Preserve our Nation

clearsky

Part one - The System is Broken

In a conversation about politics, a friend and I tried to lay out a set of changes that might help get our country out of the  mess it is in. First of all, we need leaders who are paternalistic and are willing to tell us “No“. Most politicians are so strung out trying to please all groups from the elderly to the religious (both of whom have loud voices) that they overlook the basic premise of their job, which is; Preserve our Nation. If politicians weren’t worried about getting re-elected as soon as they are sworn into office, they might do the right thing more often and not be in a continual state of crisis management. A few things that might help are:

Term Limits for Congressman and Senators – People making a career out of politics are flawed from the start. In order to stay in office, one must form relationships with political parties and special interest groups that will allow them to stay in office. The politician becomes obliged to their “patrons” and often loses objectivity and the sense of obligation to the people who elected them. I am always waiting for the politician who says, and means, “I am going to do the right thing, which may not be popular. If the people don’t think it is right, they shouldn’t re-elect me.“  However, since Mr. Smith isn’t going to Washington, just to keep them honest, Congress should be limited to four terms and the Senate to two terms.

Committee appointment lotteries – The ruling party (and the hierarchy within, tiered by seniority ) control the system and  the flow of  bills and discussions. It is not hard to imagine how a conversation between a rookie legislator and a senior one might go. “Listen kid, here is how it goes down. You follow the party line or else you might as well go home now because, you will never get a voice around here.” If the committee appointments were done by lottery, perhaps the element of chance might produce more objective and productive groups.

Issue Specific Bills – Currently, bills make it through the system after much compromise. Totally unrelated added wording is included in order to secure votes. So a 1,000 page bill on defense might have a farm or oil subsidy buried in it, or perhaps a “road to nowhere”. Bills should be limited and should name the sponsors.

Campaign Financing Reform -Media spending determines the outcomes of elections.  Only the rich or influenced politicians can afford to run and win an office at State and National levels. So, unless you are independently wealthy and don’t mind financing your own campaign; you will either lose or compromise your integrity in order to get elected. Only ‘hard money’ limited to $1,000 individual donations and donations by political action committees should be allowed. Also, after the primary elections, candidates should have equal spending power which would be subsidized by the government or private donations to ‘campaign pools’ to be distributed to balance the spending by candidates. ‘Soft money’ which is money spent by independent organizations, not controlled by the candidates, should be prohibited since it often is used to attack candidates without revealing the true source of the funds. Soft money also allows special interest groups uncontrolled spending power to advance their agendas.

Part two – Rescue our Nation

The big question is how does America get out of the mess we are in. Again, someone needs to step up and say, “The cure for our problems is not going to be easy. As a nation, we will have to make individual and group sacrifices in order to Preserve our Nation”. It is easy to blame the government or greedy Wall Street for the fiscal sewer backup that is threatening our country as well as the rest of the world. Remember, even though the rest of the world blames the selfish excess of the United States for the world’s problems, they still look to us to solve them.

Here are a couple of ways the fiscal problem could be addressed and put on the path of turning around our country. Before you start throwing tomatoes, hear them out.

Spending Cuts - The political lines have become so polarized that both parties have become stereotypical. Republicans refuse to raise taxes and the Democrats protect big government and entitlement programs. There is no non-partisan cooperation. In fact, the politicians behave like obstinate children, even using crying as some sort of tool. I guess it is time for parental intervention. “Quit playing around with our country, fix the problems, quit blaming each other for the serious state of things. It is everybody’s fault. Preserve our Nation. Spending cuts have to be bold and deep. Calling a reduction in future spending increases, a spending cut is a falsehood that jeopardizes our country’s sustainability”. For example, government workers should pay into the social security system like everyone else. Government pensions should be replaced with a 401k type of plan. Government workers would contribute to their own plan and the government could make partial matches of contributions, just like everyone else. No one should take a job for the benefits. Government jobs have competitive salaries, enough is enough.

Entitlement Programs – Every day we hear about reducing government and reining in spending. Some of the problem stems from the very nature of the spending. For example,  Social Security is the largest single government program in the world. The US spends more on Social Security payments than on either discretionary defense or Medicare/Medicaid. It keeps many elderly Americans out of poverty and is the sole source of income for some. However, many elderly Americans do not rely on social security at all. Americans with incomes, excluding social security, over $100,000 should not receive it. The argument that “We paid into the system and we are ‘entitled’ to it ” falls on deaf ears to those trying to Preserve our Nation. The Social Security system was meant to pay a person over 65 for up to five years, during which the retired receive more than they paid in over their lifetime. Of course, when the system started, the average life expectancy of a person was around 70, so the formula worked, then. With the current life expectancy at 84 for people reaching 65, it is easy to imagine the system can’t support everyone. With the baby boomer retirement bulge in full swing these faults become clearer.

Personal Taxes- The word tax has been demonized for too long. It is a simple equation, in order to reduce a deficit and pay down our nation’s debt, spending cuts in concert with revenue (taxes) increases are necessary. The arguments of late are plain dumb. The marginal tax rates need to be adjusted back to pre-Bush levels. Of course real spending cuts need to me made now, not phased in over twenty years, that is silly.

