How to Transform the US From a Debt to an Equity Economy
I originally wrote this at the end of 2006, largely because of the need to find a way out of mammoth amount of debt in the US economy. This article and the ideas presented are salient to the recent push to drill in Alaska and offshore. While I have heard a great deal of rhetoric from both candidates, little of it makes economic sense. McCain wants to institute another round of supply-side policies despite the fact that the previous two times these ideas were implemented the US increased its overall debt at a mammoth level (see charts below). While I agree with Obama's overall concept he faces a different problem: he inherits a federal government that is deeply in debt. I explained his basic problem here. The problem with both candidates is no one is accepting the fact the US is in a dire situation at the federal level. Dire situations call for radical solutions.
The US' current economic trajectory is unsustainable in the long run. The domestic economy is dependant on foreign capital to finance consumption beyond our production. The US government has issued over $500 billion dollars in net new debt per year for the last 4 years, indicating the budget deficit is not under control in any meaningful way. The US consumer has taken on an enormous amount of debt to finance the latest economic expansion. In other words, debt saturates every level of the economy to a harmful degree.
What I am about to propose is a radical departure from the overall current economic policy of the United States. Implementing this policy will require an incredibly difficult debate and policy application. The application of this program will hurt many people. Ideally, we should spread the pain out among as many people as possible. However, the pain cannot be avoided. In addition, implementation will take a great deal of time. The method of paying for this plan will be extremely controversial, especially among Democratic circles. Implementation will take consistent effort and sacrifice.
THERE ARE NO EASY ANSWERS TO THE OVERALL PROBLEM. The sooner we accept the reality there will be some pain for everyone, the better off the process will be. As a country, we have lived beyond our means for far too long; it's time to pay the bill. We have a very bitter pill to swallow. The best thing we can do is swallow the pill and move on.
The short version of this plan is simple: The US must move from a debt to an equity economy.
Overview of the Problem
The US international trade deficit has trended to a more negative position over the last 15 years. The following chart is from the St. Louis Federal Reserve:
A trade imbalance indicates a country is consuming more than it produces. The country with the trade deficit must borrow money too fund the difference between consumption and production. At the current level, the US must import roughly $2 billion/day to finance its consumption. At some point, creditors will demand a higher interest rate for the increased risk associated with holding US debt. In addition, it is also possible for the host country's currency to drop in value. Should the currency drop in value, the host country has a greater likelihood of importing inflation. Neither possible scenario -- an increase interest rates caused by increased perception of risk or a devaluation of the host country's currency - is beneficial for the host country.
The federal debt situation is just as dire. The problem started with the implementation of supply-side economics in 1981. While the Reagan administration loved cutting taxes, they did not cut spending. As a result, the Federal government issued a large amount of debt, increasing the debt/GDP ration from roughly 30% in 1980 to over 60% in 1988. Bush 43 implemented the same policies with the exact same result. According to the Bureau of Public Debt, the US has issued over $500 billion in net new debt each year for the last 4 years. (For a complete listing of government and revenue and expenditures, please go the historical budget data (PDF) at the Congressional Budget Office.) As a result of Reagan's and Bush's policies, the US federal government has issued debt to pay for growth. Here is a graphical representation of the situation.
At the household level, we have seen the exact same situation develop over the last 20 or so years. As wages have largely stagnated for a large percentage of the population, households have increased the use of debt to finance their lifestyle. As a result, household debt has continually increased, as the chart below from the St. Louis Federal Reserve indicates.
So, why is all of this debt bad? To quote Dave Ramsey, you're making someone else rich. The person that lent you the money gets some of the benefits of your growth. As the amount of debt increases, the lender receives more benefits in the form of higher interest payments. Eventually, the borrower must pay an amount so large that growth is almost painful. While current payments on US debt are not a large amount of money, we have also been the beneficiary of historically low interest rates. It's only a matter of time before lenders realize the US may not pay its debts and ask for a higher interest rate on their respective debt. This is when we will run into big trouble.
So, we've outlined the problem. That's the easy part. Let's move into how to solve this problem. This is where a great deal of pain comes in, because there are no easy answers. In fact, there are only difficult answers that must be implemented.
