Back in the mid-1990s, an old boss of mine and I had a lively discussion about the economy. I argued that a service economy is a loser economy and that we needed to build and make things. He told me that information technology was the wave of the future and that we didn't need an industrial base anymore. Information was the key to everything.
We see this same "do just enough to fill their bellies" attitude in the so-called "shovel ready jobs" for public works that the Obama Administration is pushing. In reality a fraction of this money has been spent in anticipation of the later purchase of votes in the fall elections in key states. The big contractors will get the lion's share of the monies while workers will get just enough to keep up a few more payments on their houses or a maxed-out credit cards. Once the project is done, the politician has his or her legacy (by using other people's money) and there is another monument to governmental ineptitude.
What is needed right now, to paraphase the munificent Obama, is a "laser beam" focus on creating a new industrial base in this country. But that won't be easy because we've outsourced manufacturing to the third world, India, and China. We cannot do it by legislative fiat and order businesess to return to the United States. All that's left is the make work public sector jobs.
The public sector labor union AFSME says that we must invest more in public sector services to create a robust private sector! According to AFSME:
The public sector labor union AFSME says that we must invest more in public sector services to create a robust private sector! According to AFSME:
“President Obama addresses the nation tonight [NN: i.e., The State of Confusion address!] after pulling the American economy back from the brink of a second Depression. Unfortunately, we have learned in the past year that the American Recovery and Reinvestment Act (ARRA) was not big enough to stimulate a full-scale recovery. Unless we act now, more Americans –- including nearly a million public employees –- could lose their jobs as current federal investments run out and the vital services Americans need during tough times are cut to the bone. There simply won’t be an economic recovery if Washington turns its back on Main Street USA. [NN: Investments? WTF!?]
“Economists from all sides of the political spectrum agree that one of the best ways to save and create American jobs is through vigorous investments in public services. For example, respected economist Mark Zandi, a former advisor to Sen. John McCain, estimates that every dollar invested in public services yields $1.38 in economic growth. [NN: Did you ask supply-side or Libertarian economists about this assertion?
“Investing in public sector jobs creates jobs in the private sector. Federal funding is needed to keep our streets safe, our children educated and our families in good health. As living, breathing engines of economic development, AFSCME members urge President Obama and members of Congress to focus like a laser beam on saving and creating American jobs by including robust investments in public services in any upcoming jobs legislation.” [NN: Here's the payoff to the public employee unions.]
Talk about a self-serving and an infinitely stupid approach to the economy. Spending money that you don't have to make money. This is like borrowing money to bet on blackjack. Keynesian economics has never worked anywhere, anytime, or anyplace. The last time it was used on a broad scale was in the 1970s during the Carter malaise. For those not educated in the public school system since 1970, we all know the result of Carter's deficit spending. It's seems that we don't learn the lessons of history very well.
Obama's stimulus package is the same tired "solution" but on a far grander scale. Just as in the 1970s when I worked as a student intern the Office of Intergovernmental Affairs for a California county, the only permanent jobs that I saw created were in the public sector. This time the job creation is more insidious because the government jobs that are being created by Obama's stimulus package is nothing more than a political payoff to the SEIU public employee union.
So what do we do? The tax code must be oriented toward rebuilding America's industrial base and retiring the Federal debt.
1. Exempt the first $10,000 of Gross Income from taxation that is placed in a designated liquid tax savings account. The final figure for purposes of determing the tax exemption would be determined by the same method used to determine the average daily balance for your credit card balance. The difference is that the figure would be determined on an annualized basis. Because the account would be liquid, it would available without the penalties associated with withdrawals from other time deposit accounts. The only penalty to the taxpayer would be a self-imposed one that would reduce the size of the tax exemption if any funds are withdrawn prior to January 1st of the succeeding tax year. The net effect of this proposal would be to provide real funds to financial institutions and not loaned Federal fiat money. The banks in turn could loan these real monetary funds to the real job creators--small businesses. This expands the money supply in the purest capitalistic way without any government bailouts or loans. You can almost hear the class warfare stooges saying that the exemption favors the rich. So what if some "wealthy" people get a $10,000 exemption? Isn't their money just as good if used to benefit the entire nation? This proposed investment tax treatment also makes any tax savings savings bank account an attractive investment for every economic level. More importantly everyone, poor, comfortable, and rich alike would have the incentive to save and provide their own tax cuts. Warren Buffett and Bill Gates have sheltered their fortunes through charitable foundations. So why not have a shelter for the the rest of us? Of course this would take a lot of power away from the Federal Reserve Bank, but quite frankly they've done a lousy job of managing the money supply and the economy.
2. Provide for generous capital gains treatment and accelerated depreciation for all domestic AND foreign companies that construct or significantly improve factories located or constructed within the United States.
3. Provide for a sur-deduction of ten percent of the average monthly salary plus the monthly base salary of non-management employees. The caveat to this deduction would be that the (1) employee must have worked for a minimum of 180 days in tax/calendar year and have not been terminated for cause or laid off, (2) Have the absolute legal right to work in the United States, and (3) have actually worked a minimum of 90% of the employment period. There will be no exceptions to requirment (3), including illness. Temporary and seasonal help would be excluded from eligibility for the sur-deduction.
4. Place a 12-month moritorium on NEW applications for immigration visas and citizenship. Those already in process may continue. Hardship and refugee cases may be considered on a case by case basis.
5. Under no circumstances shall unconditional amnesty to illegal immigrants be granted.
6. All costs for expenses incurred because of illegal immigration shall be collected from the country of origin and not the Federal government. Jurisdiction for a new Federal cause of action for state, local governments, and other entities that have provided uncompensated services and goods to illegal immigrants shall be in the Federal Court system in the Court of Claims.
7. American English shall become the official business language of the Federal government. This means that all official Federal documents and voting materials involving any Federal election shall be published in American English only. States and local governments may continue to use multi-lingual ballots, but only for local and state elections. The purpose of this measure is to prevent the balkanization of the United States and to provide a unifying factor that will assist in economic growth.
8. Immediately end all bans on offshore drilling and nuclear power construction. We have denied ourselves a plentiful energy source because of a stupid movie, The China Syndrome and one oil spill. The Liberal-Fascists are Luddites when they talk about the illusory green economy and its windmill retro-technology.
9. Immediately commence an investigation into the accounting procedures and practices of Freddie Mac and, in particular, Fannie Mae that resulted in former head Franklin Raines to reap $93 million in bonuses. This money be recovered and paid back to the American taxpayer. This would go a long toward restoring confidence in the stability and integrity of the American economy.
10. Term limits for every Federal office. No one should ever have a lifetime office or job. This results in the decline of innovation if the same tired approaches are allowed to entrench themselves. Two four-year terms for the President, two six year terms for Senators, four two-year terms for House members, and 16 years with a right of reconfirmation for all Federal judges. The reason for 16 years is because Americans voted in 1944 to give the First American Fascist Dictator, Franklin D. Roosevelt a fourth term as President. That was the last time that Americans spoke on the issue of term limits on the Federal level. For too long, we had plutocrat Liberal-Fascists like Obama, Kennedy, Soros, Buffett, and Rockefeller deconstructing selected aspects of the American economy. It is time end this economic tyranny.
If you think that you've seen this before, you have. It's a part of a new Contract with America that I wrote about some time ago. Maybe if I say the truth long enough it will be believed.
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