We Can Still Repair This Broken Economy

Repairing the broken economy would be an easy homework assignment for any sober, realistic economist. We can fix this broken economy but we desperately need

United States Bureau of Engraving and Printing...

United States Bureau of Engraving and Printing – 2012-03-15 (Photo credit: dctim1)

Congress to grow up. The main problem with the U.S. economy is the intrusion of politicians where they don’t belong. Politicians are simply not equipped to search for, much less implement solutions. They exist to curry favor with their constituency so that they can keep their job. Everything bad about politics stems from that one overwhelming reality, so to actually fix the economy Americans must come to their senses and understand that the alternatives to resolving these problems quickly is calamitous at best.

The Deficit

Despite what Ronald Reagan (“I am not worried about the deficit. It is big enough to take care of itself), or VP Dick Cheney (“Deficits don’t matter. Ask Ronald Reagan)  THE DEFICIT DOES MATTER. But it’s not the most important aspect of the economy when we’re in the down cycle of of the ebb and flow of economics.

If for no other reason than perception, the imagery that surrounds the size of the U.S. debt load must be addressed.

I have laid out a comprehensive plan plus the implementation methodology necessary to accomplish reduction of the long-term deficit that has to be addressed. Yes, The One Penny Solution is a VAT/Surcharge whatever you want to call it, but that’s what it is. However, it is not a typical VAT (Value Added Tax) because it addresses:

a)     A static amount of debt to be agreed upon by all parties, be it pay off the debt entirely or to simply a more manageable level

b)     A way to reach that goal with a dedicate revenue stream that is out of the reaches of politicians unless a national state of emergency is declared

c)     It ends once the goal is achieved.

In my opinion, removing the possibility of any political hijacking is the most important aspect. After all, George W. Bush wrecked our economy with two unfunded wars financed with IOUs issued to the Social Security Trust Fund without the knowledge of the electorate. If you don’t believe it just click  on the Plan’s name highlighted above because I’m not going to restate it here. But it WILL WORK if  it’s FULLY implemented and it won’t be as hard on Americans as the two most likely alternatives; Civil War 2.0 or Great Depression 2.0.

Go with the VAT.

Jobs

Conservatives must understand that government is ok, and that the policies of “anti-government ideologues” would only exponentially exacerbate the most destructive trends of the last thirty years. We simply have to man up and tackle the problem for a relatively short time. And we have to put the recovery ahead of partisan politics. Liberals will not like it, but there are other bullets to bite:

  1. We need to repatriate (bring home) the profits that are currently stashed overseas because, like it or not, the U.S. has the highest corporate tax rate in the world(35%). Give companies a deal. I don’t like the word “amnesty” and I don’t think a free pass is warranted, but most estimates place the amount stashed between $1 trillion and $2 trillion dollars. A one-time “repatriation tax” of 10%-12% ought to do the trick in bringing it home.
  2. Make #1 contingent on the companies having their headquarters in the United States for the next 25 years so that jobs come back along with the return of the money to the U.S.
  3. If a company is able to prove they will use their repatriated profits to create new jobs in the United States, the tax rate should be dropped all the way to 0%, but corporate welfare (subsidies) must be stopped as well to allow for an actual “free market”. Handing out subsidies to favored industries is a prescription for corruption and abuse and they are counter to the principles of true capitalism.

Other Major Economic Concerns Easily Solved

  1. Homeowners that have made the effort to retain their homes should be made whole in at least a moderate principal reduction if they are underwater on their mortgages.
  2. Prosecute the money-laundering banksters that have stolen pensions, IRAs, 401(k)s, and life-savings from Americans(see LIBOR, Bank Scandals, and Investment Scandals). Put them in jail AND fine them. My absolute biggest disappointment in President Obama is that there hasn’t been a single perp-walk for the executives who caused the 2008 crash.If corporations are people then let’s quit letting them skate with fines. Jail time for a few banksters will go a long way.
  3. Investment in green jobs,failing roads, bridges, and the electric grid are a national security priority. If the national debt is being addressed with the One Penny Solution, find the funds to implement the real job-creation like they did during the Great Depression. A mere fraction of the waste and fraud in the defense budget will do it.

Energy

If the profits being held overseas are repatriated, investing in something other than fossil fuels has to be addressed logically. If we laid solar panels end-to-end in a 10-sqaure mile area in any western desert, enough energy would be generated to supply the entire west coast. Throw in solar and we can lick our energy problems on both coasts. But as long as the U.S. continues to be the world’s biggest sucker by paying through the nose for oil that we could do without, we deserve what we get.

Germany has successfully converted 45% of all homes to solar panels. The reason it’s so popular is that for people willing to heat and cool their homes with solar panels can sell their excess energy back into the grid. Each and every home with solar panels becomes a new energy entrepreneur. When you pay that many people to figure out how to save energy, they’re going to come up with some ideas never before imagined.

At the very least, business buildings’ rooftops should be painted white to cut down on energy costs for which they would get a tax break.

Extreme Partisanship–It’s Got to Go 

Of course all of the above is dependent on Congressional action but Washington is tied in knots and totally consumed by partisanship among people who are supposed to be doing what’s right for America–not their own careers. Apparently a large segment of the country seems to think that extreme partisanship is a game. If it is and if it continues, we are going to lose everything.

This spurring on by constituency enables a Congress, with the lowest favorability rating in our history, to continue doing very little. Politicians have been enabled by the voters to fight battles over politics and ideology rather than encouraging debate or  passing the legislation needed to create jobs, and regulate the corporate entities that got us into this economic mess in the first place. I could be wrong, but one thing Americans don’t like are ultimatums and that is what the Republicans and Tea Party are offering-Ultimatums using the American people as human shields.

These are not insurmountable problems, but “we the people” are complicit by becoming extreme enablers. If we continue to go to the polls and elect men and women behaving like petulant children, we have no one to blame ourselves for the consequences.

Don’t let these couple of hundred men and women bring down the entire country for the sake of one-upmanship.

We deserve better, so demand it. Vote!

 

Harvey Gold

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