Priority 1. Balance the Federal Budget.
Here are the benefits of a balanced budget.
It prevents crowding out. This is a fancy way of saying money that would finance the federal budget deficit is instead invested in private capital. Let me use the current situation as an example. According to the Congressional Budget Office, the US had a $318 billion budget deficit in 2005. That means $318 billion dollars was not invested in the private economy, but instead invested in US government bonds. The larger the deficit, the less money available for private investment.
Psychology and uncertainty. A budget deficit detracts from individual's confidence in the market and the overall economy. As individual's look to the federal deficit, they understand that at some time the government must pay back the money it borrows. That means the government will probably have to either raise taxes (more likely) or decrease spending (far less likely whichever party is in control of the government). Deficits create psychological uncertainty. The larger and more persistent the deficit, the less happy people are and the less prone they are to take economic risks.
One of the primary reasons for the economic expansion of the 1990s was the prevailing sentiment among business leaders that Washington was finally in control of the deficit. This created an environment of confidence which increases economic potential. It's that simple.
So, how do we balance the budget? First, we either let the 2003 tax cuts expire naturally with their built-in sunset provision or we raise them. I would argue against raising taxes immediately because of the current slowing of the overall economy. I would argue we wait until at least the 3rd quarter of the next economic expansion before we consider this. We also need to look at several other options on the tax front, including reforming the estate code, increasing the maximum amount of income subject to social security taxes and certain corporate giveaways. This is all subject to Congressional give-and-take. But, the bottom line is that if we want to balance the budget we first need to increase government revenue.
In addition, spending has to be cut. And honestly,all programs must be on the table. That does not mean all programs will be negatively impacted to the same degree. However, the Federal government spends a lot of money; we have to decrease the rate of spending to a large degree. For the last 6 years, federal spending has increased an inflation adjusted 35%. That level of spending growth is simply unsustainable.
This process of balancing the budget will take awhile. I would guess at least 6 years if not longer. It will take constant concerted effort. And it will mean a lot of people will catch a lot of flack for the consensus decisions reached in the process. This is where political skill comes into play -- the ability to sell this achievement to the electorate in a away that allows Dems to continue the process. It will be a difficult sell -- especially after the Republicans have won elections on easy, something-for-nothing themes. I do not envy any political consultant's job in this task.
OK -- that's the federal side of the deficit. As promised, it is not a pretty picture. However, it is what must be done. Now, how do we deal with the consumer debt?
The first point to make is consumer debt is really a problem of poor wage growth. Save the 1990s, wage growth for most Americans have been stagnant for some time. What has made the "standard of living" bearable is the cost of many things has come down, allowing consumers to feel richer without really being richer. In other words, the central issue is how to create better paying jobs which actually increase wages for most Americans. So, how do we do that?
We take a page from Asian development which has a track record of success. We coordinate three different policies: education, domestic investment, and industrial policy
Priority 2: Education
American manufacturing has undergone a fairly radical transformation over the last 20 years. We have moved from (for lack of a better phrase) a pure brawn model to a brawn and brains model.
But manufacturers, regardless of size, specialty or location, across the USA are reporting a dire shortage of skilled workers: people such as welders, electricians or machinists with a craft that goes beyond pushing buttons or stacking boxes but does not require a degree.
In a survey of 800 manufacturers conducted by the National Association of Manufacturers (NAM) last year, more than 80% said they were experiencing a shortage of skilled workers. In October, manufacturers surveyed by the Federal Reserve Bank of Philadelphia said "finding qualified workers" was their biggest business problem.
The shortage of skilled workers is the result of a number of factors. One of the biggest is that manufacturing in the USA is becoming more high-tech and skill-based as the more repetitive, less-skilled work is moving abroad. Such jobs require greater expertise.
Innovation in the manufacturing sector means that the jobs require greater skills than ever before. According to an analysis by economists Richard Deitz and James Orr at the Federal Reserve Bank of New York, employment in high-skilled manufacturing jobs rose 37%, or by 1.2 million jobs, from 1983 to 2002. At the same time, low-skilled factory jobs dropped 25%, or by approximately 2 million workers.
