So this month, I am going far more political in the post than I normally would. I admit that I have not studied economics very much, nor am I an expert in politics. But one cannot ignore the state of our country both economically and politically. Our economy has recovered a bit from the crash in 2008, but it has become stagnant and in fact is threatening to fail again if measures are not taken. In this post, I will lay out a few suggestions for fixing the economy that I will direct at our political leaders, sort of an open letter to them, if you will.
After much work and toil, you managed at the last second to create a deal which would raise our debt ceiling, thereby putting off any immediate economic collapse. Unfortunately, this deal will not do much in the long or short term to help our economic state as everything has been left undefined and ambiguous; for example, the $2 trillion or so in cuts is to be decided by a committee as soon as Congress gets back from their vacation. We've tried leaving big decisions like this to committees before and nothing ever gets done. We'll instead see the same bickering and political bias that got us into this mess in the first place. In the meantime, our economy is still floundering. Many states are more in debt than the federal government. In the last few weeks, the stock market has dropped like a rock. Unemployment continues to rise. Yet the debt deal was held up as a victory. For who? Surely not the American people.
But this essay is not about bashing politicians, it's about suggestions for getting our economy back on track. However, in order to do this, you need to open your minds and stop with the political bias and greed. Stop letting decisions be made by your party or the corporation that paid for your campaign (for that matter, tell corporations to stay the hell out of the government and its affairs. They have no right to be there whatsoever.). Instead, do the job we elected you to do. That being said, I would like to propose a three point plan for fixing this mess. I will again admit that I am no expert on economics, but my position as a rational, sane human being lets me look at this from the vantage point of common sense.
Step 1 – Go through Budget
I know this one seems way too obvious and I know that the federal government and many state and local governments have already started this, but we need to go far deeper. We spend far, far more than we bring in and this cannot continue without drastic and dire consequences. Instead, we must examine every part of the budget at all levels, determining exactly how much revenue is brought in and how much we are spending. Once we have documented this, we need to look at what could be trimmed from the budget without posing detrimental short or long term ramifications. There are likely many programs that could be either cut completely or be reorganized in a way that would cut the cost; I would however suggest that, at least at first, we don't even look at social security, veteran's benefits or medicare. Those are programs that are vital to tens of millions and while I fully agree that they need to be revamped, now is not the time for that. But until we get our budget back on track, they are taboo.
In addition to looking at the ebb and flow of money from all our various programs, we also need to to look at every agency that receives any kind of funding from the government. We have so many agencies now that we cannot keep track of them and, as our president pointed out in this year's State of the Union address, we also have many instances where we have multiple agencies for doing the same thing. We need to eliminate duplicate agencies unless they actually serve a purpose and all other agencies need to go through their entire budget in the same manner as the government, determining every single penny of revenue and spending and trimming any fat that could be trimmed. This applies applies to both private agencies funded by the government and agencies that are actually run by the government. This does not, however, mean that we should just slash their budgets. Their budgets must be treated like all others in that they need to be balanced; in essence, find the fat and trim it out or find a way to boost revenues. The first place to look will be in wasteful spending, such as when congress spend weeks trying to repeal ObamaCare.
But there is one other aspect of the budget that needs to be examined, and that is the pay and benefits of elected officials. While I am certainly not suggesting that any of them work for a pittance, I do feel that many of them are overpaid. Surely they can live more like their constituents, many of whom can currently barely keep food on their tables and a roof over their heads. I constantly hear politicians claiming that they know how painful various budget cuts are, but this couldn't be further from the truth; I have never once seen congress make a cut that actually affected any of them. They have $4,000 suits, luxury cars and expensive houses while their constituents are going broke. I challenge all politicians to be willing to take cuts in pay or benefits and to stop taking contributions from lobbyists and corporations (more on that in the section directed at corporations). Stop being so hardheaded, arrogant and selfish and walk a mile in our shoes.
There has been talk recently of a constitutional amendment that would require congress to pass a balanced budget; this is not only brilliant, it's about 200 years overdue. Under no normal circumstances should we ever have a budget where our spending achieves our revenue because this will only set us up for failure down the line. I fervently hope that this amendment will pass because it is just one step of many to fixing the mess we're in and preventing it from happening again.
Step 2 – Revamp the Tax Code
This is a big one, and Obama has already pointed out that it needs to be done; frankly, I think everyone has known this for several decades, so it's not exactly new news. Unfortunately, as the years have gone by, instead of tackling the problem, our tax code has become bloated and convoluted to the point that even the government has difficulty understanding it. Small businesses and consumers are losing many tens of thousands of dollars a year due to outdated and undecipherable codes while big corporations exploit loopholes and ridiculous tax breaks to rob the government of millions (why the hell do we give a tax break for owning a corporate jet anyway?). It has been estimated that just fixing the business tax code could save tens of billions of dollars.
