THE BLOG

Playing Games

07/05/2011 11:50 am ET | Updated Sep 04, 2011

The people don't realize that Washington is playing games. Once you get to Congress, you can stay there if you play the money game and don't make any mistakes. The money game is vicious. To be elected the seventh time to the United States Senate in 1998, it took $8.5 million. Eight and a half million factors out to raising $30,000 a week, each week, every week, for six years. It's not just raising money the year ahead of election, but all six years -- and all the time. We used to have a junior Senator read Washington's Farewell Address on February 22nd. But now we've merged Lincoln's Birthday with Washington's so that we can go to California to raise money. We have breaks each month for fundraising, the month of August off for fundraising, and fundraising morning, noon and night in the city of Washington. The name of the game is to get the money to get on TV and make no mistake when you come in from the fundraising. That's why nothing gets done.

As far as the President and Congress are concerned, paying for government is a mistake. That's why the President and Congress have been borrowing to pay for government for 10 years. Getting out of wars is a mistake because it makes you appear weak on defense. That's why we continue in five wars: Iraq, Afghanistan, Pakistan, Libya and Yemen. Creating jobs in the U.S. is a mistake because it will turn off the contributors: Wall Street, the big banks, and multi-nationals who want to keep the off-shore profits flowing. That's why Congress gives a tax benefit to create jobs off-shore -- and refuses to repeal it.

Globalization is nothing more than a trade war with companies looking for a country with cheaper production costs. Every country is competing, building its economy, while the President and Congress play games, doing nothing to stop the off-shoring of the nation's economy. Our country has trade laws, but President Obama refuses to enforce them. We wouldn't be begging Russia for helicopters for Afghanistan if we enforced the War Production Act of 1950 like Jack Kennedy did in 1961. Imposing an import surcharge like Richard Nixon imposed in 1971, when our trade deficit was comparatively minuscule, would immediately create jobs and growth. Ronald Reagan obtained restraint agreements on steel, motor vehicles, computers, and machine tools, and imposed a 45 percent tariff on motorcycle imports to save Harley-Davidson. Repealing the tax benefit for off-shoring and enforcing our trade laws would create millions of jobs. The president and Congress are a fifth column in this trade war.

The principal weapon in this trade war is a value added tax which is rebated on exports. The VAT is not complicated -- easily installed and administered with computers. It's self-enforcing so we can reduce the Internal Revenue Service and get rid of the tax lawyers and lobbyists in Washington. One hundred and thirty-six countries compete with an average VAT of 15 percent. Our corporate income tax is not rebated, so U.S. exports are levied; the U.S. corporate tax and a VAT when reaching destination -- 17 percent in China; 19 percent in Germany. The VAT is also used to put U.S. manufacturers out of business. Germany has a windmill plant in Charleston, S. C. It produces the parts at high cost in Germany, ships them at 3 percent cost, assembles the parts at 3 percent cost, and with its 19 percent rebated, it produces windmills or green jobs 13 percent cheaper in Charleston than any U. S. production.

The problem is not entitlements -- Medicare is in surplus until 2024; Social Security 'til 2036. The problem is the president and Congress playing games and refusing to pay for government. We didn't pay for tax cuts, prescription drugs and wars under President George W. Bush, increasing the debt $5 trillion. Under President Obama, we have refused to pay for tax cuts, prescription drugs, wars, and stimulus, increasing the debt $4.5 trillion. The target is $9.5 trillion to stop borrowing and get back to a balanced budget like we gave President Bush in 2001. Now, paying trillions for tax cuts, prescription drugs and wars with only spending cuts is playing games. Eliminating tax breaks for corporate jet owners, hedge fund managers and oil companies is playing games. Budgeting for growth, closing loopholes, and taxing the rich is playing games. Nothing gets done.

Corporate America pays no income tax on off-shore profits if the profits are re-invested off-shore for more profits. We should stop playing games and reverse this benefit to create jobs on-shore by canceling the corporate tax, averaging 23 percent, and replacing it with a 6 percent VAT. This cuts taxes, promotes exports, creates jobs, and provides billions to pay down the debt. Last year, the corporate tax brought in $194.1 billion, whereas a 6 percent VAT for 2010 brings in $700 billion. With $70 billion exemptions for the poor, this leaves $630 billion to pay down the debt. Spending cuts will provide billions more to pay down the debt and have a vote on the debt limit. Now Corporate America can repatriate a trillion dollars in off-shore profits to create jobs in the United States.

But the President and Congress play the game of "chicken" on the debt limit. Each thinks it has the upper hand because each can blame the other, and the press and media play it for all its worth.

It's easy. All the President and Congress need to do is take the tax benefit they give Corporate America to off-shore investment and jobs and give it to Corporate America to create jobs in the United States. Replace the eliminated corporate tax with a 6 percent VAT and "presto," Congress has cut taxes, created millions of jobs, lowered the debt limit and started competing in the trade war.

Instead, the nation suffers as the president and Congress play games and fight for contributions.