There are three main policy areas that must be competently addressed to fix America’s current and future economic troubles:
1) Financial Policy
2) Domestic Policy
3) Energy & Foreign Policy
Energy and foreign policy were grouped together because, unfortunately, energy drives US foreign policy. Before describing the fixes, some background is necessary.
True freedom can only be obtained by economic freedom. Debt is therefore the enemy of free people. Consider the origins of the word “mortgage” which comes from the Latin root “mort” and means “death”. In earlier European times having a mortgage on your property meant being a serf or slave to the land owner for your entire life.
As our political leaders wave American flags and casually use the word “freedom” as though they actually know what it means, the US is sinking deeper and deeper into debt. This is exactly what the richest 1% desire. Since they already own 80% of the world’s wealth, what better way to maintain this economic status quo than insuring the majority of Americans stay in debt or close to it? Is it any surprise that pensions are going away? Is it any surprise US citizens are being prepared for the day when their social security will be taken away? Is it any surprise we don’t have universal health care in America? Yet, look at the number of people without adequate health care coverage that have been conditioned to cringe at the mere mention of “universal health care”. Ironic, isn’t it?
Yet the wealthiest Americans apparently have nothing to worry about. There are no demonstrations here. Unlike France and Great Britain (which both have very successful universal health care systems), people still protest in the streets. When segments of society feel wronged, they hit the pavement with signs, stopping traffic and protesting with abandon. The governments there are concerned about their citizens and cognizant of their moral. After all, the French gave us the guillotine – a device which chopped the heads off some of the wealthiest French men (and women) during the French Revolution. Anyone watching Bill Maher’s “Real Time” closing monologue last Friday night can see that at least one person “gets it”. At least one American realizes something had better be done soon to turn this tide. Yet here in America, the land of the free and the home of the brave, it seems as though people are afraid to demonstrate and protest. That is exactly how the wealthiest in control want it to be. Be scared, be intimidated, and accept the dysfunctional governmental and financial policies that exist today which do not favor the middle class in the least.
You see, there is a reason the rich want Americans to hate the French. The French have health care, pensions, generous vacations, and a more relaxed and higher quality of life. The French, in general, have the philosophy of working to live. What’s not to like about that? Yet in America it is the reverse. That is exactly why the French are vilified in the American press and by American politicians. If Americans began to expect the same quality of life as the French do, the 80% of the wealth that the wealthiest 1% own would begin to be redistributed in a much more equitable fashion. So, they make fun of the “socialist” French “frogs”. Well my American friends, the joke is on us. The French are laughing all the way to their health care facility, the beach, and to their vineyards.
But this article isn’t about the French. It’s about how to fix America. It’s about how to bring real freedom (that is, economic freedom) back to America by adopting more fiscally responsible financial, foreign, and domestic policies. In order to keep the article brief and to the point, very short or no explanation at all will be given for many of these policy suggestions. That said, the solutions presented are not complicated and are indeed fairly self-evident.
Firstly, Americans must have their faith in the financial system restored. They watched their 401k savings disappear while at the same time they’ve seen their tax dollars go to pay bonuses for the thieves who brought about this crisis as they bankrupted their firms. (Where are the demonstrations?). Middle class Americans need to feel as though their government, if not on their side (we have been conditioned to believe that is not at all possible), is at least somewhat fair. Foreign countries such as China and Japan also need to see real financial reform. After all, they not only hold trillions of dollars in US debt obligations, but continue to bankroll current US deficit spending. They must be reassured their existing holdings are secure and that future US obligations will be met. Therefore the US should, in a very controlled, logical, and transparent way, do the following:
• Shut down the three existing bond rating agencies S&P, Moody’s, and Fitch. Without their fraudulent AAA ratings assigned to repackaged sub-prime debt, most of the existing calamity would not have been possible. A new “Bond Rating Commission” will be established to rate US bond offerings. The BRC will consist of private and government employees. It will be closely regulated and its “high commissioner” will report to the “Department of Finance”.
• Banks and businesses must be allowed to fail. There are too many banks in the US! Canada has 14 domestic banks. The US has 9459 banks with over $100 million in assets (or did have). The US is bigger, but not that much bigger. The US will have far fewer and much stronger banks. The US banking system will be regulated by the “US Department of Finance”.
