Friday, December 4, 2020

Nero Continues To Fiddle While Rome Burns: Part VI

 

 

Final Summary

By Roy Eaton

America is the greatest nation, but we have temporarily lost our way, for we have strayed from the inherent qualities that have made us the envy of most other countries. We lack empathy for our fellow man, civility in our actions, restraint from entering conflict, and the will and resourcefulness to solve complex problems through negotiation. In addition, our complacency, lack of self-discipline, inability to compromise, and propensity for greed have decimated our economy and tainted our image as the indisputable guiding light of democracy and capitalism. We must correct our present course by reorganizing our priorities, restraining the arbitrary use of our military might and exercising prudent monetary and fiscal policy.

It is often said that healthcare providers must care for themselves first, or they will be of little use to those who look to them for assistance. The same can be said of America in regard to our allies. No longer can we direct resources to other nations while depriving Americans at home. No longer can we continue to place our forces in harm’s way to defend regimes that do not desire or warrant our assistance, or dishonor and threaten our people. And no longer can we place the welfare of other nations ahead of our own.

CBN_A9-4America’s greatest immediate threat is our national debt, which continues to mount and is rapidly approaching a sum that will soon make it impossible for future revenues to service the indebtedness which threatens our nation’s sovereignty. We recently avoided an economic meltdown because depressed economic conditions allowed the FED to artificially hold interest rates at historically low levels, and because our recent recession coincided with the end of a 26 year downward interest rate cycle. However, if nothing is done to increase revenues and reduce our liabilities and a new upward interest rate cycle were to begin and rates were to reach their modern historical average of 6.9%, America would surely be on the brink of economic Armageddon. If rates were to ever approach the double digit rates of the 70’s that saw prime rates peak at 21.5%, our economy would collapse, and along with it, the economies of most of the remaining world. Considering the seriousness of our situation and the consequences that a potential United States default could one day trigger, Congress should be far more concerned with passing reforms that will prevent such a catastrophic event from happening; modifications constructed to raise revenues and reduce expenditures, eliminate annual deficits and reduce our spiraling national debt. If our legislative branch passes reforms that are fair and productive and are in the best interests of all Americans and not the special interests that currently have undue influence on Congress, Americans will be far more supportive of changes that require sacrifice.

It is possible Congress chooses not to formulate constructive legislation because they hope to avoid blame should their decisions lead to a further destabilization of markets and a continued disintegration of public confidence, although this is hard to believe considering the low esteem we currently have for our elected representation. It is conceivable that close affiliations with lobbyists have provided our representatives with a false sense of security that allows them to believe their economic welfare is cushioned from such a cataclysmic economic implosion. We know a substantial number are more concerned with party-lines than in bi-partisan cooperation. Perhaps, as in the past, they think default could never happen if they remain deadlocked and do nothing. But, if the latter is the most likely cause, they need only to look to debt-ridden Southern Europe; to Greece, Portugal, Spain, Ireland, and Italy, or to the city of Detroit, which faces bankruptcy, since it appears unable to continue to service its debt. It is my belief we simply overestimate our representatives’ ability to solve problems, because most members of Congress are politicians rather than ‘statesmen’ and are simply incompetent and incapable of developing and negotiating rational solutions to complex problems. Whatever the reasons, Congress has avoided compromise and prevented rational and fiscally prudent legislation from being passed, making most members appear unworthy of the offices to which they were elected.

Our indebtedness is not our only concern. We face growing threats from abroad from Iran and North Korea, and from radical Islamic terror groups like Al Qaeda, which threatens the safety of our people and our allies, and have added trillions of dollars to our debt. And, we are hesitant to address the inappropriate conduct of one of our largest trading partners and holders of US debt, because we do not wish to offend China, a country that one day may become our greatest military adversary.

Our dangers are not solely from abroad. We are

 

 

a polarized nation, politically divided on immigration and wealth distribution, on healthcare and entitlements, and between those who favor an omniscient Federal government and those who prefer greater state control. Centuries of mistrust and resentment may one day again erupt in civil conflict if our representatives are unable to work together to re-balance power and resolve conflicts in a way that will pacify our two major parties and unify our great nation. States must realize that a population of over 300 million requires a strong federal government to defend our people, deal with catastrophic climatic events, and care for our sick, poor, and elderly. The Federal Government must recognize that there is a constitutionally mandated balance of power which delegates authority to states to self-govern, and that they must to do so within the limitations of a balanced budget.

Dysfunctional government is not our only internal concern, for government alone can not address and rectify our growing debt. The public and private sectors of our economy must work in harmony because each is dependent on the other as our economy periodically transitions between expansions and contractions. But extreme, immoral behavior by either sector is no longer acceptable. Rampant spending must be reined in and unfettered capitalism disallowed. The public and private sectors   must work together to create jobs that give workers and their families the money required to purchase goods and services, for demand is the machine that drives the economy, although supply-side economists would like you to believe differently. Driven partially by greed and the lack of clear direction from government, banks and big corporations are hoarding more cash than during any time in history. In order for this money to be reinvested in the economy, it is imperative that Congress provide the leadership and clarity required to maintain fiscal discipline and encourage growth.

America is slowly absorbing the economic consequences of unfunded spending on two wars and a massive tax cut. If we fail to care for our sick, poor, and elderly who are truly incapable of caring for themselves, we will increase civil anxiety. If we do not reduce our debt to enable us to honor the entitlements to which hard working Americans contributed and expect compensation, we will have civil unrest. And, if we don’t reduce the great disparity between the ultra rich and the remaining population, we will have civil war.

