Jlknapp505's Blog

There’s a point behind some of Romney’s criticism.
While Obama had Congressional power, he worked to get the Affordable Health Care Act passed. That took much of his political capital. Attempting to also get immigration reform, education reform, any number of other issues addressed, would simply have meant that nothing got passed, given the obstructionist aims of Republicans.
But Obama allowed Congress to work through most of this without risking his own political status. This is not the action of a strong president.
He also didn’t risk that status by attempting to address any other hot-button issue such as immigration reform.
That weakness or unwillingness is now coming around. He’s been a weak president. Put into context, that’s understandable. He’s the first Black president. A serious mistake can set back 70 years of progress in a nation that has had a history of enslavement of Blacks and oppression of minorities in general. For a lot of the Republican base, Mr Obama’s skin color trumps all of the other issues. Racism is not an issue that Republicans address; there’s a reason for that. Put simply, Republicans can count on the racist vote.
Not that I think Romney is an improvement over Obama. The policies he apparently favors, as much as any outsider can determine his real opinions regarding education, budget, the safety net, and the economy, are a disaster in the making.
He would ‘encourage private enterprise.’ I hope he has a better idea than his predecessor in the Republican Party. Encouragement then was to simply shovel enormous amounts of public money to financial firms, who were then suitably ‘encouraged’ to sit on some of that money as a cushion for future losses, skim off some of it as shareholder dividends and executive bonuses, and use some of it to acquire competitors. Supposedly, they were to loan the money in the hope that this would stimulate the economy; not being fools, they used it in ways that seemed most profitable to themselves.
That, BTW, is how you encourage industry: you decide what you want them to do, and via a carrot-stick approach (tax breaks, tax penalties) you encourage them to do that. They’re in it for the money, after all; so use that to encourage them to act in the national interest.
A Value-Added Tax, to replace the current corporate tax system, works. Say you dump the tax rate that only the foolish pay and the savvy avoid; replace it with a VAT, but suspend a portion of that tax for any product produced domestically using domestic labor. No loopholes. Set this at a nominal 15% (vice the current rate, the one that Apple and GE and Big Oil doesn’t pay), and put in a mechanism that automatically raises or lowers this depending on our international balance-of-trade. Work to keep trade within a narrow range, + or – 1% of balance for example. Trade will still happen, but not based on cost; instead, it would be based on quality. Better quality always wins out in international trade.  Nations that want to sell us goods and services would thereby be encouraged to purchase our goods and services or see that VAT rise.
In this way, everyone who has access to the US market pays for that, and those who bring goods in as imports will pay more than those who produce goods domestically.  Want to export a lot of goods to us, then buy our domestically produced goods.  If you don’t want to buy from us, then don’t plan to sell to us.  Balance of trade can easily be determined quarterly; indeed, such information is currently published in The Economist.  And the automatic adjustment mechanism (needed to take the matter out of the hands of a Congress that is far too easily bought by special interests) can take effect as soon as this information is obtained, certainly within the following quarter.
What about planning on the part of managers who might want reassurance of tax rates before they produce goods?  So long as those goods are produced domestically, the manufacturers can be sure their products won’t be undercut in price by imports.
Simple. And it encourages domestic companies to act in the national interest, not their own financial interest. That’s the kind of ‘encouragement’ that they understand.

Tags: Obama, Politics, Romney, Taxation

This entry was posted on June 22, 2012 at 4:57 pm and is filed under Economics, Government, Politics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.