The stock market went over 14,000 last week for the first time since 2007, a good thing if you are invested in it. But I would hate to judge the economy based on the numbers. The unemployment rate is bad enough, but the numbers who are underemployed is equally alarming if not more so. What can be done about it? Well, some seem to think if that they keep blaming Obama, somehow that will make things better. I assume the real message is that the Republicans have a solution if only they could get rid of the current president. If that was the cure, I would support it in a New York minute, which is very fast. But consider that we have the lowest interest rates in perhaps 75 or more years, yet that hasn’t spurred home ownership or businesses to go out and borrow money to expand. Corporations are sitting on upwards of $3 trillion but not spending it. Why? Some blame Obamacare and excess regulations, but in fact if you ask any business owner the reason is lack of consumer demand for product and services. Lowering the FICA by two percent put some extra cash in middle class people’s jeans, but it didn’t really stimulate the economy. (I remain puzzled that the Republicans blame Obama for not continuing the FICA cut in December, but the Republicans didn’t come out and support it either. In fact, the Republicans pushed for a FICA cut when Bush was president and then opposed it when Obama first proposed it.)
Politicians can argue all day about how the corporate tax needs to be reduced or eliminated to stimulate the economy. So why hasn’t it happened? Could it be that the myriad of tax credits and deductions that many business can take advantage of might get cut, so it’s in their interest to keep it where it is? Remember, GE was only one of the big corporations, despite the 35% corporate tax rate, to pay no taxes a year or so ago. I’m not a tax lawyer or accountant, but I can sit back and say that that is a pretty good deal if you can get it. Of course our military protects American businesses, but the way the tax code is structured, it’s much better to make the shareholders happy than to worry about paying for the hardware and personnel costs of our armed forces. And the social costs of military retirees (not wounded or disabled veterans) is staggering. It is more than twice that of those on active duty. I’m all for either cutting some of these benefits or raising taxes to pay for them. The volunteer military was never projected to be adequately funded. It became law as an emotional response to the draft, something I still think we need. Recipients of this largess claim they have earned it, and I won’t dispute that. I will only say that Congress decides what it means to have “earned” the benefits they bestow, and in these hard economic times everyone has to have an oar in the water and feel some of the pain. (As a federal retiree I am fine with taking a reduction, but to suggest that I should be an “army of one” and take the cut myself as a matter of principle is meaningless.)
Our elected officials face two very real issues as I see it when it comes to fixing the economy. They can dramatically cut spending, which will happen if sequestration occurs. If that happens the pain will be felt by almost everyone. Too many politicians blame spending for all the problems, but there is a revenue side to this equation, and this recession has dramatically cut revenue. The government pumps a lot of money into the private sector, Lockheed being just one example out of millions. Take that money out of the economy and you are now hitting all the stores where these private sector employees shop and buy their morning coffee. The government doesn’t operate under micro economic theories. If every American saved all their money, some would say that’s a good thing. But on a macro level it would put us into a depression. Ask a restaurant owner what they think about politicians or other pundits that urge families to cut their spending and eat more meals at home or brown bag.
To sum it up, our politicians are not addressing how technology has and continues to replace good middle class jobs. On the state level our elected officials are too interested in giving enormous tax credits and benefits to attract individual industries that often fail and don’t come close to making up the advantages they were given to locate here. Instead, spending money on transportation, education, and infrastructure, which would not be cheap, would likely draw many businesses because of the better quality of life we could offer. But consider that a few years ago the voters of Georgia turned down a $10 added fee when renewing a drivers license that would have gone to build new trauma units in rural hospitals. So if you are seriously injured once you get south of Macon, good luck---you will need it because you won’t have a trauma facility near you. And like so many issues related to taxes and spending, it comes down to those who know the price of everything and the value of nothing.