After listening to many experts, reading hundreds of opinion pieces and engaging in far too many discussions on the subject, it is more than clear that there are limited but very specific ways to conquer the recession. None is simple or easy and none will happen within the next year or even two but all are possible and some will lead to a much better country than we have now or have lived in for the past ten years.
First lets get rid of the two great lies on which the Republicans have been building their case for tax cuts. There isn’t going to be any economic fix by consumer spending or consumption and tax money saved by the rich will not trickle down to prime the economy. Money, whether in the form of tax cuts or other income is going into savings and paying down debt, not into expanded consumption. That’s a fact and you better learn to live with it.
So how do we get out of this mess? Well, we don’t do it by giving tax breaks to the rich. Listen to the richest of the rich, like Warren Buffet, Bill Gates, George Soros and Ted Turner and you will hear the same thing. They all say it. The rich do not spend their tax savings on investing in new business to create employment. They don’t have to. They already have enough money to start new businesses without worrying about tax savings. They will start new businesses when they want to and taxes have nothing to do with the process. Moreover they already pay less tax per dollar earned than you and me.
Warren Buffet explained on This Week that he polled a number of his executives and found that whereas they averaged about 28% in taxes he only paid about 16% because of IRS rulings that already existed in favor of the rich. Granted his 16% amounted to a hell of a lot more than everybody else 28% but he calmed our fears by assuring us that despite his onerous tax bill he was in no danger in defaulting on his mortgage.
So what is the answer? Actually there are two, one for the short term and the other for the long. The short-term answer is also two fold. We have to create instant or almost instant jobs and we have to support the unemployed until those jobs are created and available. How do we do this? First we must extend unemployment insurance payments while tightening the regulations on eligibility so as to prevent abuse. Unemployment compensation has long been a target of the conservative right whose demigods scorn it as a welfare handout. In fact it’s no such thing. The money for unemployment compensation comes not from the government but from employers who contribute a given amount each pay cycle to support it. In our current circumstance the need for compensation has far exceeded the systems ability to cover the bill so as we did with almost a third of the Stimulus package we must now find the means to extend this program until we come up with a way to create new jobs. Whether the conservatives like it or not, that means it will have to come from the government and if not paid for by other means, like eliminating the Bush tax cuts for the rich, will become part of an increased deficit.
The second part of the short-term answer is the jobs themselves. If we don’t, as I suggested in an earlier blog use the armed forces to rebuild our infrastructure then we have a ready work force to fill the void. I’ve said it many times; the country is in desperate need of a complete infrastructure overhaul. A program such as the WPA is perfect for this job, just like it was perfect for it in 1939. A large percentage of the roads, bridges and parks in this country are a result of it and most of them could now use repair or replacement. Where does the money come from? How about Infrastructure Bonds? How about instead of borrowing the money from China we borrow it from ourselves? We did it with war bonds during WWII. That’s how we paid for the $10.5 trillion it cost to arm us to fight the war. Yes it will create a long-term debt but the faster we get the country out of the doldrums and back earning money on which we can pay taxes, the faster we will be on the road to liquidating that debt. It will also mean that the average person will have a safe way to take money out of the market and invest it in the country.
Which gets us to the second answer, the long-term answer. It’s pure and simple: education. We are now 12th in the world in the percentage of college graduates. Our high schools only graduate one third of their students with the ability to succeed in college. This has to change. We have always been a nation of innovators and entrepreneurs. That doesn’t mean we have been the only one or that we will continue with our leadership in these fields. The rest of the world is catching up. We must equip our schools with every modern tool available to upgrade our children’s learning process and we must launch an adult education program that will concentrate on teaching grown-ups the skills necessary to work in the kinds of modern technology jobs that will be the backbone of our nation’s future. If we don’t learn those skills and fill those jobs they will be filled in places like, India, Indonesia, China and Eastern Europe. We have the spirit and the tradition to create whole new industries, industries that will fuel the future but we must have the tools and those tools are all found in education.
Fortunately some of our most successful entrepreneurs, men like George Soros, Bill Gates, Ted Turner and Warren Buffet are cooperating to bring together some of the richest men in the world who will donate significant percentages of their wealth to helping with the education problem both in this country and around the world. Now if our government, our local school boards, our teachers unions and our parents can manage to overlook their selfish goals and band together for the benefit of our children and our country maybe we can get something done. If we don’t educate our children to do the jobs of the future some other country will educate theirs and we will be left out in the cold.