Archive for the ‘8. Jobs & the Economy’ Category

IS CAPITALISM ETHICAL? DOES SOCIALISM WORK?

Bernie Sanders, Kamala Harris, Elizabeth Warren and many politicians as well as academia advocate Socialism; the National Debt doubled…increased by $10 trillion to $20 trillion during President Obama’s 8 years; annual Gross Domestic Product growth under 2% for Obama’s entire reign; …ad infinitum.  Was Capitalism to blame for America’s woes under President Obama or has President Trump proven that Capitalism is the solution to our Nation’s economic problems?

Let’s take a closer look, first with very brief definitions of Capitalism and Socialism so we’re clear on what we’re talking about.  From the book, ‘isms and ‘ologies by Arthur Goldwag, Capitalism is the “free exchange of goods in a competitive marketplace.”  In that same book, “Socialism” is defined as the opposite of Capitalism.  Further, “In socialist economies, the means of production are either controlled by or directly owned by the state…” European and Nordic countries are not socialist, but simply are capitalist countries with many welfare benefits and healthcare.

Capitalism is fueled by a motive to make profits and it does this by providing goods and services that consumers want and at a price that can beat competitors’ prices who also provide similar goods and services.  This forces capitalists to constantly improve quality and undercut competitors’ prices.   Socialism eliminates the profit motive and therefore satisfies some people’s altruistic side and also attempts to redistribute wealth from the “haves” to the “have-nots,”  satisfying some people’s idea of fairness.  Because in Socialism there is no continuous need to improve efficiency and effectiveness, there usually is significant waste and inefficiencies.  Capitalists would argue that they earn their profits, attending college for many years and then working 70-80-hour workweeks… and it’s their taxed profits that enables government to have the money to help others.

Capitalism creates wealth,  which then is taxed and used to help the poor and needy.  Socialism makes equality of outcome most important, consequently leading to everyone being equally poor with no large sums of funds available for government and charities to help those in need.  Socialism takes away the incentive for people to work hard and excel to provide for themselves and their families.  The top 10% of the wealthy pay 70% of all Federal taxes.  The lowest 50% of taxpayers pay about 2% of Federal income taxes.

Government is usually the culprit behind much fraud, unemployment and economic downturn and  is responsible for our current economic woes.  Loans to people unable to repay them was the precipitating event that caused the 2007-8 economic downturn.  Quasi-government Fannie Mae and Freddie Mac forced banks, with threats of lawsuits, to make those bad loans.  Therefore, to have the government fully control the economy is insanity.  Government does not understand business, does not understand how jobs are created, does not comprehend how many of its regulations, especially “Obamacare,” are destroying the economy.

The Dodd-Frank Bill, proposed by and named after two of the most significant initiators of the 2008 economic downturn (Congressman Barney Frank and Senator Chris Dodd), was truly absurd.  For all of its harm to small banks and to the economy, it didn’t even address the cause of the downturn, Fannie Mae and Freddie Mac.

So, let’s answer our two basic questions, “Is Capitalism Ethical”, “Does Socialism Work?”  Capitalism is a huge engine for job creation and wealth to the extent that the Pacific Rim countries have embraced it, as well as China (and they are all becoming wealthy fast)…and there’s nothing unethical about making a reasonable profit for providing goods or services.   Socialism, on the other hand,  can be forced to work, but at the cost of civil liberties, prosperity, unemployment, and political interference in all aspects of your life.

Finally, how about some people becoming billionaires?  Is it ethical for anyone becoming that wealthy?  Huge wealth is certainly a possibility under Capitalism.  However, very wealthy people pay most of the taxes and also give much of their wealth, after providing for their families,  to charities, which use it more wisely than the government ever will. Finally, if you still have a problem with Capitalism, then call it “free enterprise” which means the same thing but is more descriptive and uncontroversial.  And if you’re still unconvinced if socialism works or has ever worked, just check out what’s happening in Venezuela, and if you think Socialism is great, then continue to vote for Democrats and be prepared for the continued decline of the United States.  On the other hand, keep an eye on the Trump economy to see what capitalism can do.

 

 

HOW TO PAY OFF THE NATIONAL DEBT?

