THE WORLD'S FLOUNDERING ECONOMIES
Make no mistake about it, the current Administration in Washington D.C. is as anti-capitalist, anti-business and anti-American as I ever seen and it is because of these attitudes that American businesses have all but shut down in the past year.
The unemployment rate that was 5.8% in 2008 has mushroomed to over 10.0% in 2010 with the end not yet in view and that is due primarily to their politics. They have created a distrustful and pessimistic business climate through their ideology and utter incompetence and as a result America teeters on the verge of financial insolvency.
Certainly Democrats blame Republicans for these problems and I supposed they have contributed to them, but in the main they are the result of this administration’s poor performance and ideological bent.
THE ENTITLEMENTS
Social Security, Medicare, and the New Health Care Program
Entitlements have created most of our huge national debt and continue to push us deeper into debt. With the advent of the new Health Care Program, this is only going to get worse. Things like Medicare and Medicaid and Social Security are draining our economy at an alarming rate and it must be corrected if we are to survive.
Entitlements were originally conceived to create a floor under our society not a ceiling but today they have both become anomalies inasmuch as those who need help the least get the most while those who need help the most get the least. The reason for this is obvious: those who get the most put in the most and those that get the least put in the least. But that makes them like savings plans rather than entitlement programs and that’s not what they were intended to be. Therefore, changes are needed and they won’t be well received. But we need them anyway – no matter how much it hurts. We take a little pain now or a great deal of pain later. That’s our choice. With that, I begin.
STRAIGHT TALK THAT YOU MAY NOT LIKE.
To begin with, let’s expose a number of very irresponsible and ill-considered ideas:
(1) That each of us lives in this world alone and is responsible only to himself for survival;
(2) That we need not care about others as long as we take care of what’s ours;
(3) That we are not so much a part of a society as we are individual self-sufficient units and not our brother’s keepers;
(4) That we have pulled ourselves up by our own bootstraps and owe nothing to anyone; or that
(5) Our only duty is to our friends, our families, and ourselves.
That is all absolute nonsense.
To begin with, none of us lives in this world alone and we are all responsible for [and dependent on] lots of other people for our own survival. Another way to say it is that no man is an island. Like it or not we all in this together. No matter how you “pulled yourself up by the bootstraps”, you didn’t do it alone – you couldn’t have done it alone.
For example, you go to the store and buy food but for that food to be there, others had to struggle to raise it, harvest it, process it, transport it, and then staff the store where you can buy it. Without the combined efforts of all those people, there would have been no food there for you to buy.
Your house catches on fire. Are you going to run out with a bucket of water and splash it on the flames to save your home or are you going to call the fire department? Obviously you are going to call the fire department. And who is going to respond? Will it be just your friends and your family members? No, firemen – people that you don’t know - are going to respond. And who are those firemen? Well, they are working guys who are paid to perform this vital function on your behalf. They are members of the society who have come to do for you what you cannot do for yourself. IF you lived alone on a mountaintop, your house would burn to the ground and maybe your family would die. But you don’t. You live in the arms of a collective society and that society provides collective services for everyone’s good.
Ever wake up in the middle of the night and swear you hear a noise downstairs? You are sure someone is in your home – the home where your wife and kids are sleeping? Do you get out a baseball bat and go down to do battle with the invader(s) one-on-one or one-on-two? I hope not. A better and safer idea is to pick up your cell and call 9-1-1- for help and hope to God the help gets there in time to save you and your family from harm.
Those are a few examples of what this society does for you. There are many others. For example have you or one of your loved ones ever found yourself seriously ill and rushed to an ER? If so, once you arrived, did you not find a dedicated group of working people there ready to take care of you or your distressed loved one? Of course you did. Society provided them. Just as it provides doctors and nurses for our health care when needed.
Do you drive? Fine and do you ever think of the number of people that contributed to making that car available for you to buy? There are too many of them to mention here but they include people from all walks of life and all income levels. Without them there would be no car for you to buy no matter how much money you have.
My point is that you are not in this by yourself. It is not you against the world. You are not the only one responsible for your current status no matter who you are, or what it is that you do. Even if you attended a University to acquire the knowledge that you used to become successful many dedicated people at that University had to be there to help you along the way.
The truth is that we are all mutually dependent one upon the other and though some are more privileged and others less so, we each need and depend on one another for our very existence. We are indeed our brothers’ keepers.
Which brings me belatedly to my subject which is our failing economy and our national debt and our imminent collapse as a nation and what we may have to do to save our society for ourselves and our children. After all, we do want to give to them what was given to us, don’t we? We want to give them a shot at a happy life, don’t we? Of course we do. Well then, it’s time to make some hard decisions. I am confident we can summon the will to do so.
