No silver bullet will fix the economy

Oct 19 2011 - 1:13pm

The GOP makes fixing our economy sound easy. Just create jobs! No argument there, but their plan to cut taxes, deregulate business, employ "trickle-down" economics and "drill baby drill" to lower gas prices is the same failed strategy they have been promoting, forever.

Ten years of Bush "trickle-down" tax cuts has done nothing to create jobs or improve our economy; the financial industry meltdown was caused by not having enough regulatory oversight and Big Oil is not going to lower prices simply because they don't have to. The GOP solutions are based on political ideology, not sound economics.

Our economy is a multi-faceted, convoluted, intertwined beast. No single event caused the mess and no single silver-bullet will fix it. Until our leaders understand the intricacies and interconnectivity of the pieces of the problem and leave their political agendas out of it they will only make it worse as they have already shown.

For example, the GOP claims its first priority is to create jobs, yet it wants to cut government jobs and break the unions which will result in lost jobs. During the manufactured debt-ceiling "crisis", the GOP priority was lowering our national debt. Instead, they added to it. The debacle caused our credit rating to be lowered which will cost us about $10 billion a year since we have to pay our "lenders" higher interest rates now. If this exemplifies their plan, I don't want them touching my finances.

Fixing our economy won't be easy or quick. We have to address the totality of the problem and all its parts so fixing one problem doesn't cause another. In doing so, we have to accept some hard-to-swallow realities.

For example, war and military spending fuel our economy. We have a military presence in 135 countries and spent just under $1 trillion on defense in 2010 which didn't include the cost of two unfunded wars. Military bases around the country (Hill Air Force Base) are economic drivers in their communities.

Think of the negative impact closing those bases or eliminating hundreds of thousands of military personnel or cancelling civilian defense programs (ATK) would have on both the national and local economy and labor market. Sad to say but, war is good for the economy.

Big business has no incentive to create jobs. The goal of any business is to make profit. One way it does so is by reducing costs which include cutting jobs or using cheap foreign labor.

I can't find fault with businesses making profit, but if we're going to give them tax breaks and subsidies, be sure they are tied directly to creating American jobs.

Big Oil has no incentive to lower prices. "Drill baby drill" and promising $2 a gallon gas prices are laughable strategies.

Big Oil is not going to lower prices unless there is major competition from some alternative energy source. They control the "supply" side of the "supply and demand" formula. If demand increases, they produce only enough "supply" to keep prices up. If demand drops, they cut "supply" to keep prices up.

Big Oil is in business to make profits, not lower prices. A glance at their 2010 profits shows they're doing very nicely.

"Trickle-down economics" doesn't work. "Trickle-down," "supply-side," "Reaganomics" or cutting taxes for big business and the wealthy, or whatever it's called, simply doesn't work. It only makes the rich richer and the poor poorer.

Here's what Ronald Reagan's own budget director, David Stockman, had to say in a July 31, 2010 New York Times article: "If there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing. ... It is therefore unseemly for the Senate minority leader, Mitch McConnell, to insist that the nation's wealthiest taxpayers be spared even a three-percentage-point rate increase."

A weak dollar is not necessarily bad. The Chinese have deliberately kept their currency devalued to make their products low-priced and therefore attractive to other countries.

We accuse them of manipulating their currency but the tactic has elevated them to the second strongest economy in the world and the second-largest exporter at $1.58 trillion.

Factor in the impact of a weakening global economy, a poorly regulated Wall Street, the housing crisis and a grid-locked, dysfunctional congress, to name a few, and you can see how complex the situation is. It will take Congress' working together closely and cooperatively.

No more "just say no," "no new taxes," walking out of negotiations and putting party allegiance ahead of what is best for the country. Everything has to be on the table.

If you pols can't rise above personal or party ideology, please change jobs but please, stay out of the economics business.

Beauchamp, a North Ogden resident, is a retired aerospace marketing director and consultant and a member of the local Coffee Party.

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