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Economic Solutions

          The essence of our current fiscal dilemma is a lack of demand for goods and services.  Without demand, production ceases.  Without production, unemployment increases.  The reason demand has faltered is simple - nobody has money!
          Without discretionary money in the hands of consumers, demand for goods and services diminishes forcing  businesses to lay-off their employees which only exacerbates the problem by creating a demand for more government assistance in the form of unemployment benefits.  As unemployment escalates, so does the demand for food stamps, energy assistance, housing subsidies and health care to name a few.  In addition, many on unemployment take "cash" jobs to supplement the modest rations doled out by those who have created the very policies that brought us to the precipice of an economic abyss. This only compounds the problem by encouraging the undergound economy which drains untold millions from the federal coffers.  If we continue on this path, we will have been the author of a treatise detailing our own economic demise.                  
           Since our current problem stems from a lack of demand, we need to stimulate demand. The one sure-fire way to do so is to put money into the hands of those who will spend it on consumer goods and services.  Giving billions of dollars to foreign countries produces no demand for goods or services in America.  Giving billions to corporations, banks and insurance companies does not stimulate demand as illustrated by the recent TARP give-aways.  Those monies were squandered.  The recipients thumbed their noses at us, took their bonuses and literally laughed all the way to the bank. Even more
astounding is the fact that a significant portion of the money that we gave to these corporations was then used for lobbying and campaign contributions to the very lawmakers who were instrumental in giving our money away. 
          So why not simply give this money back to the ones it was taken from in the first place?  It was not taken from the very poor; they don't pay taxes because they don't have money.   It was not taken from the very wealthy;  they don't pay taxes because they have sufficient money to pay accountants and lobbyists to insure  they have ample loopholes to avoid paying taxes. It was taken from the people who work everyday trying to make the ends meet. It was taken from the people who work to pay a mortgage every month knowing they are one paycheck away from foreclosure.  It was taken from those who work to pay rising rent and utility costs each month knowing they are one paycheck away from living on the street.  It was taken from those who work and struggle to put food on their table knowing they have weighty decisions to make about that food and the health, education and welfare of their children.
          These are the people who will spend the money and thus increase demand which, in turn, will decrease unemployment. These are the people who will insure that every able bodied person can work to fulfill their aspirations and take home their part of the elusive American Dream.  Putting this money in the hands of the working people will create a demand for houses, cars and appliances which, in turn, creates a demand for people to return to work in order to produce those goods.  As companies sell more goods, they make more money and hire more people to produce those goods.  As companies hire more people to produce those goods, unemployment decreases and people earn money.  As people earn money, they pay taxes and ultimately government revenues increase through payroll taxes.  That's Win Win Win by any measure. That is what this country needs; an economic trifecta whereby everyone shares in the wealth produced by those who put in an honest day of work and pay their fair share of taxes.
          So where does all that money come from that we would entrust in the hands of our working people?   Although some may not like the answer, it is simple, logical and necessary. It comes from the very source that the government received it from to begin with; the American working people.  How did it end up in the hands of so few?  The answer to that is simple also;  the government took too much from the working people and gave it to a select few.  They gave it to those who had the money to pay lobbyists to carve out tax loop holes for themselves so that they pay little or no taxes while the less fortunate working people pay more than their fair share to compensate for the shortfall of revenues from corporations and the wealthy.  The benefactors of this system are the lobbyists, our lawmakers and the wealthy and that's the reason those groups would vehemently oppose any change in the status quo.
          Ironically, it is from those quarters that we hear the calls for more corporate tax cuts.  Their premise is that cutting corporate taxes will prompt them to hire more people. Nothing could be further from the truth!  Getting a huge tax cut is like finding money.  The corporate perspective is that they got something for nothing.  No CEO worth their MBA is going to turn around and say  "we have all this extra money; let's spend it on hiring employees"  when there is no demand for their product or service.
Tax cuts don't create jobs; people do.  Subsidies, price supports and loan guarantees don't create jobs; people do.  Corporations don't create jobs; people do when they demand goods and services from the marketplace.  To proclaim otherwise, is to sell the American People short. 
          To illustrate this, consider Whirlpool Corporation.  With sales of 18 billion last year, they sent lobbyists, armed with cash, to our lawmakers enticing them into extending legislation calling for 'energy tax credits'.   Since lobbying is a tax deductible expenditure,
Whirlpool didn't spend a penny of their money to purchase this loophole. They spent our money.  The lawmakers accepted the money and then voted in opposition to our best interests.  The top two recipients of Whirlpool's generosity were, not coincidentally,  the co-sponsors of the bill.  The bill passed  late last year and effectively insures that Whirlpool won't be paying taxes this year and for years to come. The argument for extending these credits went something like this: 'If we give these companies (Whirlpool, GE etc.) a tax break for making energy efficient washers, dryers etc., the American People will be the ultimate  benefactor in lower energy bills".  The reality is no one's electric bills are ever reduced and hopefully the People's memory is too short to remember this 'bait and switch' scam at election time. To add insult to injury, Whirlpool has just announced plans to lay off 5000 workers!  So much for the argument that tax breaks for corporations will prompt hiring.  The winners, here, are the lobbyists, the corporations and our lawmakers;  the losers are the People. 