There are two steps we must take to begin to right our ship: (1) we must reduce government spending no matter how hard that is and (2) we must increase revenues and use that money to pay down our national debt no matter how hard that is.
Let us begin with a look at our principle entitlement programs: Social Security, Medicare and Medicaid. They are our biggest problems today and will be even worse tomorrow with the new Health Care Program. I can imagine how many of you are going to react to what I am about to say but that doesn’t matter because I can’t see any other way to accomplish what we have to accomplish - so here goes:
(1) Establish a means test for all entitlements. While everyone must contribute during their working years, sadly not everyone can take out when they retire. Nor does everyone have to take out when they retire. These programs should serve those in need and not be treated as national savings programs, which they are not.
(2) Eliminate the maximum cap for FICA withholding during the year.
(3) Extend the age for retirement and Medicare by another 2 years.
(4) Get the federal government out of the business of business.
(5) Reduce all government staffing by 5% a year for three consecutive years. *
(6) Reduce government wages by 5% a year for three consecutive years. *
(7) Pass the Presidential line-item veto.
(8) Pass legislation limiting the number and dollar amount of “earmarks” any legislator can request during one full term based on the size of the population district he or she represents.
(9) Encourage the formation of more open-to-the-public health care clinics in distressed neighborhoods.
(10) Make changes to our “welfare” system to reduce systemic abuses.
(11) Pass a flat tax to replace the income tax.
Here are some suggestions to accomplish these difficult tasks:
SAVING OUR FLOUNDERING ECONOMY
THE ECONOMY:
The problems with our economy seem to be magnifying daily. They are now beyond special interest payoffs. They are beyond politics. They are beyond taking care of your support base or even your campaign contributors. It is now about our future as a nation and the future of our children. In all my 80 years, this is the worst mess I have ever seen. And it’s not over yet, not even close. Soon, another explosion in real estate will hit us, this time commercial real estate like shopping malls. Their ARM’s are coming due. When that hits us this spring (2010), it will cause still another blow to our ailing economy.
We must do something now so here are a few suggestions that might help:
1. Option #1. Continue unemployment compensation until the unemployment rate gets down to 6.5%. In the interim, introduce legislation encouraging out-of-work people to take jobs even for less money that their compensation check offering to issue them a check for the difference. This should be a three-year program so as to give workers a chance to adjust to lower paying jobs and perhaps earn an increase. As a by-product this will reduce government unemployment payments by as much as 75% for each worker that elects to avail himself of this offer.
2. Option 2. Allow those who are receiving workman’s compensation checks (usually about 40% of their former income) to work in part time jobs and earn up to 1/3 of the amount of their compensation check without affecting their eligibility. This will help them to meet their bills.
3. Re-introduce the old “Schedule-G” type IRS allowance for income averaging going back three calendar years for businesses and the last three years of employment for individuals. For individuals, if their average income for the last three years of employment is greater than the current year, the difference will be subtracted from the current year’s AGI. This is directed at those who have lost their jobs and had to take new jobs for less money. It will help them over the adjustment period.
4. Establish a 3-year program where lenders earn a .05% tax credit on each new or re-refinanced mortgage they issue at a 4.5%. This reduced interest rate will help the real estate market for new home sales as well as prevent foreclosures by lowering carrying charges. It will also have the effect of revitalizing the economy permanently because refinancing of existing mortgages at the lower rate will put more money into the economy on a monthly recurring basis unlike one-time spending from a stimulus check. Speaking of stimulus payments, let’s have one more for $600.00 per family. BUT – and this is a big but – it will not be cash. This must be in the form of a purchase VOUCHER. The vouchers will have a 120 day expiration date and will be transferable (we don’t care). However, the vouchers can only be used for the purchase of LOCAL services and/or the purchase of durable goods that are manufactured in the United States. (Not “Made in America” because that includes Canada and Mexico.)
5. GAMBLING. Hundreds of billions of dollars are now being spent in Casinos around the country and that money is ruining local businesses everywhere. They say “oh yes, but look at all the people we employ”. That’s true but it would be well to remember taking billions out of local economies and from small local businesses causes lost jobs in those businesses which more than offset the increase inside the Casinos. Plus the money spent with local businesses has a residual affect among their suppliers that is not present to the same degree when the money is spent in a Casino. It’s time to ask ourselves what kind of society we want to be. Once we limited Casinos to remote locales where people vacationed. That was much better than what our shortsighted states are doing now in their misdirected quest for tax money. You can’t build a healthy society with Casinos on damn near every street corner (and yes, I do gamble). We need to return to the old way.
