One marvels at the predicable actions of our business, labor and political leaders who find it so easy to proselytize their counterparts around the globe on the values of a free market system, one not encumbered by undue governmental interference or bureaucratic stagnation and incompetence. In their infinite wisdom, they are quick to counsel Messrs. Gorbachev, Walensa and others to prepare their countries to endure short-term hardships if their peoples are to enjoy the fruits of future prosperity.
Yet, back home, the political courage of these sanctimonious individuals is quick to desert them, falling victim to both their own egos and their compulsive drives to maintain their lofty offices with the power, influence, notoriety and frequent wealth which frequently goes with them.
While urging foreign leaders to risk the wrath of, and even revolution by, their constituents, our American “leaders” find it all too easy to seduce us into new eras of ever larger, increasingly costly, far more intrusive and less democratic government. They just can’t muster the courage to do the right thing to cure our national ills! To do so would risk some of the most lavish jobs and plush retirement plans in America.
Our skyrocketing federal budget deficit, in particular, remains America’s number one, long-term economic liability. Although some economists (most of whom seem to be wrong more often than not) preach the gospel that the deficit remains at some “acceptable” fraction of GNP is little more than smoke and mirrors. When the annual interest payments on this obscene debt run approximately $1,000.00 for each man, woman and child in the country, and continues to grow, it’s time to say ENOUGH!
The reality of our national budget impasse is that until business, labor, social, environmental and other special interest groups/PACS are willing to “bite the bullet”, neither Congress nor the Administration are likely to show the mettle to act responsibly!
Meantime, the press must get its act together. It’s been frightening to witness the media swallow and then feed the public the Bush/Congress “budget deficit reduction” pabulum. How can an additional one trillion in deficit spending over the next five years be any form of “reduction”? The electronic and print media must no longer allow themselves to be so easily co-opted by the rhetoric of the “pols”, but need to broadcast the whole truth, absent partisan agendas and the predictable, carefully scripted and conveniently supplied sound bites!
These influential organizations must demand, their national leaders take immediately steps to scrap the plethora of costly legislation which has been enacted to “protect”, and generally fund at handsome levels, the growing list of special interest causes. Instead of pouring billions of dollars into lobbying efforts to protect their “sacred cows”, they should rechannel those monies and energies into directly addressing the causes of the issues they so claim to champion with near religious fervor.
In exchange for eliminating everything from the home interest mortgage deduction and lavish farm subsidies to their pet tax breaks, they should demand the budget deficit be reduced to zero by the year 2000! Further, they should insist within the following twenty-five years the national debt be fully retired, with a requirement that subsequent to that time the national surplus/deficit during any 3-year period must net to zero!
Unlike the emasculated Graham-Rudman law, such a commitment must have real teeth requiring a super majority, of perhaps 80% of both Houses of Congress, on a simple “up” or “down” vote, absent any extraneous amendments, to override or suspend a balanced budget mandate.
Additionally, these business, labor and other groups must demand real tax reform. Specifically, they should lead the way for the elimination of all deductions on personal income, substituting a flat tax rate on all gross incomes above the “official poverty level”. Maximum figures as low as 10% to 15% have been tossed around as being more than sufficient.
The net benefit to individual tax payers would, in most cases, more than compensate for the loss of various deductions, of which only 28%, on average, represent real savings. Taxes on interest should, however, be eliminated. With a legitimate balanced budget, the government would quickly leave the money markets, allowing interest rates to drop significantly and remain low. This would provide untold savings for individuals and businesses alike … providing a positive environment for capital formation, new business activity and increased consumer spending.
Additionally, such tax reform would return a sense of fairness to the American tax system. Today’s “tax the rich mentality”, which plants the seeds of class warfare and plays well as an evening news sound-bite is, in reality, nothing more than a government-sponsored program of income redistribution. History is replete with examples of the ultimate failure of systems employing such counterproductive and insane taxing tactics. Haven’t we learned anything from history, particularly recent history?
Finally, the corporate/business tax structure must also be reformed in a similar manner. All businesses should pay a flat rate tax on their profits, net of legitimate operating expenses, over a certain base level … the base level exemption providing a reasonable cash flow for small and marginally profitable companies to continue operations.
Will there be hardships and dislocations … certainly, and particularly in the short run. Moreover, certain individuals, companies and even industries will be hit hard. However, a continuation of our present irresponsible and unrestrained spending policies is a surefire invitation to widespread and long-term economic, and possibly social disaster!
Our economic future, and thus, the standard of living for generations of Americans hangs in the balance. We must abandon the business as usual approach of allowing the narrow self-interests of well-connected and well-financed special interest groups to drive our nation’s economic policies. Rather, we must force those policy makers Washington to abandon their beltway, “simple answers to complex issues”, mentality as we move toward the twentieth-first century.
