July 19, 2011
In proposing to cut entitlement spending, Republicans risk everything. They could ignite the furor of senior citizens (who reliably show up to the polls) so terribly it might jeopardize the GOP’s chances in 2012. But, Republicans rightly insist, social programs must be reformed to avert fiscal disaster. If President Obama offered to trim entitlements as part of a deal to raise the debt ceiling, Republicans surely wouldn’t balk because the offer included a small tax increase…. Would they?
Alas, they would and they do. Obama has courageously offered to touch the “third rail” of American politics, not to mention the pride and joy of modern Democratic policymaking. While Republicans were prepared to exhaust their political capital to cut Medicare and Social Security, now their mortal enemy has asked to do this unenviable work for them if they’ll only agree to a very modest tax increase.
“We have a responsibility — and an opportunity — to reduce our deficit as much as possible and solve this problem in a real and comprehensive way,” Obama said in his weekly radio and Internet address. “I’m willing to do what it takes to solve this problem, even if it’s not politically popular. And I expect leaders in Congress to show that same willingness to compromise. The truth is, you can’t solve our deficit without cutting spending.”
Obama’s most sweeping proposal in these talks that Republicans rebuffed amounted to $4 trillion in savings over 10 years (no, that’s not a typo). Republicans have revealed their top priority is not debt reduction nor entitlement reform but reflexive opposition to raising any taxes at all. Disgraceful.
I wish this weren’t so. I ran as a reform-minded Republican for Congress in 2006, and though I had major policy disagreements with Republicans, especially on the Iraq war, I believed the GOP was the party more willing to do what is necessary to right out fiscal ship. Now, facing a real financial crisis when the conversation even involves the word “default,” Republicans show they are focused on narrow political gains at the cost of the nation’s economic health. This is not acceptable.
Consider the courage it took Barack Obama to propose entitlement cuts. He surely noticed how the public treated George W. Bush’s effort to reform Social Security and modernize Medicare. What President Bush’s got for his boldness was inaction from his own party and disapproval from the public on Social Security. He also succumbed to signing a Medicare prescription drug bill that vastly expanded the healthcare program without changing its “defined-benefit” structure. Now the “big-government socialist” Obama is poised to do what Bush wanted to do but couldn’t, and Republicans want no part of it.
The Congressional GOP is not only stubborn, but delusional. It wants the debt deal to include a Balanced Budget Amendment. What’s so crazy about this idea is that it would need to go before not just Congress but our state legislatures. We need a solution to the debt problem and we need it fast. There’s nothing fast about amending the Constitution.
Contrast this with the president’s proposal. He wants to close tax loopholes for the wealthy and corporations. Why the outrage at such a modest, responsible idea? The special tax breaks that rich people, oil companies and all other fat-cat beneficiaries of our current distorted tax code receive are simply welfare-queenism of a kind that today’s Republicans can’t recognize. It’s perfectly consistent with conservative values to ask the well-to-do to sacrifice for the good of all Americans. It’s even more desirable if Obama’s opponents can leverage tax hikes for spending cuts. Unfortunately, Republicans have abandoned their war against the debt in favor of a war against common sense.
When the great British historian Paul Johnson wrote that what really separates Americans from the rest of the world is not that we have no problems, but that we solve big problems. Left or right, Republican or Democrat, all agree that we have to make changes. With competing visions of the role of the state, a solution will involve compromise. The President is willing to do this, showing great political courage. Republicans should join him for the sake of the nation and their own credibility.
July 14, 2011
Now that U.S. unemployment has reached a shocking 9.2 percent, we can confidently declare America’s political class knows nothing of how to foster a sound economy. Remember, this isn’t just any 9.2-percent unemployment; this is the jobless rate two and a half years after the recession hit. What does this sorry economic state suggest our leaders should do?
