 5 years proves that rising government debt is not an issue is equivalent to arguing that because you've smoked for 30 years and especially heavily the last 5 years and you have no health problems proves that it's not an issue down the road.

We know from history that if you do it for long enough, it eventually catches up with you in both cases. The idea to so get ahead of the problem, not say you'll deal with the cancer when you get it.

Also, the argument that we can never default since we can print money is purely semantic. Printing money eventually causes inflation to rise and inflation is default by another name, essentially stealing from savers to give to spenders, including the government. Same goes for holding interest rates at zero. Ask anyone who is actually trying to save money for retirement.

Many economists also argue that we must spend now and save later at the government level, but i challenge you to point out a time in the post war period, and especially after the breakdown of Bretton Woods in the 70's, where politicians have been wiling to get spending under control and actually save during good times for a rainy day. It's like expecting a dog not to eat until it dies when you keep putting food in front of it. It's simply not in either's nature (or either party's nature). You have to deal with the nature of things as they are.

The 'balanced budget' of the 90's (which was only balanced due to crafty government accounting which would be illegal in the corporate world) was a fluke and can't be used as a baseline expectation for the long term.

The fact of the matter is that the economy has been inflated artificially since the early 90's by the addition of copious amounts of consumer debt which ended disastrously starting in 2007. Now as consumers delever, the government is trying to continue this artificially high growth by borrowing and spending, and that will end in the same kind of disaster eventually.

We have the resources and the ability to deal with all of our problems but they will involve hard choices. The answers are somewhere in between the extreme positions taken by partisans in both parties.

Sep. 24 2012 11:38 AM

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