A simple plan to fix the economy.

Any student of history will tell you that the economic problems facing the United States are enormous in scope, but rather simple in complexity.  The short term issues are easy to fix both structurally, and politically, we simply need to invigorate the business climate.  Over a longer period of time one cannot discount the potential disaster associated with Social Security and Medicare benefits promised to eighty million baby boomers.  Honoring this promise will require deficit spending for years.  But if we set our house in order today, we will have the liquidity and confidence of creditors to meet the demand. 

The plan I am outlining is nothing new. It is the path lighted for us by past politicians, economists and the march of time itself.  Big problems aren't always complex.  This is one of those instances.

This plan will result in rather quick economic growth, based on real productivity, and it will check inflation.

1. Lower the capital gains tax rate to 7%, permanently.  When nations lower capital gains tax rates, economies and revenues to the government rise.  There is no historical empirical data to suggest otherwise, and in fact, very little anecdotal evidence.

2. Increase oil exploration and drilling in Alaska and the Gulf of Mexico.  Oil prices are effecting everything we buy.  We must approach the task of exploiting American based oil assets with the same vigor we approached re-arming for World War II. 

3. Overturn Sarbanes-Oxley. This misguided piece of legislation costs public companies billions in productivity.  It is a horribly conceived bit of law, that does nothing to protect investors from criminals.

4. Remove as much regulation on small business as can possibly be accomplished in ninety days.  The family leave act, Americans with disabilities act, and as many as 80 other regulations could conceivably free up more than one trillion dollars per year.¹  Many of these regulations offer no real protection to the general public, and of those that do, the cost often far exceeds the supposed benefit.

5. Do not intervene in the housing market.  Housing prices were run up in many areas because of speculative buying and selling "flipping".  Perpetuating this bubble will only cause further ruin.  If the prices are allowed to settle at a more natural level, the crisis will quickly pass with minimal impact on the overall economy.

6. Drastically reduce illegal immigration and begin massive deportment of illegals in the country.  Rising health care costs related to illegal immigrants are pushing up health insurance rates for small business, and employees, while causing severe economic pressure on border state hospitals.  These illegal workers are also pushing wages down even further for the working poor.  Build the border wall to discourage repeat offenders.

7. Drastically increase the visas allotted for highly skilled technical workers.  These highly skilled workers will pay taxes, and keep jobs in the United States.  Unlike low-skilled jobs these positions bring with them high pay and disposable income so necessary to growing our economy.

8. Cut government spending by ten percent.  Even social security direct payments will need to be cut by 2.5 %.  This will solve the short term deficit problem and allow for further tax cuts to stimulate the economy.  Welfare and food stamp payments will also need to be cut.  One of the biggest health  problems of the poor is obesity², let no one tell you people will starve if food stamps are cut by 5%.

9. Protect the drug companies from class action suits once a drug has been approved by the FDA.  This alone will lower health care costs, specifically for the aging baby boomer generation. 

10.  Rewrite HIPAA laws.  While portability is good, much of the HIPAA regulations have increased health care costs with no discernable benefit to health care consumers or providers.

11. Cut military spending by twenty-percent across the board.  Re-focus military spending on defensive initiatives (missile defense).  Drastically cut overseas troop deployments. Dragon slaying is a diversion for nations flush with cash, in times of economic woe, it is a recipe for disaster. 

12. Streamline the process for building nuclear power plants.  Nuclear power is more environmentally friendly, and cheaper than fossil fuels.  The construction of these power plants is over-regulated and is strangling our economy.

13. Promote free trade.  The Smoot-Hawley rhetoric from the Obama and Clinton campaigns will lead to , the same thing the first Smoot-Hawley tariffs led to , increased misery.  Cheap imports are a staple of growing economies.  Our growth is not dependent on building walls, it is dependent on increasing our competitive advantage. This is done by lowering taxes and regulations.  Paying fourteen dollars for a pair of socks is not going to grow our economy.

All of these ideas are easy to implement.  Incorporated together they will build a strong foundation for growing our economy quickly, and allowing us to meet the demands of the future.  The United States economy is in dire straights. Thankfully, it is easy to fix, as most (not all, but most) of the problems were created by our government. 

The time has come for us to put the politicians feet to the fire.  No longer can we listen to nonsense about Universal healthcare.  There simply isn't any money for it. Universal health care is about increasing access to health care, not decreasing the cost.  The time has come for the American giant to rise from his slumber and confront the beast.  The beast is nothing more than sloth and ignorance.  We are all guilty.  Make no mistake the winds of economic chaos are strengthening and their gusts threaten to blow your very livelihood away.  This is not the time for slick politically speak, or straight talk that isn't straight about anything.  The election of 2008 is not about change, or staying the course, it is about real leadership. 

History will judge us harshly if we continue on the path we have taken. The world wide web has opened up mountains of data for historical research.  I urge you to get involved.  We must find a leader willing to make tough decisions, and one who can lead as all great leaders do, by building a consensus if possible, standing alone if necessary.  I do not know who will win the presidential election in November.  I do know that if it is McCain, Clinton or Obama, it will be a one term presidency. 

Sources

1. Advocacy created the r3 initiative because complying with federal regulations

now costs our economy $1.1 trillion per year, which costs more per household

than healthcare.  The smallest of businesses bear the brunt of regulations. 

They annually pay 45 percent more per employee to comply with federal

regulations than big businesses do.

From SBA advocacy.

2. www.usatoday.com/news/health/2006-05-23-obesity-teens_x.htm

Author note:

Eric Gurr is the President and founder of U4Prez.com.   He writes regularly in his blog at blog.u4prez.com.  Eric is 43 years old and is married with three children.

He can be reached at egurr@intralinkinc.com