Yes, We CAN Grow the Economy and Create Jobs – Redux

September 30, 2011

G’Day!

On June 10 I posted the below article on the above subject. To date the Obama Administration and Congress have failed to act on any of the issues and suggested solutions presented. The article is still essentially accurate after three (3) months of non-action and is repeated below for those who missed it. We must get our government working for the people and not for themselves. I hope you join with me in advocating responsible government that supports individual freedom, free markets, sound fiscal and monetary policy, economic growth, and limited government! Let’s get to work!

Obama and the Democrats have tried and failed with virtually every centrally controlled socialist alternative to stimulate the economy and create jobs. The only jobs they have really created are in government. The so-called recovery is the weakest in decades and may be about to “double dip”. Big collectivist government solutions have failed miserably (see “Big Government IS Our Problem!”). Obama and the Democrats only answer to this failure has been to blame it all on Bush. They claim that without their $4 trillion dollar taxpayer & debt funded stimulus, nationalization of businesses, increased healthcare regulations and spending, increased financial regulations, and extreme monetary easing by the Federal Reserve, it could be worse. The only thing that worked has been TARP and that was enacted under President Bush! It is time for government to stop regulating, remove the uncertainties facing business, get out of the way, and let the free market and capitalism work. You do not create jobs by taking wealth from those that generate it, siphon off government administration and oversight, and redistribute less of it back into the economy.

Economic growth and job creation is about free markets, minimum regulations, incentives, and opportunities in the private sector. Government doesn’t create jobs; the private sector creates jobs. Government also doesn’t create opportunities but it can discourage or prevent them (think energy policy) and it can and does distort the market through politically motivated subsidies or tax deductions for selected industries. If taxation and regulations are minimized to the level necessary to support the essential role of government as defined in our Constitution, business will take advantage of whatever opportunities are available in the marketplace and the economy will grow. Unfortunately, the Obama administration and the Democrats in Congress do not understand this. They apparently believe that a few “elites” (themselves) in government are smarter than the millions of consumers and business managers throughout the global economy. They have imposed on American business a climate of increasing regulatory restrictions, increasing healthcare costs, high business taxes, and increasing uncertainty as to what they will do next. In this centrally controlled environment, it is no surprise that American businesses are not currently hiring or investing in our country. The regulations and costs just in Obamacare and the Dodd-Frank Financial Regulations Act are particularly harmful and businesses are wisely waiting to see what the government will force on them next.

So what needs to be done to create jobs and get our economy back on track? At least six actions could and should to be taken: 1) Stop/Minimize non-essential regulations, 2) Have a business-friendly government, 3) Reduce tax rates, especially on business, through tax reform, 4) Enact an energy policy that encourages rather than discourages development of domestic sources of traditional energy, 5) Fix the fiscal and debt crises by cutting government spending, revising entitlements, and increasing tax revenues through tax reform, 6) Pass the three pending Free Trade bills and expand them to include other trading partners.

First, a moratorium on new regulations should be declared and all regulations associated with Obamacare and Dodd-Frank (especially the Consumer Protection Agency) halted until after the next election in 2012. The uncertainty overhang from these two bills alone is stifling hiring and investment by business. Ultimately, all regulations, both existing and new, should have a “sunset clause” that requires our government to formally reaffirm their need at pre-set intervals, perhaps every ten years. This would insure that outdated or unnecessary laws do not become permanent.

Second, President Obama needs to realize that his collectivist socialist policies don’t work and become truly business-friendly. It is no secret that the current administration is pro-union, pro-environmentalist, and anti-business as evidenced by numerous actions by himself and the Administration’s Departments and Agencies. The pro-union/anti-Constitution actions by the NLRB against Boeing in South Carolina (see “Attack on American Business by Obama “packed” NLRB!”) and the many actions of environmentalists against any form of energy development (drilling in the Gulf of Mexico, Shell Oil off the coast of Alaska (see “Obama Administration Attacks American Business Again!”) are not conducive to economic growth and job creation. This week the issue of an energy pipeline from Canada to Texas has also come under attack by environmentalists. These and other obviously pro-union and environmentally biased activities against businesses (and some States) should be halted and free markets given an opportunity to function.

Third, tax reform is essential to both economic growth and reduction in the deficit (see “Fiscal & Debt Crises – Tax Reform essential!”). As the referenced article indicates, there are several excellent proposals available and Republican presidential candidate, Tim Pawlenty, just added another this week. All are pro-growth and pro-job creation and all will work by providing incentives for private sector investment IN THIS COUNTRY, not abroad. Naturally, the Democrats, who believe in centralist government solutions and not in free markets, are generally opposed to all of them. Perhaps the easiest, most immediate, and most beneficial tax reform is to reduce (or eliminate) corporate tax rates to a level equal to or less than the major nations with whom we compete and simultaneously eliminate the politically motivated subsidies and deductions that distort the market. Currently US corporate taxes at 35% are highest in the developed world and actually represent double taxation on income, first at corporate level and again at personal level, when distributed as dividends. Additionally, the high US corporate tax rates discourage US based international companies from repatriating foreign profits back into the US because, if returned, they are taxed at the higher US tax rate. Our current tax policy encourages investment abroad and discourages repatriation of profits back into America. This is a job killer, not a job creator. Is our government crazy?