A paper titled The Changing Nature of Manufacturing in OECD Countries highlights the problem as well. On page 8, the paper notes, "The graph shows that most of the decline in manufacturing employment over the past three decades has occurred in only two activities: textiles and metal products." The bottom line is the developed world is moving to increasingly high-tech manufacturing.
However, as the evidence from the Federal Reserve and NAM indicate, the US workforce is not ready to make this transition. This means, quite simply, that Americans must go back to school. And high school education must be expanded in important areas -- especially math and science. This is what the Asian countries did and still do for the most part. They concentrate education in the primary areas -- the American equivalent of K-12 -- and make the program much more demanding than their American counterparts.
In addition, we need to improve access and the cost structure of trade schools in huge proportions. There are industries which are currently in their end -- stage, at least in the US. Textiles lead the way, as do other more purely brawn-oriented manufacturing. Employees in these industries must be given the benefit to retraining if they are able to make the transition. If they aren't, we must insure their respective pensions are secured so they can live-out their retirement in dignity.
Priority 3: Targeting high-growth industries
This is the final area to discuss, and frankly it won't take long. The bottom line is there are several industrial areas that everybody knows show high-promise as industries of the future. Alternate energy development probably tops the list. The world's energy resources -- particularly oil -- are either at their peak or near their respective peaks. The world market is in desperate need of a true alternative to oil/petroleum as a means of energy. And it's time a country spent the capital necessary to develop one or all of the possible alternatives. I cannot speak to the possibilities. However, I know they are out there.
Two of my personal pet projects are stem cell research and nano-technology. I am sure there are others.
The primary way we target these areas is with money - as in massive amounts of federal dollars going into think tanks, research groups and universities to develop these ideas. Pure research has consistently demonstrated itself to be the mother of most of the greatest inventions. Therefore, funding pure research is the best way to develop these industries.
Paying for all of this.
I mentioned above that this would be the most controversial aspect of this idea. I guarantee I wasn't lying. However, before we get there, let's sum up the basic problem. At a time when the US economy needs a large infusion of cash for investment, it doesn't have it. The Federal government is in debt up to its eyeballs. Foreigners are financing our trade deficit. And consumers have already taken on debt in near-epic proportions.
So where do we get the money?
We open up Alaska and the Coastal reefs for drilling. I realize the controversy this idea will generate in Democratic circles. However, governing is about difficult choices. And we have a ton of them to make. Just as importantly, the US economy stands near a very dangerous precipice. We are completely dependant on foreign investors to finance our way of life. The federal government is facing serious financial problems. The US consumer hasn't seen a meaningful pay raise is some time. In other words, we have very serious problems. Weighing all of these problems against environmental interests is difficult. However, the long-term benefit of this program (as in 50 years from now) outweighs the drawbacks.
However, we do the following. First, we earmark a large amount of the proceeds from this specifically for investment in the above-mentioned programs. We do this through higher royalty fees and a high tax structure on the companies that develop these areas. Secondly, we put in place stringent environmental regulations. Finally, we put in place provisions about using American resources -- as in American manpower resources -- to perform the work.
So - why should we do this? Frankly, we have little economic or financial choice. The US economy must make the transition to the 21st century. We have little national savings to pull on. We have a government issuing debt like a drunken sailor. And, we have a set of resources that can develop the cash flow to allow us to pay for the above ideas. Just as importantly, as we make the transition we create a large amount of high-paying jobs. The bottom line is this solves a lot of problems.
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Hale,
An excellent plan. Though energy efficiency will have to be encouraged or we will just blow the additional oil out the tail pipes of our SUVs.
A revenue neutral carbon tax would have immediate impact on encouraging efficiency and balancing the budget. An emission fee of $200 dollar per ton of carbon dioxide with flat rebates of half the tax revenues going monthly to citizen's bank accounts, would be revenue neutral for most household's energy utilization levels.
Using numbers from carbontax.
This level of carbon tax results in a $2 carbon dioxide emission fee per gallon of gas and 14 cents fee per kilowatt hr of electricity. The yearly $4500 rebate would make the carbon dioxide emission fee positive or revenue neutral for most peoples utilization levels.
