The Political Parties would do well to consider a Rational Economic Platform
Call me a dreamer, I am living at this moment in fantasyland, because the prescriptions I offer have some pain or dislocations associated with them - so these ideas will probably not be on the platform, and will not happen until …………
Until we have a fiscal crisis and are forced to deal with the terrible consequences of the policies we have followed - the disaster we have brought down upon ourselves - at some point in the future. It will be very ugly, but today, there is complacency among the public and Congress will not act unless the public is informed and demands it. FONBE (fear of not being elected) will dictate Washington policies, and that will not get us to fiscal sanity.
With that said, a few thoughts on my fantasy policies follow:
Economic Growth: To continue our prosperity and growing standard of living, the economy must be growing at a solid pace. All proposals should be evaluated on pro-growth, fiscally responsible merits. Sounds like a platitude, it is not. Many policies are just the opposite. If we grow our economy faster, and make some real cuts to spending, with modest increases in revenue, we will conquer our debt problems.
Inflation/Interest Rates: These are directly a result of bad fiscal policy compounded by bad monetary policy (which usually starts with bad fiscal policy). We can cure inflation with a sound fiscal policy. This directly leads to lower interest rates.
Fiscal Responsibility: Debt is just the symptom; Deficits are the disease. We are on a road never traveled, and it is a short distance to the end of that road. At the end is the fiscal cliff. If we go over the cliff, chaos will ensue. We must not let that happen. Below are some major areas to address.
Entitlements: Demographics have made them unworkable, and government largess has accentuated the failure. They cost the government over $1 trillion per year. They must be reformed without cutting benefits.
Social Security should evolve to a private account system. I have suggested an approach in our book. Other options can work, but we must do something to reform it.
Medicare should evolve to a private voucher system.
Medicaid should be block granted to states and let them handle it from there, getting Washington out of the picture. The grants should be reduced over time.
Currently the incentives are backwards and drive expenditures to be worse, not better (I believe incentives are the most powerful force in the world – they must be properly aligned with goals, presently they are not).
The Government: The Constitution outlines the federal duties, all else is left for the ‘states or the people’. We should cut departments, bureaucracy, and regulations from the Federal government moving back to limited government as was intended by the Founders. They feared too large and powerful government would lead to tyranny and loss of liberty. They were right. We grew powerful and wealthy with limited government, we now are struggling with massive government and an unaccountable bureaucracy constantly devising extraordinary and costly regulations.
Taxation: The tax system is an unworkable, unintelligible mess, all 75,000 pages of it (counting interpretations and rulings, etc.) There are numerous special benefits provided to those with money and power. We don’t need to raise or lower tax revenue; we need to start over with an equitable system. Trying to reform it in the past has just made it worse. Corporate rates should not be changed from current, but all the loopholes should be addressed and most closed. (The public needs to understand that corporate tax is primarily born by the employees and public, not the corporation). Simplifying the individual tax code and cutting out special interests would be a start. How about the Flat Tax or Fair Tax (fair Tax is my favorite solution -See No Spin # 79 - but not politically possible at this time)?
Free Markets: The marketplace is an efficient coordinator of economic activity. Supply and demand determine prices and provide signals for businesses which direct their actions. (Corporate ‘greed’ does not set prices, competition is the guardrail against that.) The more the government interferes, the more disruptions occur. We should stop trying to direct the market with incentives, industrial policy, subsidies, and price controls - and let the market work. It does work and works quite well.
BOTTOM LINE
Getting to fiscal sanity with pro-growth policies would be a vast improvement over the ‘road never traveled’ that we are on. This road is short, and at the end ……… (clue, we do not want to find out how this movie ends).
Our concerned citizens must learn and understand the dangerous road we are on, only then will we act. Our website is meant for laymen and provides much information about the problems and solutions.
Look, Learn, Act. Speak up, Speak out and Contact Congress on our website, it just takes one minute.
LEARN ECONOMICS, THEN VOTE SMART
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