Economy Voters

Because I work in the mail and shipping industry, today’s Senate passage of the postal reform bill interests me.  The Senate voted 62 to 37 on the bill, which aims to restructure the mail service and protect it from bankruptcy. The legislation now goes to the Republican-controlled House where it faces an uphill battle. 

Thousands of postal employees have renewed hope because of the bill.  The Postal Service has plans to shut down 252 mail processing centers around the country, as well as hundreds of rural post offices. But, the bill cuts the number of centers that could close in half, to only 125.  The bill also includes provisions to keep overnight delivery standards for regional areas for at least three years and would also prevent the Postal Service from eliminating Saturday mail delivery for two years.

I am constantly amazed by the Postal Service and how much they really do get right.  Over the holidays, I was able to take some mail directly to the dock of our local sort facility.  I was amazed at the sheer volume of mail – mounds of mail and parcels piled up on the dock.  When I considered that all that mail would be sorted and en route to their destination within a few hours I was amazed.  What surprises me more is how few pieces of mail and parcels get lost.  The Postal Service tracking system is years behind FedEx’s or UPS’ systems.  And yes, packages and mail often times don’t get where they are going in as timely a manner as we would like.  Yet, they usually do get there. 

Consider the cost of a stamp ($0.45) will get your letter cross-country in three to five days, or for just around $5 you can get it there in two to three days.  Think on the alternatives – FedEx and UPS cannot get your letter anywhere in two to three days for $5.  It will be at least three times that cost.  And then, we want to squak when the price of a stamp goes up a few pennies?  It seems to me that if they are to compete, and to help bail themselves out of crisis, they may need to continue a regiment of prices increases. 

And, why would we required that they pay forward a pension plan by decades?  No other industry is required to do such and that money could be well used to get the Postal Service back on track.  No matter the answer, one thing seems clear to me – that we should strive to preserve the USPS while considering reforms that would better streamline and improve the Postal Service, not send it backwards to Pony Express days.

The most basic responsibility Congress has is deciding how much money the government takes in and how much it spends. But Congress has passed its spending bills on-time only four times since 1952. In the last 14 years, annual spending bills have been submitted an average of four months late.  If Congress can't make spending and budget decisions on time, they shouldn't get paid on time either.

Currently our Congress has two bills (one in the House and one in the Senate) - H.R. 3643 and S. 1981 under consideration.  These bills are also known as the No Budget, No Pay Act.  According to the bills, if the congressional budget and appropriations process is not completed by the start of the government's fiscal year on October 1, members of Congress will not be paid for any time that the federal government lacks an enforceable budget and all appropriations bills.

The purpose of this act is to help eliminate wasteful and inefficient government by encouraging Congress to act and not simply rely on temporary spending measures.  No more of Congress spending first and asking questions later.  And, no more of the funding uncertainty we see every few months.  Instead, Congress would be required to create a budget and make fiscal responsibility a reality in America. 

Of course, like with any budget, there will be wrenches thrown in at times.  But, the process of creating a budget will help Congress actually set priorities.  Because there is a timeline and because their pay would be tied to doing this, they would be encouraged to get the budget done in a timely manner – each and every year.  We are expected to make and strive to stick to a budget, shouldn’t our government also strive to do the same?

With the Ryan economic plan back in the spotlight, it begs the question - who should be responsible for shouldering the burden of our country’s economic woes?  Neither government, corporations, nor households should be exempt from the basic rules of accounting. Revenues should match or exceed expenditures, excessive debt should be avoided, and some funds should be kept in reserve for future rainy days.

Fiscal responsibility is about borrowing responsibly, not refusing to borrow at all.  However, excessive deficit spending should be limited to times of economic crisis or war.  In the private sector, most firms of any significant size will borrow money to expand their businesses. Furthermore, most individuals will borrow for college, buy a home, start a business, or acquire other forms of productive capital. In short, borrowing money for good investments is responsible fiscal policy.

We should not, however, be borrowing money just to pay for routine government expenses. Salaries, benefits, rent, and other ongoing operating costs need to funded by matching revenues. The exception to this is would be war, national emergency, or recession. Government services need to be provided regardless of the economic situation, and borrowing through a recession is better than raising taxes or throwing more people into the job market, which is currently what most "balanced budget" states are doing.  Austerity measures don't work; they only make a bad problem worse.

Post-crisis financial reforms should include limits on leverage, the regulation of derivatives trading and most important of all, and the break-up of financial institutions that are “too big to fail”, so that no one entity can bring down our entire economy unless bailed out by taxpayer money. A properly-functioning market economy should not require taxpayer bailouts of private companies in the first place. The recent financial reform legislation and proposed legislation by Paul Ryan is a missed opportunity to address the “too big to fail” issue and avoid future bubbles. Over the last twenty years improper regulation and deregulation may have contributed greatly to the current economic crisis.

However, we need to be careful about instituting an overnight change that impacts a majority of American’s negatively.  We have got ourselves in quite a situation and it will take cool heads from both parties to work together to come up with a way to keep working our country out of the current economic situation.

Why are gas prices continuing to rise? This is not standard economics and the law of supply and demand.  In fact, supply of oil and gas is higher today than it was years ago when gas prices were under $2.00 per gallon.  Furthermore, the demand for oil in the U.S. is at its lowest level in over a decade.  So, who’s to blame?

Big Oil – well, at least partly.  Big oil companies have been gouging us for years.  What other company, or set of companies, can receive the high level of federal subsidies and tax loopholes and still net early a trillion dollars in profits over the past decade?  So, the federal government is also partially to blame for allowing these loopholes and subsidies.  Even without government assistance, big oil would still rake in record profits for their efforts. 

But there is another reason for the wild rise in gas prices – Wall Street.  Speculators are raking in profits by gambling in the loosely regulated commodity markets for gas and oil.  This does nothing but hurt us as gas and oil prices rise.  So, very little about gas prices has to do with how much we use and what it is used for.  Instead, greedy hands, gamblers, and inefficient government systems are what drives gas prices up.  Knowing that, what can we do?  Very little, it seems.  Yet, the Occupy protesters are doing their best to bring attention to this issue, among others.  Unless we really start to push our elected officials to remove subsidies and tax loopholes for big oil and find a way to disassociate speculators from gas prices, gas prices will continue to rise as the puppet masters work their strings.