• The “Federal Reserve” as it exists today will be abolished. The “US Department of Finance” will have an “Interest Rate Policy” board which will determine the interest rate structure of US banks.
• The “US Department of Finance” will consolidate all financial market regulatory agencies under its one roof.
• The “US Department of Finance” as discussed in this section will report to the Secretary of the Treasury and will have Congressional oversight. Major financial policy changes will therefore be voted on by the House & Senate.
• The President and US Congress will operate under balanced budgets restraints.
• Taxes will be raised on the wealthiest Americans. A graduated flat tax will be imposed on all income above the following levels. No loop holes, no fancy accounting.
$350,000 : 45%
$500,000 : 50%
$750,000 : 55%
$1,000,000 : 60%
The goal will be to roll back these taxes when and if the country gets its finances back in order.
• It will be criminal for any US tax-payer money to go for bonuses of financial, insurance, and banking executives of any company, let alone bankrupt companies requiring US tax-payer money to stay afloat. This practice has been an abomination and we should be rioting in the streets.
• The new “US Department of Finance” will work with the Department of Justice and begin prosecution of financial fraud. Harsh jail sentences should not be the exception.
US citizens need to force their elected officials into adopting policies for the benefit of the middle class as opposed to policies for the wealthy. Why do you think Rush Limbaugh gets paid $1,000,000 a day to take heroin and push his views onto the airwaves? One reason is because Limbaugh is highly successful at bamboozling middle-class Americans into supporting policies against their own interest and thereby maintaining the status quo (1% of the people keeping 80% of the wealth).
While Limbaugh talks about “freedom”, isn’t it ironic after 8 years of a President that Limbaugh fully supported we have seen the nationalization of the banking, insurance, and financial services industries? We have seen the US fiscal debt doubled - and that doesn’t even count the military spending in Iraq and Afghanistan. We have seen more erosion of our Constitutional and Civil Rights than we have seen in the prior 200 year history of our country. Yet, boy-o-boy, don’t the poor middle class folks just love to tune into Limbaugh and hear the latest jokes about the “liberals”, “greenies”, “gay marriage”, those “spending Democrats”, and any other handy label Limbaugh can use to instigate fear and anger in his listeners. But the joke has been on those middle class folks. As they laugh and howl and are whipped up into an angry froth their standard of living has dropped sharply, they are in more debt, their taxes were basically stolen and transferred to the wealthiest Americans, and they are losing their health care and their pensions. China, Japan, and countries in the Middle East own their countries debt. This isn’t “freedom”. It’s hypocrisy and theft and is at its core where the wealthiest draw their true power - economic power. Just imagine if Bush had succeeded in his grand scheme to privatize social security and invest that money in the “markets”? This was yet another policy initiative designed to weaken the middle class and transfer the country’s wealth to the already wealthiest Americans. Imagine having social security taxes taken from your paychecks for decades and then watch your benefits get flushed down the toilet in the recent market crash. It could have happened, yet there is no fundamental reason why it should.
So, here’s what middle class people should demand from our government:
• Universal health care. Every major advanced western power – England, France, Canada, Sweden, etc all have very successful universal health care. Americans not only spend much more on health care, they are falling behind in almost every meaningful health care statistic. It is disgraceful.
• Pension benefits, once promised by an employer must be fully funded and paid by that employer. This is non-negotiable.
• Social Security must be fixed and secured. This is non-negotiable. Period. No excuses. Other countries can do it, we can too. We’ve been conditioned to believe it is not possible. It is. After all, even the French can do it, and we are superior – right?
• End the insane war on drugs and use the billions of dollars saved for education and health care.
• Secure the borders and adopt common sense immigration reform.
• Increase testing of food and water supplies for quality. Levy large fines when necessary.
• Initiate programs to make frugality cool, and waste unacceptable.
Well, I finally got around to my favorite topic. Faithful readers are aware of my belief that energy (oil) is at the root of America’s economic decline. American policymakers keep attempting to fix a commodity problem (oil) with financial policy and this simply won’t work. Likewise, the Pentagon/petroleum relationship could quite likely do us all in.
