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StockBlade.com Proposes Long Term Economic Fix: The Ten Step “Save America Plan”

This is an economic plan that I believe McCain should adpopt, in some form to fix the serious economic problems facing our country. These are not ideas to simply stimulate the economy like sending out checks to everyone, which does zero to solve the reasons why we are having declines to begin with. We cannot continue on the same road we are on or I see incomes and manufacturing decline continuing their slide. 

The Ten Step Save America Plan

The Problems:

1. Real Incomes have declined for 8 years” This has never happened before in our history, to my knowledge, not even during the Great depression, for this long a period.  

2. Trade deficits continue to swell with both China and the middle east

3. The dollar is no longer considered the preferred currency of the world because we have practiced massive fiscal irresponsibility both at the government and consumer levels.

4. Our manufacturing base has eroded to all time record lows.

5. We have the greatest generational wealth divide ever seen. All wealth, literally, is concentrated to the population over 40. This is a direct correlation to the free trade policies with third world nations. This has never happened before. 

6. The social security fund will be bankrupt long before the baby boomers die unless changes are made to it.

7. The concentration of wealth is the greatest since the Great Depression.

8. 10% of all disposable incomes in this country go to pay interest on credit cards.

9. We are completely dependant on foreign oil for the survival of our economy

10. The CEO pay relative to workers within their companies is at all an all time high since the Great Depression

The Solutions:

1. Real incomes: Real incomes have been declining rapidly because we are have free trade policies with countries that are not equal partners, in both economic terms and environmental regulations. This can and should be resolved by having a temporary “trade balance tax” designed to adjust trade to some measure of equilibrium by placing a flexible tax on imported goods if the trade gap with a country exceeds a certain threshold. For instance, if the trade gap is above 25%, a .5% tax would be implemented, a 50% trade gap would equal a 1% tax, etc. The tax would be reviewed annually to see if the balance has become within a different threshold. 

2. Trade Deficit: This issue would be addressed by implementing the policies named above. In addition, much of the trade deficit is a direct result of complete disregard for labor rights as we know them as well as a complete disregard for the environment - for which we will all pay for, eventually. In addition, some of our trade deficits have been the direct result of countries refusing to allow their currency to float with the market as should be required as part of having free trade status.

3. The dollar: Our currency would once again regain the strength it deserves if we would get our house in order both in terms of trade and fiscal soundness. 50% of all taxes collected on “excessive” imports would be earmarked to social security, 25% to community college education grants, and 25% to rebuilding the infrastructure in the country, which desperately needs attention and would also create jobs. People in this country do not fully understand the importance of the value of it’s currency as it has never collapsed unlike Germany in the 30’s. It is far more important than most anyone realizes.

4. Manufacturing: This would improve as companies would have a more even playing field with some level of taxation from countries bringing in excessive imports from possible unfair practices such as manipulating their currency or paying wages far below a livable standard.

5. Generational Wealth: The generational wealth divide is the direct result of a collapse in manufacturing and should improve with time if the above policies were implemented. One could argue that this divide is simply a direct correlation with free trade, but I firmly believe it is causation, not just a correlation.

6. Social Security: The fund would receive billions in funds currently not expected,  to replenish a system that will be bankrupt otherwise via the excessive import tax revenue.

7. Wealth Equality: There should be a standard rule that gives companies a clear choice: the possibility of unionization or provide full health coverage to it’s workers.  For instance, possibly a rule that all companies above a certain number of workers should be allowed to unionize if the majority of the workers elect to do so. Votes should be mandatory every 5 years. Companies could avoid this mandatory vote if they elected to provide full medical coverage to their employees. This would allow a possible redistribution of some of the wealth and eliminate some of the burden on the state medicare systems from large companies not paying a livable wage nor health coverage. Therefore, companies would have a very clear choice to make - pay for health coverage or be subject to a union vote.