First, they should treat our economy as the national economy it is. Unfettered importation of cheap goods from China and other nations may comport with the mindless free-trade dogma that reigns supreme among America’s cloistered university economists, but try getting our millions of unemployed citizens to like it. It makes little sense as well to import $700 billion a year in oil, which both funds enemy nations and makes it harder to create innovative “green jobs” here in the U.S. Think it could be worse? Keep in mind that in the first three months of 2011, when unemployment was reported at 9.5 percent, the total percentage of U.S. adults without a full-time job was 16.8 percent. (The jobless rate is always worse than it appears.) Our public is simply taking a beating from inexpensive overseas labor. We need policies that will put us at a competitive advantage. For one thing, we should have a tax policy that will keep manufacturing on American shores. If companies like GE and Boeing want subsidies and tax credits, they should hire domestic labor. For another, we must grow our intellectual capital and therefore should end subsidies for higher education in areas unrelated to math and science. Financial aid to major in African dance is not an investment in our future.
The Center for Immigration Studies cites the recent jobless figures to make a different point—to call for restricted legal and illegal immigration. While I believe America must remain open to promising, innovative immigrants who desire life on our shores, tighter border security could at least spare our lower-skilled workers much pain and insecurity. But trade and immigration are two facets of the same issue: our need for a national economic policy that is truly national, meaning tighter borders and adherence to fair trade.
A second lesson our leaders should learn is that they must stop micromanaging commercial activity through such failed policies as the 2009 “stimulus.” The Obama administration falsely sold this $787-billion mistake as the only policy that experts said could jolt economic vitality and avert a second Great Depression. Instead, we reached 10 percent unemployment for much of 2009 and 2010. Our neighbor Canada, however, created no large spending programs, and used tax policy and deregulation to stimulate its economy. Before our two nations enacted recovery packages in 2009, our jobless rates were nearly identical and rising at the same pace. After the acts went into effect, however, Canada’s unemployment rate ceased to grow and then fell much further than ours would, to 7.4 percent.
President Obama has pursued dreadful economic policy—he even now admits that his talk about “shovel-ready” projects in the stimulus was misguided—and takes a stay-the-course attitude almost as galling as President Bush took after he disastrously debuted as a war leader. In the 2008 campaign, Obama talks a good game about “change.” Now is a good time to act on that idea.
June 7, 2011
After a bipartisan majority in Congress defeated an increase in the $14.3 trillion debt ceiling last week, Republicans offered Democrats a deal: Cut spending by the amount you want to raise the debt limit. Democrats of course insisted on increasing taxes and leaving alone popular but costly programs, particularly Medicare. Republicans, meanwhile, are prepared to support any domestic spending cut within reason as long as it doesn’t come with a tax hike.
In other words, even with a looming fiscal crisis, legislators continue fighting the tired partisan battles over whether to lower spending or increase taxes. They’re right not to raise the debt ceiling until they can find significant savings; America can’t keep recklessly accumulating debt. But Congress needs a solution to this mess forthwith and — sorry, party faithful — that solution must be a compromise.
It must be so for two reasons. First, no legislation will get anywhere with a Republican-controlled House, a Democrat-controlled Senate, and a Democratic White House unless it’s bipartisan. Second, while government spending must be limited, low taxes don’t help to do that. Yes, you read that right: “Starve-the-beast” doesn’t work and may backfire. The spending cuts conservatives rightly demand may depend on increasing the taxes conservatives rightly hate.
When taxes are low relative to spending, as the libertarian Cato Institute’s William Niskanen tells it, “you make government look cheaper than it would otherwise be.” No wonder the public largely opposes U.S. Rep. Paul Ryan’s proposal to voucherize Medicare, making it less expensive. Right now, Medicare isn’t forcing taxes up and therefore doesn’t feel expensive. Fixing the program before Medicare goes broke will take more foresight than American taxpayers now have. Some kind of tax increase could give them that foresight.
A tax hike’s main purpose shouldn’t be to raise revenue. Suppose we do as Obama wants and end George W. Bush’s tax cuts for those making at least $250,000. We’d bring about $80 billion annually into the Treasury. That’s not too exciting when the deficit is $1.6 trillion. Higher taxes will only help if they spread the pain of big government more evenly among the taxpayers, incentivizing opposition to overspending.