After the rebates there would still be $600 Billion. $500 Billion could be used immediately for eliminating the deficit. The remaining $100 Billion would finance education and the public domain development of renewable and energy efficient technologies.
A carbon tax(carbon dioxide emission fee) has the big advantage of having an immediate impact on the national deficit. It is simple, quick to implement and hard to game. Revenue for offshore oil and budget cutting will be effective long term.
You liberals always think a tax will solve everything.
If you created a tax that brought in 1-2 trillion that would nosedive our economy.
And public domain development of alternative energy has already been a huge failure.
How then do you explain that the apparent result of the Clinton tax increases was a growing economy and a budget surplus? Furthermore, how come the economy is in collapse right now in light of the Bush tax cuts? Some dirty rotten America hating liberal must be to blame for all this, right?
The Republican administration has presided over an increase in gas from $1.50 to $4.50 per gallon. This is $3.00 per gallon of gas. Increased energy costs, like this, for all energy sources are ripping $1.8 Trillion out of our economy this year. Even more next year.
How is sending this $1.8 Trillion dollars a year overseas good and a carbon tax spent in this country bad?
In comparison, a $200 per ton fee for carbon dioxide would be about $2 per gallon on gas. It would raise $1.2 Trillion
Spending this Carbon Tax for flat rebates to citizens, debt reduction, education and public domain energy efficiency technology would a huge economic benefit for many of the reasons Hale has outlined.
Nothing is stopping us from doing what is in our own best interests but fear. Primarily Republican fear of taxes.
How about I keep ALL of that money that I earned and not have to worry about a rebate? You make it sound like I will be MAKING money.
Offshore drilling is to our economic problems as a grain of sand is to a beach.
Wrong. There is more than enough oil out there to make a huge impact on world prices. There is even more natural gas. Like trillions of cft.
Quit repeating this bogus information.
So where are your superior sources of information. Simply chanting 'there's plenty of oil' isn't enough.
First, even if we accept that there are huge, untapped sources of oil and gas (totally unproven), supply and demand are not the reason for current high prices. Speculation in the stock market is responsible for high prices.
Second, even if we started drilling today in every spot where we even thought there might be oil (including your backyard), it would be YEARS before we would see any increase in production. We need solutions NOW, not ten years from now, and not solutions that just add to the bottom line of obscenely rich oil companies. Why is the conservative answer always to keep digging the hole deeper?
We need to have this discussion, and need to do some, or all of what you are saying. The Republicans will have none of it, or will skew it to favor Corporate income and assets, and be unwilling to devote proceeds to correct the economy in the manner you are describing. It is no coincidence that the run-up of debt has occurred primarily on the Republican watch, wih only an everso slight abatement under Clinton. "Conservative"? Not by any definition I can understand!
In short, we need to defer the implementation until after the election, and in the interim, educate ourselves and our representatives about the perilous condtion of the economy. Your articles are tough to understand, Hale, but your graphics should make it clear to everyone. Thanks.
The neocon plan from the beginning has been to run up the debt, loot the treasury, freeze or roll back wages, eliminate healthcare and pensions for working people, flood the country with millions of immigrants to destroy the ability of labor to fight back, confuse the public with moralistic bs about the End of Times, Baby Killers, and a New Crusade To Kill Muslims.
Then, when we're all broke, the neocons will say: Well, the only way to solve this problem is to sell off all our assets. To foreign countries or to home-grown neocons who will "kindly" rescue us by, for example, buying up every road and highway in the country. You want to drive your car on the freeway? Get out your wallet and pay money to your rescuer.
And they will take all our water, lakes, timber, oceanfront, mines, ores, metals, they will take our agricultural land and our crops. They will eliminate all social programs including water delivered to your home, education, fire, police. They will sell everything off to the wealthy elite.
And all the rest of us will have all the rights of slaves -- we own nothing, we are legally obligated to work for the people who conquered us, we will work until we die. The plan is going swimmingly.
You are right. Though I do not think it is really a Republican plan. I think it is largely due to the Republicans irrational fear of taxes.
