Tuesday, October 26, 2010

A Need for Vision

       I don’t believe many people would pack up the family and head off on vacation without knowing where they were going. Most likely an individual is not going to leave to go to someone’s house without knowing where they live. A business will most certainly have a better chance of success with a vision of where it wishes to go and accomplish. Basically speaking it is always better to know where you are going before you set out on a journey. Sometimes I feel that American does not know where it is going. America seems to be split up into different factions all pulling in different directions. Each division is trying to sway the decision makers that their plight, issue, or concern, is most important without regard to the larger picture. America in my mind suffers from a lack of unified direction and without it we will continue to scrap over solutions to smaller problems without fixing what I believe is a major concern, a united path for America’s future.
          Where is America going? What kind of country do we want to be? What should our roll be in the international community? How do we as Americans define success for America? Our country has been at its best when faced with a challenge and a unifying goal. When Japan attacked our Pearl in the Pacific, America responded by putting forth an effort that ultimately led to freedom from oppression and tyranny for millions around the world. In the height of the cold war, America’s response to the presidents Kennedy’s challenge to put a man on the moon in a mere decade, gave birth to a focus that led to technological breakthroughs as we developed answers to problems that had never even been conceived before. America is the richest country, not only in personal worth but most importantly in capital. No other country can match our amount of factories, equipment, buildings, land, resources, and the most highly trained work force in the world, and the world knows it. That’s why they keep loaning us money because they believe in the potential that America possesses. Currently a much underutilized potential.
          At present America faces some very critical choices, large unemployment, huge budget deficits, shrinking middle class, large trade imbalances, military conflicts and obligations worldwide to just to name a few. All these are difficult and complicated issues that will employ many complex and overlapping responses to deal with as America goes forward. The only way that I believe that America can solve all these issues are if they are addressed within the context of larger goals. Larger goals let you prioritize the smaller accomplishment needed to reach the ultimate destination. This prioritization allows for the logical allocation of the resources needed to solve the problems we currently face. Currently we fight over budget dollars and resources, in what amounts to a haphazard me first way that delivers little direction to our country as a whole. The challenge in America as I see it is finding a vision that most can agree upon for the future direction we wish to head.
          I believe Americans love to win. We love to be the first at something, the inventor of something great, leaders in our chosen fields. Our past is literally a tapestry of accomplishments and firsts spanning the last two centuries that can attest to the advancement of society as a whole. Americans have harnessed the power of lighting, and the atom. We were the first speak to “Mr. Watson” on the telephone and the first to take flight among the clouds. Time and again American ingenuity and know how has made the world a better place to live. Well I believe it’s time for America to lead the way once again. It’s time to give this great American potential something to organize around and focus on. But what should it be?
          For me the answer is energy. As this world continues to grow and the demand for energy rises, the country that leads in the production of energy will be the country with the best economy, the lowest unemployment rate, healthy tax base etc. Now we all know that fossil fuels are bad for the environment and finite in their numbers so the future must be in the form of renewable sources. For my dollar I would love to see a push in this country for renewable energy that would rival the national effort it took to go to the moon. We can all agree that we send too much of our wealth out of our country each year to import foreign oil. We should be able to agree that the development of these resources is happening worldwide whether we do it or not. This type of national effort could grow jobs that will last well into the next century not just some short term answer that we will have to pay for later. I would be interested in a goal of reducing our demand for foreign oil by 50% in ten years and by 100% in twenty. Some might see this as too aggressive of an approach, but it often takes bold vision to lead through tough  times.
          If this country could focus on such goals it could prioritize spending on projects that develop new industries that would employ Americans in quality jobs for decades to come. We could center the efforts of our financial institutions to support business development in these areas with all the bailout money there sitting on. We could bring down our trade imbalances by exporting the solar and wind power to developing nations around the world. All without the threat of socialism or the loss of entrepreneurship that has led this country to greatness. We need quality leadership that can instill this type of long term vision in America. Without a long term vision that we all can agree on, America will continue to be at the will of the same old short term solutions to long term issue that never fully solve anything.  I’m sure energy alone isn’t the solution but we need long term goals like this to capitalize on the incredible advantages that this country still has over the rest of the world. The challenge will be to find the leadership that can unite America in a common purpose, for when we are united, Americans have time and again have made this world a better place for everyone.