Corporate Taxes – It is not true that reducing corporate taxes incentive corporate investment. Corporations are now multi-national conglomerates that often earn more outside of the US than they do domestically. In fact, many corporations pay little to no tax on foreign income unless they bring it back into the US. So, they invest it abroad instead of creating new jobs here. An individual US citizen, however, must pay US income taxes no matter where it is earned. Corporations should be taxed on all income. However, they should get a tax deduction for amounts that they pay in dividends. That would eliminate the double taxation trap and bring income to the US.  In concert with a raise in the marginal tax rates, dividend increases would provide tax revenue.

Address the problem with the Dollar - The Dollar is the word’s currency standard. Foreign currencies are “pegged” against the dollar, for now. We lose worldwide creditability when use our Federal Reserve to print more money to provide temporary relief to our financial woes. Because our currency is the standard by which other currencies depend, actions at home affect the entire world. There has been increasing talk by other countries to “uncouple” their currencies from the dollar. That would cause a rippling effect that would grow to a tsunami for the world economy. The removal of the gold standard by Nixon has allowed the dollar to float like a bottle on a storming sea. When the  gold standard was lifted, the value of gold was approximately $38 per ounce. That meant that a dollar equated to 1/38 of an ounce of gold. The use of a full gold standard means that the government maintains enough gold in reserve to back up the dollar. (at the writing, gold was trading at $1,725 per ounce; so under a gold standard, a dollar would equal 1/1725th of an ounce). The gold standard protects against hyperinflation and other abuses of monetary policy.

Part Three – Grow our Economy

Put banks back in the business of banking – Banks have become risk adverse investment firms and money handlers. The downturn of the economy exacerbated an existing problem. Banks don’t like to lend money. As long as banks are allowed to take in deposits and charge  fees to customers for storing and facilitating the exchange of  money, and are allowed to borrow money from the Fed for next to nothing and invest that cheap money in securities for a positive spread, why should they loan it out. They seem to get into trouble when they act like banks and make ill-based decisions. Banks should be limited on the amount of marketable securities that they may own and should be prohibited from short-term trading. The formula for computing a bank’s capital requirements should be balanced to encourage lending. The Federal Reserve should reduce the current Fed Fund rate to discourage banks from parking money with the Fed instead of lending it out. Listen, banks need to return to sound lending practices, keep the loans they make instead of packaging them and selling them to others. If the originating bank had to keep their own loans, they would tighten up their lending practices and make sounder loans.

Put People to Work!

In 1933, the Congress created the Tennessee Valley Authority (TVA) to provide economic development in an area hit hard by the great depression. The TVA built electrical power plants,  dams, flood control and manufacturing plants and put many Americans to work. Today, the TVA produces over $11B in revenue and helped our country  create a nationwide electric grid.  Today our nation’s infrastructure including roads, bridges and the electric grid are aged and need to be re-built. If the government is going to spend money to stimulate the economy, spend it on jobs that result in hard assets that will benefit and Preserve our Nation. For example, we have millions of acres of desert in this country that would look beautiful covered in solar electric generating panels and our coastlines would be just as beautiful with wind turbines along the cliffs. In addition, sea water reclamation facilities are probably the only solution for the rapidly deteriorating fresh water supply of many areas.

Quit Being the World’s Police Force

The 2012 defense budget exceeds $700B. Of course, we have and should have the most advanced and powerful armed forces the world has ever known. However, the wars in Iraq, Afghanistan and conflicts in Pakistan have cost the US over 6,000 precious members of the US military and upwards of $4 trillion dollars. Yes, trillion. It remains to be seen what the situation in those countries will revert to upon our exit, however, the situation at home is uncontrollable; deficits, debt and high domestic unemployment. That is an unacceptable tradeoff. The rest of the world will likely turn their backs on the US if we lose our dominance as the leader of the free world. If the money spent on the those wars was used to build our country’s infrastructure and defense systems, the US would not be vulnerable and exposed by fiscal deficiencies.

Reform the laws for non-violent crimes -

Over 700 per 100,000 US citizens are in prison. That is the highest percentage in the  world. In fact, 25% of the world’s prison population is in the US. The composition of the prison population includes a high percentage of drug related offenses. Face it, the war on drugs is never going to be won and the costs in government spending and disruption and often ruinment of the lives of our citizens is frankly, not worth it. As much damage as drugs do to users is pale in comparison with the damage to our society that harsh enforcement of recreational drug possession causes. Other non-violent consensual behavior, while often in bad taste and immoral, is not worth the effort of pushing religious and other beliefs into the laws of a free society.

In Summary

The United States is the greatest nation the world has ever known. The freedoms allowed our citizens have encouraged and rewarded hard work and ambition. The world envies the US and wants to be like us. Unfortunately, they are not us and we can’t make them us. The United States has great challenges ahead of it. However, if we put the good of all ahead of our short-term gratification, we  cannot be defeated and we will grow even greater, for our children and countryman.

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