Both County Party Chiefs Are Wrong About the Economy

Sunday, September 5, 2010

Good grief! I've read the columns by Bob Levy and Jim Heim (Aug. 22) and they're both wrong! No wonder our political system is in trouble.

Bob Levy, Republican county chairman, wants to create jobs by withdrawing from our international trade agreements, restricting imports and raising tariffs. In other words, he wants to start a trade war.

Bob, do you think our international trading partners will stand idly by and not retaliate against American exports? Throughout history, free trade has been good for America. Companies that are protected from competition become bloated and weak and lose their ability to compete. History is replete with examples of this. A good Republican like you ought to know that.

As for Jim Heim, the Democratic county chairman, his solution is to create jobs by raising taxes on "the wealthy" (including small business men), extend unemployment benefits, expand the food stamp program and prop up state governments' excessive spending with more excessive spending by the federal government. If there was ever an unimaginative set of proposed solutions, this is it.

Then he wants to set up a new WPA (more government jobs) and implement trade restrictions (one of those rare moments when a Democrat agrees with a Republican). In short, he wants the federal government to spend-spend-spend its way out of the predicament it has gotten us into by too much spending. What happens if a second trillion-dollar "stimulus" doesn't work any better than the first one? Do a third one? Where does the money come from for that?

If the federal government really wants to do something to create jobs, here are some suggestions:

First, get the federal budget under control. Congress could start by announcing that it plans to approve the Deficit Commission's recommendations when they're finalized in December. Because of the commission's bipartisan structure, any recommendations it makes must be bipartisan in nature. And virtually anything it recommends will be better than doing nothing, which is what many of us fear.

The capital markets fear this too, which is why the stock market is languishing at a time of strong corporate profits, and why businesses aren't borrowing and banks aren't lending. How can investors and businesses be optimistic when the government is borrowing 40 cents of every dollar it spends and is projecting trillion-dollar deficits as far as the eye can see? If the government sent a clear signal that it's getting its fiscal act together, you would see a huge spurt in economic activity.

This includes getting control of entitlement spending (Social Security, Medicare and Medicaid). Politicians are afraid to do this, fearing retribution by the voters. However, the American people are a lot tougher than the politicians think we are. Real people understand that these programs are out of control and need to be reigned in.

And this includes repealing the new health-care program, which adds a huge new entitlement program on top of the ones that are already out of control. In the past, the "Greatest Generation" showed its toughness by simultaneously conquering the Depression and our enemies in World War II. Do you think we could cope with a small cutback in our social programs?

Second, the Obama administration needs to make it clear it is ending the war it has been waging on business. We need a positive, productive partnership between government and business, where the government supports business and doesn't think it's the enemy.

They should start with some pro-business tax changes. For example, don't raise taxes on small businesses when you're trying to encourage them to expand and hire. Also, implement an accelerated multi-year write-off of businesses' capital investments. They could encourage innovation by eliminating unnecessary regulations.

It currently takes an average of five years to get a new patent approved by the U.S. Patent Office. Talk about stifling innovation! If you want businesses to expand, grow and create jobs, start supporting them and remove the impediments the government has put in their way. This isn't rocket science.

Once the government gets religion on its deficit problem and begins forming productive partnerships with business, the economy will begin to turn around. Then just stand back while the stock market soars, businesses expand and jobs are created.

Finally, the government should implement a new tax system that doesn't discourage success and encourage government overspending. My vote would be for a "flat tax" system, with no deductions other than for charitable giving. That would be fairer and less painful and would allow us to greatly simplify the tax code and eliminate the IRS.

I think the American people understand these things, and they're getting ready to demonstrate it in November. I have great faith in the American people.

John Rowerdink lives in Pinehurst.

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JRowerdink 2 years, 8 months ago

Prometheus…I share your concerns about the Deficit Commission and the European model that we’re headed for in terms of growth, unemployment, taxes, etc. Unfortunately, the path we’re on is adding $100 billion per month to our national debt and I have zero confidence that our current crop of politicians has the courage to get it turned around. At least the Deficit Commission will produce some kind of bipartisan solution. It won’t be perfect but the path we’re on now can’t be sustained. Our fiscal problem is so serious that any solution is better than no solution and I’m afraid that’s where we’re headed.

