I’ll cover the next three points briefly as there’s not much new to be said about them.
(4) If we do not have a balanced budget amendment then something needs put in place where borrowing and spending is kept within reasonable boundaries.
It is difficult to create black and white rules that work with consistency. There always seems to be times when rules need to be broken – as Solomon says, “There is a time and season for all things.”
The problem with our economy, and especially the spending part, is that it must be handled with good judgment and our elected representatives have a dismal record beyond what could have been imagined in this category.
We need to do two things to correct the problem. First, we must change their job description as written about previously. Secondly, an independent body such as The Committee of Twelve mentioned earlier should approve any budget-busting spending.
And finally citizens themselves must serve as watchdogs and let their representatives know the full force of their will and that will is not to spend toward bankruptcy.
(5) Grow the economy through low taxes and business incentives. A healthy economy strengthens the dollar.
This is a no-brainer and there has been plenty written on this subject. Unfortunately, the tax and spend crowd just does not seem to understand that infinite taxation is not possible.
More taxation does not mean more corresponding income to the government, as the Left seems to mistakenly think. There is a percentage point, which if crossed, brings less income and not more. I have heard of no definitive study that proves what that percentage is but many guess that the rate is around 20%. In other words, a tax rate averaging at over 20% may bring a diminishing return and is not productive.
In addition to keeping the tax rate low the tax collection system needs an entire overhaul. Consider this: The cost each year to businesses for all the accounting and record keeping to comply with the tax system is estimated to be $338 billion for just one year. That is an enormous sum equal to over $1000 for every man, woman and child. Add to this the $12 billion (and growing) to sustain the IRS and the lost production due to the diverted capital and energy we’re talking about some big money here. That’s plenty to cover any Social Security, Medicare, health care, or educational shortfall we can imagine.
Supporters of the Flat Tax claim that this would reduce the compliance expenses by 94%. If this is true than that alone makes a great case for implementing it. In addition to saving all that money business owners would have much greater peace of mind since they do not have to place so much attention on pacifying the IRS.
An even more labor saving idea is a national sales tax. Not only does this eliminate the need of the many billions spent on compliance but it increases the tax base. Currently there are many who do not pay taxes, or fudge the books and just pay part of them. This not only includes many business and individuals but drug dealers, The Mob, and many others outside the law. With a national sales tax even the drug dealer who declares no income to the IRS would have to pay the sales tax when making a legal purchase.
It is indeed important to overhaul our tax system but we must not let this goal overshadow the necessity of making spending cuts, which are of equal importance. We must achieve a working balance in both of these areas.
(6) Reduce the trade deficit. We have had a trade deficit since 1975. Should we be worried?
The problem with deficits is they lead to us becoming a debtor to the nation that holds our dollars. If we spend $100 million more in China, Japan or the UK than they do here then that nation’s banks will be just sitting on all that cash drawing no interest. This they do not like to do so they will take that money and loan it back to us if we are willing to take it – and we always are. These loans are usually made in the form of buying U.S. Treasury bonds. They figure it’s better to have these bonds drawing interest than just sitting on the cash making nothing.
If you buy some tires on credit the problem is that sooner or later the tire company will want payment of some kind. Even so, our debt to China is over a trillion dollars and this gives them a tremendous economic power and advantage over us. We are in a similar disadvantage to a lesser degree with numerous other nations.
During the past decade our deficit has ranged from around $400 to over $800 billion. The interesting thing about this is that the average deficit is not that much more than the cost of our oil imports. If we were to become energy independent then our deficit would be minimal and very manageable.
Doing more manufacturing and developing resources at home could do a lot to solve the problem, but energy is the big item that could reduce the deficit and that is the core of the next point.
(7) Secure energy independence. This is another no-brainer but the problem occurs in execution. The Left and the Right have conflicting ideas of how to achieve this.
Helping the trade deficit is just one of the benefits of securing energy independence. There are numerous others. Among them are:
• Producing most of our energy at home will create many American jobs and reduce the unemployment rate creating more prosperity and a sounder economy.
• It will reduce power from many who wish us harm such as Iran or Chaves from oil rich Venezuela.
• It will remove the securing of oil in foreign lands as an incentive for us to go to war.
• The United States will be seen as less intrusive which would improve our reputation around the world.
With all these potential benefits it is almost criminal that our fearless leaders have not had the common sense to devise a workable plan for energy independence. One thing we know for sure and that is the mere speaking of words is not enough. Here are a few we have heard in the past.
