order to save
10% unemployment we have now means 13% less money in taxes (added unemployment
benefits). However, the real
unemployment is 21%. This figure is all
the people not working who could be working, whereas the 10% is just those who
are collecting unemployment benefits. To
In order for the unemployment to go down the GDP has to first go up. First let us look at what is going to happen over the next 18 months as things stand now. Even if Fiscal Conservatives take over the House and Senate in November, which I expect, taxes will go way up in January. In January the Bush tax cuts will expire. In order to stop it the House and Senate will have to pass a law extending the Bush tax cuts and Obama will veto that. So we know this will happen. Because of the new taxes for Health Care and the coming taxes in 2011, unemployment may be at 11% before the November elections and go up after.
Fiscal Conservatives can refuse to finance much of the newly passed health care
bill, they cannot stop the taxes that will hit businesses even before the
elections, and this will cause almost every company in
Even if Obama and his liberal congress do not pass Cap and Trade, Card Check, financial reform, and immigration reform, which he is planning, I predict the following for 2011:
1. Unemployment will go to 16%
2. GDP will drop to minus 1.5%
3. Taxes will rise to 55% of GDP (total State, Fed. County and hidden), and in some states 65%.
4. True unemployment will go up to 28%
5. Some cities will go bankrupt
6. Some states will default on debt bonds.
7. Housing sales will drop another 10%
8. The Stock market will drop 40% by April of 2011
10. The Euro may collapse. It has already dropped 30%.
The Israel –
12. Gold will rise to 2000 an ounce because inflation will start quickly in 2011.
14. Know this for sure, Obama will pass Cap and Trade by executive order through the EPA. He will pass card check for unions through executive order. He will legalize the vote forIllegal Aliens by executive order. Before the elections the house and senate will pass comprehensive immigration so that they can win the Mexican vote.
Ronald Regan inherited Carter’s economic mistakes, he was blamed until he fixed
it three years later. When
Now, Fiscal Conservatives will take over congress, but for more than two years things will get worse no matter what good they do. Let us not blame them because fixing this will take at lease 6 years and this is what we have to do and do quickly.
Most of the above would not happen if we could have a veto proof congress or if Obama could be impeached but these two things will not happen. What we can do and must do will take time and because of that things will get worse before they get better. I believe if we do all the following ideas, we can again become the strongest economy in the world and stronger by far than we ever were before. All the ideas are geared to reducing debt and increasing GDP, which will increase jobs and increase individual wealth for every American, rich and poor.
Most people, even government people, have forgotten the principles of economy. Money is an easy exchange means of production. When someone makes a thing or grows an apple, he sells that for money. He spends that money on a service or a good. The people who help these exchanges, banks and services also make money.
A dollar created by making something, generates 2-1/2 dollars of GDP. A dollar created by simply exchanging money in banks creates 1-1/2 dollars and a dollar given to government to spend creates 1-1/4 dollars from the government worker spending the money, but it takes 2-1/2 dollars out of the market, so it looses 1-1/4 dollars.
So production of goods is the greatest way to create wealth by far. We have become the third largest nation in the world in production and yet still by far the biggest in GDP per population. So the only place we have lost is in production of goods.
Today we were impressed that the 4th quarter of 2009 had a 5% growth in GDP. Big deal, over the past two years our GDP went from $17 Trillion a year to $14 Trillion a year. When we go up 5% we get to 14.07 Trillion a year. Big deal! It is still a loss of $3 Trillion, not counting the $10 Trillion in lost wealth, although somewhat a false wealth.
One of the biggest problems with making, mining or growing “Things”, is an unfriendly government. In 1910 we were the friendliest country in the world for business, but now we are 17th among industrialized nations. This is because of rules, regulations and taxes.
is not labor costs.
Rules and regulations have unforeseen consequences. Let me give an example. We have mandated air bags for cars, and these add $3,000 per car to the price of the car. Great idea, but does it work. The cost including other things forces poor people out of the new car market, so they continue to fix their old car or buy old cars that do not have air bags. Because of the mandatory law we may have more unsafe cars on the road now than ever before.
we make a new car now that even the poor can buy? No! Why?
Rules and Regulations! In most
cities it takes at least 18 months to open a new business because of red
You cannot tax business. I have repeated this over and over in Newsletters over the years, but it is as true today as it ever was. This new Health Care bill will tax Medical Equipment and yet the companies who make Medical Equipment are not threatened and the stock is holding fine. Why?
They will never pay one dime. Their profits will even get higher. If it costs them $100.00 to make something, labor, material, shipping, design and promotion. They will add 10% to their costs and make $10.00. If they add $10.00 tax to their costs and add 10% profit, they make $11.00. Who pays the extra $11.00? Not the business, he makes more, but you do.