The United States currently owes $26 trillion, $3 trillion of which President Trump needed to  spend to help the U.S. to recover from the Corona virus lockdown of the economy. This debt is an albatross around the neck of the Country and there is little likelihood that it will be even partially paid off anytime soon…or is there?

The richest country the world has ever seen, sitting on top of  huge untapped oceans of oil, natural gas and coal, as well as millions of square miles of publicly-owned land, and we’re the beggars of the world, owing trillions of dollars to China, Japan, and many other countries, including our own Federal Reserve, which creates money out of thin air.  This picture doesn’t make sense but what can be done to change it?

There are many proposals floating around to help address this problem, from a fair tax to a flat tax and the “Penny Plan”.  Ohio Governor John Kasich paid off billions of Ohio’s debt by cutting ineffective programs.  Former Wisconsin Governor, Scott Walker, cut government programs and also stopped the Union practice of letting outragiously expensive Union contracts.  Former Florida Governor, Jeb Bush, created many jobs and took Florida from billions in debt to billions in surplus.

Various plans have been tried, some with dire consequences, like the “Sequester” that President Obama suggested and Republican leadership agreed to.  The Sequester had been devastating to the military because it cut budgets across-the-board, both good programs and bad.  There are many expensive Federal programs that are ineffective and do little or nothing, have been around for a long time, and need to be terminated.  Some programs simply need to be revised in order to make them effective and efficient.  But any revising or terminating requires a strong leader. That’s why the 2016 Presidential election was so important.  Not many leaders would cut ineffective government programs and also expand production of, and then sell off, oil, gas and coal to other countries and perhaps sell surplus public land to its citizens, but President Trump has begun this process and will continue to do so to pay off the National debt.  He must wait until after the 2020 elections because cutting government programs is unpopular and President Trump would therefore probably not be re-elected if he started cutting programs before then.  Bringing back trillions in cash currently “parked” oversees by American corporations is also greatly helping now that the U.S. corporate tax has been reduced from (highest-in-the-world) 35% down to 21%.

If the United States doesn’t get its spending under control it will most likely be piled onto the ash heap of great countries that spent their way into mediocracy.  This requires President Trump and a Republican House of Representatives and Republican Senate together in order to end those Federal programs that are not helping people.

CAN PRESIDENT TRUMP CREATE JOBS & GROW THE ECONOMY AGAIN?

After most recessions, Gross Domestic Product (GDP) growth comes back with  a strong minimum 5% increase/year.   But not the recession of 2008-09…annual growth averaged under 2% for the eight years that Barrack Obama was President and the Civilian Labor Force Participation Rate diminished to 62.8%, the lowest it had been since 1978.  Moreover, although the official unemployment rate was under 5%, it would have been about 12% if it were measured the way it was back in the year 2000, and over 20% if it were measured the way it was during the Great Depression in the 30’s.

So what happened under President Obama?  Why not the usual strong growth?  Business had  a few trillion dollars that it held onto oversees, so why didn’t it spend its money to expand its operations and create millions of jobs in the U.S.?  There’s a lot of  reasons why business was cautious in expansion…and we need to understand what the problem was in order to continue to turn around today’s economy and foster substantial job growth (and the increased tax revenues that come with job growth).  Of course, the Affordable Care Act (“Obamacare”) is filled with disincentives to job growth, especially full-time jobs, so it was partially responsible. The large number of regulations and tax increases under President Obama also added additional burdens on job creators and that’s another major cause.

But who am I to be pontificating on jobs and the economy?  Well, I do have a masters degree in Government Administration from the University of Pennsylvania.  And my degree is from the Wharton School in the U. of P., which is known for its econometric models of the economy.  To be clear, however, my education was in government, not economics, though I did need to have economics and accounting courses as well as a statistics course in order to graduate from Wharton with my MGA long ago.  I also worked for the Federal government for over40 years in various capacities, and have also worked for the state of Pennsylvania and the city of Philadelphia.

FORMER  SUCCESSFUL QUICK RECOVERIES

Let’s put aside education and experience qualifications because, from my observations, ideology trumps education.  I’ve seen PhD’s advocate  really stupid positions, even in light of contradictory evidence.  So I tend to look at the real world, what actually happens when a particular economic policy is followed and practiced.