John Rowerdink

None 2 years, 8 months ago

"but to merely extend government control and to coerce people into certain behaviors." very well spoken; keep the populace poor and in need of government handouts and the government maintains control over the people.

When in better times government would have implimented guidlines on "pork barrell" spending, and reduced taxation on small business, entrepreneur's could have a fighting chance against excessive taxation. Stimulating growth in the private sector. More and More small business's are succumbing to government imposed fees, regulation, and taxation. The only benefit of our existing tax code all 69 thousand pages, is for corporate loopholes. A FairTax would spead the tax burden across the spectrum for anyone spending in the US. Tax what we spend and not what we earn. But then the Washington Politicians wouldn't have PAC leverage for wealthy contributors.

Psychodad72 2 years, 8 months ago

Good grief! You agree with Obama! He and many Republicans agree. All want free trade. Soon they will pass another bill giving free trade to Columbia. The result is that American jobs will go to China, India, Mexico and, now, South America. We will continue to borrow in order to buy cheap "stuff" from overseas until our debt overwhelms us. Then, just like a housewife who buys groceries on a credit card, suddenly China will "lower our limit". When the US needs a missile or a highway built, the credit card will be rejected.

What people do not seem to realize is that the credit problem is not just one involving government spending. Our government borrows from China to buy fighter jets. Our people also borrow from China every time they use a Visa card to buy a foreign T.V. Banks have "no savings to loan". They borrow from the Fed to "float" your purchase. The Fed, in turn, borrows from the Chinese.

The method used by both Republicans and Democrats to "re-inflate" the economy (tax cuts or government jobs), simply puts America farther into debt and closer to rejection of the dollar as a reserve currency.... ultimate bankruptcy.

The only answer is to do what America did in its second hundred years and what both China and India are doing now. We must lower the purchase of foreign goods and make it more profitable to manufacture here in America. The dollar needs to be strengthened, not weakened. Weakening the dollar is exactly what Obama and his free trade people are talking to China about this week.

We need to re-open our textile factories. Get the people in Rockingham and Carthage back to work. Maybe we could even close a few welfare offices (also funded with Chinese loans)

moonchild7 2 years, 8 months ago

Prometheus said: 1. "The government cannot fix the economy." 2. "Why are recessions allowed to occur?" 3. "If the economy improves it will be in spite of government action and not because of it."

ANSWERS: 1.The government HAS fixed the economy in the past. 2.Recessions occur after our lovely Capitalist wunderkind's get rather piggish. 3.The economy can improve(I said can and not will)only with government action. The U.S. economy gets bad when the government reduces or eliminates regulations, the Capitalists then "HAVE AT IT"....and they grab every last piece of the pie there is to get...for themselves.

I said it before: THE RICH NEVER HAVE ENOUGH!!!!! How many more times do I have to say it? So right now they don't want to lose anymore than what they have and they are NOT going to go out on anymore limbs for anyone. The government has to spend to get things going or else bring in the ARMY and make those "Too Big to FAIL" company guys start to do something!

We have economic freedom, it's called education and entrepreneurship.

bigD 2 years, 8 months ago

Levy's column is not in keeping with fiscally conservative ideas.

Levy would have us say good bye Supply Side Economics and the low tax rates that go with it.

“Recently, America has exported jobs and imported immigrants”- Bob Levy

Good bye to productive taxpaying legal immigrants

Hello Taft-Hawley and the misallocation of resources and union bargaining power that accompany it if Levy were to have his way

Hello mass confusion of implementing the Fair Tax at a time of great uncertainty.

Thank you Mr Rowerdink for writting an article that makes economic sense.

Don't kid yourself. Levy is a California Democrat he is not a good Republican!

bigD 2 years, 8 months ago

You cannot find or name one single economic reason to restrict trade. Opening back up the factories which make toys and textiles will lead to a misallocation of American resources. Do we really need our highly skilled workforce producing such products? Would it be better if we focused our workforce on producing more technologically advanced items. Our workforce needs to be retrained so Americans will have better skills which lead to higher wages.