6. Online Shopping: This is another attack on our local communities. With no need to maintain attractive stores in local neighborhoods, or hire local employees, online marketers can offer products cheaper. We buy them and that takes business from our local entrepreneurs causing them to shut down with a resultant loss of local jobs. Soon our downtown areas become blighted as local money flees the local community. This is not going to work. Having a vibrant, orderly local society provides it own reward. I propose we increase the taxes on profits from out of town (or at least out of state) marketers in order to level the playing field. We need to reinforce our communities. When communities collapse, nations collapse. If we are a society and not just a bunch of moneymakers, we need our local communities to remain viable and to achieve that, we need our local businesses to be successful. It is committing suicide for us to be so generous with out-of-town marketers whether they are from another country or just online.
7. The world is shrinking. We can’t stop that. But it is also causing us a giant problem: we have to compete with cheap foreign labor and nations that have no environmental laws, no health insurance mandates, no unemployment insurances and no labor laws. All these regulations tend to increase business costs so the lack of them decreases costs and that allows them to lower their prices and undercut our businesses that are faced with all those costs. So what do we do? There are two possible answers: (1) find ways to help our companies and (2) impose duties on imports based on the direct labor costs of the products being imported. I have never supported duties before but today, I think I would. We import so much more than we export that duties can only help. So they have become a short-term viable option. Now, here are some other ideas that might also be of help.
8. Reduce corporation tax rates based on the number of workers employed in the United States as a percentage of this company’s worldwide employment. The more Americans you employ here, the less tax you pay.
9. Immediately transfer 3 billion dollars from the unspent stimulus money to the SBA for DIRECT loans to small businesses for startup or expansion. This is NOT to be a minority welfare handout, this is to be a sound business program lending money to entrepreneurs with going businesses or business experience married to a sound business proposal. I repeat: this is not to be another welfare program handout.
10. Encourage Americans to buy products manufactured in America wherever possible. Public service ads explaining why they should might help.
11. Increase the minimum wage by $1.00 / hour.
GOVERNMENT vs THE PRIVATE SECTOR: The workers doing the best these days are government workers. They make twice as much money on average as the people who pay them - the taxpayers – and they have better health insurance and better pensions. Plus they actually work 1.8 hours less a day than their civilian counterparts.
There is a reason that of the 10% of American workers that are unionized, 70% work for non-profits (that’s a joke) or for the Government (a bigger joke). Can you tell me who represents the taxpayers in wage negotiations between government managers and government workers? Both are using OUR money so where is our seat at the table and where is the incentive to increase productivity or lower payroll or install cost cutting measures on the part of these government workers?
The more people that we put to work in government in America, the more certain we are of failure. The sector that pays the bills should be the biggest by far and the sector that spends the money that creates this debt needs to be as small as possible. So why are we all so hell bent to increase the size of the spenders (government) at the expense of those that produce (private sector)? Can you show me any country in the world that ever prospered with this philosophy?
It is past time to stop spending money like drunken sailors. We need to cut the size of government not expand it. We need to reduce payrolls in government. We need to cut back downtime and increase productivity. And we need to bring their benefits into line with what workers get in the private sector doing the same kind of work. Government is not SUPERIOR to the private sector it is INFERIOR. That’s why the private sector far out-produces government.
Working for the government is a great job. My friend has been working for a State government for 22 years now. He makes $100,000.00 doing a job that would get him about half that much in the private sector. He has a great pension plan and wonderful health insurance. All paid for by taxpayers who are not nearly so well off as he is. And do you know what he says to me? He says, “anyone who doesn’t work for the government is a sucker!” He’s obviously right. It is therefore past time to reign in the government. As defined earlier, it is time to reduce both staff and salaries for all government offices by 5% a year for the next three years.
We are in a real mess and it’s just getting worse. Confidence is the basic motor for an economy and that’s what we don’t have today. Our people rightfully have no confidence in the future and that’s sad. Well, other than people working for the government. They are so isolated from reality it’s not even funny. That’s because they really don’t have to worry about losing their job as the rest of us do. Sometimes I get so confused: who works for whom again?
I care about Americans and about America and I am prepared to throw anyone – ANYONE – out of office that doesn’t have the same priority that I have. Mine is SAVE AMERICA. It’s far and away the best country this world has ever seen even if half the Obama appointees don’t seem to know that. But that doesn’t matter because they aren’t going to be around much longer anyway. If they don’t change their ways, we are going to throw them all out of office ASAP.
Count on it.
Now for some recommendations concerning other vexing problems.
JOEY
Welcome to Joey’s Newspage, where people come to exercise their minds
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