Instead of crudely taking more off the top of American taxpayers’ incomes, lawmakers could repeal inequitable income tax breaks for corporations and individuals and use some of the resulting revenue to lower tax rates. Erskine Bowles and Alan Simpson, in their report as co-chairs of President Obama’s fiscal commission, made a wise recommendation with regard to corporate taxes:
“Corporate tax reform should eliminate special subsidies for different industries. By eliminating business tax expenditures – currently more than 75 – the corporate tax rate can be significantly reduced while contributing to deficit reduction. A lower overall tax rate will improve American business competitiveness. Abolishing special subsidies will also create an even playing field for all businesses instead of artificially picking winners and losers.”
Personal income tax loopholes should also be closed. The Competitive Enterprise Institute’s Eli Lehrer describes the right approach to raising income taxes while making the system fairer:
“The mortgage interest, state/local tax, and health care deductions should and could fairly be considered broad-based features of the tax code. Efforts to limit, cap or repeal them should, for those who support lower taxes, be paired with efforts to cut rates elsewhere. After all, everyone pays some state or local tax, everyone needs health care, and almost everyone buys a home at some point. Elimination of these revenue expenditures will have the same consequence, roughly, as raising marginal rates.”
Then comes the easy part for small-government types like me: Cut, cut, cut government spending. Some kind of Ryan-like plan that reforms Medicare and cuts other domestic expenditures could help achieve this end, but everything should be on the table. The Cato Institute has outlined cuts to even defense spending totaling $1.2 trillion over 10 years. For conservatives, those would surely be the most controversial spending cuts, but the menu of options Cato proposes should at least be considered.
Our leaders must reach some compromise. A default on our debt, which becomes a possibility after Aug. 2, would be a disaster for our economy. Pushing the problem down the road by raising the debt ceiling without a long-term fiscal solvency plan can only worsen the problem. For the common good, all of the powerbrokers in Washington are going to have to give up some of what they want.
May 9, 2011
Say whatever you want about Donald Trump: He didn’t get to the top of America’s real-estate industry without understanding international markets. His breadth of knowledge and experience is why this young businessman, along with dozens of other Apprentice contestants, valued his guidance so much. Later, my congressional run reinforced my regard for Mr. Trump’s understanding of our politics and our economy.
Some folks don’t share that regard. By proposing a 25-percent tariff on Chinese goods, the real-estate magnate and possible presidential candidate has invited the wrath of low-tariff dogmatists who believe they know more about creating jobs than a guy who has actually created jobs.
Mr. Trump saw China’s unfair trade dominance firsthand when he found he had little choice but to buy inexpensive goods from China for his building projects. I see it firsthand as well in my spirits business; it’s an ordeal finding even simple things like cheap glass made in the U.S.
Many economists’ visceral support for “free trade” can at least be attributed to the ivory tower blinders so commonly found on academics. For America’s CEOs–like those in charge of manufacturing firms like Caterpillar–the motivation is more disturbing. They are myopically committed to short-term profits, unable to see how they’re endangering their own companies’ futures—not to mention their nation’s future.
Mr. Trump’s call for a tariff should resonate with any American who doesn’t want to see our manufacturing base, to the extent is still exists, sucked dry by an economic parasite. And that scenario is fast approaching: The International Monetary Fund projects that America will lose its distinction as world’s largest economy to China in 2016.
Measured in Purchasing Power Parity (income and spending within a domestic economy), China’s economy will grow from $11.2 trillion in 2011 to $19 trillion five years hence. Our own economy will grow from $15.2 trillion to just $18.8 trillion in that time. America’s share of world economic output will decline to 17.7 percent while China’s is projected to reach 18 percent.
By some measures, China is already beating us. It recently became the nation with the highest manufacturing output. While we were in recession last year, Chinese manufacturing expanded by 18 percent and its economy grew by $2 trillion, Manufacturing Digital recently reported.
