The U.S. Economy: What Happens on November 7th, 2012?

 Since it’s election time, with all the expected bickering, shouting, blaming and finger-pointing that comes with it, my question is this: regardless of who wins, what happens on November 7th?

A few weeks ago, I wrote an article showing in very clear detail illustrating that the GOP campaigns going back over a generation have not changed. Moreover, both Republicans and Democrats are simply mired in the past. With shockingly little honest debate taking place about economics in a recession that is barely crawling to recovery, politics has transformed the debate into some kind of bizarre time machine. And the right-wing ideologues for small government fail to recognize that we simply cannot make the math work by cutting spending without sending hundreds of thousands of people to their graves.

We can certainly find areas to cut government spending, but the only serious economic answer to our problems is that we need new revenue sources that are FREE FROM POLITICAL MANIPULATION FOR VOTES.

If nothing else came out of the two parties’ national conventions, this struck me as the current condition of our two-party political system: the race became clearer but the actual policies became muddier.

Mr. Romney did not deserve, nor did he receive the usual convention “bounce,” while Mr. Obama received a moderate bounce. The bounce will dissipate, but Mr. Romney still faces a much harder uphill climb. The FiveThirtyEight blog now gives President Obama an 80 percent chance of winning. The last conceivable remaining chance for Mr. Romney is to do some serious damage to Mr. Obama in the upcoming debates. This week, Mr. Romney’s campaign has promised that they will start laying down details for the infamous five-step plan that this wizard-of-wall-street says he’ll implement because the plan is bold, it’s a proven winner, and he knows how to implement it.

The only problems with the Romney campaign’s claims are that :

Mr. Romney’s five step plan, as I explained in “Romney’s Economic Plan–Shhh It’s Not Really His”, is the exact same five step plan that George H.W. Bush promised before he became president. It’s the same plan that George H.W. Bush promised when he got beat by Bill Clinton, the same plan that George W. Bush promised for eight years, and the same plan that John McCain promised during his campaign. 

And President Obama, if he wins re-election, will actually have to fashion a set of policies and a governing strategy for the next four years. Therein lies the problem. Neither candidate, nor convention, offered a single mention of useful economic policy.

Yes, President Obama has harped on raising taxes on those making over $250,000. And Yes, there’s Mr. Romney horribly vague five step plan. But neither is sufficient to make a dent in any or our immediate, not mid-range economic problems. They just do not add up mathematically to anything remotely adequate to place the U.S. in a position to improve the overall economy.

Hard Choices

The ideological center of both parties seems to believe that a return to the 1950s is the viable direction to take. Both conventions and both parties have already rejected the idea that there actually are hard choices that are going to have to be made. I’ve long tried to ignore politics because I always felt that any system that allows the “makers of law” to enact ALL laws, even those that benefit themselves, is doomed to failure unless the electorate stays engaged enough to hold these lawmakers in check.

Inevitably, and despite the right-wing’s supposed love of the “free market” and “capitalism”, we in America enjoy neither.

A “free market” system is defined as an economic system in which prices of goods and wages for labor are determined by unrestricted competition between businesses, without government favoritism or fear of monopolies.

As long as there is a single government subsidy, as long as lobbyists are allowed to bribe lawmakers in order to gain favor for their causes, as long as the Sherman Anti-Trust Act is routinely ignored, we do not have a free market economy. 

And neither of the conventions offered up any view at all of the future beyond the election. Neither party can come to grips with real policy or choices about the future because they are both caught in a cage fight to the death about the past.

Taxes and revenue are perfect examples. The right-wing hates the idea of more revenue because it views government as enemy number one. This philosophy dates all the way back to Revolutionary times when one group of colonies wanted to answer to no one but themselves and wanted states to hold all the rights. This group initially produced the Articles of Confederation as the new country’s stated principles for going forward. The left wants more revenue and a centralized unit of government, which George Washington eventually decided upon when he could not even get the thirteen colonies to agree on a meeting time or place to discuss the country’s war and business plans.

And neither side seems to care much about what ought to be the goal: equitable, sustainable growth.

Solutions Have Taken a Back Seat

Some truths about the current tax system: It is immeasurably excessively complex, it is inefficient, and it doesn’t raise enough revenue, which will be necessary even after you make allowances for substantial changes in today’s entitlements. But the obvious fact is that we have reached a dead end with the income tax. 

The Romney tax plan, which simply assumes there is an entire class of people in the country who will learn to accept being second-class citizens that will be thankful for any scarp of meat the upper class wants to “trickle down” upon us. The GOP would be fine if we could just go back to 1923; when women knew that their place was to cater to the men-folk, spread their legs whenever a man felt like it was her time to do so, and be damn happy with squeezing out a child or two. People of color should be happy for whatever menial job was tossed their way and rich white men could do whatever they wanted, whenever they wanted and to whomever they wanted.

That won’t happen. I’m sorry fellas, even buying Supreme Court Justices, Governors, or making Republican Congressmen sign some stupid oath to never, under any circumstances raise taxes or be considered un-American cannot ultimately return us to those “glory” days for old, rich, white guys.

The Obama tax plan doesn’t come close to a solution, even after you assume that the affluent pay more, as they should. It’s just not enough money. It’s great for a populist campaign, but what happens afterward? We are not going to change the big deductions very much, so the base-broadening strategy won’t work. And not even Paul Ryan is willing to put out the details his budget glosses over. So we are going to need new revenue sources — and as it happens, I have a suggestion.

The First Step

As with any difficult problem, taking the first step is always the hardest. There is, on this web site, a plan that does that for the country. It tackles the problem that we have accumulating for a century. And like any other recovery plan, whether it’s weight-loss, smoking, alcoholism, or any other “ism”, it’s going to mean changes.

The One Penny Solution would be disliked by everybody but given the seriousness of the world, not just American economies, it is the ONLY viable solution that  I have seen anywhere that would actually work.

We should also consider a carbon tax. A carbon tax would raise substantial revenue. A recent study by M.I.T. estimated such a tax at about $30 per ton of carbon would yield $1.2 trillion over the next decade. A carbon tax would be the single most important step we could take to slow global climate change.

Now is the perfect time, as the energy revolution America is going through, although one would never know it by the amount of media coverage it gets, provides some actual pricing flexibility for a tax. We can make this change and have a cheap energy platform for the next American economy.

Would these two changes solve our debt/deficit problems? Of course not; we are still going to have to cut the growth of spending and raise revenues. But they would put a sizeable dent in the problem, make economic growth much more sustainable, and provide some lubrication for a possible bigger fiscal deal.

There are simply no other ideas out there that will change our course enough to avoid hitting the real iceberg…another Great Depression.


Harvey Gold

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