“At the end of this decade, in the year 1980, the United States will not be dependent on any other country for the energy we need.”
Nixon 1974 when oil imports were at 36.1%“We must reduce oil imports by one million barrels per day by the end of this year and by two million barrels per day by the end of 1977.”
Gerald Ford 1975. Oil imports still at 36.1%“I am tonight setting a clear goal for the energy policy of the United States. Beginning this moment, this nation will never use more foreign oil than we did in 1977 — never.”
Jimmy Carter, July 15, 1979. Oil imports – 40.5%“While conservation is worthy in itself, the best answer is to try to make us independent of outside sources to the greatest extent possible for our energy.”
Reagan 1981, Oil imports – 43.6%“When our administration developed our national energy strategy, three principles guided our policy: reducing our dependence on foreign oil…”
George H. W. Bush 1992, Oil imports – 47.2%“The nation’s growing reliance on imports of oil…threatens the nation’s security…[we] will continue efforts to…enhance domestic energy production.”
Bill Clinton 1995, Oil Imports – 49.8%Unfortunately, by the time George W. Bush assumed office the rate had hiked to 61% and continued to get worse forcing Bush to act. In 2006 when imports reached 65.5%. He said:
“Breakthroughs…will help us reach another great goal: to replace more than 75 percent of our oil imports from the Middle East by 2025.”
Finally in 2009 when imports had reached 66.2% Obama added:
“It will be the policy of my administration to reverse our dependence on foreign oil while building a new energy economy that will create millions of jobs.”
A couple years has passed at the time of this writing and nothing much has changed.
All of our presidents have meant well, but the lesson we get from them is not how to achieve energy independence, but that words alone without a workable and executable plan is meaningless.
What should we do then beyond just speaking the words – “We must get off foreign oil!!!” “We must become energy independent!!!”
First we must realize that adding exclamation points to out desires does nothing. We must have a plan.
A book could be written on a reasonable plan but I just have space here to cover some essence.
The pure essence of our energy policy should be this:
Do everything possible to maximize domestic energy production of current energy products and methods. In addition to this we must encourage practical forms of alternative energy and do what we can to bring forth new energy sources.
It is possible that new energy sources like fusion, or wave energy will be perfected in the next couple years and our troubles will be over but we can’t risk letting down our guard on conventional sources until their replacement is secure.
Right now their replacement is not secure so we must drill for oil, mine coal and build nuclear plants. The advantages of securing energy from conventional sources far outweighs the disadvantages of discarding them too early.
Without sufficient energy we would wind up polluting our country much more than we would by burning fossil fuels. If you do not believe me then check out the quality of the environment in third world countries where there is a dearth of conventional energy sources.
Environmentalists do not want us to drill for oil in America because of potential damage to the planet but if we do not get domestic oil then we will get it from some foreign country and that country is still part of the planet. If we look at the earth as a whole what is the difference between drilling in the United States or Mexico, Venezuela or Canada?
None.
If we can continue to supply the energy we need and advance in technology then we should have viable alternatives to coal (the worst polluter) and oil within 50 years, maybe less.
If we sabotage ourselves and shoot ourselves in the foot by cutting off our energy sources then technology will suffer and it could be hundreds of years before environmentally friendly alternatives are perfected.
In other words, we have to advance to clean energy on the back of not so clean energy. Sometimes you have to wade through some mud and grime to get to the cleansing current of the river.
Abundant domestic energy is crucial to our economic prosperity and economic prosperity is crucial to achieve a lasting clean environment.
May we follow the sensible path.
Read This entire series. Here are the links.
- The Economy – One Last Chapter
- Creating Sound Money
- The Gold Standard, Part 1
- The Gold Standard, Part 2
- The Gold Standard, Part 3
- The Gold Standard, Part 4
- The Gold Standard, Part 5
- The Gold Standard, Part 6
- The Gold Standard, Part 7
- The Fed and Common Sense
- Additional Points
- Alternative Currency
- Giving Away Our Power
- Parable of Money Systems
- To Fiat or Not Fiat
- Fiat Money of the Past, Part 1
- Fiat Money of the Past, Part 2
- Fiat Money of the Past, Part 3
- Fiat Money of the Past, Part 4
- Fiat Money of the Past, Part 5
- Fiat Money of the Past, Part 6
- Examining Fiat Money
- A Flawed Money System
- The Ideal Money
- A Time for All Things
- The New Greenback
- Narrowing the Focus
- People Taking Charge
- Creating Wealth
Copyright 2011 by J J Dewey
Copyright by J J Dewey
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