The competition for the top economic spot has not been a fair fight. Mr. Trump has said he’d “love to have a trade war with China.” Those who recoil at that suggestion should face the facts: China already has declared a trade war on us, and we must decide whether or not to surrender. Our fighting back would truly be a war on terror—on economic terror, for China is an economic terrorist nation that undermines our working men and women by keeping its currency undervalued and extorting technological expertise from U.S. companies who locate branches on their shores.
This makes a mockery of true free trade, for free trade must be fair trade. China extorts our companies’ business expertise and uses tariffs and quotas to block our manufacturers’ goods, like those used to make steel and aluminum, from their shores. The Chinese are brutally taking advantage of us.
American branches employ Chinese workers who make a pittance compared to American workers and avoid the reasonable safety and environmental standards America enjoins. All the while, China heavily subsidizes industries in which it has no natural competitive advantage, building them up to tower over their global competitors.
Take the paper industry. According to the Economic Policy Institute (EPI), China tripled its paper production over the last decade in no small part with the infusion of $33.1 billion in subsidies from 2002 to 2009. Before 2008, we Americans manufactured more paper products than any other nation. We lost that top spot to China that year.
Countries depend on a strong manufacturing base for their economic health, and there too we have suffered significant losses. According to the Coalition for a Prosperous America, manufacturing employment lost 6 million jobs in the last decade. That’s not simply due to higher productivity: In that same period, 57,000 employers have disappeared.
Our nation cannot remain a global commercial power if we sit idly by as China continues its rapacious ways. Economic dominance, and in turn military dominance, flow from making what the world consumes. It’s no coincidence that America was the world’s number-one manufacturer for over a century and has for most of that time been its foremost superpower. If you’re still wedded to freely importing Chinese goods even as China doesn’t reciprocate, think about what this policy will do to our two countries’ relative military strengths. China clearly wants hegemony in the south Pacific and beyond. Why are we feeding the beast that desires the kind of military power only America has enjoyed in recent memory? And let’s not forget, China will solidify that dominance with a massive nuclear capability.
There is too much at stake to continue on the current path. American elites, if they are serious about wanting America to remain Number One, should ditch their cynicism about Donald Trump and rally behind his call to put China in its place.
April 18, 2011
Japan’s earthquake and tsunami—with a death toll of 14,000 at this writing—are a tragedy. We should foremost mourn those who lost their lives and pray for their loved ones. We should also act hopefully and charitably toward those struggling to rebuild their livelihoods and their nation. Finally, we should look hard at what lessons Japan’s disaster teaches America about preparing for a national emergency.
One lesson is the danger in accumulating massive government debt. America and other developed nations have only gradually sensed this danger because it has crept up on us slowly. Japan is a case in point.
In 1995, Japan experienced its worst seismic activity in 47 years in and around the port of Kobe, a city with a population of 1.5 million. The earthquake killed 6,500 people and caused over $100 billion in damage. Still, as Marine War College Professor Jim Lacey writes in National Review Online, Japan’s government managed the situation well, shouldering 90 percent of those necessary costs.
It later went on to shoulder huge unnecessary costs, creating deficits reaching 10 percent of GDP and bringing its debt above 200 percent of GDP. Japan, like America in the past few years, was engaging in “stimulus” spending to spur an economic recovery. This policy failed in both cases. (Much as some tout a “recovery” in America, unemployment stubbornly remains at nearly 9 percent.)
Even more troubling, such unneeded deficit spending will hamper Japan’s ability to rebound from whatever shock may come along. “At a time when Japan already is close to reaching its debt limits,” Professor Lacey writes, “it will have to dig deep to find significantly more funds to finance recovery.”
So will America, if we’re similarly unfortunate.
When al Qaeda attacked America 10 years ago, debt held by the public as a percentage of GDP was roughly 33 percent, according to the Congressional Budget Office. That percentage hovered around the mid 30s until 2008 when it reached 40 percent. One year after that, it shot past 50 percent. The CBO projects our debt reaching 90 percent of GDP by 2020.
A deep financial hole like that is a frightening place in which to recover from a natural disaster or terrorist attack.