I’ll start with the policies used by President John F. Kennedy in the early 1960s.  When confronted with a recession, he cut tax rates which led to increased economic growth and recovery.  In addition, when President Ronald Reagan inherited the worst recession since the Great Depression from President Jimmy Carter in 1980 (unemployment over 10%, inflation 13.5%, mortgage interest rates up to 20%), President Reagan cut tax rates to the extent that GDP almost doubled in ten years and tax revenues to the Federal government greatly increased in the 10 years following the tax rate cuts.  President George W. Bush had a similar experience with tax rate cuts, revenues to the Federal government significantly increased.

The most recent economic successful recovery was orchestrated by President Trump with cuts in taxes and regulations, which resulted in an extremely low unemployment rate of 3.4% and the lowest unemployment rates in U.S. history for African-Americans, Hispanic-Americans, and Asian-Americans.

PAST FAILURES

Let’s look at what actually happened when the opposite approach was used:  it is estimated that President Franklin D. Roosevelt doubled the duration of the Great Depression in the 1930’s by using the John Keynes economic model of increasing government deficit spending, and the US still did not even get out of the Great Depression until World War II.   Moreover, when Japan’s economy went bust in the 90’s, it spent trillions over a 20-year period trying to stimulate its economy.  The huge deficit spending did nothing except give Japan a huge debt.

WHAT PRESIDENT OBAMA TRIED

Which brings us up to to when President Barrack Obama spent almost a trillion dollars in his “stimulus” package in a effort to turn around the economy…and he also devalued the dollar by having The Federal Reserve Bank print trillions of dollars with no backing through it’s so-called Quantitative Easing 1, 2, and 3.  He also tried other short-term Federal spending programs such as his “cash for clunkers” and engaged in huge annual deficit spending, the extent of which had never been seen before.  His economic policies, based on the discredited theories of economist, John Maynard Keynes,  have actually have made the economy worse by piling up huge government debt (over $20 trillion in total national debt which is greater than the annual GDP of the US), with very little to show for it,  and whose interest payments will be unsustainable when interest rates increase.

Let’s look at other factors significantly adversely affecting the economy, such as oppressive government regulations.  One of the reasons for President Bill Clinton’s economic success in the 1990s was his significantly cutting back many Federal Regulations (as well as the reduction in government employment through attrition) as part of his “National Performance Review” initiative.  President Obama’s policy, on the other hand,  on preventing drilling for oil in the Gulf of Mexico, has resulted in 240,000 barrels/day less oil from the Gulf,  which would have led to large increases in gasoline prices were it not for oil companies engaging in horizontal drilling and fracking on private and State lands.  Another example of over-regulation is the Dodd-Frank bill, the stated purpose of which was to prevent future financial meltdowns…but it did not even deal with the cause of the meltdown, Fannie Mae and Freddie Mac, who threatened  and coerced banks into making housing loans to people who could not afford to repay them.  Dodd-Frank also had adverse impacts on small banks and dried up loan money for small businesses that would have otherwise been available to them to expand.

Then there’s Obamacare which has been estimated to actually cost the government up to 3 trillion dollars in the first 10 years, as well as lead to very expensive, rationed and inferior health care.   Then, of course, there’s EPA’s over-regulations, such as the one on carbon dioxide, which as we know, is an inert gas, the chief purpose of which is food for plant life, plants which turn carbon dioxide into oxygen.  Moreover, let’s not forget how hundreds of thousands of farm hands were suddenly unemployed when the US Department of the Interior shut off the water to California’s Central Valley in an effort to protect the Delta Smelt (a small fish) that was on the Endangered Species list.  All of these things had severely hurt jobs.  Finally, President Obama extending unemployment benefits to 99 weeks actually increased unemployment because studies show that, on average, unemployment benefit recipients don’t even begin looking for work until 4 weeks prior to the end of their benefits.

IS CUTTING TAX RATES FAIR?

But stimulating the economy by cutting tax rates isn’t fair, is it?  Even President Obama said in an interview a year or so before he was elected President, when confronted with the fact that cutting the capital gains tax rate in the past had actually resulted in increased tax revenues to the Federal government, that he still would not cut the capital gains tax rate because “it isn’t fair.”

