They say that a politician who tells the truth exists only in stories. And if he did exist, then his reward would be to lose his job. Well, I would rather be a one-term success than a two-term failure. I want to tell you the truth, even if it turns out to be hard on all of us.
The first truth is that this whole debate about the annual deficit and the national debt has been a fraud. Neither Democrats, nor Republicans, nor I, have been serious about eliminating deficits or about reducing the national debt. Every plan, and I mean even the House Tea Party plans, guarantees more deficits and another $10 trillion or more added to the debt in the next 10 years.
Why is this so? Because with an annual deficit of $1.5 trillion or so, the celebrated August deal to save over $3 trillion in 10 years means only $300-plus billion in savings each year, creating over $1 trillion in new debt, or $10 trillion more in 10 years. Simple arithmetic. Simple facts. No one is talking seriously about balancing our budget. No one.
Of course, this assumes a deficit baseline of $1.5 trillion each year. We all want to reduce the baseline budget, but is it smart to guarantee how much budget discipline we will have over a 10-year period? It's safer to assume a worst-case deficit than an optimistic one.
If we can't afford a $14-trillion debt right now, as some say, does it make sense to create a $24-trillion debt in 10 years? Well, of course we can afford the current debt, and we probably could handle another $10 trillion, but who wants to go deeper in debt when we have so much to do to revive the economy and to put people back to work?
Why is it so hard to balance the budget? We have been borrowing instead of paying our way. We have been building a burden for our children and grandchildren instead of taking responsibility for our debts. We have been running up the national credit card bills and making the minimum interest payments. You know where that leads: to personal and national disaster.
How did this happen? First, we passed the Bush tax cuts, expecting them to create jobs and stimulate the economy. But they didn't work. The Bush tax cuts created few jobs and never paid for themselves. Those who call for more tax cuts need to look at the reality since 2000 and admit that calling for more tax cuts is a political statement with no regard for the consequences. Cutting alone is not an economic program. So, if we continue the Bush tax cuts, they will add over $400 billion a year to the debt, or $4 trillion over 10 years, wiping out the savings recently agreed to.
The truth is, we can't afford the Bush tax cuts. I propose that we accept reality and phase them out. Doing this gradually, over the next four years, will not harm the economy and will eliminate this drain on our finances. It's the first step toward managing money responsibly.
I am not talking about just raising taxes on the rich. I am talking about all the Bush tax cuts. All of us need to contribute to paying our way. This is what patriots do when the country needs it. While every taxpayer will pay a little more, the burden of eliminating the Bush tax cuts will fall more on those who earn more, as it should.
The second major factor that expanded our deficits was the vast expansion of national security after 9/11. In 2001, our defense budget was the biggest in the world by far, but it was under $300 billion a year. Can you believe it? It is now over $700 billion a year, not even counting homeland security costs. None of this expansion has been paid for: it has been financed by borrowing. Instead of buying war bonds, as in World War II, we have asked future generations to pay for our defense. This is both selfish and irresponsible. We need to pay our own way for defense and homeland security. We need to reduce the defense budget by a lot more than anyone has proposed. At a core defense budget of $400 billion a year, we still would be spending more than the rest of the world.
But how can we cut the defense budget by so much? First, we will end our occupations of Iraq and Afghanistan as soon as we can, and then help those countries rebuild. Next, we will bring home more of our troops from around the world. Do we need so many troops in Europe? Do we really need more than 800 military bases around the world? Doesn't that look like an overextended Roman Empire, even if our motives are pure? Other nations are right to be concerned about our military presence near their gates.
I am directing that 400 overseas bases close in the next four years. In addition, we will stop our military expansion into Africa. That long-suffering continent needs our aid more than our arms. We also will bring home half of our troops from Europe, and half of our troops in South Korea. Overall, half of our military personnel will be brought home in four years. The savings will be great.
We also have to fight harder to eliminate unnecessary and expensive weapons systems. For everyone who suggests that bases and weapons systems provide jobs and support the economy, we will ask if those jobs contribute to our long-term economic health. Or, do they take away from investing in our schools, infrastructure, alternative energy, fundamental research or, most important, jobs in the civilian sector? We can and must have guns, but when faced with a real choice between guns and butter, we will choose butter. Fear will not drive us to waste money. Fear will not drive us to sacrifice our people for a few corporate giants. We will choose wisely and spend what we have to spend on defense, not what some want us to spend.
Making these cuts will be hard, no question about it. And it will take several years to achieve all that we need. But, doing this will make us stronger economically, while preserving a strong core defense program.
And until our defense cuts are achieved, we need to pay for our military, not borrow against the future. We need to pay for the past 10 years, as well. That is why I am proposing a national security surtax of from 2 percent on low income taxpayers up to 5 percent for the wealthiest. This will pay our way while we debate the future size and shape of the defense establishment.
Are we done now? Unfortunately, phasing out the Bush tax cuts and paying for our defense will not be enough. Together, they account for just over half of the annual deficit. What about the rest?