Getting out of this mess will mean reining in the major cost drivers in American government. And no, those cost drivers are not earmarks, or “waste, fraud and abuse.” They are entitlements and military intervention as well as public-sector salaries and benefits. Ideologues on all sides of the political spectrum will walk away unhappy if these expenditures are reformed. But the American people will walk away secure in the knowledge that when disaster strikes, their government will be poised to recover.
March 29, 2011
Make no mistake: What’s going on in Libya is a “war.” President Obama does not want to call it that, and who can blame him? His predecessor had two wars to his name and that situation worked out none too well. But our engagement in Libya plants a seed that could grow to match the other giant mistakes we recently made abroad.
Why is Libya a mistake? Reverse the question and it becomes obvious: Why is it not? America has no rationale for getting mired in this conflict. Libya’s leader Moammar Gadhafi has long posed no threat to U.S. security; he gave up his nuclear weapons program years ago and his rebel opponents may have stronger ties to international terror groups than he now does. Obama and allied nations tout the humanitarian reason for war, as if it existed. War, by definition, is not humanitarian. It’s a nasty, deadly enterprise that is sometimes necessary to defend a nation’s interests and impose a durable peace. See anything like that here?
So far, the Libya War is a modest air campaign to protect the population from Gadhafi’s air and ground forces. Its proponents make no clear pretense of a firm objective (e.g. Gadhafi’s ouster) or a plan to see the war through to that objective (e.g. a sustained bombing and ground campaign). We speak ambiguously about whether Gadhafi must go. We defend Libyan rebels but refuse to support their offensive efforts. This is a strategy for stalemate, not victory. Obama & Co. want this war tame, but successful wars never are. If we get out soon, we will have embarrassingly accomplished nothing. If we stay and topple Gadhafi’s regime, we may inherit humanitarian and security crises worse than we’ve seen yet.
Cato Institute Vice President Ted Galen Carpenter outlines how those crises could unfold in a recent National Interest piece. Because Libya is a fragmented state, with anti-Gadhafi rebels dominant near the eastern stronghold of Benghazi and Gadhafi’s forces stronger in the northwest in and around Tripoli (Tripolitania), a victory for the rebels would spell danger for the Tripolitanian population. Denizens of eastern Libya won’t likely agree to forgive and forget Gadhafi’s years of brutality. They’ll find it more than tempting to match it with their own.
“Assisting the [eastern] rebels to oust Gadhafi will almost certainly provoke resentment from the people of Tripolitania,” Carpenter writes. “If the rebels split the country, that will become a focal point of resentment for those defeated tribes—and a new grievance against the West throughout much of the Muslim world. Even if the rebels attempt to keep Libya intact, the Tripolitanians are bound to resent Washington for their new, subordinate status.”
What would our president have us do in that situation? Would we Americans—who polls find to be decisively in favor of our strikes—stand for our involvement at that point? The American people tend to support American interventions as they begin but grow skeptical as those interventions bog us down in tribal clashes unimportant (indeed, counterproductive) to our own safety.
We’ve been on this track repeatedly. The disastrous Vietnam War began with “military advisors” working quietly for Saigon. George W. Bush’s miniature Vietnam in Iraq came after the imposition of a “no-fly zone.” Even in the necessary Afghanistan War, we let the simple goal of catching our attackers expand into a crusade for American-style democracy in a nation that has shown little interest in it. America has a habit of getting into quagmires uneventfully and gradually.
This war’s security dangers—not to mention the strain it puts on our already overextended military—come with great damage to the American rule of law: Obama has sought approval for the war from the Arab League and the United Nations but not our democratically elected representatives in Congress. This war is a mess on all fronts. Our president, working with our legislators, should cut our losses by withdrawing or, if he insists on staying, deploying overwhelming force for a quick, decisive victory with no occupation afterward.
December 11, 2009
The idea of free universal healthcare is emotionally soothing and arguably quite Christian. On the surface, it seems like an ideal to which all wealthy and civilized countries should strive. It “feels” good. (So does heroin, apparently.) In truth, it is a stake in the heart of individual responsibility.
