HEAL THE ECONOMY
HEAL THE ECONOMY: End Crony Socialism/Capitalism, Cap Spending & Debt, Cut Taxes & Regulations To Grow The Economy, Opportunity, Jobs, Dignity, & Hope For Millennials, Young Families
Jobs and wages are stagnant or falling since the economic collapse of 2008, and, under Obama, we have had the worst jobs recovery in modern times (see graphic). The jobs picture is particularly bleak for minorities and the young, far worse under Obama than under Reagan. The only reason that the unemployment rate is down is that tens of millions have given up and dropped out of the workforce (see graphic).
Counting discouraged and underemployed workers, the real unemployment rate, the U6 rate, is 10%, not the 5% the government likes to claim. The 2015 third quarter growth rate was a stagnant 2.0% and the fourth quarter may fall to 1%, not the 3-4% we had under President Reagan.
As 2016 begins, the economic clouds are gathering again, seeded by all the government debt in the U.S., China, Japan, Europe, and the developing countries. The federal government has spent and borrowed record amounts to try to revive the economy. Debt left for our children to pay off is exploding, doubling under Obama. Debt as a percentage of GDP is far higher than at any time in our history except for World War II, and set to go a lot higher (see graphic). The debt has never been anywhere near this high during peacetime.
If government spending would do the trick, it should have and would have worked by now. It obviously is not working except for Wall Street and its Crony Socialists/Capitalists. The Democrats are trying to change the subject from the failure of their economic policies by talking about income inequality and raising the minimum wage, essentially an admission of failure by them.
More government spending and more government programs are not the answer. Big government does not create prosperity, it creates stagnation. Big government does not reduce income inequality, it increases it. When government expands, it is the government that prospers, not the people. Many of the wealthiest communities in America are now found around Washington, D.C. It is the heartland of Crony Socialism/Capitalism that thrives on regulation. We can grow Washington or we can grow America, but not both.
My recommendation is to cap spending and debt and to put the Crony Capitalists/Socialists and their lobbyists out of business through deregulation. We need to cut income tax rates across the board. There are many ways to do this and a number of good tax reform proposals have been made. We can debate which ones are the best. Most agree that we need to flatten tax rates and cut the corporate tax rate. I favor cutting the tax rate for corporations who agree to share half the savings with their employees. They would contribute that money to tax-free employee retirement accounts because the social security trust fund will go broke in about fifteen years. In any case, the important thing is to cut tax rates to create jobs and grow the economy. I am a supply-sider. Keynes is a failure, again.
While cutting rates will grow the economy and tax revenues, it is also important to cap federal spending so that budget deficits do not continue to explode, as they are doing now. Federal debt is a big cloud over the economy that stifles the investment needed to grow jobs. The Republican budget sequester has been very effective at holding down spending and we can do even better. There are so many wasteful, ineffective, and even harmful federal programs in existence now that capping spending need not touch anything truly important and necessary. By capping spending and growing tax revenue, we can easily cap the federal debt and maybe even pay it down so that we don’t leave so much debt for our kids.
I would also end the discretion of the Federal Reserve to print unlimited amounts of money to try to “stimulate” an economy crippled by overborrowing, overspending, overtaxation, and overregulation. This has been an enormous windfall for Wall Street while doing nothing for Main Street. Federal monetary policy should have no goal other than price stability. It should be determined through the legislative process as part of the annual budget process and then left alone unless some unforeseen emergency requires the Congress to act on it. Constant tinkering with monetary policy by the Federal Reserve does more harm than good by interfering with orderly financial markets and sound long term investment decisions.
Taking away the Fed’s discretion would also help end the incestuous relationship between the Fed and Wall Street, one of the most obvious forms of Crony Capitalism under this administration. We should also get rid of Dodd-Frank. It does not regulate big banks, it protects them from competition. Any bank or other business that is too big to fail is too big to be legal under the anti-trust laws. They need to be broken up, no more bailouts and no more sweetheart regulations. Real capitalism is about fair and open competition in free markets. Crony Capitalism is all about Cronyism, not Capitalism. Under the present administration’s policies, government regulation protects big banks and other companies from competition and they make political contributions in return. That is its business model, monetizing influence. There is no better example than the Clinton Foundation. It has taken in untold millions from interests, such as Goldman-Sachs, that needed influence with the government, including Clinton’s State Department. We need to clean house.