Recently, America announced it was sending 17,000 more troops to Afghanistan. At the same time, Brazil’s Petrobras just announced the Chinese finalized a $10 billion line of credit in exchange for guaranteed future oil supplies. China also signed a $25 billion financing deal with Russian oil producer Rosneft and pipeline company Transneft in exchange for building a pipeline from the East Siberian oil fields to China and the associated oil that will flow through it. This pipeline will deliver 300 million metric tons of Russian oil to China over two decades. Now, I ask you, which foreign policy is more effective?
We now all know that the war in Iraq certainly was not about 9/11. We also know it wasn’t about “freedom” either. If it was, why is the US working with Uzbekistan president Karimov instead of overthrowing him as well? He makes Sadam Hussein look like a boy scout. It was about oil, plain and simple. For any doubters out there, please read Lutz Kleveman’s fascinating book The New Great Game. Anyhow, it certainly wasn’t about American freedom. As I said before, real freedom is economic freedom. All the war in Iraq has done (beside the very sad deaths of a great many Americans, Iraqis, and others) has been to put the US in debt. The US is in Iraq building schools, road, hospitals, power systems and infrastructure when we have high unemployment and badly need the same infrastructure here! It’s madness. The US military is paying money every day to Iraqi tribal leaders for their support when we should be using that money at home for health care, education, and national security issues (among of litany of other needs). Now we’re headed over to Afghanistan to do the same thing? Why? Well, it is hoped we can pound the Taliban into submission in order to build oil and natural gas pipelines from the Caspian Sea region through Afghanistan to the Indian Ocean. You see, that is the only way the US can get the quantity of oil it needs out of the region without first traversing Russia and Iran. Good luck with that one! Meanwhile, China continues to gobble up precious oil assets all over the world.
So, here is what the US should do:
• Bring the troops from Iraq and Afghanistan home. All of them. Do it sensibly, but do it.
• Use the money saved (from decreased military spending) for the following:
- Increased US border security
- Increased US port security
- Low cost loans for a trans-Canadian Alaska/lower-48 natural gas pipeline
- Build out of the natural gas refueling infrastructure on the US interstate hwy system.
- Incentives to build and purchase natural gas/electric hybrid vehicles.
- Build out wind and solar electric generation along with the transmission lines needed to deliver the energy from source to consumer.
- Invest in electric car battery research, development, and manufacturing.
• Adopt a more fair-handed diplomatic policy wrt the Israeli – Palestinian issue.
• Adopt a common sense approach with Russia. Bush’s threat to put missiles on Russia’s border while at the same time supporting the idiot President in Georgia was insanely ignorant and completely backfired. Russia has made it clear then can close the BTC pipeline any time they want. We should be engaging with Russia, not antagonizing them.
• Adopt a more common sense approach with Iran. Iran is not Iraq.
• Most importantly, adopt a strategic long-term comprehensive energy policy like this one:
Of course these policy suggestions were painted with big broad strokes, and one can quibble about the ins-and-outs of the particulars all night over many bottles, cans, glasses or cups of your favorite beverage. However, in general, this is what the US needs to do. I can hear it now, but Fitzman, you want the government to takeover everything – you’re a friggin socialist pig! Hello – the government took over everything in Bush’s last year in office – were you not paying attention? They’ll say, but Fitzman, how can we afford all these things? And I’ll say, well, Bush ran up $10 trillion in debt and what do we have to show for that except a lot of war and some very wealthy (and incompetent) bankers, insurance and financial services executives. Of course those executives are laughing at me calling them “incompetent” when they have all the money. Touché.
Americans need to stop listening to Rush Limbaugh and start paying attention to their own financial interests. We need to start demanding more of our government, not more deregulation so that the wealthy can rip us off (again). A country is only as strong as its middle class, and the middle class has been severely damaged.
Most importantly, American needs to completely change its energy policy from one of conflict and war and dependence on foreign oil to one of self-reliance, pragmatism, and realism. Fighting oil wars is simply not the way forward. It’s not working. Switching a significant portion of our transportation over to NGV’s and natural gas / electric hybrids is a national security and economic imperative. Long term, the US simply must transition away from foreign oil and rely on its own natural gas, wind, solar, and yes nuclear energy for its transportation needs.
The only way to rationalize long term investment in US equity markets is for US financial, domestic, foreign, and energy policy to be crafted for the benefit of the middle class instead of the wealthiest Americans. This will take some time. Meanwhile, buy gold.