Here’s how it works: As countries (like families and individuals) get rich, they tend to lose their common sense. Like spoiled rich kids, they forget about virtues like hard work and personal responsibility—the attributes that got them rich in first place. These nations make ill-advised, indulgent, “feel good” decisions. Such decisions weaken countries over time and, after a generation or two, render them mere shadows of their former grandeur. This story is as old as time.
Let’s look at this through the lens of America in 2009. Imagine if an impartial observer were to examine our current situation. He or she would have to note that the greatest nation in the history of mankind is not currently in a particularly strong position. The U.S. is spending more than it takes in, importing more than it exports, and fighting wars in the global quicksand of empire. The global community is losing faith in our currency just as another great power on a breathtaking rise (China) salivates for the reins of power and is increasingly poised to snatch them from our hands.
At this very moment, our government deems it prudent to borrow yet more money to hook up a broad swath of the American public up to a vast new entitlement program designed to grow, as all entitlement programs do, like a weed.
Have we lost our minds? Handing vast new authorities to a government with an already peerless record of incompetence and lust for power is sheer madness. Forget the huge strain on the budget and the squelching of the free enterprise that made America great. Even more insidious is the effect of socialized medicine on the citizenry.
Such a system makes more people dependent on government. Dependence corrupts and transfers power from the individual to those who dispense the favors. Dependence is what happens to drug addicts. Our government wishes to be the biggest dealer on the planet, and, like any human organization, to grow.
Socializing healthcare is another great step forward for the misguided efforts of FDR in the 30’s, expanded with devastating effect by LBJ in the 60’s. This is the dream of the big government left: to hook up and buy the votes of the middle class—to turn them into a mushy, addled mass clamoring for mama government to come and give them a bit more mother’s milk.
This is a prospect for which all Americans should feel visceral revulsion.
The bureaucrats in Washington are seeking to extend their cold reach. We all know that nothing is produced in Washington, D.C. The Department of Energy has not made a kilowatt, the Department of Education teaches no children, and the Department of Agriculture (with more employees than farmers in America) has never grown a bushel of wheat!
America does need healthcare reform. Costs are out of control for many reasons, all of which stem from the distortions caused by government intervention.
We need freedom of choice, robust markets, faith in ourselves, and a level playing field. These are the pillars upon which American greatness rests.
May 7, 2009
But according to the United States government, the tenth-grade home-schooler is being held on a criminal complaint that he made a bomb threat from his home on the night of Feb. 15.
Teen’s mom questions Patriot Act
The family was at a church function that night, his mother, Annette Lundeby, said.
“Undoubtedly, they were given false information, or they would not have had 12 agents in my house with a widow and two children and three cats,” Lundeby said.
Around 10 p.m. on March 5, Lundeby said, armed FBI agents along with three local law enforcement officers stormed her home looking for her son. They handcuffed him and presented her with a search warrant.
“I was terrified,” Lundeby’s mother said. “There were guns, and I don’t allow guns around my children. I don’t believe in guns.”
Lundeby told the officers that someone had hacked into her son’s IP address and was using it to make crank calls connected through the Internet, making it look like the calls had originated from her home when they did not.
Her argument was ignored, she said. Agents seized a computer, a cell phone, gaming console, routers, bank statements and school records, according to federal search warrants.
“There were no bomb-making materials, not even a blasting cap, not even a wire,” Lundeby said.
Ashton now sits in a juvenile facility in South Bend, Ind. His mother has had little access to him since his arrest. She has gone to her state representatives as well as attorneys, seeking assistance, but, she said, there is nothing she can do.
Lundeby said the USA Patriot Act stripped her son of his due process rights.
“We have no rights under the Patriot Act to even defend them, because the Patriot Act basically supersedes the Constitution,” she said. “It wasn’t intended to drag your barely 16-year-old, 120-pound son out in the middle of the night on a charge that we can’t even defend.”