So is it fair to cut tax rates even though we know that the result would be to increase tax revenues?  The nation would then have more money to help the poor, not less, so why not do it?  I can understand the “equality” argument but  is it really a good thing if everyone were equally poor as they are in many countries?   “So what” if there are some super-wealthy people…we know that in the United States they will eventually give most of their money to charity anyway and do it much more wisely than the Federal government!   Winston Churchill said that  capitalism is a bad form of government except that it’s better than all other forms of government.

THE SOLUTION

Cutting  tax rates and regulations have always worked in the past and stimulated the economy and thereby created many jobs.  Presidents Kennedy, Reagan,Bush and Trump all increased tax revenues by cutting tax rates for everyone.  Today, the bottom 50% of earners pay almost no Federal income taxes…the wealthiest 10 %, on the other hand,  pay over 70% of all Federal income taxes.  If you believe that’s not enough, how much is enough?  The U.S. corporate tax rate was 35% but Trump and the Republican Congress reduced it to its current 21%, and it consequently has led to many corporations moving their operations and jobs back from other countries and has caused the United States to regain many jobs.  It’s time for President Trump to work his Wharton School “magic” again and bring back the economy again.  I believe that President Trump can and will bring back the economy.

 

DEMOCRAT LEADERS DO NOT UNDERSTAND THE ECONOMY

The Democrat and the Republican parties have completely opposite ideas and policies on stimulating the economy and creating jobs, but it’s difficult to understand how this can be.  No longer simply theory, but proven time-and-time again to work, cutting tax rates and cutting regulations stimulates the economy and creates jobs to the extent that the additional tax revenues generated from the cuts can exceed the cost of the cuts.

President Kennedy did this, as well as Presidents Reagan and Trump.  Why doesn’t the Democrat Party get it, but instead has stuck with Keynesian economics which allegedly doubled the duration of the Great Depression in the 30s and early 40s?  Moreover, leaders in the Democrat Party, like Senators Elizabeth Warren and Bernie Sanders, embrace Socialism which has destroyed every economy that has fully embraced it (currently Venezuela).  Understanding the economics of it is so simple that I can only conclude that the Democrat Party doesn’t want to get it, but why not?

One of the constituencies that the Democrat Party claims is the poor.  The Democrat Party’s policies, however, keep the poor being poor.  On the other hand, “Supply-side” economics (see Milton Friedman’s book, Free to Choose)  pulls up many of the poor into the working class, middle class, and some will even become wealthy.  When this happens, they frequently no longer vote Democrat.  It’s therefore in the Party’s self-interest to keep people poor, keep them victims, keep them envious and vengeful, have them believe they’re the victims of racism, discrimination, etc.

Another reason that the Democrat Party  wants everyone to be poor is that it strongly encourages equality of results or outcomes and with their preferred economic system (socialism), everyone except government officials, will be eventually equally poor (ask citizens of Venezuela).

The most recent evidence that this is so is the relentless attacks against the huge Trump and Republican tax cuts, using the phony pretext that the cuts only benefited the wealthy.  Since the wealthiest 1% of the population pays about 37% of Federal income taxes and the top 10% pay about 70%, they receive back the most in dollars, though they are just a tiny amount of the population.  In addition, lowering the corporate tax rate from the very highest in the world, 35%, to a much lower and more competitive rate, 21%, benefits not only the stockholders of the corporation but all of the people that a corporation employs, as well.

It’s far past the time that the Democrat Party changes its posture on stimulating the economy and creating jobs based on reality.  Actual results have been achieved every time cutting taxes and regulations have been tried and usually pay for themselves in generating greater tax revenues.

HOW WILL PRESIDENT TRUMP ELIMINATE ANNUAL FEDERAL BUDGET DEFICITS?

