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A Real Stimulus Package

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Despite being both ineffective and unpopular, the Democrats and Obama continue to use Keynesian economic policy to stimulate the economy. A historical review proves it did not work for FDR either. The Great Depression lasted through1946, even with the mistaken myth that WWII brought us out.The Uncertain Trend in U.S. GDP by Christian J. Murray and Charles R. Nelson of the University of Washington makes that point. Printing money by fiat and increasing the debt level actually stunts real increased GDP. Furthermore, increasing taxes actually sucks money out of the private sector and places it the hands of bureaucrats who produce nothing, and who do not increase wealth or output (GDP). The only way out of this prolonged recession is restoration of the public confidence in its government and in the business environment. The problem has been stated; now what is the solution?

Part One-The Government

Restoring confidence in our government should take the following steps: First, be aware that elected officials are mostly professional politicians whose real job is to get re-elected, not to serve the best interests of the nation. Obama himself has never really had a private sector job. The American process is every two, four, and six years to vote the scoundrels out, hopefully replacing them with public servants who have some experience at a real job and setting sound objectives. Money from pressure groups can be neutralized by you putting your money where your mouth is. These newly elected officials are likely to expose and eliminate perks, i.e., a 737 aircraft for the speaker, 5% pay raises in tough times, a separate health program and an overly generous retirement. The focus should not be that we tax too little but spend too much. Our current officials use our own to money to bribe us to offer social programs whose cost is unsustainable (Medicare and Social Security are insolvent) and the public must realize this. All civil service job rankings should be correlated to average American workers compensation down from the two times it is now. Legalize marijuana, regulate it and tax it like tobacco and alcohol which will reduce the cost of the war on drugs and increase tax revenues. Close the border, but permit a path to citizenship to make illegal immigrants pay taxes and allow wages to increase, making job competition fair, thus boosting American employment and reducing the costly strain on social services. More bloating of the federal budget because of higher levels of social welfare and the coronation of a privileged class will not stimulate our economy, common sense will.

Part Two-Business

A lack of confidence in business compounds lack of confidence in government. Banking big business has become “too big” to fail, and they use our deposits to finance high risks. Other industries move jobs overseas, which is one reason for high unemployment. Workers at Wall Street firms receive huge bonuses after being rescued by our tax dollars and what is wors, think they are entitled to them. The disparity between the average worker’s pay and top level executives’ compensation has become unreasonable.

Banks too big to fail should be mandated to carry a much higher level of capital reserve than currently, to cover unavoidable losses. Otherwise, let them fail while still maintaining an insurance plan to protect depositors against financial ruin. And a re-enactment of the Glass-Stiegel Act would prohibit banks from being both a commercial bank (loans, checking accounts, etc) and a broker/dealer (stock trading, underwriting, etc). Little risk to our deposits, but the separation would force them to use their own money for very high financial risks. Moving manufacturing overseas cannot be totally stopped but at least discontinue federal tax incentives. Move overseas profit back to the US without taxes as long as that money is used to re-train employees who have lost their jobs. To rein in the huge bonuses and to instill sanity in executive pay, change the rules for shareholders to have more authority to have their suggestions easily included in any shareholder vote, especially on executive compensation. Furthermore, any stock option grants must be prohibited from trading for two years after becoming effective. That should prevent short term profit goals and unjustified compensation. To loosen onerous governmental agency rules, congressional oversight committees should have voting power with the votes transparent. Prohibit the appointment by the executive branch of any “Czar” who now skirts legislative approval. Reduce or eliminate corporate taxes similar to other industrialized nations. Corporations do not pay taxes but rather just pass on the cost to consumers. In summary, America was founded on the principles of an economic system of capitalism for equal opportunity but not equal outcome, a legal system that is fair and just and a responsive executive, legislative branches. A return to these principals that have made us the most successful nation in history will stimulate the economy. Lastly, vote!

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