In this country, the congressional “super committee” achieved nothing in its two months of existence. Most of its brief life was a charade of activity; the last time the 12 members from both parties met in private was back in October. Across the pond, EU leaders are barely a days’ ride ahead of the bond market posse. They meet with the regularity of climate negotiators and are just as effective, issuing proclamations and press releases that to date have solved nothing.
It’s no surprise that political paralysis now increases doubts about a continuing global recovery. “Markets are now starting not just to look at financial statistics but to make judgments about governance,” said World Bank President Bob Zoellick.
And here is the problem for the U.S. mining industry that increasingly relies on export markets. Last year, Europe accounted for almost half of all U.S. coal exports. U.S. companies fear a decline in the value of the Euro will bolster the dollar and make their exports costlier. Already, the EU’s imports from China are sinking fast as global mining CEOs say China is slowing its torrid demand for coal, minerals and metals.
The scale of the crisis in public debt was highlighted recently by the NMA’s tax counsel. Each year, say Raffaniello & Associates, our government now spends almost $1 trillion more than it collects in revenue. Our national debt approaches $15 trillion, or about $48,000 per person. For the typical family of four, that tab just about equates to the value of the median American home. No wonder you feel like a 99%er. Global lenders, who have already started cutting up Europe’s credit cards, could cut our allowance too.
If there is a solution in sight, the NMA doesn’t see it. No matter how many Americans are “rich” today, raising their taxes won’t put our fiscal house in order. The president refuses to stand behind the bi-partisan reforms proposed by the debt reduction commission he appointed. Recall the Simpson-Bowles commission proposed a serious solution that blended tax increases and base broadening with substantial long-term reductions in entitlement outlays. The White House response has been to say, “Thanks.”
House Budget Committee Chairman Paul Ryan (R-Wisc.) followed earlier this year with a plan offering similar cuts in health care and social security spending more compatible with Republican orthodoxy. But after demagogic attacks accusing Ryan of throwing the old and the sick into the snow, his plan was radioactive for Republicans facing election. More recently, tentative suggestions to lower marginal rates, broaden the tax base and bend down the curve of rising Medicare and Social Security costs have attracted no strong leaders or sustained bi-partisan support.
With a major election looming ahead, the prospects for continuing political gridlock look better than those for a robust recovery. For coal, one of the few American industries that have been adding jobs despite a hostile regulatory climate, Washington’s feeble response to its debt crisis will only deepen convictions that change is needed in this town before change is all we’re left with. That’s why the NMA urges its members to engage the political process, call our elected critics to account and support elected representatives who appreciate coal’s contributions.
At the annual Washington Coal Club banquet this fall, we heard from one congressman who does. Rep. David McKinley of West Virginia thanked coal for its “vital contributions” despite, he said, critics in and out of government who belittle or deny them. Mike Morris, CEO of American Electric Power, had government in mind when he advised his audience: “Don’t be so concerned about what fuels are taking our market away; be concerned about those who are trying to put us out of business.”
Happy New Year, fellow 99%ers.
Popovich is a spokesperson for the National Mining Association, the industry’s trade group based in Washington, D.C.