A National Emergency
Reversing a falling dollar and a burgeoning deficit.
by James Leroy Wilson
April 21, 2005
Much of what needs fixing in the USA today requires radical proposals, such as what I laid out last week. (As if following policies that served our country well for most of its history is "radical.") But that's not going to happen, anytime soon, because the political follows the cultural. The way to radical change is to either transform the hearts and minds of the people, or impose a revolution from the top, much as Franklin Roosevelt broke all of his campaign promises in the first one hundred days of his Presidency, or President Bush launching his delusional crusade against the Arab peoples.
As neither method of change to change is common or likely, gradualism and moderation seems to be the way to go. Of course, the question is, gradualism in what direction?
Five weeks ago I laid out the general vision: peace, civil liberties, economic opportunity, and local democracy. Such a vision must be adapted to the crises facing us, which are more immediate than we may imagine. While foreign policy and the war in Iraq loom large, it is but one part of the overall problem, which is financial. Monetary and fiscal policy are our main concerns, as budget deficits, trade deficits, Medicare and Social Security bankruptcy, and the general indebtedness of the American people. Not to mention the real estate bubble.
One reform, abolishing the Federal Reserve and fixing the dollar to the gold standard, would provide an almost automatic check and correction in the economy. But of all the changes we need, while this is perhaps the most important, it is also probably the least likely. So, instead, we have to work around the edges.
The crisis is ultimately that of the falling value of the dollar, with hyperinflation on the horizon. At some point, our government and our people will be so heavily in debt to foreign lenders that they will be reluctant to lend any more. They will consider our dollar to be too cheap to possess. They will have no more faith in the robustness of the American economy. Strengthening the dollar is the means to strengthen the economy, and that means to borrow less.
The following proposals for Congress are not radical, but they are drastic. But they are necessary means to delay, and hopefully, avoid, an economic collapse.
1. Cease funding for the War on Iraq by a specific date, forcing the President to withdraw by that time. No matter how one feels about the President's desire to spread his conception of "freedom" to Iraq and the rest of the world, we literally can not afford it, and will set that cause back if we go bankrupt. Further, we should negotiate troop withdrawals from NATO territories and other secure parts of the world.
2. Limit any increase of federal spending to slightly BELOW population growth and inflation, with only Congressional Declarations of war, or 60% of both houses in Congress, to override.
3. Set deficit reduction targets so that there is a balanced budget within x number of years.
4. Cut the deficit:
a) Eliminating subsidies to corporations and agribusiness.
b) eliminating unneeded military bases and hardware.
c) Wage and hiring freezes in the federal government
d) In case of a lack of budget agreements according to set deadlines, initiate automatic, across-the-board spending cuts throughout the entire federal government, much like Gramm-Rudman in the 1980's.
e) Create a moratorium on spending on new projects such as federal buildings and scientific grants - otherwise known as "pork barrel projects."
f) The cost of any new program will be offset by spending cuts elsewhere - not by deficit spending or tax hikes.
g) Tax cuts will be equaled by spending cuts
5. Reform Social Security by
a) Limiting increases of allowances to rates slightly BELOW the inflation rate;
b) Every year, increase the age of eligibility for retirement benefits by four months, so that over the course of thirty years the age of eligibility goes from 65 to 75.
6. Reform Medicare by
a) Reducing administrative costs and red tape by deregulating the health care industry
b) Reform patent law and liberalize FDA procedures to lower drug costs and get drugs to market faster
c) Increase tax deductions for health care and expand "medical savings accounts."
d) Allow the working uninsured to pay more into Medicare and receive benefits
The deficit, and the threat of hyperinflation, is our greatest emergency. Raising taxes will not help; it will just drive away more businesses from our shores. Holding the line on spending will be the best means for the world to restore its confidence in the dollar and the American economy.
About the Author:
James Leroy Wilson blogs at Independent Country (http://independentcountry.blogspot.com)
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