The United States is on the verge of an economic nightmare. We are experiencing a spiraling deflation caused by a severe contraction of credit while simultaneously we have rising prices of oil and commodities caused not by inflation but by the double effects of the falling value of the dollar in world markets and the bidding up of scarce resources in those world markets.
The problem is mostly caused by living way beyond our means; borrowing hundreds of billions of dollars for needless wars and a bloated military while giving out hundreds of billions in welfare for the rich, cutting funding on infrastructure while shipping millions of middle class jobs overseas all combine to create a sure recipe for disaster. New estimates of the long term cost of the Iraq War are in the order of three trillion dollars. According to the GAO, every American man, woman and child is now on the hook for $170,000 of government debt not counting any personal debt.
The solution; when you find yourself in a deep hole, stop digging! Handing out $600 of borrowed money for everyone to spend is not a solution; it is just digging the hole a little deeper. We need to divorce ourselves from the notion we can get something for nothing. The voodoo economics of Reagan/Bush assures us that we can cut taxes and increase spending with no consequences. This promise of something for nothing has proven successful at convincing a gullible public for a while but now the jig is up and we are going to have to start paying for those excesses.
As a nation we need to abuse ourselves of the macho militaristic notion that when some country doesn’t do as we demand, we are justified in using our giant military club on them. This “schoolyard bully” mentality has not served this nation well. Beyond all the sound and fury about regime change or WMD or whether the surge is working are not, the whole rationale for invading Iraq boils down to reducing the number of young Muslim men who want to kill Americans. Instead, by the account of every expert in the field, the hundreds of billions of dollars wasted on this war have bought us a huge INCREASE in the number of young Muslim men who want to kill Americans. Our country, which is only 5% of the world’s population, spends over 50% of the entire world’s military budget. Every American pays about twenty times what everyone else in the world pays for military expenditures. This enormous economic burden is entirely unnecessary and is crushing our economy under a mountain of debt. Are the armies of Mexico and Canada poised to sweep across the border? If we spent only one tenth what we currently spend, would there be any threat of some other country attacking us? Is the Iranian army going to get in speedboats and traverse 10,000 miles of ocean to land in Florida? Could you imagine the slaughter; there are more weapons in Florida than the whole country of Iran. A huge military, as we have seen, does not protect us from terrorism; in fact our large military and its intervention in other countries is the reason we were attacked on 9/11.
The real solution:
1. Cut military spending by 90%. Get out of Iraq and pull our forces out of other countries. Why pay to keep troops in Germany? Germany can take care of itself and pay for its own defense. How would we feel if Germany had troops stationed here in America? Reducing our military interference in other countries has the added benefit of reducing the fear, resentment and hatred so many countries have toward us.
2. With the money saved from the above we can instantly balance the budget and have enough to start making payments on our debt and still have a lot left over. This will stop the collapse of the dollar and make some credit again available since government debt will not be gobbling up all available credit.
3. Raise taxes on the rich so they pay at least the same rate if not more as the middle class. Billionaire Warren Buffett recently noted how wrong it was that he was taxed at 17 per cent while his secretary, who only made 60K, was taxed at 30 per cent.
4. Use the surplus money from above to encourage the emerging new green energy economy. Over the last eight years we have fallen way behind the rest of the developed world; we can to catch up and pass them if we put our mind and effort to it. We can create millions of new jobs engineering, manufacturing, exporting, installing and servicing a new green energy economy that has the added benefit of freeing us from dependence on buying oil from countries that hate us.
5. Use a little more of the surplus to start repairing our neglected infrastructure. We could put more unemployed and underemployed Americans to work fixing our bridges, roads, levees, power delivery and water and waste treatment systems. Now that would be an economic stimulus.
6. Change the tax code to punish companies that export jobs overseas. Give tax breaks to companies that create or keep good paying jobs here.
We can rebuild this nation but the problems we face will not be solved by the kind of thinking that created the problems in the first place. We need to change our militaristic thinking; we simply can’t afford to be the world’s bully any longer. We need to stop thinking we can get something for nothing. We need to get to work creating real jobs, real wealth and real solutions. Unfortunately, like in the depression of the 1930s, the change will not come until a vast majority of the people demand it and they will probably not demand it until they are left impoverished, hopeless and angry.
