Monday, December 27, 2004

Why America is in a tenuous position

Although it does not seem obvious, and I'm sure many will disagree with this posting, I believe that America stand on the edge of a great precipice, from which we can either save ourselves from falling in or we can tumble to our doom. Here's why:We are drowning in deficits and credit. We are committing troops in numbers resembling empire building, even though that is really not the goal. We have been through war, and will continue to be in it.
Most importantly, though, we are trying to have our cake and eat it too. While the world has changed since World War II, we are cutting taxes to record lows, which may sound good, but isn't in this case. The jobs loss combined with the military expedentures are stretching our economy, and not in good ways. We continue to watch CEO salaries rise to ridiculous heights while our important manufacturing jobs disappear. Our education level is not keeping up with the world.
It's not about more days added to the school year, it's what's done with the existing days. We offer no incentive for talented people to teach. We are burning out our students by cutting their break times, and we offer such a large amount of materialism that kids don't bother to try, my own brother being a prime example. In short, we are slowly but surely inching back towards the 1970s, an era in which both us and Britain drowned in red ink, drowned in high interest rates and recession, etc. We also had oil shocks then, similar to what we are facing now. We are becoming the world's boutique, selling everything but making nothing. Service is fast becoming the nation's largest industry, and Wal-Mart is the largest employer in the nation.
When your largest employer pays its average full-time worker wages that would put them in the poverty level if they had kids, it's a BAD situation. It returns me back to the CEO thing. In other nations, instead of laying off workers, the CEO's take a pay cut. Why aren't we doing that here? Why are the Tycos and Enrons happening? Why is a company that is closing so many stores like KMart paying its CEO so much money? The world is growing in population. Our national birthrate, though, is falling. More families are stopping having children because they can't afford it. Parents are not spending enough time raising their children because they can't afford it.
When we can't afford to do the things that have been the core of our nation, we are in crisis. My biggest worry about President Bush is that he wants to eliminate Social Security. When it becomes a private account, it's no longer an insurance policy. Instead, it's subject to the whims of the market, making it an investment, not an insurance policy. IF the market were to fall out, Social Security would be dead in one broad stroke. The 1932 bank crash was part of why FDR insituted the program in the first place, so people wouldn't be wiped out by an economic crisis.
Furthermore, T-bills, which have been considered safe investments for 60 years, don't look so safe anymore, mainly because the dollar is sinking. Why is it dropping? Because the world thinks our tax cuts and deficits are leading towards a major nosedive of our economy. It is obvious that the top end tax cuts need to be repealed. Maybe the President doesn't believe in it. Maybe he was just trying to help those who helped him. In either case, he does not face relaxation again, and while his father was vilified for it, Bush senior saw the necessity of raising taxes, which helped lead to the Clinton boom.
Those top end tax cuts will make a difference. They are hundreds of millions in revenue. A luxury tax would be a good idea as well. How much money do you really need? This might sound a bit socialist, but if a CEO or athlete makes a hundred million, does paying a third of that really hurt? Yes, it's a lot of money, but that's still 67 million, and that's still hundredfold over what I make in a year. Reality is going to hit soon, and either we'll be prepared to weather the storm, or we'll fall into a repeat of the Hoover presidency, and the latter choice is one that should be avoided at all costs.


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