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The Populist Solution

January 26th, 2011 · No Comments · Economics, Politics, Populism

Let’s get right to it. Here’s how a political party that had the interests of the People at heart would balance the budget and fix the economy.

1. Billionaires used to pay 97% of the incomes over a certain amount. They did so because this country gave them the opportunity and the markets to make billions and at the same time we had problems. We had a Depression and they helped. We had World War I and they helped. We had World War II and they helped.

But now, today, we have two wars, both created by the Republicans in Congress when they were in total control of the Senate and the House of Representatives. But now the billionaires…more billionaires by a factor of 100 than we have ever had as a percentage of the population…the richest rich ever…and they not only will not pay 97%…they won’t even pay 40%!

We not only did not ask them to pay 97% at the top rate, we didn’t ask for any increases at all from 1993 to 2009 while deficits grew. We cut their taxes to 74% in the 1970s, even with the bills from Viet Nam still not paid, and in the 1980s cut those taxes in half.

Now they complain about paying 35% and get a tax cut that we have to borrow from China. We owe 13 trillion dollars, spend a trillion a year more than we take in, and we borrowed $700 billion from China so that the rich could continue to have the Bush tax cuts! They now pay only 35%…but actually end up paying only about 20% out of pocket on millions and billions…and often much less than that…sometimes nothing at all.

So, we need to move the top income tax marginal rate to 55% and scale up taxes commensurately at all levels. Paul Ryan’s plan to cut taxes to 25% is not only stupid, it is marginally treasonous. It is a thinly veiled plan to pay off rich Republican billionaires and millionaires for their campaign contributions. It is essentially the offer and acceptance of a bribe.

2. Spend 200 billion more dollars to create 5 million jobs for one year, and in the second year half that amount to pay those who have not yet been hired away by what will be a growing economy.

Let’s put 5 million people to work building up the country—specifically to restore key infrastructures that may be crumbling, state by state. Next, put them to work on expanding alternative energy, on conservations techniques and on the energy grid.

The addition of 5 million direct government workers will stop the economic bleeding by creating a shortage of workers. A worker shortage and an increased money supply from these government workers flowing to small business will force private investment off the sidelines.

Money is the only thing important to the bankers. If we create a public market for labor that runs in tandem with the weak private markets right now, we will force mid-sized investors in. That is because some of these public initiatives will create similar private initiatives, ready to take over to make a profit from the shut down of a public enterprise. As these businesses come on line, larger investors will be forced in. It is all about competition.

The initial stimulus pays for itself by taking 5 million people out of the private labor market. This tightens the demand in the private market, while flowing more revenue and creating more tax revenues. Each public job will create another 1.5 private jobs at a minimum. Gradually the public sector jobs in important functions will be superceded by private company initiatives to take over those functions.

This will immediately add back some of the $300 billion in tax revenues we lose to unemployment and welfare right now with no offsetting tax revenue. It will put those funds directly into small businesses, simulating a private economy. That will lead to private business hiring away the public workers and the economy will be jump-started.

3. Cut back on the military by 40% and bring all troops home. Start over. This, with the increase in taxes on the rich, will close the deficit. We will then be able to shut down programs in government at random with no pressure and have a balanced annual budget and a write down of long-term debt within less than five years. A 40% cut in military expenditures would still make us the leading military spender in the world, more than Russia, China, North Korea, Eastern and Western Europe, the Middle Eastern countries combined.

4. Create a crash program to teach high school sophomores, juniors and seniors the fundamentals and as many of the advanced features of mathematics as is possible. Simultaneously begin to use many of the techniques that both private and successful public math learning programs have developed. Force anyone who does not meet the minimum standards to attend summer school. And begin math teaching in kindergarten and accelerate it significantly beyond the levels we currently teach.

5. Create a new 401K retirement program for all those who are currently 45 or under. But also give them minimum credit for any years that they cannot work and therefore cannot contribute to their retirement fund.

The new job of government will be to see to it that people who want to work have a job. That is a government’s responsibility. To create an atmosphere where businesses can grow and people can be employed.

6. We will investigate corruption among those in government, both those who use government for their private advancement or that of their political friends and those who simply prepare legislation or create contracts for their political friends. These investigations will result not in adverse comments but with indictments, trials and imprisonment. Theft is theft, in government or out of it. It is a crime.

7. We will impose heavier duties on corporations who make products abroad and bring them into this country from countries with a favorable trade relationship. No business will create products abroad and bring them here to sell in this market without substantial duty. Any product produced in China or India or Taiwan or Korea, for example, by an American corporation will be taxes 5% additionally to whatever duties apply. Those funds will be held in trust for loans to U.S. manufacturers who create jobs here in the U.S.

8. The environment and energy production. We would create subsidies for U.S. manufacturers of solar and wind products. We would give tax credits to people buying U.S. electric cars and hydrogen cars or flex-fuel cars if available. We would create subsidies for alternative energy production. Those would be such that for the next five years, the subsidies would try to make the product return the investment in 2 and ½ years or less.

9. Cut government spending. We would consolidate departments and projects and cut everything back until we reached discretionary spending that would balance the budget under the current system with the new tax rates and military spending. We would only exempt Social Security and Medicare and Medicaid…as they are laid out in the new health reform bill.

10. Health care reform. We would implement the multi-state insurance pools immediately using the Massachusetts model and if reductions of more than 15% reductions in rates could be from base 2010 rates, it would remain a private industry business. If it did not, private health insurance would be continued but it would all…all companies who wanted to remain in that business…would be required to convert to non-profits able to mark up no more than 15%, caps on employee compensation and have much higher base solvency requirements.

These are the basics. Raise taxes. Cut government. Not difficult unless you are trying to please a billionaire.

But we do have billionaires who want to expand de-facto segregation, wage-slavery, Robber Baron tax rates and no government services. This is exactly what the Koch Family Foundation wants and they are meeting in secret this month with Republicans to try to arrive at those goals.

We will do everything we can to stop them.

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