A Pamphlet from Don Stuart, Preserve Our Nation, LLC
Pamphlet #30 - 1/1/2010
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An Economic Dream/Vision for Our Nation
This is my Economic Dream of the future for our Nation. See if you agree.
In my dream, I see America as the place where businesses from all over the world want to locate and create jobs. I see America on the leading edge of education and research. I see America luring labor to come to America to seek those abundant jobs. I see our citizens as the most healthy and wealthy in the world.
I see businesses sprouting up across America in every town. I see children growing up, getting a good education and able to find a job in close proximity to family and friends. No longer will families have to be divided across our Nation in order to have a rewarding career and provide for their families.
Current Status
Our leaders, both current and past, have pushed our Nation into a debt trap that we may never recover from, at least by following the same old strategies.
Congress and the President, current and past, work in a world of the status quo, manipulating the same old laws and formulas that have dragged us into this death (debt) spiral. It is theorized that the only way to solve this problem is to inflate the currency: Inflation.
Current economists predict that the US economy will grow at a miserly 2% for the next decade. Obtaining a growth rate of 3-4% of GDP will not grow us out of debt. It may take 10 years to achieve the 3-4% growth rate by following the same old strategies, thereafter followed by 20-30 years required to double our GDP. That is a 30-40 year wait we cannot afford.
It is projected that our debt to GDP ratio may rise to 60% in the next few years. We can’t afford to wait 30 years to cut this in half. We can’t wait 50-60 years to reduce the debt to zero. If we fail, then we are surely passing our debt to our children, grandchildren and great-grandchildren. Will this debt trap ever end?
This is unacceptable.
We have to achieve a 7-8% growth rate as soon as possible and maintain it for an extended period of time. Once achieving 7%, we can double our GDP in 10 years. Doubling the GDP will reduce by half our debt/GDP ratio to 30%, balance budgets and pay off part of the debt.
The 2003 Pro-Growth impact of lower tax rates increased tax revenues for 2006 to $2.41 Trillion. Based on 2006 GDP of $13.06 Trillion, the tax revenue is approximately 18.4%. Doubling our GDP to $26 Trillion would thus increase tax revenues to $4.82 Trillion per year during the tenth year. Along the way tax revenues would increase each year thus allowing us to balance budgets and pay off part of the debt, assuming that the government doesn’t spend it.
Utilizing my projections of 7-8% growth rate, it would be likely that we could balance the budget in 4-6 years (assuming no more spending increases above 2008 level) and eliminate our debt in the following 15 years. That would require 20 years to clear our debt.
So how can we achieve this 7-8% growth?
I have a plan!
Our Economic Equation
Spending = Income + Borrowing
On the left side of the equation is Spending; I expect the Tea Party and Conservatives to bring Congress around and reduce government spending. The election in 2010 is a major step toward achieving this. The elections in 2012 will determine if the Nation’s citizens want to reduce government spending and our debt.
Preserve Our Nation is forging ahead (with donations) to work on the right side of the equation: Income and Borrowing. We have to increase the income (GDP growth) and decrease the borrowing (debt reduction).
We have to recognize that business is the backbone of our Nation. People don’t employ people, businesses employ people. People can only move up the ladder by working hard and/or taking risks - starting a business of their own.
We must put Congress on notice that they can no longer have a free rein on borrowing. They will have to come to the American people to justify their borrowing. If we say no, then they must cut spending.
Goals for the Right side of the Equation
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Other Accompanying Goals
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The goals listed above have been in decline for decades, some for a century. The trends are forcing businesses to move to other countries. Individuals seeking to come to America cannot find jobs. Our citizens are not prepared to compete in an educated world.
These trends must be reversed!
Goal: Remove Tax Burden
The Labor Tax, called Income Tax by the government, is a tax on our labor -- the output of an individual. One of our individual Natural Rights (we are born with them) is to be the owner of the output of our labor. Labor is our property and we have a natural right to keep it! The passage of the 16th Amendment by the Progressives in 1913 was the first step in taking the output of our labor for their purposes.
Business is the engine that drives our economy: government is not. We have to change our economy to a consumption economy where government tax revenues are based on the success of businesses, not on the backs of individuals. Government must work for business success not for business failure.
Moving to a consumption tax can be accomplished only by changing the taxing authorization on individuals’ income and businesses’ profits as dictated by the 16th Amendment.
We have to repeal the 16th Amendment: Income Tax!
Goal: Restrict Government Borrowing
The government has an unrestricted ability to increase the debt limit and keep borrowing money to pay for our increasing debt burden of deficits every year. Our debt is now at $14.2 Trillion and is expected to climb by trillions over the next few years.
We must put limits on the government’s borrowing capability. We must restrict our government's borrowing from foreigners unless there is a national emergency. Ordinarily, the government would borrow only from its citizens. Thus if the government wants to spend more than the tax revenues, then they must take their case to the citizens who would then buy bonds and treasury notes.
Restricting borrowing achieves three goals. One is that the citizens can reject the request by not purchasing treasury notes. Two, the government may have to pay higher interest rates to get citizens to purchase the treasury notes. Three, our citizens would own these notes, thus when the government redeems them, the money goes back to the citizens, our children and grandchildren.
We must add an Amendment to the Constitution to limit government borrowing.
Goal: Reduce Business Costs
What are the business costs that have nothing to do with making a product? Here’s a small list: FICA taxes, healthcare cost, employing people to calculate and pay taxes to government and overseeing purchasing of healthcare, and corporate taxes.
We are competing in a world where other nations do not put these burdens on their businesses. Our businesses must be allowed to be the most competitive in the world. Untangle business from the taxing authority of the government.
Repealing the 16th Amendment would remove the cost associated with collecting taxes for the government and eliminate the tax on profits. Profits are good!
Goal: Remove Business Barriers
Federal, State, and Local government have to remove barriers to starting businesses. This does not mean “no regulations” but “limited or reasonable regulations.” The biggest burden that individuals have in starting a business is the paperwork, time and cost. Governments must realize that the fees and regulations do not increase their revenue but cause fewer businesses to start up and survive.
Government tax revenues will increase from consumption taxes and sales taxes provided by new businesses.
Goal: Free Markets
As more business can compete and sell our products abroad, more people will be employed. We must make it easier to compete around the world. But to do that we must also make it easier for foreign businesses to compete here.
We must establish free trade agreement which enables free marketing to work.
Goal: State Sovereignty
States must again have representation in our government. The Founding Fathers knew that the states would need to have protection from an ever growing federal government. Their solution was to have Senators appointed by the States Legislatures.
Again the Progressives changed this to their advantage by adding the 17th Amendment in 1913. Senators no longer had to represent the States, but were now free to pass burdens on to the states in the form of unfunded mandates.
Many Senators are elected with contributions coming from all over America, not just from their States’ citizens. Do those out-of-state contributors really have your state’s interest at heart? I think not!
We have to repeal the 17th Amendment: Electing Senators!
Summary
In conclusion, I want to transform the economic structure of our Nation. And this process is the only way.
Our current population growth rate is exceeding the business growth rate in job creation. We must encourage our businesses and the people who create business growth. If the population grows by 2% a year, then jobs must grow by 2% a year. Can America manage this? Not by continuing down the same old path of “government against business.”
Help support this cause. The sooner we start the sooner we can reduce the debt and build a better Nation for the next generations.
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