How else can you explain increasing military spending dramatically to fight wars on several fronts while reducing taxes? Economic suicide, yet they did it anyway.
They would rather we all pay $5 per gallon of gas with $3 on the increase going out of the country, than increase the tax on gas a dollar or two a gallon. Increasing the gas tax a few years ago would have kept a lot of money in the country and greatly reduced the growth of our national debt.
I got news for you. It is labor unions headed by LIBERALS that are supporting the importation of foreign labor. The Republicans are allowing it to happen but the Democrats are certainly no better.
Hi Mr. Bonddad...
I'm by no means an economist.
Knowing this... wouldn't it make sense to give the people more money? Couldn't the increase in spending pay for the increased salaries and still give the corporations big profits? Wouldn't the increased income from taxes on the higher salaries pay for the deficit and balance the government's budget?
As an example... if GM were to raise workers salaries..
Just wondering if we could apply the judo principle to work in the economy (find your weakness..
You just stated that the problem is that the more people make the more they spend. And your solution to the problem is giving them more money. Common sense dictates that you live within your means REGARDLESS of how much you make. If you make $50,000 a year then don't spend $55,000. It's simple math. I speak from experience. When I was younger I went from making $8/hr and always broke to making $20/hr + benefits and always broke. The problem is most people don't learn. I learned my lesson and I know that giving me more money does NOT make me more responsible with how I spend.
Actually, a better example would have been "if FORD were to raise workers' salaries..
Because he did. That's how he sold so many cars in the beginning.
Anyway, it has been shown that "trickle-down" economics doesn't work -- money naturally rises.
However, "bubble-up" economics does. If you must inject money into an economy, it's better to put it in at the bottom, let it percolate to the top, and maybe even skim the top of it and do it again.
"bubble-up" economics increases inflation, which is bad for the poor and bad for asset prices and economic growth. "trickle-down" economics is good for growth, good for the wealthy, good for the poor (because of low inflation, increased access to consumer goods, cheaper consumer goods, etc), good for asset values, and good for skilled workers. Don't forget that the Union dominated economy from the late 60s to the early 80s was responsible for inflation so severe that we lost nearly 15 years of progress because of it. Productivity virtually didn't grow at all, our urban centers fell into ruin, and the inflation was crushing for the poor and elderly.
We could cut spending by billions by stopping foreign aid. Especially to countries like Pakistan.
Little domestic impact.
Also, remove the 150,000 troupes we have around the world.
America First !
This is true, however, this does not solve the problem of individuals being responsible with their spending.
Holy Crapdoodles. I actually agree with something that Torrep said. There must be hope for the world.
Sorry, we're talking about what 2-3 billion a year in aid to Pakistan, much of which is actually spent in the US. US aid to Pakistan looks like a big deal in Pakistan, thanks to the fact that Pakistan economy leaves a lot to be desired for a country of 150 million; but it is not a big deal when we're trying to make a dent in 1.5 trillion owed to China and over a trillion owed to Japan.
Bondad's proposal, like it or hate it, at least gives numbers that aren't two orders of magnitude too small. By the way, I'm not keen on his proposal, because he's basically proposing to fix the damage the Republicans have done, leaving the Republicans free to wreck the economy again. In the absence of some sacrifices by Republicans, and with no way to bind them to a deal, I'd just as soon do what they did. Push our agenda and let the collateral damage fall where it may.
As much as I hate to admit certain of your solutions I have to agree. Being fundamentally environmentally conscious I hate to see us drilling into pristine ecological warrens to get oil to burn and pump the atmosphere with more CO2. But being realistic and knowing our energy needs are not going to go away we do need to do something and at this moment that is possibly the only temporary solution, more a panacea. But if it happens, and this is a big BUT, a vast portion of this money needs to be pumped into the government coffers and diverted directly to the research you are talking of. At the same time the government needs to start serious budget cuts, as much as that will hurt, and take on some responsibility. How many more $200M+ warplanes do we need etc.? And finally our populace needs to come to its' senses and show some self control. A big task for leader big enough to take the lumps to pull it off!