Let me start with the corporations. Their tax payments as a share of total federal tax income have dropped from over 40 percent to under 20 percent. Think about that: individuals now carry nearly 80 percent of the tax load, while corporate tax cuts, breaks, and subsidies allow the corporate sector to pay half of what for many years was considered their fair share. This has to stop.
We need to eliminate these tax breaks and subsidies, including for corporate agriculture. This is good economics, recovering $100 to $200 billion a year for the public. It also is good for business, leveling the playing field: corporate success should go to those who truly innovate and create good jobs, not to those with good tax lobbyists and tax lawyers. Every large corporation must be made to pay a minimum tax, not a zero tax. Getting government out of the way of the private sector must include this leveling of the playing field.
Next, we have to come to grips with the health sector. Unless managed properly, health care costs will drag us down to road to bankruptcy. Here, too, we need to act as clear-eyed adults, building a better health care system without breaking the bank. It has to begin with us: we expect too much. We expect access to every possible medicine, every possible surgery, and all the care we need no matter what the cost. In short, we all expect the maximum possible health care.
This is neither realistic nor affordable. We have to create a balanced health care system, not a maximum-for-all system. And here, hard decisions will have to be made, decisions we have been postponing for too long. For example, should we spend $100,000 a year for a cancer drug that may extend life three or four months? As individuals, we all would like more time. As a society, is it really the right choice, the proper allocation of limited resources? How should we balance the needs of the young and the working against those of the aged? We can't have it all: again, we need to be adults and make the moral and responsible choices.
Paying for health care procedure by procedure is a prescription for ever-escalating services. Obviously we should pay doctors a good salary, but we also need to remove the incentive for them to choose expensive procedures, or to open labs or clinics as sidelines. Thus, we should put doctors and other medical personnel on a salary and reduce their workloads, as well. This will be a major step toward controlling health care costs.
The second step is to cut administrative costs, for both hospitals and clinics, and for the insurance industry. Our goal should be no more than 5 percent in administrative costs, rather than the 10 percent or more we see now.
Hundreds of billions of dollars would be saved each year by these two steps. And, if these are not enough, we need to be willing to go further. We can and will continue to have a great health care system, but we can't "have it all."
Third, we need to address the cost of the federal government. While I believe strongly in the importance and effectiveness of our federal work force, it is clear that it takes too long to fight to cut budgets and improve services one at a time. It is time to set priorities and force the needed change. I am calling for us to cut the federal work force by 10 percent over the next four years, and the federal contracting budget by 20 percent in the same time. These cuts will be across the board, for every agency, including defense. Every department and agency will be required to make proposals on where and how to cut back and will collect public input before final recommendations. Nothing sharpens the mind like having to make cuts, and we need these across-the-board cuts to make us sharper.
Finally, we come to jobs. Our stimulus packages may have kept things from being worse, but job growth is unacceptably small. The banks and financial institutions we saved have hoarded cash instead of loaning it for new businesses and growth. Corporations with all-time high profits are not hiring our citizens but continue to outsource to other countries. So, once again, we have to stimulate the economy. This time the focus has to be on hiring people, not on planning or research. We need to get money into the hands of the strapped poor and middle class, and into the hands of the employable but unemployed. I am proposing a $3-trillion stimulus package, targeted at jobs. Infrastructure projects that are ready to go will get priority. Rehabilitating our schools and hospitals and roads and railways will get priority. Insulating our homes and offices will get priority. Energy-saving technology will get priority. This kind of stimulus will turn around the economy and pay for itself through economic growth.
Many will say that all of this is too radical, too damaging, too impractical. I say that this is essential for the future of the country. Democrats, Republicans, Independents, all of us have to take our budget problems seriously and make the serious changes we need.
But most important, we all need to have an economy of patriotism and shared sacrifice, as well as shared effort, to fix our financial situation. The time for slogans has passed. The time to join together is now. In crisis, patriots come together for the sake of the country. I call for all patriots to help us make the serious choices, the grown-up choices, that will bring us a brighter future.
30% on everything imported to our ports, and any raw material sent out a 30% Tariff for all exports of raw material.
why is it that we can't find many items made in the US anymore? its because everyone has gone offshore for the labor cost.
Well, then charge a import tariff. That would stop this flood of "stuff".
The US makes very little products anymore. When we don't make anything anymore, where are all these jobs going to come from?
get rid of the fair trade act, and charge that tariff..... We could pay off the national debt, and put our people to work
A far better plan.
Fix health care: we don't need someone in Washington making the tough choices for what level of care a dying person needs. We need millions of people deciding how much of their own money to spend on health care at all stages of life. Privatize all of it. Eliminate the tax benefits to corporations for providing it (and reduce all income tax brackets to at least offset the costs.
Second: freeze spending at 2007 levels (while maintaining. Current tax levels) until the debt is payed off and government spending is less than 10% of GDP. Then allow spending to grow at the rate of GDP growth.
Politicians can spend their time arguing about how to divide this shrinking pie.
Simple, practical and reduces the power of politicians in Washington.
