We’ve seen that the economic stimulus that has cost taxpayers trillions of dollars has had little to no effect on getting the economy back on track. We need to wake up to a few realities before we start talking about stimulus. First, a lot of jobs that have been lost over the last few years aren’t coming back. A lot of corporations had gotten top heavy in terms of labor.
They’ve made a lot of positions redundant and the rest of the workers have picked up the slack, if any, created by the dismissed workers. If the business can survive with less people without sacrificing quality and service, those lost jobs aren’t coming back. Manufacturing jobs that have been moved overseas are not coming back. American manufacturers cannot compete with low wage countries in Asia and Latin America. The majority of displaced workers aren’t qualified or willing to go to work on massive infrastructure projects. The working mom who lost her job at the bank isn’t going to start on a job site working a back hoe or something like that.
If we accept this, and the problem is really a lot larger than most people realize, there are a few things that need to be done to stimulate demand and get the economy back on track. First, comprehensive tax reform needs to be undertaken to put more money back in the pockets of all American taxpayers. This can take the form of either massive tax cuts, a conversion to a flat tax, or abolishing the income tax and replacing it with a consumption tax. I believe that the people paying taxes are better judges of how they should spend their money than the government. Every dollar that stays in a taxpayer’s pocket will either be spent or saved.
Second, corporate tax reform should lower the corporate level of tax to a more competitive level with other countries. The money saved will either be reinvested in the business or distributed to owners. In either case, the money is being put to better use than the government can use it.
Third, the federal government needs to balance its budget, restore pay-go rules, and substantially cut government spending. When I say substantially cut government spending, I think the federal government needs to carefully examine expenditures at each department and each level. If each department, excluding defense, were forced to cut their budget to the 2000 levels for the next fiscal year then follow that up with a 20% cut for the following year, we can make real progress in shrinking the size of the federal government, eliminating waste, addressing funding for entitlement programmes, and restoring fiscal responsibility to Washington, D.C. All of these factors will help build confidence in the U.S.
Fourth, I’ve mentioned it before, and I’m sure people are getting tired of hearing this, but we need to repeal Obamacare and get this looming burden off of businesses. Let’s repeal the existing plan and work together to come up with a plan that does work and brings affordable health care coverage to all individuals without any mandates.
This issue is far larger than we can solve here at this symposium today. These are just a few ways I think we can start to right this ship that has veered off course. Throwing more money at the economy is just throwing good money after bad. It’s not going to solve the problem.
Despite my negative outlook on the economy, I’m still a big fan of America in the long-term. Look, we’re the only real game in town when you think about it. And we’re the only country that has a lot going for it. Europe is a mess financially; it should be a testament that big government in citizens’ lives doesn’t work out well in the long-term. We’ll overcome these challenges. It’s just going to take time and sacrifice on all our parts. There’s no quick fix to get the economy back on track, but there are certainly a lot of things that can be done to get it moving in the right direction.