Saturday, February 6, 2010

Sovereign Debt

Economists call it Sovereign Debt when a nation racks up the numbers on it's "credit card." 2010 we are told will be the year more nations go broke as they try to keep funding recovery programs and run out of taxes. The United States is in a bad way but not as bad as a whole raft of other countries that look set to go bankrupt. Take your pick: Greece, Ireland, Latvia, Ukraine are all listed as countries in difficulties. Spain has collected a total official unemployment rate of more than 20 percent. Japan has built up debt that is three times it's Gross Domestic Product. The trick there is that Japanese citizens own their government's debt through savings plans. The US copes with it's growing debt by holding the world's reserve currency so China and Japan who have bought up a great deal of the debt need to prop up the currency's value to retain the value of their debt purchases...Sovereign debt is a mess and predicting what will happen is a mug's game.



The nature of debt among the many united States in this country is a different game and things among the 41 states with debt is starting to get interesting and nasty. Unlike the Federal government states don't get to roll over budget deficits so the squeeze is on to cut down spending. The notion of increasing taxes is anathema so services are getting cut. It's pretty horrendous too, parks, libraries and social services are all going by the wayside. It's odd too that the services that are getting cut are going to affect the poor and destitute, those who are least well equipped to fight back. Taxes on people with wealth will remain low. The recipe is for social disintegration so we can at least hope that the wealthy will be forced to build taller fences and add armor plate to their limousines which we might consider a form of tax I suppose.



It is a time of change in the US and services that we have taken for granted will no longer be available. Even police and fire personnel are being cut in many communities and the Right is calling for unions and living wages to be decimated. As though creating even more poverty will somehow help our nation forge ahead. Perhaps it's time to stop fighting wars abroad and perhaps we need to decriminalize marijuana and tax the hell out of it. That would be bizarre: funding health clinics, libraries and meals-on-wheels by the sale of dope. We live in difficult times and if the military is desperate enough to "legalize" being gay to get more recruits perhaps we should stop jailing people for smoking and trading dope and make money off them instead of spending billions to jail them. How much of our civic life to we have to pare down before the unthinkable becomes common place? Pretty soon gay marriage will excite no comment at all. That will surely be the first sign of the Four Horsemen of the Apocalypse riding to rescue the republic! And then we'll notice them smoking joints and spreading money around. The end will definitely be nigh. The alternative will be to be even more impoverished than we are today and that is totally un-American.

7 comments:

Danette said...

Four libraries closed in a large city (Aurora Colo.) close by-- leaving only three. Denver is cutting services but decided not to cut libraries (thanks goodness as I would hate to lose my job!)

In Colorado Springs (you know them? This is the city that Dobson moved Focus on the Family into and its extremely conservative-- Christian right conservative not wealthy, corporate conservatives) they are making headlines. They have had to turn off street lights, stop picking up trash as often and have cut firefighters and police services because the voters would not approve a tax increase last fall. Conservatism at it's best.

Orin said...

The voters of Oregon finally realized there was nothing left to cut and passed Measures 66 & 67. One raised the minimum corporate income tax from $10 (you read right) to $150 (you read right) and added what is in effect a sales tax on companies with more than $500K in sales but little or no state income tax liability. The other raised the tax rate on families making more than $250K from 9% to 11-point-something.

Of course, the Right screamed bloody murder and predicted the exit of all Oregon businesses to Clark County, Wash. (county officials were actually standing by waiting). And while Oregon might have one of the highest personal income tax rates in the U.S., about the only other tax you pay is property tax. No sales tax, no nickel-and-dime taxes on utility bills as in Washington state.

It must be kept in mind, the good people of Oregon did not vote to tax themselves, they voted to stick it to someone else. Oregon has something called a "kicker," wherein revenue over 2% above the biennial forecast is refunded to the taxpayers. I got one of those checks the last time I lived here, for about $300. Oddly enough, the Republicans (!) have an eminently sensible proposal to raise the bar to 6% and put the proceeds into a rainy-day fund until said fund reaches 10% of the state budget, at which time the kicker money would go to taxpayers.

Washington keeps saying, "raise the sales tax," which in King County (Seattle) is now 10%. What's funny is, Washingtonians will say, with a totally straight face, "I can choose not to buy somethng (and therefore not pay the sales tax), so that makes it fair." Probably the most blatant example of the poor subsidizing the rich.

The idea of legalizing marijuana in Oregon pops up every time the economy tanks. Back in the '80s the plan would've been for the state to purchase pot from growers for $5/oz. and sell it at state liquor stores (Oregon has an outsourced liquor monopoly) for $25/oz. Pot would be subject to all the same regulations as alcohol and tobacco. It takes absolutely no skill and almost no effort to grow the cannabis sativa plant, so growers would get rich; the weed you buy from the state would be of much higher quality, at a much lower price than that from street dealers. Plus you knock the legs out from under organized crime.

But as I keep saying, this plan makes way too much sense to happen at any time in my lifetime...

__Orin
Scootin' Old Skool

Conchscooter said...

I had heard that Colorado and Arizona were cutting right and left. Florida technically is not in great shape but Key West is trundling on as normal. There are plans for beautification, no talk of city layoffs or cuts. Weird. I am looking forward to next year's budget with interest.
I think legalizing and taxing marijuana will become a viable option when all else fails and people start to figure out the benefits...It will take a while.

Matt said...

When discussing legalized pot, a friend of mine once pointed out that taxing pot heavily might create a similar black market for folks trying to sell untaxed dope. Seemed a valid point.

My proposal for a cut is this: only deliver mail on mon, wed, fri. I doubt it will save much money, but I don't think we need mail to arrive any more often.

Da said...

"only deliver mail on mon, wed, fri. I doubt it will save much money, but I don't think we need mail to arrive any more often."

Yet more American workers with pay cuts and fewer jobs. Next you'll suggest closing libraries except for three days a week (which is what some of the libraries who are still open here do). The people who patronize them adapt but I and my co-workers would be in rough shape. And fewer people with living wages mean fewer tax payers-- which means lower tax dividends so the city has to cut more. Sounds like a vicious and stupid cycle to me.

Danette said...

The above comment should have my name attached-- sorry!

Anonymous said...

Matt said: "When discussing legalized pot, a friend of mine once pointed out that taxing pot heavily might create a similar black market for folks trying to sell untaxed dope."

A very valid point, and a real life example of this happening has existed for many years:

http://thereview.ca/story/cigarette-smuggling-trade-so-pervasive-full-18-wheeler-called-tip-iceberg

I think the trick is setting a tolerable level of taxation. The "oka smokes" situation didn't occur until the Can govt decided one day to crank up the sin/cig taxes way up.

D