CBN_A10-9In 2009, the top 400 people in America had amassed $1.27 trillion in wealth, while the bottom 50% had less than 1.22 trillion in assets. Less than 1% of the wealthiest Americans have amassed more wealth than the bottom 50% of our general population.  It is estimated that by 2050, the sum of our current minorities will become the majority. If this does occur, our greatest threat will be from within, because such wealth disparity in prior great civilizations has resulted in a total restructuring of governments.

Revenues alone will not mend the economy, firm markets, and address our indebtedness. To rid ourselves of debt, we must reduce obscene asset inequality and modernize entitlements to honor past commitments and ensure their continuance. An immediate collective effort must be made to reform our tax code, Social Security, Medicare, Medicaid, Universal Healthcare, and Immigration programs. Reforms must be incrementally implemented that reduce entitlement spending, which has doubled since the 1960’s, in a manner that honors prior commitments made to those who have funded these programs for years with the promise of future redemption. The amendments should be rear-loaded, which will not stall our recovery, but will have long term ramifications that will guide us on a path to prosperity.

President Obama and Congress must decide if they want to modify our existing progressive tax code or revert to a flat tax. If they favor our current code, which is overly complicated, cumbersome, and fosters “irrational individual behavior and corporate avoidance,” then unfair and irrational loopholes that solely favor the rich and special interests must be abolished. Should a flat tax be considered the fairest method, all taxpayers must be treated equally by having one standard deduction of $50,000 regardless of personal circumstances. Congress should not give consideration to a European-style sales tax that penalizes goods and services at every stage of production and dramatically impacts the least affluent.

Most post WWII ‘Baby Boomers’ who began working in the early 1960’s began receiving Social Security checks in 2008. We as a nation, have a moral obligation to guarantee these checks will continue. Misuse of funds, an expansion in life expectancy, and spousal withdrawals have destabilized the integrity of the fund. To guarantee future benefits, one month should be added to a worker and spouse’s retirement age from 55 downward so that a 19 year

 

 

old entering the workforce will qualify for full retirement at age 70. All retirees must accumulate 40 quarters of payroll contributions to qualify for retirement income. Those who have not qualified under their own merit, but wish to receive retirement income should be required to have their working spouse contribute an additional 50% of their payroll contribution for each missing quarter to reach the required quarter limit. Surviving spouses, regardless of age, should immediately qualify for death benefit income at the time of the working spouse’s death. Workers with incomes exceeding one million dollars should be subject to a 3% payroll surtax.

Healthcare expenditures account for nearly 17% percent of our current GNP and must be curtailed, because they are damaging to consumers, to businesses, and to local, state, and the Federal Government which funds employee healthcare programs. They are a drag on our economy, reduce our economic competitiveness, and divert monies from other crucial programs in need of funding. Congress should act immediately to streamline costs by combining Medicaid and ‘Obamacare’ with Medicare, establishing a single-payer, cost-effective, efficient system that will reduce fraud and deceptive practices and eliminate unnecessary procedures and hospital emissions. The new Universal system must reward individuals who make healthy lifestyle changes and schools that add health classes, increase cardiovascular activity in gym classes, and introduce after-school intramural sport programs. By pooling and simplifying healthcare, standardizing costs and placing it under the jurisdiction of one administration, it will lower expenses, substantially reduce premiums, and increase compensation to physicians and healthcare workers who actually provide a medical-related service.

CBN_A11-14There is no doubt that our immigration policy has been a complete disaster. But, it is ridiculous to think that we can expel over 10 million undocumented inhabitants, many of whom have deep roots within society. Nor can we allow future unrestricted mass migrations to our borders, for such massive influxes burden our schools and education budgets, strain community resources and infrastructures, tax emergency care centers, disrupt voting processes, and pose serious concerns pertaining to social behavior and crime. We must take control of our borders and address the path to naturalization for all who await, or wish to seek citizenship. And, we must expel those with felonious records, punish employers who hire undocumented workers, and levy sanctions against countries that refuse to abide by our laws of immigration or fail to readily accept those we deport back to their native lands.

Reforms are not the only matters that need to be addressed to strengthen our economy and ensure our sovereignty. Globalization and outsourcing have taken most manufacturing and a good number of service jobs overseas. Currently, companies are slowly beginning to return to our shores, because shipping and labor costs abroad are beginning to rise, while labor costs at home have remained stagnant. But, many of these jobs have been replaced with robots or other forms of automation. Some say we need a new paradigm to boost our economy. This may be true, but, in the meantime the one area that doesn’t require robotics and should never be outsourced is internal investment. Since the 1960’s, government investments in infrastructure are down 50%. It is estimated that by the year 2020, America will experience a 40% shortfall in infrastructure spending. We can increase employment and strengthen our economy by fully developing both our exhaustible and renewable sources of energy, by investing in technologies that enable us to better allocate natural resources including our precious water and energy supplies, by improving the quality of education, and by repairing, expanding, and modernizing our schools, roads, dams, bridges, high-rises, and power grids. And we can continue to modernize our military forces to prepare for the day when future superpowers may test our resolve.

Thomas Jefferson said, “It is incumbent on every generation to pay its own debt as it goes.” Our country’s leadership has continually failed to heed the advice of one of our greatest ‘founding fathers.’ It is time we address our liabilities for we have mortgaged the future of countless generations to follow and jeopardized the future sovereignty of our great nation.

Jefferson also said, “The greatest good we can do our country it to heal party divisions and make them one people.” It is not too late to heed these words as well and put our country’s welfare ahead of party-lines. But, time is running out. As FED Chairman Ben Bernanke told Congress, “The best time to start addressing the problem was 10 years ago. There is still time to fix it. But, ignoring the problem-just like hanging up on the debt collector-is not a great thing to do.” Let us not ignore our debt collector, for we will not be prepared for the economic and political consequences that follow.

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