Government interference in free markets over the past eighty years produced a tangled web of laws, regulation, and upside-down monetary and fiscal policy. Decades of heavy-handed government intervention has driven manufacturing and production overseas. America had a robust economy with low levels of consumer debt and a reasonable chance for personal savings.
The modern day economy is almost entirely service oriented and people lose money if they save money in traditional savings or money-market accounts. To keep ahead of inflation and the debasement of the currency people must earn returns in the six to seven percent range to maintain their standard of living. For many, they cannot achieve this return on their investments or do not have access to equity and bond markets, commodities, and other investment opportunities. Certainly, the person earning $25,000 year doesn’t have a substantial amount of savings; however he wants to earn a return so he can, at minimum, maintain his current standard of living.
Today, a person may earn one percent interest in a savings account. Subtract the inflation rate (nominal CPI number) and the debasement of the currency, a person loses six to seven percent a year just because they are trying to save. Monetary policy purposely keeps interest rates low to keep interest payments on the outstanding debt as low as possible. Paradoxically, the very people government claims to help are the people government hurts most. Real unemployment, referred to as the u6 unemployment rate, is seventeen percent. The rate for young, unskilled workers is even greater. Even worse is the unemployment rate for minorities.
Government and the media lie, deceive, and perpetuate a myth to unwitting citizens. The economy cannot truly recover because the manufacturing base has declined drastically over the past thirty years. The dollar’s value has been debased substantially since President Nixon broke the Bretton Woods agreement in 1971. A dollar in 1971 requires a 432% return on investment to be equivalent to a dollar in 2010. In other words, you must earn a return of 4.32% per year, every year, from 1971 to 2010 to maintain the value of a dollar. What cost a dollar in 1971 costs $5.32 in 2010. What costs you a $1 in 2010 would have only cost you 18 cents in 1971.
In addition, the government is nearly $15,000,000,000,000 in debt. According to the President’s 2012 budget proposal, the debt is expected to rise to $22,000,000,000,000 by 2020 using unrealistic assumptions. The budget proposal assumes annual GDP growth between four and five percent, and assumes the interest rate will remain at or near today’s levels. GDP growth hovers near 1.5% and, historically, interest rates don’t remain low for a decade or more. The historical twenty year interest rate averages roughly 5.5%. If interest rates rose to 5.5%, interest payments on the debt would rise from $270,000,000,000 to nearly $1,000,000,000,000 annually.
In my estimation the only possible change to reverse the inevitable demise facing the country is a complete return to free markets without government intervention. Here are my proposals:
- Eliminate all subsidies to every industry, company, non-profit, non-governmental organization, etc. Government should not pick which industries win or lose, or winners and losers within an industry.
- Eliminate the corporate income tax. Taxes are an expense to a corporation just as wages, rent, phones, and utilities are expenses. Income tax expenses are incorporated into the cost of the product which means the cost is passed on to the consumer. It is a hidden tax and hurts lower income earners the most. Moreover, global companies with revenues that have not been repatriated from overseas can now bring that money back to theU.S. Lastly, businesses will be attracted to the country because there is no corporate income tax.
- Eliminate the current individual income tax system and replace it with a flat tax or a fair tax. If the latter, repeal the sixteenth amendment.
- Eliminate the inheritance (estate) tax. This is a form of double taxation. Income is taxed when it is earned, then when property is passed onto a person’s heirs it is taxed again.
- Implement a plan to sunset the Social Security program. While this may take 20, 30, 40 years to phase out. The program must be terminated gracefully.
- Implement a plan to sunset the Medicare program. Again, this may take 20, 30, 40 years to phase out. The program must be terminated gracefully.
- Eliminate baseline budgeting where last year’s budget is rolled forward and, typically, the budgets are increased. Each year, every federal government department, agency, and bureau must justify its existence and budget.
- Implement a plan to eliminate federal departments and agencies that are unconstitutional. The plan must phase out these departments over three years.
- Develop energy sources here in theUnited States. Government must eliminate all barriers and restrictions to drilling for oil, natural gas, natural liquids, and shale oil. All technologies, old and new, must compete in a free market without subsidies from government.
- Eliminate all affirmative action programs.
- Eliminate the minimum wage.
- Pass federal legislation prohibiting public sector unions in the federal government.
The federal government, including the banking system, has competing interests with the American worker. Those that succeed are punished and vilified as fat-cat, greedy people while others are rewarded and supported by government programs paid for by others. Individual taxes are highly progressive. Corporate taxes are the highest out of the G20 countries. Statutory laws and regulations (many not made in pursuance of the Constitution) act as a wet blanket to smother creativity and ingenuity. Government imposed risks far outweigh potential rewards. Is anyone surprised when U.S. businesses move all or part of their business overseas?
Can the federal government fix itself? Are there principled leaders to run Congress and the country? If the thirty years of my adult life is any indication, the answer is a resounding NO! We need true reformers at all levels of government! Government’s role must be limited and narrow! In other words, we need to redefine government – Now!