OFW Law founding principal Richard L. Frank fills in for former USDA Secretary John R. Block on John Block Reports.
The bad news just keeps rolling in. The unemployment rate rests at 9% with over 400,000 new applicants each week. Worse yet, many folks are simply leaving the work force and not trying at all. Our GNP has flat-lined and our national debt has reached $15 trillion, or about $47,000 per American citizen. During the summer, the U.S. debt was downgraded by S&P while the Congress floundered to raise the debt ceiling. A recent New York Times CBS poll found that 89% of Americans do not trust the government to do the right thing.
With all this doom and gloom, does anyone have a plan to stabilize and revitalize the U.S. economy or are we truly seeing a decline of the American dream? Our dysfunctional Congress clearly does not have a plan. Will our children inherit a vital domestic economy or a moribund one falling behind India, China, and Brazil.
Here’s an idea – Pain and Productivity. First the pain. We need to move towards a balanced budget. We have been over-spending like a drunken sailor the past 10 years under both Republican and Democratic Administrations. It is time to pay the piper if we want to right the ship. It can’t be done on the backs of the rich alone and shouldn’t be done solely through spending cuts which disproportionally hurt the poor and middle class. Everyone must feel the pain. That’s what’s happening in Europe and that’s what needs to happen here.
50% of the deficit reduction should come from spending cuts, including entitlements (Medicare and Social Security), Ag subsidies, and our bloated military. The other 50% should come from tax increases on everyone making $50,000 or more – that’s right, everyone – the target should be getting tax rates back to where they were when Bill Clinton left Washington and George W. Bush first became President. The increases should come gradually over an 8-year period.
The results of these spending cuts and tax increases will be painful for everyone. However, such a plan should dramatically improve confidence in the system and ultimately improve the economy, laying the groundwork for new growth.
Now the productivity side. The engine that has driven the U.S. economy the past 20 years has been increases in agricultural, industrial and worker productivity. This has been fueled by good old American ingenuity, particularly on the farm where productivity per acre has soared. We have invented new ways to grow, manufacture, communicate, and transport. Unfortunately, over the past several years, productivity has been flat in the United States and even went down the last several quarters. The only way to dig ourselves out of this long-term hole will be to stimulate innovation.
Whether it be green energy, drought, resistant seeds, new computers and software, or tomorrow’s cure for cancer, we need to find ways through education and changes to the legal system to stimulate innovation.
And there you have it…a plan…pain and productivity and, hopefully, a willing Congress and a resilient American spirit.