The United States government currently owes over $23 trillion dollars, called the National Debt.   Each year the National Debt is increased by the amount of money the government overspends that year, which is over the amount it collects.  This amount is called the Annual Budget Deficit. When President Obama took office, the National Debt was $9 trillion.  When he left office it was almost $20 trillion.  President Trump continued having hefty budget deficits, mostly because of the higher interest rates on U.S. Treasury bonds that the government is paying, in addition to the cost of bringing back the military to combat-readiness, which had significantly weakened by the underfunding by the Obama Administration.  Consequently, at some point in the next few years, the Federal government may not be able to afford to pay interest on the ever-increasing  National Debt.  This problem is probably the most serious, long-term, one that the U.S. faces.  President Trump is fixing every one of the country’s serious problems so what does he plan to do about this  upcoming financial disaster?  Here’s what he will do, if re-elected, starting now and ending the last year of his 8-year presidency:

President Trump is significantly increasing revenues to the Federal government by stimulating the business environment in the United States through lower corporate, business and income taxes, which has increased the number of people working and the revenues from their taxes, even at reduced tax rates.  He’s also making Americans more prosperous by eliminating unnecessary, job-killing Federal regulations.  Recently, he cut 5% from all Federal Departments.  I initially thought that in a few years the U.S. might not even have a deficit, but with the Federal Reserve increases to the Federal interest rates, the interest on the National Debt is much higher today (about 3 %) than it was when Obama was President ( approx. 1 % ).  This translates into the government paying each year hundreds of billions more for interest on the National Debt than it had been paying only three years ago, and this makes it much more difficult for the government to eliminate its annual budget deficits.

Despite the Federal Reserve increasing interest rates, however, I believe President Trump will still eliminate annual government budget deficits, estimated to be about a trillion in fiscal year 2020, and perhaps also start paying down the National Debt by the end of his second term, with one caveat.  Trump must have a Republican House of Representatives and a Republican Senate in order to put the U.S. financial house in order.  Democrat leaders will do anything to make Trump fail, including preventing his eliminating annual deficits and the reducing the national debt.

In the final phase of eliminating annual budget deficits, President Trump will attempt to eliminate useless and duplicative Federal programs and pare down programs that have shown only meager results.  This will be unpopular with the general public and and a Democrat Congress and that ‘s why he’ll do most of it near the end of his presidency.  How do I know what President Trump will do and when?  Here’s how:

  1. I went to the same school as President Trump, the Wharton School of the University of Pennsylvania, though my Masters was not in finance but from the FEls Government Center, which back when I graduated (1972) was in the Wharon School.  My focus was on government, but there still was some commonality between the two programs though Trump became a billionaire in business and I became a moderate-income Federal employee.
  2. I’ve followed politics for 60 years, beginning with the Kennedy-Nixon TV debates, and have worked for the federal government for over 40 years, a city government for over a year and a State government for less than a year and therefore understand politics and government.
  3. I’ve followed Trump beginning a year before he became President and believe that  I usually know why he does what he does and therefore can explain most of his actions.

MINIMUM WAGE INCREASE: PROS & CONS

Who can be against a livable wage and why would they possibly be against it?  That’s what this post is about.   President Obama raised the minimum wage for Federal contractors from $7.25 to $10.10/hour.  It covered future Federal contracts only and therefore didn’t affect many workers.   President Obama urged Congress, however, to pass legislation to cover all minimum wage employees in the U.S.

The Congressional Budget Office (CBO) subsequently reported that if the minimum wage were to be increased to $10.10 nationwide, or a 40% increase, about 500,000 to 1,000,000 million minimum-wage employees, from the current pool of 16,500,000 minimum wage employees, would lose their jobs because employers could not pay it and remain in business.  However, the new proposed minimum wage jumped to $15/hour.  The specific effects of such a raise have not been officially calculated, but it would surely result in millions of “minimum wage employees” losing their jobs because many employers could not afford to pay it and remain in business.

So why do it?  The main argument is that it’s not a “living wage,” that no one can live on and raise a family on that wage.  Sounds like a reasonable justification but, of course, we need to look at other sides of the argument before reaching sound conclusions.  I already cited one of the primary reasons why not to raise the minimum wage too high…the loss of about 1,000,000 minimum-wage jobs; however, another significant reason is that it would almost shut down the first step on career ladders for unskilled workers…to the extent that they couldn’t even get that first job, get their foot in the door…because their work would not be worth $15/hour  In addition, many businesses, like restaurants, are very sensitive to the minimum wage and when that wage is increased substantially, restaurant prices increase substantially, which hurts the business or makes it fail (so the end result may be the elimination of some jobs).  Finally, it’s far more accurate to call the “minimum wage” the “starting wage,” because that’s exactly what it is for most people.