Thursday, October 21, 2010

Bush Tax Cuts

          The next election will be dominated by the economy, and the deficit. One of the major political battles is being waged over the expiration of the “Bush Tax Cuts”. Many agree that the economy is too fragile to repeal any of the cuts. While others believe that only the cuts for the wealthiest of Americans should be allowed to expire whereas cuts for the middle class and the poor should be extended. Some even believe that we should make all the Bush tax cuts permanent.
          What does this all cost us? The cost of making the cuts permanent for all Americans as estimated by the US Treasury at 3.7 Trillion dollars over the next ten years. This is a hefty price to pay considering the political wrangling over deficit spending and its continuing negative effect that deficit spending has on the economy. What seems more likely is that some scaled down version will be extended and those figures vary from 300 – 500 billion depending on what cuts are allowed to continue and for how long.
          There seems to be growing bipartisan support for extending the cuts for poor and the middle class. The debate seems to be centered on extending them for the wealthiest of Americans. Most Democrats oppose tax cuts for the wealthy including the Obama administration. Many Republicans and Tea Party candidates support the continued relief for the wealthy claiming a failure to do so would hurt small business and hurt job growth. The left claims that the wealthy don’t need the money. Many Republicans do admit that they would not hold up extensions for the poor and working class just to extend them for the wealthy. The Tea Party seems to be the wild card in the debate with some not wishing to stray from the hard right position.
          So let’s take a look at some of these arguments in further detail. The one that strikes me the most is that the wealthy don’t need the money. Seems vague and for me, it needs some sustenance before I agree so I did some research. According to the Christian Science Monitor to qualify as one of the top one percent of wage earners in America you must earn $600,000 annually. Currently approximately 120,000 Americans fall into this category and earn on average an astonishing $8.637 million each year. These Americans account for less than .04% of the population but garner an unbelievable $1,036,440,000,000. That’s 1.03 trillion annually. Repealing the bush tax cut for these individuals would result in a tax increase on average for these individuals of approximately $310,140. A lot of money to most of us but for these households not much would change if anything.
          Raising taxes on the wealthy will hurt small business. This seems to be the battle cry behind many of the supporters of extending the cuts for the wealthy.  Sen. Orrin Hatch (R-Utah) stated recently, that allowing the cuts to expire would amount to "a job-killing tax hike on small business during tough economic times." This claim is nothing if not misleading. A report in the Washington Post cited that less than two percent of tax returns of individuals in the top two tax brackets even report income from small business. An expiration of cuts for the top two tax brackets would leave 98% small business virtually unaffected and have no bearing on job creation. Many believe that the money would be better off spent helping the states recover by extending unemployment insurance benefits and tax credits favoring job creation.
          Ultimately as I see it the tax cuts are like a fiscal band-aid. Though they might help in the short term they must eventually be paid for. The economic recovery is slower than most would like so a short extension of some of the cuts might help, but in the long term as we try to pull ourselves out of this financial crisis, we need the tax revenue to help end all this deficit spending that leads to higher interest rates and hurts long term growth.
          What I would propose is a phase out of the cuts over time. I would suggest immediately starting with the top income brackets and working downward over time and phasing out all the cuts over the next few years. As we try to reverse the trend of deficit spending and putting our country back on the path to fiscal responsibility we must realize that we can’t have our cake and eat it too. We must strive to end our live today, pay tomorrow attitude and understand that we must pay for these cuts eventually and the longer it goes the higher the bill will be.

Bush tax cuts 101: What changes could be in store for taxpayers?
By Ron Scherer, September 13, 2010, CSMonitor.com, accessed 10/21/10

Five myths about the Bush tax cuts, William G. Gale, Sunday, August 1, 2010, Washington Post.com, accessed 10/21/10

Bush tax cuts: What you need to know, Jeanne Sahadi, September 15, 2010, CNN Money.com, accessed 10/21/10