December 5, 2010
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American Economic Questions - and possible answers
At last we seem to be focusing, albeit reluctantly, on our country's financial and economic dilemma. The Republicans are demanding a return to normalcy, pretty much as Harding and Hoover did, and claim the answer is to "Grow the economy", thus ending the Recession. I have a few questions about that tack: Why should the economy grow? For new jobs to be created, there must be a basic need for whatever those new employees would make or do. That presupposes a rise in demand for what they produce, be it industrial products, infrastructure, service, or whatever. Just what is it that is not available that is demanded?
Also part of the dilemma is the massive public debt - increased many times, mostly because of our financing of expensive wars and programs by borrowing rather than paying for them with tax money. Actually reducing taxes when you know you will need the money was at best a stupid idea - and has meant that for the past several years the growing debt service (The interest we pay to China for all those bonds they hold) has meant that there is less and less tax money to pay for more and more expensive wars and programs - which we seem incapable of ending.
Sensible solutions would seem to me to tap sources of money that we have right here in the United States, namely re-start taxing those who can well afford to be taxed at reasonable rates. The upper rate for personal income tax should be returned to 70%, as it was before Reagan began the process that started this mess. The tax rate for corporations should also be a progressive scale. Remember our income taxes are on net INCOME; if your "small business" doesn't have an income, you are not taxed, and a way to increase your "small business" income is to produce more of whatever you do - that generally means more employees. If you pay your employees health insurance, that is part of their income and they should pay tax on it - that's only fair, isn't it? Generally, business expenses are deducted from your profits and it is your profit that is taxed.
Also, perhaps more of us would take our tax problems more seriously if all of us who had incomes were obliged to pay at least some income tax - might give us a sense of responsibility for our government's finances.Other parts of the solution would certainly include re-evaluating our government expenses. What we are spending that is productive of "The Public Good" such as Medicare, Social Security, unemployment insurance, healthcare, and infrastructure maintenance are obviously reasonable government expenses that are for the public's good and make our nation stronger, but I can think of ways to make even these expenditures more reasonable and efficient. Wars in far-away places are harder to rationalize.