Know this! The oil corporations are already sitting on oil leases that they're NOT using. It's highly unlikely they will pay us anything close to a fair amount to secure them. We already possess the technology to solve our energy needs. What we lack is the will to change.
These warplanes have become extremely expensive. We have to stop buying them and use the money saved to put green energy into effect or to make up some of the incredible debt we owe.
Ummmm no. They are sitting on land leases.
I
When I graduated from high school back in 1953, I went to work for the Santa Fe Rail Road as an apprentice electrician and I learned a trade that led me to a rewarding career. What happened to that concept? If the need for skilled workers really exists, the means are there to readily meet it and it’s a win/win solution.
If we are to recover from our overwhelming debt, there are several things we must do. Selling leases for oil drilling is not one of them, it may make economic sense but it means worsening an ecological disaster. We simply cannot do that.
First we must stop the hemorrhaging.
Bring our troops home from Iraq, Afghanistan, and all of our bases on foreign soil. Allow those who want end their enlistment to do so, and base the remaining troops here at home.
Someone has to pay for this debacle, why not the ones who benefited from it? A steeply progressive tax rate and not just the rescinding of Bush’s tax cuts are in order.
I’m sorry to tell you there will be tariffs and they should gradually increase until they correct our negative balance of trade.
II
Then we must pay down our debt.
We’ve saved a lot of money here and some of it can be used to bring our debt down, but that’s not all. We must become producers again. We have to make our own stuff. If Nike still wants to make its shoes in China, in spite of the tariffs, then let them sell their shoes there. If a corporation closes its factory in America and moves overseas, then our government must take up the slack and replace it in kind. And oh, all of our workers deserve the ability to earn at the very least a living wage.
There done! Stand back and watch our economy grow, Paying down that overwhelming debt should not be that difficult now. Let’s stop making everyone else rich and do it for us.
Workers deserve nothing. They are entitled to get an education or to learn a skill or trade. They are not entitled to a set wage based merely on the fact that they are a citizen. This is EXACTLY why we don't have skilled labor. People just EXPECT to paid a living wage while offering no benefit to the employer or the community for that matter. There are plenty of places to go and learn skills and trades for little or no cost. I as a businessman would not invest in an employee who refuses to invest in himself. Also you have to understand that not all jobs are designed for supporting your family. If you work at McDonald's and you expect them to pay you enough to pay a mortgage, two car payments, 3 kids and who knows what else then you are not very bright. An individual has the responsibility to qualify for a particular job. If that job does not pay what you think you are worth then you have the right to quit. The job is NOT required to pay what YOU want.
By converting from income tax based revenue to a national sales tax, you would immediately implement a stealth tariff of 21% on all foreign imports, without any of the negative consequences of implementing tariffs on trade policy. Plus all the tax loopholes would be closed for the rich, those defrauding the IRS, and for the seething underbelly of society. And it can be as progressive as you want based on tax pre-funds.
You would send in a one page form to the IRS each year listing your income and your dependents, and they would determine if you qualify for tax relief. Then you would get a check in the mail, or a deposit into your bank account each month to offset whatever percentage of tax you qualify for.
I think the rich would much rather have to pay 21% on sales tax as opposed to 50% income.
The rich are not the only ones with loopholes. Many Americans pay 0% tax yet enjoy the benefits of the system. This equally is not right.
Isnt' this a form of a regressive tax?
Given that the uber rich and the middle class spend similar amounts on upkeep of the lifestyles and vastly different percentages of their income on the same, aren't you in fact suggesting that we lower the tax rate on the uber rich from the ridiculous 15% current to less than 1%?
Hale,
This is a fantastic post. Although I feel a great reluctance to support the opening of Alaska for oil, with the right environmental regulations, meaning regulators and regulations that actually regulate, it could be a great source of economic growth. I also especially like how you mention asian developmental strategies, especially with the emphasis on higher education. We Americans are just not as smart as we think we are and if we do not make a concerted effort to correct this differential, the manufacturing and other jobs that are currently bleeding into China, India, and the developing economies in that area, will surely become a bleeding of high tech and skilled labor jobs. It is not simply a preference of education level achieved, it needs to be a serious national priority. Once again, very good post. I love reading your articles because hardly anyone wants to tackle the actual distribution of money in our government, especially the government itself!