The NATIONAL WEALTH that is created by GREEDY private businesses is (almost) the ONLY source of wealth available for the federal and local US governments to FORCIBLY TAKE a portion of in the form of taxes in order for the government to raise funds in order to pay for bureaucratic government bureaucratic employee payrolls, government contracts such as the gigantic Lockheed-Martin contract(s), infrastructure improvements, wars and other government expenses that increase employment by expending wealth for these non-wealth creating activities.
There are also funds that the government raises by borrowing money (printing and selling US Treasury Bonds that mortgage (can be exchanged for) our existing private owned businesses and other existing assets located in the USA with the promise that our children and future unborn generations to work hard to repay these bonds when they become due.
There are a few additional sources of Government revenue such as Import duties, mineral right royalties from government lands, sales taxes, etc.
Bureaucracy is not a dirty word when EVERYONE makes use of the services the government provides that taxes pay for.
1. plant, grow and/or harvest something of commercial value from the earth;
2. extract something of commercial value from the earth;
3. manufacture something of commercial value that is consumable
4. construct permanently useful for rental income;
5. provide professional services (medical, legal, dental, engineering, architecture, land surveying, technology, accounting, etc.);
and then trade, sell, lease or rent these items and/or services to parties outside of their family, in return for a net transfer of gold, currency or commodities from other parties outside of their family into their own family.
The members of that family (tribe, state, nation) can then reflect their real NATIONAL WEALTH and financial security with the net positive accumulation of grain, gold, cattle, jewels, land, buildings, hotels, casinos, factories, commodities and/or other marketable products that are then available to be used for economic security for reserve use in times of emergency and/or also to raise the standard of living for the members of that family and also accumulate redeemable products and/or commodities plus title to US located assets as redeemable value for any printed currency that they might care to issue.
The US International Trade Deficit must be corrected by any means possible in order to generate more NATIONAL WEALTH and stop the flow of title to US located assets (privately owned businesses, factories, casinos, hotels, farms, land, ports, refineries, forests, ports, breweries, distilleries, and other NATIONAL WEALTH) that are leaving the USA to pay for the things that we import from foreign manufacturers, and also to pay for increasing government expenses, such as stimulus for infrastructure expenses.
The Trade Deficit is the basic structural economic foundation problem that will destroy the US economic miracle because title to US located assets are also leaving the USA to pay for the things that we import in addition to US government expenses.
Millions of unemployed US citizens could be employed for a short term to build high speed rail, infrastructure, and other things while the USA still has title to sufficient remaining privately owned NATIONAL WEALTH that was created by previous generations of US citizens available to exchange (sell or mortgage) in return for US dollars back from individuals in foreign industrial nations to spend for these wealth consuming activities,but that would bankrupt the USA and turn the USA into something resembling Somalia.
How do you think that any of the US manufacturing businesses could ever possibly even consider creating and/or keeping any jobs in the USA if they are hamstrung with many times more expensive labor costs, many times more expensive electrical energy that is required to be generated in compliance with the EPA, health care payroll tax costs, unemployment payroll tax costs, social security and medical care payroll tax costs, environmental compliance manufacturing costs, fringe (holiday and vacation) benefit payroll costs, OSHA compliance payroll costs, union labor work rules, anti-business laws, and general anti-business attitudes that make manufacturing products in the USA many many times more costly than manufacturing the same product in almost any other foreign country?
Only these GREEDY private sector businesses and GREEDY corporations create the NATIONAL WEALTH that is then available as business profits, private personal income, property taxes and personal inheritance to be CONFISCATED through taxation to pay for government bureaucratic employee payrolls, infrastructure improvement contracts and other WEALTH DESTROYING GOVERNMENT EXPENSES, and also to pay off any existing government bonds when they become due at maturity.
Federal, state, county, municipal, school district and other various government taxing authorities CONSUME (or destroy) the NATIONAL WEALTH that was created by the GREEDY private sector and spent by the tax supported activities.
The US governments at all levels must encourage the GREEDY private sector businesses and GREEDY corporations to engage in more WEALTH CREATING activities, if the US citizens want more jobs!
What a true statement.
"Political power only comes out of the barrel of a gun!"
Mao was only partially correct because a strong economy is also necessary to arm, feed, support, house, pay and otherwise maintain a strong military.
The soldiers need to be happy, or they might overthrow whatever government might be in power. China now has the strong economy and is rapidly building their military technology and military might to surpass military capability of the USA in the very near future. If the USA decides to pirate (steal or nationalize) all foreign owned property, ala Mexico in the 1960's, Venezuela. Etc., China might be able to enforce their property rights with appropriate punitive military action onto US citizens on US soil to preserve the rights to their US located property.
Future wars might also be industrial wars where the nation with the most wealth creating industrial manufacturing production will win the economic war by producing more NATIONAL WEALTH!
And non-wealth producing nations like the USA might destroy their own economies with (deficit) government spending which will impoverish all of their citizens by selling and/or mortgaging existing NATIONAL WEALTH and spending the proceeds for federal government activities!
The only part of this plan that would resonate with Republicans is: "a national security surtax of from 2 percent on low income taxpayers."
What this country needs first and foremost is campaign finance reform so we get people running for office who know and demonstrate the meaning of the words Public Servant.
Allan