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How do we begin to rebuild our economy? Today’s crisis is an object lesson in economic cause and effect in reverse. The effect was described in pessimistic detail by the media for months leading up to the Presidential election. Whether the Liberal press was trying to sway the election outcome by disparaging our current administration is anybody’s guess, but the result of the negative reporting is clear for all to see.
The cause was then manifested by ill-informed and panicked Americans running on their banks, unloading their stock and walking away from shaky mortgages. Soon the phantom effect of economic downturn became real, and the bad news that had been reported for months became prophesy. Lack of confidence feeds upon itself, predicting failure, failing, panicking and then predicting more failure. Our government must break that cycle, or the end to this downward spiral will result in total economic ruin for the United States. Someone in Congress (Or the President Elect) needs to step up and take control of the situation by proposing the following actions: 1. Immediately cut corporate income tax by 50 percent. Big business in this country is responsible for producing goods, employing people and making up the bulk of the value of individual retirement plans. I’m as socially conscious as the next guy, but the truth is that tax rebates for the poor will have little effect on our economic problems. Poor people do not sign payroll checks, or contribute to the GNP. We can take care of them properly only after our economy becomes strong again. 2. When our government bails out Detroit as I am convinced they will, our lawmakers must dictate exactly what is required. Congress must insist that the Auto Workers Union make wage concessions and reign in future pensions. The so-called legacy costs of pensions and benefits for retirees is eating Detroit alive. The union bosses still don’t understand that high wages and great benefits mean nothing when the plant closes its doors. They’ve got to work with the auto makers and Congress, or our future cars will be built in existing non-union plants. 3. Insist that the banks which have received federal bailout money must loan a percentage of it to consumers. In the past, banks made their money by loaning it out and collecting interest. Today they are concerned they won’t even see the principle much less the interest, so they are just sitting on the cash, an institutional version of burying it in a can in the back yard. No amount of money thrown at this problem will make any difference if the banks aren’t required to put it back into circulation in the form of loans. 4. This year only, give all individuals a 50 percent credit on their federal income tax liability. Then spend the coming year completely reworking the tax structure in this country to a flat or national sales tax system. Hardly anyone opposes a tax that is reasonable, fair to all and offers a good return on the investment. Our current system is none of those things. There are a lot more ideas that can and should be implemented, but one thing is sure: We have to make some drastic and bold changes right now. If our President and Congress continue to wring their hands, pass the buck and engage in political posturing, we are all in for very tough times indeed.
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