8. Credit Card Debt: This is a more difficult issue as it involves freedom of choice. On one hand we should not place a maximum on cards a person should have, but on the other hand we need to place firm rules on a national basis for when credit companies can increase rates, and set firm limits. In addition, there should be a some kind of rule that requires credit card companies to set income to debt ratio guidelines similar to those for other types of debts, like mortgages. This would assist in our country in becoming a saving nation rather than a borrowing nation, at some point.

9. Carbon Tax: One percent of all profits from all petroleum based (oil coal, natural gas) companies should be required to go to wind energy to generate electricity. While this may only seem to benefit homes, autos will eventually be electric as well, if not hydrogen, and the power required to convert will be substantial. This should not be viewed as simply a socialist redistribution of wealth. Society pays a price in real dollars from the burning of these fuels and there is no reason some sort of a carbon tax should not be implemented and used to plan for the future.

10. CEO Compensation: All companies that conduct business in the U.S, publicly traded or not, should have to adhere to a maximum multiple of their average worker for executive compensation, unless shareholder approved via a vote. Keep in mind, this is not setting a limit on compensation it is simply mandating that any compensation above a threshold, must be approved by a majority of the stakeholders/shareholders of the entity. If the shareholders deem an CEO worthy of excessive pay, they certainly should have the right to pay them what they think he/she is worth. But it should be law that it be put to a vote and allow the true owners of the entity to decide.

 These are 10 very dramatic problems we face in this country. In addition, there are 10 easily implemented solutions to each. I can easily provide documented proof of each and every problem on here, but I suspect that all are very self evident and need no documentary detail. In addition, the solutions are reasonably simple, if someone has the courage to move forward and put them in action.

Other Related Issues:

Consumption Tax: I also feel that the Federal Reserve mandate should be changed to an inflation only mandate similar to European nations and their rate policy should only be used to control inflation and not GDP. Instead of raising rates in times of excessive GDP expansion to slow the economy, there should be a national consumption tax that automatically enacts when GDP exceeds a certain threshold. This money should be set aside in an “economic downturn rebate fund” and be released when GDP falls below a defined threshold. This would not only even out the economy, it would also somewhat eliminate the current bias of creating budget deficits when GDP falls.  But I realize this is far too complicated to be “sold” for election purposes, but I believe it clearly should be done.

Healthcare: I also contend that healthcare should be based on a single pay system. There is no excuse, on any level, for the system currently in place. For instance, I know for a fact that the premium paid counting my contribution AND my employers was less than $150 a month total. I left the company and for the exact same coverage with the exact same company it was over $550 a month. While i agree there should be some extra adminstrative fee involved, to charge 3 or 4 times for what is essentially a financial commodity is unethical at best. There should be a single pay system set up, where companies pay via the internet the fee of which individuals have equal access. This is a very simple solution to what has been made out to be a complicated problem. It isn’t.

Ok, I guess there are 12 suggestions. If some or all of these suggestions were implemented, it would bring America back rather quickly I believe. And one cannot argue that we are imposing “tariffs” for protectionism. We would be creating temporary taxes on goods to level out temporary extreme imbalances related to most likely unequal laws or other factors that should adjust over time.

Therefore, whoever wins the election, McCain or Obama, some or all of these ideas would greatly assist in restoring this great country to what it once was. If we do not, expect more of the same, regardless of any rhetoric from either. I cannot think of any other alternatives to bring wealth creation back other than letting the dollar continue tofall and that would increase manufacturing. But that reduces real wealth and relative spending power as well, so that does not seem like a real solution.

While this site is my personal blog on the markets and trading in an effort to provide “the average Joe” an idea of how the markets really work, these issues are too compelling to ignore. We have to restore this country to greatness and the issues we face are long term structural issues I believe, but not nearly as complicated as many make them out to be. It can be done, rather easily. But someone has to have to the fortitude to do so.

I am not an economist, so perhaps all of this is a bunch of nonsense and wouldn’t work. But seems to me they are ideas that should be given consideration.

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