Let’s Elevate Teachers to Build a Better Future

It is National Teachers Day, a day of recognition for one of the most challenging and under appreciated professions. It is a day to stop for a moment the rush of our daily routines and recognize the degree to which good teaching builds a healthy, vibrant future for our families, our communities, and our democracy.

The Climate

There is a culture war taking place in the policy arena surrounding our education system: mayors and governors are demanding regimens of high-stakes testing, in hopes of revealing the quality of education available, along with reasonable means of improving that quality. Teachers are often seen as obstacles to reform, though they may be the most impassioned advocates for reform, and the minds best positioned to see what is needed.

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Bad Tax Policy Has Tragic Consequences

For the last three decades, we have heard that transferring wealth to the top of the income pyramid—to what used to be called “the supply side” of the macroeconomic equation, and is now referred to by the supply-side party, collectively, as “the job creators”—would make everybody else more affluent. We have been told that the natural result of pushing wealth in the direction of the wealthy would be massive hiring, and the “trickle down” effect, as wealth from the top eventually flows to everyone else.

The result has been a steady decline of the American middle class. Median household wealth, when excluding the wealthiest 1%, has declined. The income gap between CEOs and the average worker at their own firms has now leapt from a ratio of about 24:1, in the 1960s to well over 200:1 today. The entrepreneurial class—or rather, those best positioned to motivate major investment in entrepreneurial activity—were given huge amounts of money, and so saw less urgency in investing it.

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The Mystery of the Progressive Open Market

Why is a struggling open market so hard to turn around? The answer is really quite simple: A centrally planned, totalitarian economy is easy to predetermine; in fact, that’s the point. An open market for the trade of goods and services cannot be predetermined, because its governing dynamics depend entirely on the manner in which goods and services are traded, at what volume and by whom, and direct command-and-control is likely an obstacle, not a source of efficiency.

Open markets, in their most virtuous state, foster the optimal distribution of resources, goods and services, and produce generalized value for all involved. It is at this point, where the middle class is the focus, and where it expands by inviting (and making possible) more membership from the less affluent segments of the socio-economic web, that open markets are democratizing in their effects. Intervention, then, needs to be subtle, and favor democratic outcomes, so less central control.

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Big Ideas to Solve the Debt Crisis & Restore the Middle Class

The debt crisis is attributable to “structural” causes, meaning the way the nation’s financing is structured over the next several decades, but also to political and economic causes, meaning both the way we make policy and the way we live and experience the marketplace for trade, credit and consumer purchases. So, we need to implement policies that make serious, sustainable corrections on all three fronts.

Stabilizing debt financing requires the least expensive cost of borrowing possible, i.e. a AAA credit rating and the reputation for 100% likelihood of on-time repayment. It is unhelpful and counterproductive to indicate that the US might not meet 100% of its obligations on time 100% of the time. The long-term solution has to be oriented toward making social services solvent, and reducing the costs of debt repayment.

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The Drivers of National Debt

The composition of the national debt is a complex history of policy decisions, governmental priorities and Congressional authorizations. Republican opponents of Pres. Obama have suggested that debt and deficits have “exploded” since he took office. They have sought to paint the president as a “tax and spend liberal”, because that accusation fits their standard campaign model.

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Boehner Stands Alone between Reason and Unreason

House Speaker John Boehner appears to be under attack from an intransigent House Republican caucus that will not allow him to retain any credible leadership if he agrees to a debt and deficit reduction plan that includes any tax increases of any kind. While select Republicans in the Senate agree with the deficit commission recommendations and the Gang of Six proposal—which recognizes the need to increase revenues to deal with escalating deficits—, radicals refuse to agree to any compromise.

It seems Speaker Boehner is being held hostage by a radical Tea Party revolt in his party, whom he is not prepared to anger. Part of the problem is rhetorical. On issues of debt, deficit, entitlements and security, routine use of hyperbole has so distorted debate, that much political discourse now distorts what is actually happening in policy. Republican Sen. Tom Coburn (OK) told Meet the Press, falsely, that “the government is twice as big as it was ten years ago; it’s thirty percent bigger than it was when Pres. Obama took office.”

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Default Means 44% of Bills Unpaid, 10% Decline in GDP

The Bipartisan Policy Center has found that if there is no agreement to raise the debt limit by August 2, the Treasury Department would fail to pay 44 percent of its obligations. That 44 percent of government spending, over a year, is equivalent to a real decline in GDP of 10 percent.

The number is that high because the Treasury Department has been making fiscal adjustments since March, in order to stave off default. Those adjustment have been pushed as far as possible and cannot continue to push back the deadline, beyond August 2.

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Why We Should Have a National Infrastructure Bank

There are competing theories about what makes for good economic stimulus, and there are practices that work well and which don’t work very well. We know that tax cuts are not very stimulative, because they take a long time to show up in people’s bank accounts, and they are comprised of money that was already there to begin with. New money, extra money, is more stimulative. So food stamps, for instance, can return 70% to 100% gain in stimulus, above and beyond cost.

But we aren’t looking to fix the long recovery by using food stamps for stimulus. And we can’t really do any tax cuts that would help to expand GDP. If we want to spur a more vibrant recovery, we have to find a way to put new money, extra money, in people’s pockets, and it has to be more than they need to meet the ever-rising costs of living. It makes sense, then, that intelligent investment in high-growth activities would be the best way to make that happen.

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Not Every American “Owes” the Same on the National Debt

The House majority leader Eric Cantor (R-VA) recently published an op-ed, in which he argued that “If Washington actually had the discipline to live within its means over the long term, every American citizen would not owe $46,000 toward the national debt.” The rhetoric is effective, but the logic is flawed; not every American “owes” an equal share of the national debt.

The national debt is what the federal government owes in long-term interest on government-backed bonds, Treasury bonds. Long-term Treasury bonds pay out over several decades, and have (thanks to the high credit rating of the United States government) a very low rate of interest. The bonds are used to finance spending in the short term for which there are no sufficient tax revenues in reserve.

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Once World-leading Infrastructure in Decay: the Road to Recovery

The road to economic recovery must run through major new infrastructure upgrades, innovation and development. The American infrastructure was once the envy of the world, a valiant testament to the ingenuity and collaborative muscle of a free people; now, it is crumbling [pdf] from malignant neglect, and the cynicism of our political system’s dealings with money.

Infrastructure spending was once part of the central mission of building a great nation, open to trade and competition, where free people would migrate, ship, travel and explore, according to their own free will, imagination, and opportunity. Now, that embarrassment of riches is little more than embarrassment, and the resulting confusion over how we let such a vibrant landscape slide so far.

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