The individual tax code is just as bad. Most people (myself included) pay someone else to do their taxes or just punch them into Turbo Tax because they can't figure out how to do them. Federal law requires that individual and family taxes be easy enough for just about anyone to do, yet most people have no clue how to do them. To make matters worse, big companies like H&R Block and Jackson Hewitt take complete advantage of people by charging them hundreds of dollars to essentially punch the data into Turbo Tax; however, I am pleased to note that at least this is soon to become a thing of the past due to recent regulations put in place that require anyone doing taxes for profit to have certain credentials. But my point still stands. It's not only wasteful tax breaks and wide open loopholes losing us billions of dollars a year, it's the fact that we have a completely incomprehensible tax code on all levels.
The federal government is already working to close come of the loopholes and eliminate the more wasteful tax breaks, such as those for corporate jets, oil companies and companies that outsource their labor to other countries. I think within the next five years, we are likely to see major progress on this front. But the revamping of the tax code will likely take at least a decade, as congress will need to work closely with the IRS and top economists in order to rewrite it. This will be a long and arduous ordeal, but look at the long term repercussions: we will save billions, possibly even trillions of dollars a year by making the tax code easier to understand and eliminating loopholes and pointless tax breaks without having to raise anyone's taxes; in fact, if we can write a more sensible tax code, we may be able to make a more fair system of tax brackets without hurting our revenue.
The tax brackets themselves have long been a quagmire of difficulty and they often seem rather lopsided as the middle class often seems to have to pay a larger percentage of their income than any other class. We are currently enjoying some the lowest taxes in decades but I tend to agree with Obama that raising taxes just a bit for the richest of the rich could prove beneficial. However, this wouldn't solve everything as so many believe. The simple fact is that even if we took every penny of everyone who had over a billion dollars, we'd still hardly put a dent in the national debt. But when you look at the actual tax percentages, middle class pays a far larger percentage of their income than most wealthy do, so how can we call that fair? Obama is absolutely right in this instance that taxes for the super wealthy should be raised a few notches.
Step 3 – Invest in Long Term as well as Short Term
We have a remarkable lack of foresight when it comes to planning for the long term and this is largely the reason for the current economic crisis. We pass bills and grant funds as knee-jerk reactions without any thought of long term consequences, which in many cases are financially and legally dire. For so many decades we have tried to give band-aid fixes to enormous problems such as revamping medicare and social security while not realizing that that very action was not only putting off the inevitable, it was losing us billions of dollars. This kind of mentality must stop now because it will only further decimate our economy.
Instead of simply passing a bill, we need to take our time and have an outside party read and research the bill to ensure that it makes sense and is actually legal. Without this system, we run into issues such as ObamaCare, which is unconstitutional and wasn't even made available to read to most people until after it was passed. Congress then wasted weeks of time trying to repeal it that could have been used to fix pressing economic problems.
Now, I will recognize that no matter how much we research the possible repercussions of any given bill, there will always be unforeseen complications, but we can still prevent a great deal of grief down the line if we think before we act. Let's use the analogy of buying a car. You go to different dealers, looking at different makes and models so that you can find one you like that fits your needs at a reasonable price. Once you've selected a car, you sit down with the salesman and discuss payment. For the sake of argument, we'll assume paying cash is not an option, so the salesman checks your credit and presents you with interest rates. Now, no sane, rational human being is just going to sign the paper without considering the interest rate because a high rate could easily have you paying two or three times what the car is worth. You consider the interest rate and, if it seems reasonable, you buy the car. We can apply this exact same logic as a double entendre to our debt crisis; our debt has skyrocket because we act without thinking and if we don't pay attention to the interest rate, we could lose billions in the long term.
In addition to taking long term consequences of our action into consideration, we also need to actively invest in the long term. Our economic problems are severe and will sure as hell not disappear overnight; we weren't out of the Great Depression until the '50s. But we can start building a better future today by making investments into education and mass transit.
President Obama has talked a bit about investing in education this year, wanting to train more teachers to replace the drones of baby boomers getting ready to retire. However, we need far more than to just train new teachers. We need to overhaul our education system to offer a far better and more accessible education because the current state is not good. There are many good schools on all levels throughout the country, but so many people are either too poor to afford them or live too far away to attend them. Many people also are unable to get financial aid or grants to attend school because we have made the application process long and difficult and in some cases have slashed the amount of funds granted in a feeble attempt to save money.
But it is not only this that is affecting our educational system. While in office, President Clinton signed into law the No Child Left Behind act, an act which was in principle a wonderful idea. The problem was in the implementation. It laid out a system in which a school's funding was directly tied to its student's performance, meaning if the school's performance was low, it lost funding. Again, this is not necessarily a bad idea, but the problem was the the law gave no methods for improving performance and did not take into consideration the fact that you cannot judge every school with the same criteria. Because of this, we have instances like the recent cheating scandal in Georgia where it was discovered that teachers in many different schools were intentionally changing answers on standardized tests so that the school average would improve thereby preventing the loss of funding. This in itself actually brought to light a problem that teachers have complained about for years: that standardized tests are a waste of time, money and resources because they don't accurately show what a student is learning due to the fact that much of the material in these tests are not what would normally be in a standard curriculum. I am not, however, condoning the actions taken by the teachers in Georgia and other places to change answers. That to me says that they are lazy teachers who don't want to take the time to make sure students are learning.