          There is no shortage of arguments against change.  Most center around the idea of redistribution of wealth. For many, this concept conjures up notions of inequity as well as iniquity as though there was something inherently unjust or evil about it.  Redistribution of wealth back to the people who generated it cannot possibly be unjust or evil.  What they fail to mention is that redistribution of wealth is fine when it's flowing toward them. What is unjust and evil is the funneling of that wealth from the people who generate it to people who have not worked to earn it. What is unjust and evil is paying a politician to carve out a tax loophole for a constituency at the expense of working people. What is unjust and evil is a lawmaker working both sides of the fence; accepting votes on one side and money on the other. As with any argument, motive can usually be discerned by consideration of the source. In this particular case, those opposed to redistribution have little to gain and much to lose by embracing the tenets of this doctrine. It must vex those who stubbornly cling to their opposition for they know well the die has been cast, the ball is rolling, the piper is on his way and it's time to pay. 
          Redistribution is a natural phenomenon.  Redistribution is nature's way of promoting equilibrium.  Nature is cyclical as is our economy.  When we eat too much sugar our pancreas secretes insulin to absorb the extra sugar keeping our body in harmony.  As our insulin levels increase,  we become weak light-headed and hungry.  This is nature's way of telling us our body is out of balance and we need to consume sugar to avoid dire consequences  Consuming that sugar brings our body back to equilibrium.  In order to preserve balance in our economy,  the  government should take only what it needs to complete its mission.  It must return the excess to the people who generated it so they can complete their mission  i.e. pay bills and consume goods and services.  It must redistribute it back to where they received it in the form of tax rebates or 'revenue dividends'  thus continuing demand for goods and services.  This circle is broken when corruption provides a conduit to divert the money, which goes back and forth between the government and the people, and neither can perform their respective missions.   
          It is an abberation  for wealth to flow in one direction and become concentrated in the hands of a few.  With the proliferation of lobbyists, that is what has occurred and that is precisely why our system has broken down.  Greed has prevented the dilution of wealth, which would occur naturally,  back to the generator of wealth--the workers.  If we take the current path to its logical conclusion, entropy ensues and the generator is no longer functional. Generators produce fuel but require fuel to function properly.  If the government takes the fuel produced by the generators and squanders it,  there will not be sufficient fuel to give back to the generators. Without that fuel, the generator breaks down as does the economy since that very same fuel is vital to the proper functioning of the economy.  It is similar to the landlord of an apartment building who collects rent every month.  If they put money back into the building to maintain it, it will continue to produce income.  If they take the money and spend it on the good life for themselves, eventually, they won't have their rent, the building or their good life. By preserving the current system, we are killing the goose that laid the golden egg. Just as we need to take care of that goose, we need to take care of our workers.   
          Arguments for change are usually shouted down by those who cling tenaciously to the status quo.  Most of these boil down to ad hominen attacks on those calling for change.  To avoid any ambiguity, those calling for change are not opposed to corporations or the wealthy.  They are opposed to the manner in which they accumulated their wealth. They are opposed to a rigged system designed to siphon money, generated by working people, and redistribute it to those who have paid our lawmakers to write favorable tax loopholes and surreptitiously slip them into pending legislation.  They are opposed to subterfuge.  They are opposed to deception by those who are supposed to represent us and our interests. They are opposed to being viewed as gullible fools plagued with long term memory deficits. They are not opposed to capitalism;  they are opposed to corruption. 
          Everybody loves a winner. If a friend, neighbor or even a stranger wins the lotto, we look upon that person with a small degree of envy and wish them luck. We harbor no umbrage toward a person's good fortune.  We live vicariously through the good fortune of others hoping that someday it will be us. but if that person sits on the Lottery Commission, we look at them with a wry eye. Now if we later come to discover that the winner manipulated the wheel insuring that they win, then we view them with scorn.  That is precisely the position that Congress currently finds itself in.  We know what they've done.  They know what they've done and they know that we know.  When the same people consistently win, it's a sure bet the game is rigged and the deck is stacked.
          Our economic problem didn't occur overnight.  This has been a generation in the making.  It was an insidious process; one in which our lawmakers were key players.  Fortunately for them, Americans are a forgiving people.  They are not a greedy people. They merely want an opportunity.  They don't want to work everyday, put up a nest egg for their children and their retirement and wake up one morning to see it gone while at the same time see bankers patting each other's backs while stuffing their pockets with bonuses. 
