The Economy

We need a balanced budget and a prudent reserve for a rainy day.  What is so hard to understand about this?

The Iraq war is an example.  Who starts a war without good reason?  Our leaders started two wars and put the expenses on a credit card.  The Iraq war cost roughly a trillion dollars.  Who paid for it?  Our leaders expect their children to pay for it!  They are not only greedy, but they are shortsighted.

We have been fools; we have been sweet-talked by greedy politicians.  But we are waking up to a game that is as old as mankind:  the rich and the privileged rig the system in their favor; the underdogs work for them.  Things have always been this way. Nature whittles the species through survival of the fittest – the strong and favored thrive, and the weak and less fortunate get the leftovers.  Today 400 Americans have more wealth than 150 million Americans!  These members of the oligarchy got that way because they have skewed the system in their favor.

The Internet has turned this game upside down, and now the 1% with the power and the money have suddenly lost their advantage.  They are being exposed. The playing field, for the first time in history, is now level.  And, we are also realizing that we have a 20-to-1 advantage over those who’ve held the power!  This 1%, these elected officials, Big Business, and the hyper-wealthy, are waking up to the terrifying reality that the lights are on, they are the stark naked Emperor, and that we clearly see their game.

To paraphrase Phil Collin’s song, In the Air Tonight: “I was there and I saw what you (the 1%) did, so you can wipe off that grin, because we all see that it was a pack of lies.”

The question is:  what will we do with this advantage?  Was Einstein right when he said that humans are too dumb to figure it out, and that we will destroy ourselves?  Or, was he wrong?

Wikileaks, Facebook, Twitter, Tahrir Square, texting, and hand-held computer phones have created a new paradigm.  We are in a whole new ball game, but most of us don’t actually realize it yet.  What the overwhelming majority of Americans know is that our current political system is bullshit.  The old joke of, “If you see politicians’ lips moving, they are lying,” is no longer funny, and we are actually not sane if we continue to tolerate the bullshit.

We have the numbers. We can fix this thing. You and I.  Yes, Federal spending needs to come down, way down.  Yes, the fat cats, the 1% who have more wealth than over half of the rest of us, need to give up some of their money. We need more billionaires like Warren Buffet, who understand this.  John McCain has so much money he can’t keep track of his own property.  In the 2008 presidential campaign, reporters asked McCain how many houses he owned; the candidate replied, “I don’t know. Maybe six or seven.”  And he is fighting tooth and nail to make sure none of his wealth gets diverted to crumbling schools and breakfast for American children who woke up hungry.

Warren Buffet and Bill Gates have initiated the Giving Pledge that encourages the wealthy to give the bulk of their wealth to charity.  Many rich Americans are joining this cause.  Ted Turner, Michael Bloomberg, Paul Allen, George Lucas, Mark Zuckerberg, and Jon Huntsman are some of the Americans who are showing us what honorable and wealthy Americans can do.

At the Washington D.C. Rally to Restore Sanity in October 2010, one sign said, “Paying Taxes Is Patriotic.”  We all need to pay taxes; it is patriotic and it is right.  We each need to pay for our roads and bridges and fire departments.  Greece’s economy is failing, in part because Greek citizens see their government’s corruption, and they, like their leaders, have decided to cheat also — hence, their country is going broke.  It is tempting to do the same thing in America, after the latest rip-off by Wall Street and its Federal government enablers.  Every capable adult must contribute.  It is not right, and it is not patriotic, to avoid taxes.

General Electric is a great example of the rigged game that hurts America.  A recent article in the New York Times nicely lays this out.  (http://www.nytimes.com/2011/03/25/business/economy/25tax.html?).  G.E. hired former government officials, and former I.R.S. officials, to optimize the company’s income by avoiding paying taxes.  They bribed Representative Charlie Rangel, chairman of the Ways and Means Committee.  Rangel gave G.E. special breaks that allowed the company, in 2010, to pay no taxes on 4.6 billion dollars of income!  And, right on cue, Mr. Rangel got 11 million dollars in “donations” for his home district.  Americans were ripped off for a billion dollars in tax revenue that could have been spent benefitting Americans. This backroom deal between Mr. Rangel and G.E. took care of each of them just fine.  The only problem was that Americans were left out of the loop.  This is just one example of how our corrupt system works.

Egypt’s Hosni Mubarak had billions of dollars one month, and the next month he was in prison.  We are not Egypt.  Thankfully, we have solid institutions, and we hope those who have ripped us off will repay us, because it is the right thing to do. My hope is that most of the billionaires will become like Bill Gates and Warren Buffett and do the right thing.  We all die naked and alone.  On our death bed we realize that the only thing we get to keep is what we have given away.

I believe in capitalism, big time.  The opportunity for the individual to conjure up something new that enriches all of us is a very good thing, and these individuals should be rewarded.  The late Steve Jobs is a perfect example.  But the greedy crooks in Washington are blowing this one.  I am a small businessperson, and I need to tell you that I hate the government’s excessive intrusion into my business.  I have four part-time employees, but my taxes are so complex that I need to hire an accountant!  We have a bloated government, hindering the free market, and I believe my approach, outlined here, will go a long way toward fixing this problem.