Amazed 2 years, 8 months ago

moonchild has no clue about economics or politics...she can't see the forest for the trees...her trees, to be specific. It is a useless waste of time to even attempt to educate or encourage her to educate herself in these matters as she spouts off the same liberal leftist talking points that she hears Jon Stewart (stand up comedian) talk about every night at 11...post after post after post...Good try Prometheus, but I don't think it will get you, or her, anywhere.

moonchild7 2 years, 8 months ago

Prometheus: Our Government HAS fixed our economy:

-In the early days of the United States, government leaders largely refrained from regulating business. As the 20th century approached, however, the consolidation of U.S. industry into increasingly powerful corporations spurred government intervention to protect small businesses and consumers. In 1890, Congress enacted the Sherman Antitrust Act, a law designed to restore competition and free enterprise by breaking up monopolies. In 1906, it passed laws to ensure that food and drugs were correctly labeled and that meat was inspected before being sold. In 1913, the government established a new federal banking system, the Federal Reserve, to regulate the nation's money supply and to place some controls on banking activities. The largest changes in the government's role occurred during the "New Deal," President Franklin D. Roosevelt's response to the Great Depression. During this period in the 1930s, the United States endured the worst business crisis and the highest rate of unemployment in its history. Many Americans concluded that unfettered capitalism had failed. So they looked to government to ease hardships and reduce what appeared to be self-destructive competition. Roosevelt and the Congress enacted a host of new laws that gave government the power to intervene in the economy. Among other things, these laws regulated sales of stock, recognized the right of workers to form unions, set rules for wages and hours, provided cash benefits to the unemployed and retirement income for the elderly, established farm subsidies, insured bank deposits, and created a massive regional development authority in the Tennessee Valley. ------------------------U.S. State Department

Business Cycle: The business cycle is the periodic but irregular up-and-down movements in economic activity, measured by fluctuations in real GDP and other macroeconomic variables. A business cycle is not a regular, predictable, or repeating phenomenon like the swing of the pendulum of a clock. Its timing is random and, to a large degress, unpredictable. A business cycle is identified as a sequence of four phases: •Contraction (A slowdown in the pace of economic activity) •Trough (The lower turning point of a business cycle, where a contraction turns into an expansion) •Expansion (A speedup in the pace of economic activity) •Peak (The upper turning of a business cycle) A recession occurs if a contraction is severe enough... A deep trough is called a slump or a depression. ----------------------------------U.S. State Department

moonchild7 2 years, 8 months ago

IRRATIONAL EXUBERANCE: "A phrase coined by Alan Greenspan in 1996 to explain the FRENZY and GREED that stock market investors feel at the top of a bull market. This irrational exuberance causes investors to overlook deteriorating economic fundamentals in the pursuit of ever higher returns. This exuberance DOESN'T LAST......the frenzy of greed then turns to the panic of fear and drives investors to sell at any cost. This collapse then spreads to the entire economy."

Is that enough Prometheus or do you need more explainations to help you and the others understand why America is in the fix it's in? Let me know. I'll try to get more FACTS to you.

moonchild7 2 years, 8 months ago

Prometheus, your answers back to me are very reminiscent of President Clinton's lovely statement: "It depends on what the meaning of the word "is" is......." It's amazing to me "Moonchild/Flowerchild" of the '60's, that I even learned this much about a computer. When I had to become more familiar with this contraption because of my job I sorta "grew into it", but to have a complete knowledge base of it, isn't a priority at this time.

I answered you and your on and on economic rants with my pretty simple facts. That you are unwilling or unable to accept them is your personal problem. Today President Obama gave his idea's to help our economy attempt a recovery. It's absolutely worth it to give them a chance. 100% tax deductions for new capital improvements?! Never happened before, so that's radical. Making the rich pay at higher tax rates....are financially and ethically needed. Continued tax cuts for the middle class, great.

It was pretty tough when I first started out in adult life in 1972 with a part-time job that paid me $1.80 per hour. My husband at the time earned a whopping $2.00 per hour. I went to college full-time. Things were stable for a little while until the "gas crisis". That's when my REAL education about $$$, life, economics, and survival began. Those lessons I learned about frugality, relevance, recycling, quality, tolerance, truth, lies, hard work and a good education have served me very well. So far at least because of those things I'm having NO ill effects from our economic downturn. With hope and prayers I'm confident I won't suffer any either.

That's more than a whole lot of people can say today, so my "ignorance" of complex economic principal's are bliss.