          So what is the solution to our current economic mess?  Solutions are like opinions;  everybody has one.  It is difficult to arrive at  a cogent solution unless the problem is well defined.  Our economic problem doesn't suffer that fault.  It is patently clear that the problem with our economy is a lack of demand which is a direct result of the paucity of money in the hands of those who will readily spend it.  For solutions to be viable, they must be simple and results must be imminent..  They must be logical.  They must have the ring of truth to them.  They must pass the 'smell test'.  Sometimes, they must even be radical; radical problems call for radical solutions. Hallowed promises of crumbs falling from the heavens onto the American dinner table does not fit the bill. The people have listened to that hackneyed line for the past thirty years and watched their lot in life actually diminish.  No longer will they be taken in by the empty promises  of  schemers and swindlers picking their pockets clean.  No longer will they fall prey to politicians stealing the future of their children before their very eyes.  No longer will they listen to the admonitions of those telling them they must be patient and eventually their ship will come in.  No longer will they buy that pie in the sky.  They know that a bird in the hand is worth two in the bush and they are not going to be left out in the cold holding the bag for some lawmaker making promises who may not even be in office two years hence.
          The solutions put forth by those currently holding or running for office don't address the fundamental problem which is a lack of demand for goods and services.  
The economy needs a kick start.  The simplest way to do that is to immediately suspend all payroll taxes for Americans who are working. That would provide an immediate shot in the arm to workers and grant them excess discretionary income;  the necessary ingredient to stimulate demand and bring about economic recovery.  Where will government revenues come from?  We may have to borrow more money.  We had no reluctance in borrowing money from China to finance two undeclared wars; why should we hesitate to borrow money to save our nation from economic anarchy?  Moreover, since the wars are winding down, we should easily be able to make a huge cut in our defense budget and allocate those monies to a domestic economic defense fund that would tide us over until we can put our people back to work.  We should also consider a TARP like program whereby the Treasury defines payroll taxes as assets of the American people and accepts them as a premise for loaning money directly to the American People much the same way they did with banks and corporations.
          There are many other sources of revenue; we just need to put our priorities in order.  Instead of asking the working people to tighten their belts any tighter, it's time to demand the same of others.  It's time for others to step up to the plate that American workers have been standing on.  It's time to collect the tickets of those who have been riding the gravy train for the past thirty years.  It's time for banks to bite the bullet and lower their interest rates to one percent on existing mortgages until we emerge from the housing crisis.  They can afford it.  They won't go broke and this will insure that they stay out of the real estate business.  A foreclosure hurts not only the home owner; it has deleterious effects on the entire community by lowering everyone's property values and consequently eroding the tax base. There are currently two million homes in foreclosure with 100,000 being added each month.  The monies banks are spending on the foreclosure process and the subsequent maintenance of these properties could be better spent to offset decreased income from lowering their interest rates.
          We need to put a moratorium on all foreign aid.  We can't put the weight of the world on the backs of working Americans.  No one is opposed to helping others; but, we can't help others until we help ourselves.  No one can even say for certain if the money we give is being used for its intended purpose or if it's going to the intended people.
          We need to put a moratorium on all price supports, subsidies and loan guarantees.  This money can be used to support and subsidize American workers until we can guarantee them employment.  Individually, the very wealthy need to do their part and learn how to give.  We are aware they know how to take;  they didn't get wealthy working for a living.  They played on us conniving, cajoling and convincing our lawmakers to furtively place their thumb on the tax scale tipping in it their favor.  That was their way of accumulating wealth. That just isn't the American Way.
          Finally,  we need to rescind all tax deductions for lobbying activities. American workers should not be financing lobbyists who are working for the good of their pocket and against the good of the public. They would certainly be welcome to lobby; but, it would have to be on their dime and not ours! 
          In order to fully comprehend these changes, we may have to change our manner of thinking. These measures could be considered, not as a handout but, as an investment--an investment in people.  More specifically, working people;  the people who produce the working capital that runs this nation.  If done properly, that investment could be parlayed into an historic win for the government and its people. This may be a difficult concept for many CEO's since they would not be the direct beneficiaries but once the demand for their goods and services begins, they will flourish along with the rest of our nation.
           Admittedly, these are short term solutions designed to remedy an immediate problem but the effects would be profound and lasting.  In the long term we have to look at our tax pollicies which played no small part in getting us in the fix we're in.  When corporations spend money, there is little benefit to the American people since those expenditures are tax deductible and the people ultimately pay for them.  When government spends money, there is little return on those dollars since the people, again, must pay for all government expenditures.  However, money in the hands of consumers is what makes the world go round.  When our people are spending money, the economy hums.  There is a psychological aspect about having money to spend.  It makes us feel good.  Commerce is a good tonic for the soul of our country.  Commerce can't occur unless we give the people who spend money the money to spend.