In recent years, government officials have accepted kickback money from Big Banks.  They have let some businesses “have it both ways.”  Big Banks wanted to be capitalists when they could make the big bucks, but then they turned into sissies and ran to mommy when they lost their money.  No business should be too big to fail.  Any business that is too big to fail should cut itself into smaller companies and be left to sink or swim in the market. This is a must, in a free economy.

Our financial state, our economy, is based on trust.  The collusion between Wall Street and politicians has taken us to the brink.  The trillions of dollars corporations have given to Super PACs has brought us to a tipping point.  Just three years ago, many people lost their homes and their life savings when the housing market crashed and the banks collapsed.  Unemployment is staggering — more than one out of every ten able and competent American adults has no job.  We, as a nation of law-abiding citizens, do not want to return to chaos and mayhem.  We need our national economy to get healthy. Right now, the median American has a net worth of about 200K and debt of 50K.  We each own $50,000 of the national debt.  We need to get our financial house in order.  Each of us, including Uncle Sam, needs to have zero debt and a prudent reserve.

Americans are capable of greatness.  Are we ready to take the next step?

Our economy looks like the work of an addict:  multiple credit cards with big balances; borrowing from Peter to pay Paul; piling up debt; creditors knocking on the door; impending bankruptcy; money deals being done out the back door.  Always making excuses.  Always some story as to where the money went.

Let’s start with a simple proposition for an economic plan that is used by every sane American.  We are self-supporting, and we have a prudent reserve.  Period.  We don’t spend money we don’t have, and we save something for a rainy day.

It’s a simple principle.

We need to start with revising the tax code that was created by the 1% to serve the 1%’s need for even more money.  You would think that a tax code specifying tax requirements for individuals and companies would be, say, a few pages long.  Well, it turns out that our current tax code is 17,000 pages long.  It was written by the 1% to give special breaks to thousands of corporations, unions, lobbies, and God knows what else.

Our tax code should be understandable by every high school student who is studying civics.

My plan is to have each of the two parties pick their ten best people and ask them to come up with a bipartisan plan for our economy during the first 30 days after the new term begins.  This economic plan must include a tax code that is no longer than 25 pages.  (Replacing the one that is now 17,000 pages long).  This plan would take away special breaks for corporations – like the one that allowed General Electric to pay no taxes on 4.6 billion dollars of profit last year.  It would restore the Glass-Steagall Act, levy a transaction tax on those who buy and sell millions of shares of stock per day, and create transparency in all transactions.  This plan would remove all subsidies to corporations, like the one that gives Big Oil twenty-eight billion dollars a year, or the one that gives Big Food fourteen billion dollars a year to put lousy food in our school lunch programs.  It would identify banks that are “too big to fail” and create a mechanism to break them up.  And this plan would balance our budget and set up a prudent reserve to have on hand for a rainy day.

This new economic plan would fix our debt problem, our tax problem, and our spending problem.  And this plan could be less than 25 pages in length.  It would close corporate loopholes and eliminate unwise subsidies.

Additionally, we all need to adjust many aspects of our money use, but probably by no more than 5%.  Wouldn’t you gladly pay 5% more in taxes or get 5% less in entitlements if it meant that the economic system were fixed, and that it would ultimately lead to much lower taxes and a sustainable and secure country and world?  My guess is that the stock market would soar, and the price of gold would drop, if we actually got our economic engine in gear and stopped mucking up the economic system with complex, contradictory, discriminatory, and anti-market regulations that are designed to make the wealthy even wealthier.

And I believe this 5% tax increase would only be temporary.  We need a bloated government like we need another hole in our heads.  Seriously!  We have let our politicians create a huge bureaucracy to support their pet projects.

The next phase of my economic plan is creating a green economy. Jeremy Rifkin, author of The Third Industrial Revolution, has been advising the European Union on how to go green, create millions of jobs doing it, and possibly save the planet.  This has to be the economy of the future.  The carbon age is over.  What Rifkin and the Europeans have been doing is making this a reality.  The plan has been well thought out and makes sense.  It is based on 5 pillars:

  1. Move from reliance on carbon-based fuel to sustainable and renewable energy.
  2. Reconfigure buildings to become individual collectors of energy.
  3. Install hydrogen and other technologies to store energy in each of these buildings.
  4. Connect all of us in America to an intelligent grid, like the Internet, where we can all share energy and store energy.
  5. Move our transportation fleet to electricity.

We need to rapidly implement Rifkin’s and others’ visions of a sustainable, green energy policy.  Rifkin has been working with the European Union for years, and Europe is far ahead of us.  (Even China is marching past us!)  While I applaud Europe’s work, I know that America can move faster at what the Europeans are doing.  When Americans put their mind to something, we don’t mess around.  We ended WWII, put men on the moon, and are leaders of the technological revolution.   We just need to get our heads screwed on straight.

This new approach will create hundreds of thousands of business opportunities and millions of jobs.  The question is:  Can we pull it off before it’s too late?

America’s corporations currently are sitting on 2.5 trillion dollars that performs no function.  Much of that money is parked offshore.  We need to give these corporations a tax holiday to bring the money home, tax incentives to keep their money here, and public recognition when they use their money to help save America.  Imagine what that money could do.

Gandhi said,  “We have enough for every man’s need, but not enough for every man’s greed.”

We need to understand that we are each responsible, and not surrender the reins of power to the 1% and let them have their way.  We need to help America recover her financial sobriety.