Fourth, enact a domestic energy policy that encourages rather than attacks development of domestic sources for traditional energy. This will create thousands of good jobs in our economy and reduce our dependence on foreign energy supply. For far too long we have allowed the environmentalists to dictate policy and stagnate domestic energy growth. Every rational person knows America will be dependent on fossil fuels for decades. Yes, development of alternative energy forms and technology is important but there is no chance “green energy” is going to be a replacement for traditional energy sources, including nuclear power, any time soon. It is madness to exclude active development of domestic fossil fuel sources and nuclear power from our alternatives just to satisfy a few environmentalists with unproven science and questionable computer projections. If “green energy” was a viable economic solution, we would not need a policy or subsidies to support it. Also, independent of the longer-term cost benefits from domestic production, the extremely high and increasing risk of supply from the foreign sources is a very dangerous national security concern. The Middle East is in turmoil and no one knows how it will turn out. Without domestic alternatives, American could find itself with an energy disaster, which could seriously endanger our economy. We must actively develop domestic energy to create jobs in America, sustain our economy, and reduce our global supply risk.

Fifth, resolve our short and long term deficit and debt crises. We must get government spending and the dual debt and deficit crises under control (see “Bowles & Simpson Have it Right!”, “Obama Ignores Bowles-Simpson Debt Reduction Commission – Again!”, “Is Obama Really Serious about Debt Reduction?”). Our Government is too big, too oppressive, and exercises too much control over the American people and business. The current policies are sucking money from business and taxpayers, adding more public sector union layers of government control, stifling business growth, and reducing America’s ability to grow and prosper. As stated above, in a free market economy with protection for the freedom of individuals and businesses, the private sector creates jobs. Since his election, Obama has expanded the size and scope of government control far beyond the level any freedom-minded citizen would have imagined possible. Simultaneously, Obama has also increased our federal deficit by $4 trillion and increased our national Debt by approximately 40% to $14.3 trillion. Relative to GDP the size of government has increased from approximately 20% of GDP to over 25.5% of GDP, a 5% increase in the size of government relative to our economy in less than three years. Without correction, our deficit next year is expected to be another $1.6 trillion and in ten years our national debt will grow to a staggering $22 trillion! Does anyone think this makes sense? My article last week, “Is Our Government Broken? – Redux!”, provides more information on this critical issue.

Sixth, pass the Free Trade Agreements for South Korea, Columbia, and Panama. These proposals go back to the Bush Administration and should be easy to pass. I believe nearly everyone including the President and many Democrats support them. As usual, politics is holding them up. Free trade works and provides value through additional products and services at lower costs to all American consumers. Only unions are opposed to free trade because, in the short term, it may reduce union jobs in non-competitive industries. Over 200 years ago, Adam Smith established the unchallenged principle that the wealth of a nation was based on the goods and services available to its citizens. Free trade allows this to work for the benefit of all consumers. It’s time for the unions to realize this and support what’s good for the nation over what’s good for the union.

Yes, we CAN solve our problems, if we have the political will to do so. This country was founded and prospered on the principles of individual freedom, free markets, sound fiscal and monetary policy, and limited government. Let’s get back to our foundations and demand that our elected representatives in government get to work.

The Old Guy PhD


Personal Responsibility – What Happened to Our Pioneer Spirit?

September 13, 2011

G’Day!

It is obvious that the current members of The Democratic Party did not create our great country. They would never have taken the risks and hardships of crossing the Atlantic and relying on their own abilities for survival without an established government “socialized safety net”. So what has happened to the original American “Pioneer Spirit” of personal responsibility and risk-taking, free of government interference and control? Why have so many of us allowed ourselves to be deluded by lawyers and politicians into believing that the government or “someone else” is responsible for our personal security, retirement, healthcare, employment, injury, or any problem that we face? Why is America becoming a European-style socialist “nanny” state at the same time Europe is finally realizing that unconstrained collective socialism not only does not work but also restricts economic growth AND is ultimately unaffordable? Greece and Portugal are current examples and others may follow. IT IS NOT POSSIBLE FOR THE GOVERNMENT TO SOLVE EVERY PROBLEM OR TAXPAYERS TO PAY FOR EVERY DESIRABLE SOCIAL GOAL OR ADDITIONAL REGULATION OR BUREAUCRACY OUR POLITICIANS WANT! Solving every social issue through additional taxation and government spending is neither affordable nor achievable and only retards economic growth and wealth creation for all. Wealth is not created by taking from those who earned it and giving it to those who did not.

