17 August 2010

Laughable Solutions to Major Debt Problems

Paul Craig Roberts, writing for Alex Jones' INFOwars has a hit piece out yesterday detailing that it's time for an American Revolution.  Funny though that the piece never calls for a revolution until the final sentence, nor does it offer any realistic solutions to the debt problem that is ruling the USA.  Roberts' article starts out well with stated facts that we have a huge budget and trade deficit that are crippling the country but that's about where the good part stops. 

It seems that Roberts understands that we have been off shoring too many jobs and far too much debt, but he fails miserably to see that the USA has lost it's competitive manufacturing advantage.  To bring those lost manufacturing jobs home, he advocates for a tiered tax structure that would make a value added tax on companies who produce goods outside of the USA.  Unless Roberts has taken notice, almost everything sold on the store shelves of American retailers is made in some other country THAN the USA.  Not only would this asinine idea increase costs to American consumers, but these "tarrifs" would effectively spark a trade war with China and other trade "partners."  If Roberts believes continued deficit spending will ultimately spark a US dollar / debt purge by Treasury bond holders, there would be no better way than to do it by slapping a tax hike on imported goods.

If Roberts truly wants a competitive America, perhaps he should find a way to reduce the costs of business here in the USA.  Labor costs are currently as cheap as they have been in the last decade, but the hurdlers of business to meet OSHA protocols, union thuggery and legislative manipulation of the markets is what is truly dooming our country.  Failing to fix these things, along with a fair tax structure instead of the regressive and putative punishment of success, companies will flee to countries like China that have lower taxes, less restrictive zoning laws, no property taxes, less restrictive government oversight, and no labor lawyers and union bosses breathing down their necks.  Further, without double taxation of capital gains, dividends, and absurd confiscation rates, the real economy could then be built on investment instead of debt as Roberts seems to advocate against. 

Instead of those trade solutions and a serious reduction in social spending and pork bellies, the dimwit decides to loose all credibility and rail against the "neocon" and "military/security complex" of the country.  Roberts wants to fix the budget deficit by a reduction of military spending.  This seemingly "brilliant" idea discounts the fact that our biggest bond purchaser (besides the Fed), China, is in a full blown military arms race with the USA.  Unfortunately, the defense budget isn't even the biggest contributor to the budget deficits!  The winner of those titles can easily go to porkulious, TARP I & II, quantitative easing I (and hopefully not II), unemployment benefits, pay for teachers, medicare bailouts, health care, social security and pork barrel pet projects, pay for unions, and bailouts of the states! 

While continuing in Iraq and Afghanistan aren't exactly the best use of federal budget, leaving Iraq while real progress has been made is not currently justifiable.  I will conceded that Afghanistan is a lost cause.  Simple isolation and mitigation of the Taliban / terrorist threat from that country would suffice our national security needs.  However, when the defense budget of the US for Fiscal 2010 was 23% versus the 55% spent on social programs, we could have easily eliminated 2 trillion in waste that was simply vote buying for incumbents (source).  If that had been done, we would have had about a 1 trillion budget surplus (tax receipts vs spending).  True, Roberts is correct that US military budget "exceeds the budgets of all the serious military powers on earth combined," but that isn't what has made us bankrupt over the last 80 years.

Perhaps Roberts realizes that gutting the social programs is actually necessary to the survival of this country, even though it is not politically expedient.  Unfortunately, I would not believe that anything the crew from INFOwars publishes, actually has any real credibility behind it, since the wackos run the asylum.  I suppose though that we could toss Roberts a peanut for effort, even if it comes up a bit short sighted. 

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