It appears that labor union leadership and consequently the Democrat Party is the only beneficiary of dramatic minimum wage increases with everyone else being harmed; therefore, gradual increases in the minimum wage may be able to satisfy genuine concerns of the minimum wage argument.

The best way to raise everyone’s wages the most is to create a booming economy like they have in North Dakota where $15 is the starting wage in fast food restaurants because of the huge competition for employees that North Dakota’s great economy fostered.  President Trump has done precisely that with the result of a 3.4% increase of blue-collar worker wages.

GOP/TRUMP ECONOMIC PLAN: REDUCE TAX RATES TO INCREASE TAX REVENUE

How can President Trump and the Republican House and Senate pay for large tax cuts and a trillion dollars in infrastructure improvements that they are advocating and still eliminate Budget Deficits and eventually the National Debt?  Few politicians explain this so I thought that a U. of Penn Wharton graduate (me), who should know this, would explain it.  Many are concerned that the large proposed infrastructure spending and proposed tax cuts will force the U.S. further into debt.  If you simply look at the economy as static, this would be true.  However, the economy is dynamic, not static.  Therefore, when you change some things, like reducing corporate taxes from the current 35% to President Trump’s 20%, as well as reducing taxes on the working and the middle classes, this stimulates businesses in many ways, bringing back U.S. business and investment money to America and stimulating new businesses and the growth of existing businesses.  In addition, Trump will repeal the individual mandate contained in Obamacare, which is the penalty that Obamacare imposes on those who chose not to be covered under it, estimated at $358 billion. Finally, there is about $3 trillion in U.S. corporate funds residing in other countries, that with a one-time repatriation tax rate of 10%, will return to the United States and be invested here.

All of this resulting economic activity will result in a huge increase in the Gross Domestic Product (GDP), which is a measure of the size of the U.S. economy.  The taxes from this huge growth in economic activity, though the tax rates are reduced, will result in tax revenues being vastly increased.  President Ronald Reagan did this in the 80’s, as well as reduce regulations, and GDP consequently almost doubled in size within 10 years from the time that Reagan’s tax rate cuts went into effect (1983).  President Kennedy also did this in the 60’s.

GDP growth is extremely important because, with 4% annual GDP growth, the United States can afford to do what needs to be done without having annual budget deficits, that at the end of each fiscal year, are added to the total national debt.

If some form of the Trump/GOP tax cuts become law, the United States economy (as measured by Gross Domestic Product, GDP) will more than double in 10 years.

 

 

CONSEQUENCES to the U.S. from PRESIDENT OBAMA’S ECONOMIC POLICIES

 

President Obama meant well.  He sounded sincere and touted “fairness” as his primary concern in his governance of the nation.  However, it’s true that “the road to hell is paved with people with good intentions.”  In plain English, it almost doesn’t matter if the President was sincere  and meant well if the results of his policies were to cause great  harm to hundreds of millions of people.  The percentage of Americans with full-time jobs (“Civilian Labor-force Participation Rate”) has not been as low as today (62% of civilian labor force) since the late seventies and if unemployment statistics were calculated the way they were in the year 2000, unemployment would be about 10%.  If they were calculated the way they were during the Great Depression, unemployment would be over 20%.  Below is my analysis of those major policies of President Obama that destroyed the American dream for many Americansand which President Trump and the Congress need to reform:

A. OBAMACARE/AFFORDABLE CARE ACT: This  law is a wet blanket on the economy. While I’m for good healthcare, and for insuring people with pre-existing conditions as well as kids up to the age of 26 years-of-age on their parents insurance, Obamacare is a bureaucratic nightmare with much more expensive premiums for most people, and unbelievably-high deductibles and co-pays.  This turns most Obamacare policies into catastrophic care only because most people will never meet their deductibles and will therefore be paying out-of-pocket for most of their healthcare.  This turkey needs to go and hopefully will be replaced with something created by a combination of Senators and Representatives from both major political parties.

