Saturday, February 11, 2006

Trade Gaps, Tax Cuts and Deficits, Details at 11

Convergence is the word of the day, the preferred definition for my purpose being “the approach of an infinite series to a finite limit.” Don't go away, this is way more useful than Econ-101.


EinsteinAnyway, we have certainly witnessed an infinite series of trade gaps, Mr. Bush has us well on the way to infinite tax cuts and deficits have been the norm since infinity itself. So, I guess the stage is set. Albert Einstein had a thing or two to say about infinity, but this particular wise quotation of Al’s has to do with what next?

“We can't solve problems by using the same kind of thinking  we used when we created them.”

Simplicity of thought and purpose and expression is, of course, the mark of genius.


AflciotrumkaThose who obfuscate, hide behind complex language or wander off into arcane theory are meaning to put us off the track of solving solvable problems. Case in point, Dick Trumka’s comment on news of current record trade deficits, "This trade deficit is unsustainable, we cannot sit back as other nations produce the world's goods and we continue to lose family-supporting, middle class jobs." Dick is secretary-treasurer of the AFL-CIO, a pioneer in same kind of thinking.


Senbyrondorgan_1Senator Byron Dorgan chipped in, "Particularly disturbing is the news that our trade deficit with China is two and a half times bigger than it was when we signed a trade agreement with them in 2000. That's pretty compelling evidence something has to change."


I couldn’t agree more, but withdrawing from NAFTA and CAFTA, or kicking China out of the WTO isn’t a new solution, but the second-guessing of old ones. World Trade (in the capitalization it deserves) is a good thing. A world trading freely is a planet ever further from war, 'cause we know it to be proven theory that you don’t bust your best customer in the chops.


Getting rid of the Income Tax could cure these problems of job loss and trade deficit by a refreshing dose of new thinking. Surprisingly, we got through the first half of our national history without an income tax and we did just fine. So, let's not get overly nervous. Unburdening American business and industry by doing away with the income tax would make us a mecca for world capital markets and manufacturing. Dick Trumka and Byron Dorgan could find some other issue upon which to focus old thinking.


The controversy over President Bush’s unabated tax breaks to the rich need not be revisited here, except to once again note the fact that all these free chickens will come back to roost, well after he’s out of office and permanently cutting brush. Those post-Bush decades will be known by the preponderance of a dollar gone-to-hell in the financial markets and free chickens everywhere.


BushtaxcutsOur fascination with fiscal madness, evident once again with the recent unveiling of President Bush's new budget and its deficit in excess of $350 billion, is hard to classify as anything other than teenagers’ in their dad’s cars on deserted country roads playing ‘chicken.’


W is, in fact, in his old man’s car, having been there and persdonally witnessed the devastation arising from pop’s raising taxes. That devastation was singularly political, the cuts worked fine economically. Clinton, on the other hand, got away with it. Maybe we just expect Democrats to tax.


But I digress. My purpose here is not to assess the good or evil that comes from taxes, but to abolish the damnable practice—put a bullet in its head, drag it out behind the barn and bury it. With that single shot, we’d


  • produce the tax revenue we need and then some

  • free up capital for investment

  • leave enough in the public’s pocket for some decent savings

  • reverse the decades-long slide into off-shoring every profitable American job

  • cut the red tape that drags like an anchor on business

  • produce top-quality jobs in this country at top-quality wages.

That’s a big shot, a shot heard ‘round the world, a shot in the dark, a shot in the arm and any of a dozen additional metaphors.


What stands between it and accomplishing it is misconstrued private interest and a national timidity that prefers using the same kind of thinking  we used when we created


  • Deficit spending

  • An imbalance in imports over exports

  • Taking America’s (particularly manufacturing) jobs off-shore

  • Tax policies run by political exigency or, it’s opposite, voter-appeal

  • Budget policy dictated by ever-growing entitlement presumptions

  • A nation gone from world #1 lender to world #1 borrower

That’s why we need leadership instead of followership.


That’s why there are so many Teddy Kennedys and so few Albert Einsteins.
________________________________________________________


More about politics in America at my opinion columns web site.