Production takes money? Manufacturing, mining, drilling, ranching or farming companies (at one time or another) need to borrow money. Sometimes we want to expand but need the money and other times we have a gap between collecting receivables and paying debts. Before this bank crash businesses had a line of credit and could make a phone call to the bank to deposit money for a week or month to carry the pay-role.
Banks make money by loaning money but there is just so much money in the system. Everyone now is blaming the banks for not loaning money, but who is borrowing the money they do have? The government is taking all the money that there is and leaving nothing for the businesses.
Government must borrow money to pay its debt, and they sell bonds for 4.5% interest. The Federal Reserve lends money to banks for .25% interest. A bank can borrow money from the FR for .25 percent and then lend back to the government for 4.5% and make 4.25% profit without investing one dollar of the bank’s own money. Why should they then loan to business?
Every dollar the government takes out of the economy is a dollar that business does not have.
Competing with overseas
does Nike make shoes in
They know that by using automation, the labor costs are not a major expense. But the unions, environmental regulations, corporate and inventory taxes, State business taxes, etc. make it cheaper to make it’s product outside the country.
example, Caterpillar and Boeing are competing well in
can bring all these jobs back to
Understand I do not mind taxing rich people like Gates a high tax, even up to 50% but Gates has not made one penny until he takes money out of his company and for his own use. The money he keeps in the business for future R&D, future product or increasing labor is not profit and should not be taxed. Why do we tax inventory that has not yet been sold?
An educated work force! In many cities across this
once great nation we have a 50% drop out rate from high school. These people cannot read or write and as is
evident cannot even talk correctly. Are these the people who are going to build
In the short run we cannot do anything about this. Most of us know how to fix the education system but before changes can do businesses any good it will take 12 years. In the mean time we must import from the nations that do have a good education system.
I will write about fixing the education and legal systems but for now, we need a quick solution.
must quickly let businesses advertise all over the world for well educated
people and then streamline their citizenship down to days from the years it is
now. With a partnership of business and
government we can up the intellectual power of
At the same time we need to rid this nation of all the illegal and mostly uneducated immigrants in two ways: Pass and finance the National Work ID card, and round up all illegal immigrants and send them home. This was very successfully done before by three presidents.
Back during The Great Depression, President Herbert Hoover ordered the Deportation of ALL illegal aliens in order to make jobs available to American Citizens that desperately needed work.
Harry Truman deported over two million Illegal's after WW II to create jobs for returning veterans.
And then again in 1954, President Dwight Eisenhower deported 13 million Mexican Nationals! The program was called 'Operation Wetback'. It was done so WW II and Korean Veterans would have a better chance at jobs. It took 2 Years, but they deported them all! You will read more of my rampage on this when I write about the sins of my own Catholic Bishops, who are advocating sin.
Pay off all government debts
by lowering tax. Every time taxes go up,
government revenue goes down. How is that?
By taking more of people’s money they have less to build up
is better to have 5% of a million dollars than 50% of a hundred dollars. But no mater how we tax Americans we cannot
pay off 74 Trillion dollars in debt without reducing the size of governments,
state and federal. By doing so we help
business and individuals rebuild their wealth and the productivity of
Sell almost all Federal Property inside
fastest way to cut the Federal Government is what some State Governments are
already doing – Sell unused property. The Federal Government over the past 90
years has illegally confiscated property in the name of conservation and has
never conserved anything. In some mid-west States, like
This is the reason States and private companies who want to drill for oil shale in the mid-states cannot do so. It is said that we have more oil and natural gas on this property than in all the mid-east put together and enough for us to last 300 years. Not only could the government make Trillions of Dollars selling this land to pay off the debt, but because we the people own these natural resources, the government would make a percentage of all the oil, natural gas, coal, gold, silver, gems, and water that comes from using this land to further reduce the debt. When selling it, the government can make reasonable restrictions so that the land is not abused. We do that in privately owned land used for logging.
is a small peace of land in
Between the sale of the property and the percent of mineral rites, we could go a long was in paying of the debt of both Federal and States.
2. Eliminate all capital gains and inventory taxes.
As stated above the best way to bring more taxes into the Governments is to put more people to work. That can only happen if business has a reason to grow - grow from 14 T GDP to 28 GDP. This would add 20% more tax to the government. Everything else would reduce taxes revenue.
3. Eliminate all tax deductions and little by little drop all taxes until we have a flat tax
I would also recommend eliminating all Tax Deductions so that all money taken out of business by millionaires is taxed. This would be the first step towards a flat tax, but would have to come little by little. A flat tax or a value added tax (both good but not together) would eliminate the need for an IRS.
