We are in the midst of an economic dilemma that is unprecedented in modern times. A global economy depression is affecting the macro economies of every nation, including third world nations whose economies are based upon cash-on-demand principals. How the United States approaches this situation will affect the rest of the world and the methods that these countries use to get their economies back on track. With over 5.1 million individuals currently drawing unemployment and over a half million people out of work with the coming of each month, we can’t afford partisanship!
The United States is the primary source of income for a number of the suppliers of goods around the world. We use twenty-five percent of the oil produced by the suppliers of petroleum. We import over one billion dollars of goods each and every day. Without these exports, our neighbors are not able to maintain a cash flow within their countries. China is a prime example of how a reduction in demand within the United States has caused the layoff of over twenty-six million Chinese workers – as demand is shrinking and trade is diminishing the world is experiencing it world-wide. If we don’t take this into account in our response to the current situation, the Stimulus Package is never going to work!
There are those that demand that tax cuts, substantial ones, are the only answer to this problem. To that I counter with the question, “Who are you trying to assist in the recovery of the American economy with that position? Let’s consider if we apply a tax cut to the economy – a reduction that equivocates to 5% of the taxpayer’s total income. With the current level of taxation being 17%, that would be an additional 12% of income in the pocket of a person making one hundred thousand dollars a year, or one hundred twenty dollars per month. This is a good thing for those that have a job, but what does it do for the person that does not have a job? This approach is selective in nature by its application.
Others say that the President’s tax plan will punish the Small Business owner. How? Why? Republican Congressmen lament this at every opportunity, but if you notice; no small business owner is shouting that he is being systematically wiped out by tax increases. Why is this so? Those who are familiar with ‘C’ and ‘S’ Corporation tax filing plans will tell you that Small Business owners are in a unique niche that allows them to take advantage of the profits that they make. The Minority leader, Congressman Boehner, is the chief decrier against the President’s implementation of this tax plan. Does the good Congressman know that there is such a thing as an ‘S’ filing, probably NOT? The informed person will see through the rhetoric and make the right choice.
The Budget package, as outlined in the proposal offered by the President, does the following:
1. A reduction in Medicare by identifying waste, fraud, and abuse along with the incorporation of preventive medicine to reduce the demand for medical care.
2. Places the burden of tax increases on the top two percent of income earners.
3. Elimination of those programs that have been proven to be non-productive.
4. Expands the opportunities for student education and student loans.
5. Investment in the production of ‘green’ energy.
6. Deficit reduction over the next four years.
The Republican Party has stated that the Stimulus Package is full of ‘pork’ with the introduction of set-a-sides for products such as prophylactics to prevent STD, appropriations for re-seeding the Mall area, etc; this is a baseless argument to justify saying no to the stimulus. Minority Leader Boehner has made the claim that the President’s tax plan is a job killer. The Republican Party has criticized every effort that this President has made to rein in the economical crisis that was initiated by the Party of ‘NO’ when it had a different answer for everything that Bush asked them to support. When are they, the Republican Party, going to realize that none of this would be necessary had they been fiscally responsible in the previous eight years? We see Republican leaders complaining with no solution and that is counter-productive.
It is absolutely essential that those scrutinizing the Stimulus Package look at the ‘domino effect’ of the Stimulus Package because it is that effect that will ensure the money spend in this package will do what we want it to do – cause cash flow. Let’s bear in mind that the original reason why we attempted to ‘drain the pond’ was to generate cash flow. Any spending will create a ‘domino effect’ thus creating jobs as it cascades around the United States which will, in turn, create a demand for the import and export of products around the globe – after all, we do have a global economy.
The by-product of inserting cash into the economy will cause employers to hire to meet demand. Those employees will spend money for goods and services, which in turns, creates a further demand that springs forth for other products. It is that simple, but there are those that are stuck on tax cuts as the only method of reviving an economy that actually has at its heart the requirement a vehicle for cash flow. Another factor is the influx of revenues into the coffers of municipalities profiting from the creation of those jobs in the form of Local and State taxes, a dividend that makes it possible for taxes within the State to remain low.
There is nothing extremely difficult to understand about this folks. What it requires is an open-mind to what is being proposed and a willingness to execute the steps involved with implementing the plan. Those stuck on stupid, excuse me, stuck on a reduction of taxes as ‘the only remedy’ to our current dilemma need to reassess their point of view. The Party of ‘No’ should remember that the national debt was doubled and the foreign debt tripled under the direction of Mr. Bush and the Republican Party. The Party of ‘No’ encouraged the out-sourcing of jobs overseas, and the de-regulation of the stock and commodity markets. With those liabilities, how can any Republican portend to have the answer to the present dilemma?
Most assuredly, there are other factors that have contributed to this situation – housing and the methods used in financing housing takes a lot of the blame. Even though it was only 2% of the GNP, the cost of sub-prime financing was just enough to create the stalemate in our cash flow. Cash flow is everything and we all need to take that to heart. Mismanagement in our banking industry, in the form of grossly outlandish compensation to CEOs and others within the banking/financial arena, caused an unnecessary drain of capital from these institutions. Adding insult to injury were the practices exercised with the bailout money that some of these institutions received.
The President, in his speech to the nation from the floor of Congress, has outlined his approach to this problem and I, for one, find his solution one that can work if we generate a bipartisan effort to formulate a comprehensive plan for the budget and the future economic growth of America. May God bless the President of the United States of America, and the people to whom he serves!
In a democracy, silence is not golden; it is condonance in the face of injustices; it is fear, where the thought of reprisal fosters control.