Posted tagged ‘November elections’

Reality Check II

June 9, 2010

A reduction in the Department of Defense budget to the $ 100 billion level would free up about $ 600 billion to help close the deficit gap. This would be a mighty effort by still would fall short. And unfortunately, such a sharp reduction would necessitate deep employment cut backs in industries serving the military as well as significant reductions in our armed forces themselves. Where would these people get jobs?

Let’s understand that there are probably not enough lawns to be cut (if we kicked out all the undocumented workers), and the pay displaced defense industry workers would receive cutting lawns would simply not be enough to live on. Without an economic engine such as industries that make things and export some of what they make, service jobs, especially good ones, have no one who can afford their service. America must make things.

So, for other reasons we would have to reduce defense spending gradually and allow part of our economy to transition from war to peace uses.

In 2007, it was estimated that 30% of all corporate profit was made by the Financial sector. Hmmm. Forgetting for a moment the implosion and near ruin of this sector in 2008-9, I wonder whether there is some gold to be mined in those hills.

Since the founding of America, the wise use of public funds has built the “common wealth” of roads, rivers, rails, harbors, education, health care, and security. It has long been recognized that a flat tax does not work because those earning less would end up with too little to live on after paying their flat tax (read, and still be able to buy goods and services from those wealthier). Our political system has accepted a progressive tax with one hand, and with the other, instituted one loop hole after another. It is time to revisit the tax code and look for some gold.

1. Allowing all the Bush tax cuts to lapse is a necessary first step. This will increase everyone’s tax but will tax the wealthy more. The deficit is everyone’s problem and the rich benefit more from the common wealth.

2. A second step could be to impose a “transaction” tax on each stock, bond, and derivative sale.  The financial sector hills are in essence no different than corporate taxes on manufactured goods.

3. The third step is to separate totally the taxing, investing, and disbursements for Medicare, Medicaid, and Social Security from the general funds. Co-mingling of funds as currently practiced by the government is not allowed in the commercial world (for good reasons).  Government should be managing the “entitlement” funds more as an insurance policy, and investing other tax dollars in building the common wealth.

4. The fourth and last step, pay as you go legislation for all routine government operations.  Once the horses are back in the barn, we need to close the door.

So, which of the candidates running this November do you expect to espouse policies such as these?