In addition to standardized tests being tied directly to a school's funding, these tests are also tied to a students academic placement. In the state of Ohio, for example, all high school seniors are required to take a test that will determine whether or not they graduate, so even if a student has a 4.0 GPA with honors, failing the tests will prevent them from graduating. Such a thing is terrible and could destroy a good student's chances of getting into college. I understand and agree with the intent behind these tests, as the Department of Education wants to ensure that students at various points of their academic career have at least some base skill sets, but these tests do not reflect what is in a school's curriculum. So many teachers are forced to alter their plans so that they reflect standardized tests that they hardly teach any of the actual course material. I could go on and on about this, suffice to say that we need to overhaul this now. Already the students of many foreign countries are beating us soundly in areas such as math and science. I fear that we are actually losing intelligence while most of the rest of the world seems to be gaining it. If we improve our educational system, we can improve our performance and productivity both as a country and on a more individual basis, meaning we can find better and cheaper ways to achieve tasks and constantly be on the cutting edge of innovation
While improving education is imperative, so also is the need to invest in mass transit. Most of the roadways in the United States are already becoming clogged with traffic, and with the hundreds of thousands of cars being added to the road every year, it is projected to increase to complete gridlock within about fifteen or twenty years. Now consider the costs of shipping freight and passengers through our congested roadways; the cost is already high, but when the time it takes to get to a destination doubles, triples or more on a consistent basis, it spells trouble. Traditionally, we transported much of our freight by water or rail because the costs are very low and we can transport very large quantities at one time. Granted, water transport is limited to places where you have access to waterways, but what about our once mighty rail network? Before the advent of the automobile and for some time concurrent with it, virtually all of our long distance freight transport was done by rail. With cars and airplanes, few companies turn to rails anymore because they can get their cargo to its destination far quicker even if it does mean paying more. Because of this, most existing railroad tracks lay rusting in the dirt, unused for years and even decades.
I believe that it is time to revisit rail technology. One only needs to look at Europe and China to see what potential a good high speed rail network has. The average high speed train goes around 100 mph now, meaning that a train could go from Cincinnati to Washington DC in about five hours as opposed to the ten to twelve hours it takes a trucker to drive. We could move many times the cargo in half the time for not much difference in price. There is also the fact that studies and statistics continually prove that rail is one of the safest ways to travel as well as being very inexpensive to build and maintain.
In addition to looking at rail technology on a national scale, I believe we also need to look at implementing it into more of our big cities. Here in Cincinnati, seemingly constant road construction and the sheer volume of traffic make driving downtown difficult at best (not to mention the outrageous parking rates). We do not have a rail system here and our Metro Bus system, though quite good, can only do so much due to budget issues of their own. For years we have fought back and forth on the issue of putting in a light rail system but we've never managed to make any headway. Instead we continue fighting down degrading and congested roads to get where we need to go.
But there is an added benefit to investing in a high speed country-wide rail system: once in place, we can begin redesigning the rest of the transportation infrastructure starting with our highways. For a long time, we have needed a better layout for our highways as they too quickly become congested and difficult to navigate; this is a result of the fact that we are still engineering them in the same way they were originally designed. True, when Eisenhower first created the highway system, it was a work of genius, but it can't continue to hold up to growing needs. We can't just keep adding lanes to try and even out the traffic flow because it really doesn't end up helping much when you have an enormous volume of vehicles and people constantly merging and changing lanes in order to get where they need to go.
There are already many ideas for how to update the system on the table and I have many myself, such as creating a high tech roadway that could interface with onboard computers in vehicles as they drive, feeding information such as traffic delays and upcoming exits and rest areas. A roadway like this could even charge electric vehicles while they drive. In turn, the roadway could easily collect data on road and traffic conditions, making the road easier to maintain. I would also suggest that we greatly reduce the number of exits on highways as they create labyrinthine interchanges and massive backups . Instead of having exits for every crossroad, we should have follow the same system that the Ohio and Pennsylvania Turnpikes, among many others, use: there are only exits for other highways and major cities and there are rest areas with gas and food about every thirty or so miles. Traffic on the turnpikes flows very smoothly most of the time, barring accidents or bad weather. We should use them as a model in redesigning the rest of our highway system.
Clearly, there is a great deal of work to be done on mass transit and it will not be easy. But that cannot deter us. It is imperative that we invest in it because it could help our economy by saving billions of dollars that are otherwise wasted. But as I have noted above, there is also a great deal of work that needs to be done now in addition to these investments in our future. My three step plan is not foolproof nor is it heavily researched, but I say again that if we look at this through the eyes of common sense instead of the eyes of political bias and idiocy, it's not as complex a problem as we want it to be. There will certainly be more than three steps, and this will not be done overnight, but it can be done if we can put aside our feelings and work together instead of bickering about how to get something done.
