I received the enclosed email from Senator John Kerry asking for my inputs on the solutions to the deficit problems in the federal budget.

Below is the first idea that I sent him.

Get Expert Help For Solving The Long-Term Debt Problem

Finding a good solution to the long-term debt problem is a highly technical undertaking. The calculation of how much short term stimulus is needed requires a deep understanding of economics. Understanding how to make structural changes in the economy’s incentive system, is not a political question.

Find the best experts in these matters that you can, and listen to their advice before making any decisions.

You wouldn’t hire a bunch of lawyers and politicians to figure out how to build a skyscraper for thousands of people to occupy. Why do something equivalently silly in trying to solve the debt problem?

It is a sorry state of affairs when our Senator asks for our ideas on how to solve a very technical problem. I was a professional computer software engineer for over 40 years. The senior level management in the companies where I worked were called upon to make decisions on what software our company ought to be making. I would not have expected them to get in a conference room and haggle over the details of how to design that software. That was my job to do. They certainly could ask my advice as to schedule, budget, staffing levels, and best technical approach. This is the kind of advice that I am recommending that Senator Kerry seek in the context of deciding how to solve our debt problems.

Other suggestions I made focused on the data he and the committee need before deciding on solutions.  I told him to first find out how much the economy is losing by permitting 9% unemployment.  Add in the losses from letting this much or more of actual and potential productive facilities of the economy to  remain unused.  Then figure out how much higher the federal revenues would be with the elimination of this loss along with elimination of tax incentives going to the wrong facets of the economy.  When he had these numbers in hand, he would know what was the goal and what resources he had to juggle to reach that goal.  Calculating these numbers is not something that can be done through debates among politicians.  This is just one example of why the committee must have expert advice.  They need to realize that the members of the committee do not have the technical expertise among themselves  to answer these fundamental questions.

As in any enterprise, investments are made over time and the benefits of those investments are reaped over time after the investments have had a chance to produce results.  It is no easy task to estimate when the cash flow from earlier investments will arrive to facilitate future investments.  An enterprise needs to figure out how much to borrow and when in anticipation of revenues from the investments made.  They need to figure out how initial investments and results will affect the ability to borrow and invest in the future.  Do these calculations sound like something that 12 Senators and Representatives can figure out in some Congressional conference room?  Even if these 12 individuals had the competence to make these calculations, they would need help in gathering data.

I wonder who among my readers of this blog think they have the competence to make these calculations let alone the wisdom to figure out what to do if they had these numbers in hand.  I am certainly well aware that I don’t have that competence myself.  I barely have an inkling of what questions to ask.