B. IMPEDING ENERGY PRODUCTION:  A decision on the Keystone pipeline was made for political reasons.  Oil production on government land was significantly down, however, basically because the environmental lobby was against all fossil fuels.  Meanwhile, America has more gas, oil, coal, and shale oil than all of the countries in the Middle East combined but government regulations prevent most of it from being developed.  The wealth created by all of this energy could pay off the National debt, the trillions in unfunded liabilities, and produce an economic boom the likes of which no country has ever seen.  And as thoroughly, scientifically, and irrefutably proven in David Archibald’s, Twilight of Abundance, the warming trend of the earth over the last century, up until 18 years ago when it stopped,  is due mostly to Sun Spots and Solar Flares, not to the burning of fossil fuels.  

C. DEFICITS/NATIONAL DEBT: President Obama doubled the National Debt (from $9 trillion to $20).  The Federal government is still borrowing billions/month from the Federal Reserve so the annual budget deficit is currently over 1/2 trillion dollars/year.  Each year the Annual Budget Deficit is added to the total National debt and currently the National debt is about $20 trillion.  This amount of deficit spending and National Debt is unsustainable. The Federal Reserve  has the authority to print money and by doing so has been able to get away with this huge deficit spending,  but doing so without the backing of gold and/or legitimate loans from other countries, simply inflates our currency.  The U.S. dollar is currently the world’s “reserve currency,”  but our borrowing and spending may eventually change that.  When it occurs, the dollar will immediately decrease in value by about 30%, our credit rating dramatically reduced and interest rates on our borrowing dramatically increased, and our ability to borrow severely curtailed.

D. REGULATIONS:  Regulations are necessary in our society but government needs to be very careful in not over-regulating since this can and does add significant costs to the economy, negatively impacts business creation, and reduces freedoms.  The regulations written pursuant to Dodd-Frank, the Endangered Species Act (ESA), and the Affordable Care Act  (“Obamacare”), among many others, are excessively burdensome to people and the economy.  ESA, for example, has caused the destruction of most crops in California’s Central Valley due to the Delta Smelt, a small fish on the Endangered Species list. Dodd-Frank is a financial nightmare that does nothing to prevent future bank problems.  Obamacare has and is destroying jobs.

E.  HIGH TAXES:  Money taken from the economy in taxes should be limited because it hurts the economy.  Tax money should be used only for legitimate purposes.  Higher taxes is a drag and drain on the economy so  government needs to be careful to spend it wisely.  Lowering tax rates on everyone who pays taxes in order to stimulate the economy is the preferred way of increasing tax revenues and growing the economy to pay for Social Security, Medicare, Medicaid, unemployment benefits, etc.

F. CORPORATE TAXES:  A significant Obama policy  that has unintentionally done  harm to many people is the retention of the 35% corporate tax, which is higher than any other country in the world.  This has led to the flight  of many U.S. corporations and businesses to other countries, and with this flight, the jobs and taxes that go with them.  They need to be reduced to 15-20%.

G. PROLONGED UNEMPLOYMENT BENEFITS:  Extension of the duration of unemployment benefits for more than  12 months is very harmful to the unemployed as evidenced by studies showing  the unemployed usually do not even look for jobs until a few weeks prior to their unemployment benefits expiring.  At one point, Obama, in conjunction with a Democrat Congress, extended unemployment benefits to 24 months. “Compassion” was the stated reason, but getting the unemployed off of of the official unemployment roles  so that the official unemployment rate would be lowered is the real reaon.

H., I., J.,K., L., M., N., etc.

In closing, most Americans were proud that the U.S. elected an African-American President 151 years after the Emancipation Proclamation freed  American slaves, even if they personally did not vote for him.  The United States inherited slavery from England when it took over the country in 1776 but had to temporarily retain slavery  in order to form the Union to include Southern States (the “Great Compromise”).  At the first opportunity, the U.S. rid itself of slavery (in 1863).

The first African-American President unfortunately had no experience in managing anything or in guiding an economy and therefore the U.S. consequently is badly hurting economically.  While I believe President Obama meant well, he also still believed that failed liberal/”progressive” economic policies (“Keynesian economics”) were the way to stimulate the economy and therefore turned a blind eye to workable economic policies.

President Reagan demonstrated how to get an economy working and the proof is the fact that the Gross Domestic Product (which measures the size of the economy) of the United States almost doubled 1n the 10 years following Reagan’s implementation of his large reduction in tax rates (1983-1993) and curtailing Federal regulations.  President Kennedy also stimulated the economy during a recession in the 60’s by cutting tax rates.

 

 

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