The US Needs a New Deal

When President Clinton left office, the U.S. had a budget surplus. When President Bush the younger left office 8 years later, the U.S. was on the brink of an economic collapse with high unemployment, a Wall Street brought to its knees by its own greed which had a ripple effect on the economy. Corrupt lending practices were exposed as many homeowners defaulted on their mortgages. Banks failed, the auto industry needed a bailing out and to top it all off, we were at war in two countries, wars that were not paid for – projected to have cost 1.26 trillion by the end of 2011 and an unpaid for prescription drug plan which cost 272 billion. And finally, the Bush tax cuts enacted in 2001 and 2003 and then extended through 2012 cost the U.S. something in the order of 2.8 trillion in lost revenues.

The U.S. has a spending problem, no doubt, starting with Bush the younger and exacerbated by President Obama’s policies to carry on with the wars in Iraq and Afghanistan, adding Libya to the mix, and his deal with Congress to extend the Bush tax cuts. But the U.S. also has a significant revenue problem. And I agree with the President and most Democrats that we have to tackle the debt problem with a balanced approach of both spending cuts and revenue enhancements. However, the government does need to increase spending, or I should say invest, in job creating programs that will help put the unemployed back to work. It is clear that tax cuts do very little to create jobs or spur the economy. In fact, favorable tax policies to corporations have succeeded only in making them more profitable as they move operations and jobs overseas. Some corporations paid very little in taxes over the years while receiving generous subsidies both at the state and federal level. Boston Scientific recently announced the layoff of 1,200 workers and a plan to create 1,000 jobs in China, this despite receiving a substantial tax break from the state of Massachusetts. So the Republicans are right. Corporate tax cuts do create jobs, just not in this country.

How do we get out of this economic mess? If I were a member of this super committee charged with deficit reduction, I would advocate the following:

  • All the things President Obama originally proposed on the campaign trail: raise taxes on the top 2% of wage earners, close corporate tax loopholes, and raise the capital gains and inheritance tax.
  • Complete troop withdrawal from Afghanistan, Iraq and Libya.
  • Implement a broad amnesty program for the 15 million undocumented in this country. This would bring economic and social justice to an underclass of exploited workers and help to keep the Social Security fund solvent. It’s the right thing to do; an economic and moral imperative.
  • Create a tax free zone near Waco, Texas, Tucson, Arizona and the South Dakota Badlands where Americans who want to live free of government intervention can live free of government services. They would be charged a fee to travel outside these zones, and have to pay tolls on all public roads. In addition, they would be assessed a clean air breathing tax while traveling outside Waco, Tuscon or the Badlands. To travel abroad, tax free residents will pay 100,000 for a passport or passport renewal. To access any public space or service, they would pay a hefty user fee.
  • For Americans who wish to pay more than their fair share of taxes, they can.
  • Last, America should invest in its ailing infrastructure and it’s national parks system.  We should invest heavily in education, clean energy and the arts. The Obama administration should create a civilian jobs program modeled after the CCC, the Peace Corp, and Americorp expanding into adult education programs focused on literacy for all. Let’s bring back Keynsian economics.

USA USA USA

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