JoeGarrison 2 years, 8 months ago

When you read the "Wealth of Nations" by Adam Smith you realize that economic growth and wealth cannot be created through government. When people are left to themselves of course with laws that deter but never eliminate vices and wrong doing, the economy will work. Yes there will be bad times but the market will come back. Goverment should deal with the climate and surroundings that foster a healthy economy not micromanaging the economy. Tax cuts to stimulate growth, spending reductions, allowing charities and non profit groups to help the poor and needy, dealing with illegal immigration while encouraging legal immigration from which we get good people, and getting back to letting the people of this country deal with their own problems and not inventing a government agency to handle everything. We all have different views and there are several when it comes to economics but I hope we can all agree that the current model is broken and we need to change it fast, more freedom, and less government.

moonchild7 2 years, 8 months ago

Prometheus: I think in reviewing past historical "facts" those generalities worked. Mechanics NOT needed. Since, as far as mechanics are concerned the following of directions from a manual still creates the great possiblity the problem won't be solved. A little "chutzpah" is never a bad thing to have.

In less than 200 years thru a myriad of economic policies the United States of America became the GREATEST most POWERFUL country on the face of this earth. Do you question that too?! or are you still skeptical?

You also said that "we are not discussing personal finance and home budgeting"....OF COURSE WE ARE!!!!!!! Home budgeting practices(or rather the lack of said good practices), personal financing, and stock market investing are at the HEART of AMERICA'S financial WOES!!!!! You do understand that don't you? Or does the simplicity of that FACT turn you off? The FACT that a huge amount of people here in this country have had little to no clue how to budget themelves into prosperity and NOT oblivion.....THAT IS THE ISSUE!!!!!

Your admiration for John Forbes Nash and his PHD from MIT plus his Nobel Prize is again your problem. His genius appeal I guess enamored you into "fandom" but Mr. Forbes seemed to have a few issues with reality. He had difficulty with mundane everday life and left in his wake a few human beings to try to fend for themselves. So much for feelings and emotions.

And finally, sorry, but the way I see it is that all of those "others" who are paying for my "bliss" fell for a rhetoric of materialistic consumption that defied reality or good common sense. I do not feel their pain.

Once in awhile I do develop a MEAN streak.

moonchild7 2 years, 8 months ago

Yes, I admit I DO NOT understand mechanics. You probably won't accept my "excuse" but here goes: In 1969(11th grade), I signed up for autoshop and carpentry classes. Seems that was NOT the thing to do back then....I was called into the Guidance Counselors office to be told I couldn't take those classes because I was a GIRL. Had to take Home Ec and hated it. Made my only C's ever in High School.

I absolutely DO NOT know more than a person with a PHD in Economics. Never said I did. What I did learn and understand was that to financially survive during times of economic turmoil(those Nixon yrs were rather unpredictable)was to keep it simple, keep it cheap, and keep getting a good education.

I also do not revel in anyone's agony but I did learn to "isolate" myself at times and avoid unneeded strife. That is "self isolation" and it is not the same as selfishness. I've ALWAYS reached out my hand to help others. Got "burned" a couple of times but tried to move on. A lot of those "acid-fueled hippies" didn't survive much past 1985. Went to some very, very sad funerals and I NEVER went to the severe extremes that they did. What really happened was that many of those people "pretended" to be cool and caring. Those were the ones who got us where we are today. I knew a lot of them too. Stopped talking to those sell-outs in the late 70's. A few of them have lost almost everything and aren't in a good way to say the least, they aren't the good decent people I knew back then.

So, this discussion is supposed to be about economics and how things should work. I worked and paid into our governments "system" to help not just myself but also to help those who needed help most. I NEVER felt resentful, angry, or bitter. I was always thankful to have a job.....any job. When you've had jobs, like I have, that included cleaning out dog kennels and horse stables ANYTHING outside of those was great.

Who exactly is NOW paying my bills? Sure'd like to meet 'em I need an allowance(joke). I guess you'd rather have all of us in the "EVERY MAN FOR THEMSELF" school of economics. Won't work. Never has worked because human beings are SOCIAL ANIMALS not ANTI-SOCIAL ANIMALS. They'll always be a few CRAZIES out there but that's why we have psyche-wards.