roundtable: Re: Federal Budget Negotiations

roundtable: Re: Federal Budget Negotiations

Re: Federal Budget Negotiations

Ted Kircher (kircher@bga.com)
Sun, 17 Dec 1995 15:59:51 -0600 (CST) 

Date: Sun, 17 Dec 1995 15:59:51 -0600 (CST)
From: Ted Kircher <kircher@bga.com>
Subject: Re: Federal Budget Negotiations
To: Vigdor Schreibman - FINS <fins@access.digex.net>
Message-Id: <Pine.3.89.9512171501.B14010-0100000@urchin.bga.com>


On Sat, 16 Dec 1995, Vigdor Schreibman - FINS wrote:
> 
> This budgetary drama is telling us something about the men who run
> our Government. The Pres is showing his stuff, and so are the others.
> Quite a show. I think the end game has already been written ... What
> do you say?

I feel that the President and the Democrats have been irresponsible 
thus far since they have not put a budget plan on the table with THEIR 
priorities that is balanced in 2002, i.e. in the 7th year, using CBO 
numbers - which fortunately became rosier last week. This is one of 
the conditions that the President agreed to in order for the first CR 
(Continuing Resolution) to be passed by the Congress.

The Republican leaders have clearly stated that this is their ONLY
requirement for a second CR to be passed which would keep all of the
government services in operation.

While I do not agree with all of the tradeoffs in the Republican's 
budget plan, I strongly agree with the need to balance the budget in 
the 7th year.  Hence, I reluctantly endorse the Republican's tactic of 
using the CR process to force/motivate the Democrats to have to state 
their priorities with this fiscal constraint.

I feel that this balanced budget issue has even more importance than 
the Republicans have stated thus far. The United States may have 
already passed the point in time when it will continue to be the 
leading competitive country in the 21th century because its paradigms 
of past successes, in addition to this debt, may cause the US to follow 
a similar 'rise and fall' scenario that has been the fate of all leading 
countries (like Persia, Egypt, Greece, Rome, England) throughout history.

Let me provide some rational for this assertion:

1. A more acccurate statement of the US debt is that it will probably be
   $6T by 2002, i.e. there will continue to be deficits until then which
   will be added to the current $5T debt.

   I fail to understand why the Republicans have not provided the projected
   debt figure in 2002 for their budget plan as they should be trying to
   paint the worst possible situation even under their most optimistic
   position.

2. If I understand Senator Hollings (D, SC) correctly, even the
   Republican's balanced budget plan will require money to be borrowed from
   government trust funds (including Social Security?).

   Hence, in addition to the $6T (or whatever the figure will be above
   today's $5T) debt in 2002, there will be intra-governmental loans that
   needs to be added so these government trust funds will be restored for
   the 'baby-boomer' generation.

   Again, I fail to understand why the Republicans have not provided the
   amount of these government trust funds loans in 2002 and their increase
   over the 1995 loans.

3. While Republicans keep saying "we are passing this debt on to our
   children (future generations)", this will probably NOT be the case 
   for many of the economic 'haves' in the global marketplace of the 
   information age.

   Within 20 years, computers will provide ubiquitous real time personal
   telecommunications throughout the world incorporating all of the
   human senses. By then computer technologies, which are expected to
   continue to double each year, will be in the order of a million times
   better. 'Being there' in cyberspace versus real space will become
   significantly closer than today.

   The economic 'haves' and their companies will become increasing mobile,
   while governments are inherently immobile. The exploitation of these
   rapidly improving computer capabilities will be necessary to maintain
   competitive productivity in this global marketplace.

   As a result, these 'haves' will increasing view their governments like
   they do a motel, i.e. what services am I getting now for the cost
   (read 'taxes') I have to pay. As such, a growing number of 'haves' will
   find themselves in the situation like Bjorn Borg was in as a global
   tennis player about 20 years ago when he moved from Sweden (with its 
   50% income taxes) to Monico (with its 0% income taxes).

   The net result of this accelerating evolution is that the economic
   'haves' will have more incentives over time to leave the US rather than
   pay off its huge debt. National patriotism will dim over time as the
   global marketplace evolves. This is no different than what has happened
   to state's loyalty in the US today and will inevitably take place in 
   the countries of the European Union during this time frame.

   This process, of course, leads to a classic 'death spiral' as those 
   who do not or cannot leave will have their share of the debt increased 
   making them even less able to leave.

   The US government, in order to avoid this 'death spiral', has to retain
   its current competitive 'value for the dollar' (the motel analogy) as 
   the world's economies level off due to technology advances in the 21th
   century. This will require more than just getting the US debt under
   control as that is only a necessary, but not sufficient, condition.
   It will require a more emcompassing effort to get all of the citizens
   in the US to mutually view each other as employees of a business, hence
   with a common goal of keeping their economy and quality of life 
   globally competitive.

   This will require, in my opinion, paradigms shifts that I question if 
   the power structure in the US (private as well as public) will make 
   in a timely enough manner since this will require 1) a long range 
   vision and 2) an implementation will undoubtedly reduces the existing 
   power structure. These are two changes that are so difficult that the 
   'rise and fall' process usually results.

Ted
----------------------------------------------------------------------
Theodore A. Kircher
Information Age Consulting	   "Exploiting Technology for Society"
6618 Lost Horizon Drive, Austin, Texas 78759-6117, USA	(512) 335-1149
----------------------------------------------------------------------

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