4. Eliminate most EPA laws
Eliminate the Federal EPA. That does not mean to eliminate Environmental Laws, even some by the Federal Government, but it does mean to get rid of the department that does nothing. States can enforce the laws as they do now. States that want to believe in Global Warming, which I think is stupid can do so, and others who do not want to are free of it. On the other hand, pollution of rivers and lakes is usually an interstate problem and belongs to Federal laws, that must be enforced, but by the states. Land and water pollution is a good thing, but air pollution is not a proven science. Even second hand smoke is 99% free of harm, and only 1% harmful to others.
5. Eliminate Red Tap on Off Shore requirements.
that States own the first 20 miles of the ocean and the Federal Government has
control of the other 80 miles, and both can make 20% of the profits from
drilling, why do they make it so hard to drill?
The Chinese are drilling off our shores now. The Russians are about to do it. The Chinese
have made a deal with
6. Eliminate all EPA rules for on shore drilling and oil shale.
for visual pollution of land (which can be minimized) there is no evidence that
drilling does any harm to land, air or water.
The jobs, Taxes and Trade balance can bring a great boom to
7. Sign bill to use Natural Gas for large trucks and start the construction of Natural Gas stations on major highways.
For almost a year now there is a bill before congress that has not even gotten to the floor for vote that would build and infrastructure for natural gas stations and the conversion of all 8 wheel trucks to natural gas, which is far cheaper than petroleum and 30% cleaner. This alone would cut our foreign oil by 30% and create thousands of jobs.
8. Encourage with tax brakes, the instillation of Natural Gas Stations at all gas stations and in homes.
The only logical automobile fuel is Natural Gas, but car companies will not convert which is easy until an infrastructure is in place. Once gas stations have been converted, homes will then be converted to fill cars at home. The real long term future is electric cars that are recharged with natural gas. We will never improve on this system, at least for the next 80 years. This is the bridge to nuclear batteries for cars which have already been developed.
9. Water Systems
One of the great problems of the world now
and in the future is clean water. This problem does not escape American, where
water projects have been neglected for 40 years and more. In
10. Build Nuclear Power Plants
Without costing the government one penny, private industry can and needs to build 30 New Nuclear power plants, which are already in the system for approval.
11. Legal System
Everyone knows that one of the biggest costs for business is the legal system, and most medium and large size businesses have full time lawyers because the legal system is so complicated. I could name a litany of things that are wrong with the system but only two things need to be changed to fix it: 1. Eliminate Precedent Cases, 2. Make the looser of every case, pay all costs – all lawyer fees, all court fees and all awards. I will write another separate Newsletter to elaborate on this.
12. Stop funding Government programs
Most Federal and State continuous programs are not needed. With a new conservative congress but a socialist president we will not be able to close these programs but we can refuse to fund them as Obama did with the National ID card. When the budget comes up for the Federal Education department, just give it $00.00 money. Same with the Energy department, the EPA, and I could name 75 more. On the ones we would keep, we need to fund them item by item and not a fixed amount that they can spend anyway they want.
You will have a hard time believing this but in some States, 45% of their budgets are retirement benefits. This too can be stopped but only by eliminating all government unions and making all retirements a personal thing and not a work thing. You cannot grow GDP, when we give 50% of our production to the government.
will say that
We are still 7th in the world of GDP per person, and Germany is 28th meaning that they cannot produce like we can.
has been said the greatest volume of sheer brain power in one place
"IT IS TIME TO WATER THE TREE OF
“It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world.
“I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.
“My reading of history convinces me that most bad government results from too much government.
“No free man shall ever be debarred the use of arms.
“The strongest reason for the people to retain the right to keep and bear arms is, as a last resort, to protect themselves against tyranny in government.
“The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants.
“To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves and abhors is sinful and tyrannical.
“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.”
“If you don't read the newspaper you are uninformed, if you do read the newspaper you are misinformed.”
“Today, if Dorothy were to encounter Men with no brains, no hearts, and no courage - She wouldn't be in Oz - She'd be in Congress.”
Note: Facts of the Future
One Federal Reserve member just reported that commercial real estate losses could reach 45% this year. That means $1.54 trillion in commercial loans could default, sinking the markets and plunging the economy back into recession.
But there's more. Option adjustable rate mortgages are teetering on the edge of the abyss, with $29 billion recast higher at the end of 2009, followed by another $67 billion in 2010. In fact, Barclays Capital says, "We expect 81% of the option ARMs originated in 2007 to default."
Yet those headlines are buried while Wall Street blares out about corporate earnings that "are not as bad as expected" and "lower job loss numbers" that don't feel very low to me.
And so unsuspecting investors are grabbing up cheap stocks, spurred on by Wall Street, and giddy with thoughts of a new bull market ahead.
But you're about to get a rude -- and costly -- surprise. If you continue down the path Wall Street is leading you on you could lose half your net worth.
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Ideas to Save USA: 5. Get Congress out of DC
Ideas to Save