Just as it took years for the economic damage to occur, it may take years to repair. Outlined below are seven proposals that will not instantaneously bust the Treasury, but will in a very short time cause jobs to be created, consumer confidence to climb, and the economy to move forward.
1). Return the deduct-ability of interest expense, from whatever source, especially automobile financing, to the tax code. People have been using second mortgages and re-mortgaging their homes to buy automobiles. By doing this they are circumventing the tax law. Automobiles depreciate, homes appreciate. Until lately, when most areas of the country have witnessed dramatic depreciation. The auto industry is in trouble and consumers have little ability to finance their now worth less homes, once again, to buy autos. Sunset the law, for some later date, but return the tax deduction for all interest expense. Perhaps even for those who do not itemize deductions. Consider some type of variable for interest expense on high mileage cars. Buy a tiny little car that gets 50 mpg? You get to write-off twice the interest expense. Buy a gas guzzler, and you only get to write off 50% of the interest. Cost to the treasury? Very little in year one.
2). The new home builders are in trouble. Let ’em yell and scream and stomp their feet. But tell ’em to get lost. The existing homes in this country need to begin appreciating again. A fresh supply of new homes is the last thing we need. The sub-contractors who supply the labor to the new home builders can work on repairing the existing home base. Consumers might be able to find a supply of plumbers, roofers, electricians, and other skilled craftsmen at an affordable rate. Cost to the treasury? Zero. Benefit to nation? Immeasurable.
3). The oil shock of the past years is not an accident. We can expect it to happen again. More natural gas and oil needs to be found. It is there, and if we have to provide tax incentives to oil companies to make them drill, do it! Provide a further reward for high-yielding discoveries. Some people hate the oil companies, but they need to get over it. More jobs will be created and less money will ultimately flow to our “friends” in the middle east. Cost to the treasury? Substantial. Cost to let the obsession of some people leave us hostage, once again? A hell of a lot more substantial. The Islamic Republic of Iran, fattened by oil revenue, and in hot pursuit of atomic weaponry, is one prime example of what our do-nothing attitude has achieved.
4). Legal immigration from other countries needs to slow down. Legal immigration from Islamist countries needs to grind to a halt. The strategy of the Islamists has been to drive all competing religions from their territories. We are making it too easy for them. American workers are losing good jobs to immigrants from other countries. Some legal and illegal immigrants are sending a substantial portion of their earnings back to their home countries, which does little for the U.S. economy. Cost to the treasury? A net plus as more American workers are employed and spend money in their own communities.
5). Apply a “means test” to Social Security. Did you make it to retirement age with a million dollars or more in the bank? Great, and if you had become disabled or died along the way, Social Security would have been there to help you or your survivors out. But you really don’t need to receive a check every month. Shed your assets, give some to your children and grandchildren now so that they might have a chance to keep their homes and educate their children. Shed all of your assets below a certain amount and you can receive that social security check. Harsh? Not really. Social Security was intended to be a type of insurance. Just as you pay for homeowners or renters insurance it is there in case you needed it. You don’t. Get over it. Cost to the treasury? A net plus as the red ink slows.
6). Forget all of the “pie-in-the-sky” make-work, jobs programs. They only amount to income-redistribution from one area of the country to another. Usually from rural areas to big cities. The rural areas will be out in full force, next election, if you continue to raid their wallets. Don’t believe me? Look at the Electoral Map, by county, from the last election. That election was a lot closer than the main-stream media reported. Seven small states with a swing of between 20k to 400k votes and John McCain would have won the electoral college and been President.
7). The industrial base of this country has been completely decimated by “free-trade” with other countries. But just how free has that trade actually been? Someone in Washington really has to look at the subsidies that other countries permit to their industries. American manufacturer’s need to know who they can complain to in order to get action. It’s nice to talk about making college affordable for everyone, or create some sort of taxpayer financed program to subsidize that education. Not everyone needs or wants to be a Marine Biologist. Some people need the types of employment that manufacturing provides, whether it be full or part-time employment. Consider placing severe tariffs on low-cost, highly petro-chemical based products from China or other importers. It’s junk, it’s cheap, and it may make some people feel good to be able to afford such crap. But it’s ballooning the demand for oil, and it’s still crap. Cost to the treasury? A net plus, once again.
With these seven fairly simple steps, easily and quickly implemented, the economy of the U.S. would once again begin moving. I expect not one of them will be pursued.
Post Script: When I wrote this post this morning, it was prior to MicroSoft announcing 5,000 job cuts. The days of the “information age” and “high tech” and “knowledge worker” jobs that were going to propel us into the next century are shreiking to a halt. Not everyone in this country is a C+ language programmer with the esoteric skills to create a new ‘paradigm’ to ‘reinvent’ our economy. Statistically, an IQ high enough to graduate college, much less understand the intricascies of computer languages, is enjoyed by less than half the population. Manufacturing, which used to employ nearly one-third of the employed, has been gradually out-sourced to other countries. Manufacturing jobs used to employ people of all age, IQ, gender and race. The days of looking down upon those jobs, and the people that filled those positions, should end.