Thanks again Hale.
The proven oil-reserve in the wilderness area of Alaska, that everyone wants drilled, is said of quantity that with Americas present consumption-rate, is a one-year (1) total-supply. The Hubert Peek theory goes for this miniscule reserve also.
They said reserves in Prudhoe Bay Alaska would be even less than that, and guess what? We still get a heck of a lot of oil there, plus there is new technology and drilling techniques so we can get oil that we never could just 10-20 years ago. And last, don't underestimate even a one year supply of oil. It could affect worldwide oil prices because it could add a relatively significant percentage to the slack in capacity (capacity minus current demand). Oil prices went down dramatically in the 1980s when new supplies came online, let us not forget that. I personally think it's ridiculous not to drill for our own oil. It's costing the country tens to hundreds of thousands of very good high paying jobs in the energy industry, and costs many industries tens to hundreds of thousands of jobs because of the high oil prices (like airlines and some manufacturers). We need to drill now. The global warming argument is ridiculous at would add almost nothing to that process.
Bonddad, Thank you for a useful, provocative post. But what's the point of devising a complex program to inflict pain on all or most of the cititzens that will have program enforcement costs and yet be difficult to enforce? The declining and soon to be valueless dollar will very effectively accomplish the same thing, perhaps distributing costs and suffering more fairly than any created program could, and at the same time the worthless (WD$) dollar would drive home the essential point about conducting the empire's affairs with more prudence and foresight.
YOu have the same habit I do. You type "ration" when you mean to type "ratio." It's a real pain.
This is how you pay for investment, take back the stolen money from the oil companies and war profiteers and invest all of it in these new technology sectors, setup affordable funds for people to invest in these industries and heavily regulate it. End tax loopholes for the rich and take back the money, with penalty fees, they have scammed out of the system... and heavily raise taxes on the rich, especially those making over $500,000..
Display all the charts and flash the econspeak all you want and still not get at the root cause of this country's economical problems. In effect....
Since this country inherited world leadership after WWII it has wasted near one hundred thousand young men and women lives in military adventures, plus destroyed the national treasure. All the while Europe (my prime example, less GB) has grown prosperous, and now bloated. It is not mere chance.
Time for the USA to turn inward, adopt an America first stance as all countries do.....no, not isolationism but merely a purer interpretation of exactly what "in our national interests" means. Clearly, saving our youth's lives and blood and stemming the flow of our treasury's funds to other lands is the first step.
I would strongly disagree that the 'root cause' of Americas debt is 'leadership in the world'.
Having researched the regimes and dictatorships that our Corp-Gov sets up around the world, and then gorges (resources) upon, that this would better be described as "World Domination" for benefit of a very few.
Dumb. Care to reveal your research? Or at least, give us your liberal rant. The USA has, mostly, stood up for democracy and in the process sacrificed lives and treasure, in case you really did miss the point.
"Free Trade" = "Enslaved People"
No...."ove
Poverty is slavery.
Approximately a billion people throughout the world have been risen above the world poverty level in the last decade because of free trade. Free trade has brought prosperity to people in places like China, India, Brazil, Russia, Eastern Europe, Latin American, .. nearly everywhere. It is absolutely ridiculous to equate free trade with enslavement.
The President just vetoed a farm bill that would pay out billions to agribusiness, probably the only thing he ever did that I agree with. He wants to spend money for war. But Congress will actually unify to override the veto. So there really is no solution to the problem. But the Republicans and Reagan Democrats will love the idea of drilling for oil as a solution. The only problem you have in California is that a lot of the people opposed to drilling are rich, politically connected Republicans and Reagan Democrats who own coastal property.
Actually it is rich liberals out here in CA
Liberal in the Fox News sense, meaning anyone that isn't a raving right wing extremist. For example is Diane Feinstein a liberal? Your so-called rich liberals voted Ronald Reagan into the Governors mansion. They put Arnold into the Governors mansion too. Didn't you know that Arnold is opposed to offshore drilling? Is Arnold a liberal? How long have you been living in California?
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