Wednesday, July 28, 2010


I read a scary article today that recounts the Democratically-controlled Congressional Budget Office’s new report on America’s horrific debt load, and how there’s a strong likelihood of fiscal crisis on the way. Nothing even approaching fiscal sanity is going on in Washington right now, and it has been that way for far too long. We can respectfully argue about, and have fun doing so for hours, both social issues and foreign policy – but as far as I’m concerned, the economy is a non-negotiable, and is the only thing that truly matters. You either do it the right way (spend less than you earn, while strongly facilitating the growth of free enterprise by getting the hell out of the way), or you don’t. I’d give the former Bush Administration a D for their fiscal management, maybe a D-, and I’ll unequivocally hang the biggest, fattest F you’ve ever seen on the Obama team, the most tone-deaf economic president in my lifetime.

Frankly, I’m pretty nervous and getting a bit alarmist about it all – and I’m usually an optimist who pooh-poohs the notion of grave national crisis. What does “fiscal crisis” mean, you ask? Well, remember when the stock market plunged 4,000 points in like two weeks? That was two years ago. No one could get a loan – remember that? That was pretty short-term as well, thankfully. Remenber when everyone was calling their bank to make sure that their life savings were FDIC-ensured, and the government immediately doubled the amount that could be ensured to prevent a run on the banks? I imagine the next problems will be far worse, and will have an impact upon this country’s long-term health for decades.

First, I request that you read this short piece, and then the CBO’s report. Then, I’d like you to join me in advocating these ten steps for stopping what looks to be an almost-certain train wreck (some of this is adapted and updated from an earlier piece I wrote on another blog):

1. Cut the corporate tax rate dramatically. If we could do just one thing to provide a real “stimulus” that would not only save thousands upon thousands of jobs, but also send the stock market soaring (which would, of course, put real money back in the pockets of millions of Americans), it would be this. Companies who once were earmarking dollars for Washington DC can now decide to retain current employees, or hire new ones to remain competitive – or instead spend the savings on new initiatives that will keep current employees engaged and future-focused. This applies to corporations, small companies, and mom-n-pop businesses – give them some of their hard-earned money back so they can use it productively.

2. Cut the federal personal income tax rate by 3% across the board. Individuals, too, are making decisions to hoard precious dollars and not spend right now. Let’s give them an incentive of up to 3% of their income to spend in 2010 and truly stimulate the economy.

3. Immediately reform entitlements so that the retirement age is raised, social security is means-tested, and benefits in general are slightly reduced. This goes hand in hand with my tax cut proposals. With reduced tax receipts, we will need to start cutting somewhere, and what better place than the three-headed hydra of federal spending: Social Security, Medicare and Medicaid. I have not designed the perfect plan yet (sorry!) – but let’s start by bumping the retirement age up (we’re all living longer now, you know); means-test social security so that the wealthy, who don’t need it, don’t get it (after all, this is a safety net for the aged, not a mandatory handout), and find a formula that reduces benefits overall without extracting too much pain from current beneficiaries. My belief is that these steps alone will ensure these programs remain solvent and helpful to those who truly need them, without burdening the rest of us as they do today.

4. Come home from Iraq and Afghanistan, and reduce our military bases overseas by 50%. We all know it - continuing these wars beyond the first year was a mistake. America needs to resume a primarily defensive posture in international relations. We don’t have to blind ourselves to international realities, but neither do we need to spend our dwindling cash reserves on expanding empire. I’d like to go back to our pre-World War II stance of being totally on-the-ready to defend our borders, and only save the world if confronted with another Hitler. The savings from this idea alone will be generationally transformational.

5. Let uncompetitive businesses fail. Totally self-explanatory. Get the government out of the auto industry, the banking industry, the car-finance industry, and every other industry we’re trying to nationalize right now. Let the market (i.e. you and me and everyone else) pick the winners and the losers in each sector. This is not the same as “de-regulation” – it is ensuring that taxpayer dollars never again go to a failing private company, solely to shore up that company’s balance sheet.

6. Allow Congress to repeal Health Care “reform”. It’s already being proven as a colossal mistake in Massachusetts, which was the model for the US’s disaster of a health care bill. Congress, who as you know barely passed this in the first place, needs to find a way for a do-over. There are real changes we can make in the health care industry, but mark my words, this year’s bill will be an albatross that history will not look kindly on.

7. Establish a commission of public and private individuals whose sole purpose is to reduce the size, scope and burden of government on individuals and business. Give them a number to shoot for – a really big one – and let them have at it. Then do what they say.

8. Kill at least 4 government cabinet agencies: education, labor, agriculture and homeland security. Watch as the world as we know it remains pretty much the same as it always has – albeit with less regulation, hassles and needless expense.

9. Recognize that not everyone has to buy a home. Get the government out of any schemes to encourage home ownership. Make this a 100% wholly private activity between sellers and buyers. Destroy Fannie Mae and Freddie Mac, slowly reduce all tax deductions for homeownership, and stop low-income housing loans. Having the government shoveling money & loosening requirements to allow people to buy homes was a major contributor to the current crisis. Let banks take on this burden themselves, and let them suffer the consequences entirely when they make mistakes.

10. Pass a spend-within-our-means constitutional amendment. No more debt spending, except when Congress allows it by a two-third majority in times of true national crisis. Stop being a debtor nation, and instead become a nation that only spends what it brings in from taxpayers.