Our pioneer ancestors came to this country searching for freedom from many different oppressions and the opportunity to build independent productive lives free from excessive government control and interference. Our ancestors accepted total personal responsibility for any risks they took. They understood that, whatever the outcome, their future and the future of their families were based on their own decisions and how well they made and executed them. Millions of immigrants have come to our country for the “opportunity” and not the “guarantee” of a better life. We need to rekindle this spirit in our country, get government off our backs, and retake personal responsibility for our lives.

For well over our first century as a country, we experienced essentially free markets and constitutionally protected individual liberties, which were largely free of federal government controls. We experienced problems but grew and prospered into a great nation. Major federal government intrusion in our commercial and personal lives really began with the passing of Constitutional Amendment XVI in 1913 authorizing direct federal income taxes. In 1913, federal government spending was less than 3% of GDP. From that year forward the size of our government and its control over our lives and commerce has inexorably increased over time, especially under F. D. Roosevelt’s “New Deal” in the ‘30s, Johnson’s “Great Society” in the ‘60s, and in this century Bush II’s “Prescription Drug Program” and Obama’s “Healthcare and Financial Regulation”. Except for WWII, the current size and scope of government spending has never been as high as it is now under the Obama Presidency at approximately 25% of our GDP! Just since Obama was elected, Federal Government ANNUAL spending has increased from $2.9 trillion to $3.8 trillion, the ANNUAL deficit increased from $500 billion to 1.7 trillion, and our total National Debt has increased by 40% from $10 trillion to $14.3 trillion! The Democrats in Congress have not passed a Federal Budget for over 800 days and have so far rejected all attempts this year by the Republicans to pass one for next year! To paraphrase Bill Clinton during the 1992 Presidential campaign, “It’s the Spending, Stupid!”

In July, my post highlighted the fact that our Founding Fathers risked their very lives, not just reelection, with “The Declaration of Independence”. Eventually, a new nation and a new government, unlike any other in history, were born based on their courage, vision, and desire to preserve this spirit of independence and freedom and to protect it for future generations. Our Founding Fathers were incredibly wise and shortly after gaining our independence from England, realized the potential flaws inherent in pure democracy, and created a written “Constitution” and subsequent “Bill of Rights” establishing the role of federal vs. state government, protecting the rights and freedoms of individual citizens from the government, and establishing appropriate mechanisms to amend the Constitution as necessary without destroying it from within.

Where are we today? We have an emerging “nanny-state” in which many believe that anything bad that happens is NOT personally their fault and it must be the fault of “someone else” or the responsibility of the government to correct. In other words, we are giving up personal freedoms and responsibilities and becoming a nation of dependency on government. Our ancestors would be appalled! The government cannot and should not try to protect us from all misfortunes or bad decisions we make ourselves. Historically, Americans don’t want or need a “handout”; they want an opportunity and the freedom to get a “leg up”. Today, only the Republicans, especially the “Tea Party”, are even attempting to risk reelection by taking a long-term view of our country’s needs. They are actually proposing fiscal solutions to correct the spending disaster that our governments have imposed on us. So what has been the “Tea Party’s” reward for standing up for what is right? They have been the subject of malicious vilification by the Obama Administration, Democrats, and segments of the media and have even been called “Terrorists”! Unbelievable! The Tea Party members are currently our true “Patriots” and should be praised for refusing to accept the short-term and totally inadequate fiscal “Band-Aids” proposed by the Democrats. Instead of addressing our long-term problems of unfunded and unsustainable entitlement programs, the Obama Administration and Congressional Democrats are ignoring the problem and are attempting to blame the Tea Party for our economic and political problems. The Administration and Democrats are not only continuing their failed policies down this path of national destruction but also seem to be intent on accelerating its speed of decline. More Liberal Madness!!

So what should be done to halt the increasing culture of dependency on the government and return prosperity and growth to the people and to our country? Our government must set priorities within “Capped” budget constraints (see “Is a Balanced Budget Amendment Necessary?”) and make rational cost-benefit trade-offs before commitments to any new or continuing government socially/politically motivated programs and bureaucracy are approved. For starters, every new law or program should have a built-in “Sunset Clause” specifying that it must be reapproved by a set date or it is terminated. As detailed in “Yes, We CAN Grow the Economy and Create Jobs!” at least six specific actions could and should to be taken: 1) Stop/Minimize non-essential regulations, 2) Have a business-friendly government, 3) Reduce tax rates, especially on business, through tax reform, 4) Enact an energy policy that encourages rather than discourages development of domestic sources of traditional energy, 5) Fix the fiscal and debt crises by cutting government spending, revising entitlements, and increasing tax revenues through tax reform, and 6) Pass the three pending Free Trade bills and expand them to include other trading partners. More is possible but this would be a good beginning.

In short, we need to return to the principles of a constitutionally limited government and individual freedoms created by our Founding Fathers. Returning to our fundamental principles of individual freedoms, free markets, sound fiscal and monetary policy, economic growth, and limited government is the proper course of action. The government should get out of the road and let entrepreneurs and businesses generate the economic growth, job creation, and increasing wealth of which they are capable. Let’s get to work!

The Old Guy PhD