Some perspective

This is not an easy time.  The stock market is plummeting today, partly because of the credit downrating, but probably more because investors see no light at the end of the tunnel for either the US fiscal problems or the European fiscal crisis, and because the US economy is showing almost no growth.

Congress is on vacation, just when they ought to be hard at work.  The administration is busy trying to shoot the messenger (the rating agencies) instead of dealing with the issue. The liberal pundits and columnists are blaming the whole mess on the Tea Party (as if they were the whole cause of the $14 trillion debt), while the conservative pundits and columnists are blaming the Democrats (as if it was they who launched expensive wars in Iraq and Afghanistan without raising taxes to pay for them).  Everyone is pointing fingers and trying desperately to spin the situation to their political advantage – nobody in power that I see seems to be trying to figure out how to improve the situation.

On the other hand, despite all these problems, the USA remains the world’s sole superpower.  Our treasury notes are still, even today, where investors put their money when they need safety. American values and culture still pervade the entire world and are the most influential forces around, from the Arab spring to the hinterlands of China.  American innovation still drives the world’s markets, and overwhelming American military power assures that no other nation is a real threat to us. Americans still have a higher standard of living, better education, and more consumer choices than almost anywhere else in the world.

So it isn’t really a time for gloom and pessimism, but it is time for some sensible heads to begin to figure out what fundamental things have to change to get us out of this mess.

It seems to me that a sensible solution might look something like this:

1) Fix Congress. The Senate, in particular, is almost non-functional. 

• I suggest first of all term limits for both House and Senate.  Something like a maximum of two terms (12 years) in the Senate (whether consecutive or not) and five terms (10 years) in the House (whether consecutive or not).  That would shake things up and get rid of those politicians who have comfortably ensconced themselves in a lifetime job.

• Second, get rid of gerrymandering districts, so that neither party has “safe” House seats.  Do what a few states have already done – assign the task of redrawing Congressional districts to non-partisan citizens groups, rather than to the political party that happens to be in power.

2)     Shift budget priorities. Put less toward supporting the improvident and irresponsible and more toward supporting our best and brightest. The future of this nation lies with the best and brightest of our children, not with the aged (including me), infirm, irresponsible and poor. It may seem morally right (and politically expedient) to help the less able now, but it is irresponsible and downright stupid to jeopardize the nation’s future by neglecting the bright young people who will be the innovators, producers, entrepreneurs and leaders of tomorrow.

• Reduce the money spent on entitlements (yes, yes, it will be a fight, but it needs to be done), and shift some of that money to investments that make the economy more productive in the future (things like infrastructure, research and development, innovation, and education).

• Find every bright young person in the country and ensure that they get as much education and training as they want and can absorb, regardless of their means.

• Support affordable on-line colleges and universities and training and certification programs, so that anyone in the country can train themselves in a useful occupation, mostly at home, without it costing a fortune. It is outrageous that students have to accumulate tens or hundreds of thousands of dollars in student loans just to get a college degree that (may possibly) get them a good job.

• Rethink the whole military system. We would be smart to keep an overwhelming military force, but that doesn’t mean we have to buy every gold-plated weapons system offered. Invest in efficient future systems, not old Cold- War systems. For example, replace manned fighters (the new F-35 costs about $75 million each) with unmanned drone fighters (about $2-3 million each), which can withstand g-forces in a turn that no human pilot could withstand. Competent experts (who are not in the employ of defense contractors) estimate that we could trim $1 trillion out of the military budget over the next 10 years without affecting the quality of our military.

3)    Reform and simplify the tax code.  It is currently 3,458 pages long, and costs individuals and companies billion of dollars in accountants and tax lawyers just to comply (or evade). It also has billions of dollars a year in tax exemptions and tax credits for special interests.

• Eliminate ALL tax exemptions (include home mortgage exemptions) for individuals and corporations. 

• Reduce tax rates (which are now real rates, since all the exemptions are gone) to be competitive with the rest of the world.

4)     Forbid public unions.  There was, and may still be, a valid argument for workers in private firms to unionize and bargain collectively, so that greedy corporations won’t exploit their workers.  There is no such argument for public workers to unionize because they don’t work for profit-making corporations, but for the taxpayers.  Public unions inevitably get into incestuous relationships with the politicians who set their pay and benefits, in return for union support.

This is my starting list. The reader can probably think of additional items to add.  But it will take some fundamental changes like these to get us out of this mess, not just tinkering around the edges like Congress and the administration have been doing to date.