In the last blog entry, I indicate that promoting economic growth could substantially help overcome the government deficits that constitute an unsustainable and growing fiscal crisis. This is not going to be easy. It's possible that tax collections from individuals are going to be lower than average for a long time and gov't deficits large for the foreseeable future.
I've indicated in the last blog Fixing the USA Part 2-Cutting Government Spending that Gov't spending can be curtailed as I discussed. Also, corporate taxes can be reformed to lower top rates, improve the effective overall tax rates and increase collections. Tax collections can be increased from individuals by removing most or all deductions with the current tax brackets. It simply must be done even if it triggers a mild recession. Remember government spending dropped from over 50% to 11% after World War II and it didn't trigger Armageddon; there was a boom (after a recession)!
After a long period of personal debt accumulation, debt saturation and even debt revulsion, there is going to be a long period of de-leveraging by the public leading to overall slack demand. This pattern is occurring elsewhere in the world as well. This means that export markets are going to be sluggish as well. Governments, trying to compensate for loss of demand, are spending but reaching or exceeding their debt saturation level in most developed nations. Government spending is wasted money with no long term gain or return on capital.
There is also a demographic drag on growth in the US as baby boomers age, retire and spend less. China continues to steal jobs out of America (and most other countries) by playing unfair with their trade practices and maintain their currency undervalued vs. the world.
But the US has several secret weapons and one is it's ability to attract foreigner to come live here. We need more taxpayers to overcome our demographic drag! We need and can lure highly qualified immigrants to fill technical jobs, buy houses, and buy furniture and appliances to furnish those houses. More population means more GDP growth.
To promote growth, government must establish stable rules--not subject to constant change or threat of change. This is a major negative of the current administration--threatening increased taxes, actual regulatory over-reach, insulting business leaders, bringing forward half-baked laws like Dodd-Frank and Obamacare that are poorly written, rushed, poorly considered, incomplete, too complicated and too expensive.
Here's a list of possible growth improving ideas:
- Give qualified immigrants 10 year visas/green cards to come to work here. Expand quotas especially of entrepreneurial Asians, South Asians, East and Central Europeans, Chinese and Taiwanese. Actively court Masters and Doctorate graduates by interviewing and offering residence and work permits. We need more taxpayers! We need more business creators---the old ones are dying off.
- Give qualified immigrants a chance to buy an existing house (not new) if they can find work and make payments. We have a housing glut and, if foreigners will come here, find employment and buy a house, it will stabilize the housing market. Stabilizing housing by creating demand for housing will markedly improve the economy.
- The shale energy boom is underway without any government help--as it should be. So much gas is being unlocked that Cheniere Energy has embarked on a project to export billions of cubic feet per day of gas as LNG! The USA is exporting more refined oil products as well. North America has increased oil production this past year, has much higher gas production and reserves and the trend looks to persist. This is one of the few areas of the economy adding jobs.
- Along those lines, the US needs to finally allow exploration of the most promising areas of Alaska including ANWR, and extend leasing in both US east and US west coasts. Offshore California (in Federal waters) is probably another North Sea of oil/gas, so how can we not take advantage? We can't allow an individual state to block access to the people's resources! Additionally, our oil imports constitute a chronic balance of payment problem as well as a national security issue. Increased exploration means more jobs, reduces our trade deficit/ balance of payments and increases our national and energy security.
- Promote conversion of trucks to natural gas and displace about 2 million barrels per day of imported oil. That alone will nearly eliminate our oil purchases from OPEC countries.
- Allow the Keystone pipeline construction to go ahead to create jobs and secure reliable energy from Canada. If we don't import Canada's oil, it will go to Asia. To not allow this pipeline hurts the jobs market, snubs our best ally, and hurts the improvement of our energy security. The administration and it's many environ-maniacs are seriously off-base on this issue (and so many others).
- In select markets, try fleets of natural gas buses and mini-buses to augment transit systems in select markets. Increase the number of buses so that a bus comes each 3 to 5 minutes. In this way, people will take the bus. Expand mass transit infrastructure to reduce automobile use.
- Increase tourism! We have a great potential to increase the number of tourists visiting our nation but immigration and customs are completely unfriendly---even rude and insulting. TSA is a joke. We've alienated millions.
- Threaten China with import tariffs if they don't let their currency float (?). This will bring them to the negotiation table. This point may be becoming mute as they are already suffering from their undervalued currency, so it has a tendency to self-correct by spurring rising prices there and reducing their advantage. Also, there are many other currencies soft-pegged to the dollar where they maintain a surplus with the US.
- Voting out the current administration will be the biggest promotion to growth of any single idea. There may be "pent up" demand by individuals and from the business community who will be happy to see Obama out of office. The ridiculous hand-wringing and "gnashing of teeth" of the current administration regarding any carbon based energy is causing them to halt new power plants and halting such projects such as Keystone pipeline. There is an absurd hostility to business in general and a ham-handed under-appreciation of how jobs are actually created. What do you expect from a bunch of academics?? Yes, there have been bad actors in the banking business, but why is no one in jail? Why is there only empty rhetoric that insults mostly innocent working/business people?