Passed after the Sept. 11, 2001, terrorist attacks on the U.S., the Patriot Act allows federal agents to investigate suspected cases of terrorism swiftly to better protect the country. In part, it gives the federal government more latitude to search telephone records, e-mails and other records.
“They’re saying that ‘We feel this individual is a terrorist or an enemy combatant against the United States, and we’re going to suspend all of those due process rights because this person is an enemy of the United States,” said Dan Boyce, a defense attorney and former U.S. attorney not connected to the Lundeby case.
Critics of the statute say it threatens the most basic of liberties.
“There’s nothing a matter of public record,” Boyce said “All those normal rights are just suspended in the air.”
In a bi-partisan effort, Rep. Jerrold Nadler, D-N.Y., and Rep. Jeff Flake, R-Ariz., last month introduced in the U.S. House of Representatives a bill that would narrow subpoena power in a provision of the Patriot Act, called the National Security Letters, to curb what some consider to be abuse of power by federal law enforcement officers.
Boyce said the Patriot Act was written with good intentions, but he said he believes it has gone too far in some cases. Lundeby’s might be one of them, he said.
“It very well could be a case of overreaction, where an agent leaped to certain conclusions or has made certain assumptions about this individual and about how serious the threat really is,” Boyce said.
Because a federal judge issued a gag order in the case, the U.S. attorney in Indiana cannot comment on the case, nor can the FBI. The North Carolina Highway Patrol did confirm that officers assisted with the FBI operation at the Lundeby home on March 5.
“Never in my worst nightmare did I ever think that it would be my own government that I would have to protect my children from,” Lundeby said. “This is the United States, and I feel like I live in a third world country now.”
Lundeby said she does not think this type of case is what the Patriot Act was intended for. Boyce agrees.
“It was to protect the public, but what we need to do is to make sure there are checks and balances to make sure those new laws are not abused,” he said.
January 19, 2009
This might come across as glib, however under some basic analysis, it is far more sound than throwing money into the financial black hole of insolvent banks and attempting the stimulate the reckless consumption that got us in the mess to begin with. Why? America has not invested in new technology for a long time. If we are going to spend like mad, let’s get something for it! Let’s DO something. Let’s develop some stunning new technology and shock the world with our wizardry. Like the development of the internet and other advances resultant from military and NASA spending, it will pay long term dividends to all Americans. It will lay the foundation for long term American economic growth based on American technological supremacy.For those worried about the environment, I’m sure we’ll have to come up some new energy technology to make it out there and back. Regarding our slipping in math and science, I can imagine that the huge number of jobs generated by this initiative will lead to an adjustment of majors away from marketing and philosophy towards the hard sciences. The trickle down from this spending will be immense of long term benefit, and which is more, America needs it.The economic growth under George Bush was of fatty, consumption based sort that left America LESS competitive vis a vis our economic rivals. We built houses we could not afford, guzzled $4 cups of coffee and bought fairly worthless gizmos from China on borrowed money. This is not a virtuous economic cycle. It’s junk food growth. This Wednesday, on his first formal day as President, Barack Obama will convene his team of economic advisors to develop a plan to attack our paralyzed economy. Foremost among the problems they will discuss is the seizure of the credit markets and our broken banks. Putting aside the laudable principal that bankrupt institutions should be allowed to fail, we have “injected” hundreds of billions into our financial institutions so that they might once again lend. THIS HAS NOT WORKED. We’ve already largely spent $700 Billion dollars of money borrowed from China. We have assumed these real liabilities and bought phantasmagorical assets in return. In addition to encouraging this recklessness going forward, we are barreling down a road financial ruin. I am resigned that our government is going to drop us ever more deeply into debt for the moment, and we might need to prime the pump a bit, however we must NOT resign ourselves that this money should be squandered. Let’s go to Mars! It will be a stimulus plan that will keep on giving. At this time when America is under global pressure from every side, we need a new trick. We need some good old American ingenuity and boldness. This found fit the bill. GoAmericaGo!
December 8, 2008
It is in the national interest of the United States to preserve what is left of our manufacturing capacity. Accordingly, it is a proper use of the public purse to help save our automakers from dissolution. They are not beyond redemption; however a few key steps need to be taken for the infusion of public funds to make these companies viable in the long run.
Our politicians say as much, however there has been a lack of understanding of the root cause of Detroit’s problems as well as a lack of a comprehensive plan to turn the Big Three around. Below is a brief outline on how this can be achieved.
Above all, the Big 3 have a perception problem. American cars are now excellent, however they remain haunted by blunders made in decades past. Admittedly, current perception has been shaped over decades during which Detroit’s products looked bland and were of generally inferior quality to foreign competition. The second of these considerations was more important in the seventies and eighties, however by the nineties quality had largely caught, but then design stayed poor. Someone who bought an expensive Cadillac or a Buick, for example, in the early ’80’s was bound to be highly disappointed to the point that they might never have gone domestic again. However, today, Buick, and to some extent Cadillac, has a wonderful lineup of vehicles, but almost no one under sixty would consider buying a one. American car brands too frequently have as much sex appeal as an overweight accountant.The past cannot be undone, so we must focus on what can be done now to save the Big Three from their self inflicted state of near-ruin.So, here’s an outline of a plan that would comprehensively save Detroit: 1) Establish a National Automotive Task Force. America can once again dominate the world’s roads with our cars if we put our minds to it. Clearly current management of these companies has been uninspired at best; we need to bring in our best and brightest to help build cars for the coming generations. Young people today do not dream of owning a Pontiac or a Ford or a Chrysler. This can be change. How? Lets gets our best creative business minds, Steve Jobs of Apple, the founders of Google and Facebook for example, people who understand what consumers are going to want in their products, to help fashion a product and marketing plan to make these companies sexy again. Detroit knows how to make great cars, they are just boring to most young consumers. We need to people who “get it” in guiding long term policy otherwise these companies will go broke in the end. For that matter, the master of reinvention herself, Madonna, should be brought in to help advise the bean counters on how to remake themselves to appeal to another generation. The Task Force should function as the Board of the Big Three. 2) File for Bankruptcy with a government guarantee for car warranties of all cars sold for the next few years. By guaranteeing the warranties, the biggest stated concern of Detroit that people will not buy from companies in bankruptcy is removed. As long as the cars are backed by a solid and generous warranty - people will buy. Why Bankruptcy? Detroit has too much baggage, accumulated during times when they were much bigger, healthier companies. Pension and healthcare liabilities, union contracts which place them at a considerable disadvantage to foreign car companies manufacturing in the United States, and a dealer network that is far too large and costly to administer and supply, need to be renegotiated. This needs to be remedied and any commitment of public funds needs to be contingent on establishing the Big Three up as entities with competitive cost structures to their foreign rivals.3) Get Hollywood and the Media Engaged. Our President elect has a lot of clout here, and Unites States government should use its growing power to push those who help shape popular culture to help give a boost to public perception of American cars. On this matter, Hollywood and the media already try plenty hard already to shape public opinion; and saving our manufacturing base is surely of greater importance for the future of this country than, say, gay marriage - an issue that they their influence mightily to support. In conclusion, we need comprehensive out-of-the-box solutions to save our automotive industry. America is the country of ingenuity. It is what made Detroit, and the lack thereof has led to its sad state today. We can do this, and, if the money is well spent and properly deployed, GM, Ford and Chrysler can once again rule the roads, but anything less than a meaningful deployment of the great creative genius of this country will not work.For those concerned that this is not the place of government: that bell has already been rung. Furthermore, our government has traditionally been an active participant in the creation of our industrial might - from Alexander Hamiliton’s trade and economic policies in the 18th century, to the railroads which girded our country in the 19th century and of the superhighways of the 20th century. The key now is for the money to be well spent and contingent on a change in the way Detroit has been doing business. This is a great challenge to any government, but we the people must demand that our money be invested well. We should establish a properly grand vision befitting this great country for the future of the American automobile - That American cars once again be the envy of the world!