Ideas to Save America: 4. Double GDP

Richard Salbato

In order to save America we must totally get rid of the Federal debt and the debt seems impossible to pay off.  It gets even harder when there is a large unemployment and when the Gross Domestic Product (GDP) is not going up even if not going down as it is now in Europe.  Income for the Federal or State governments is based on a percentage of GDP.  If we are making more money, the government gets more money to pay off the debt and run the governments. 

The 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 save America from eventual bankruptcy because of its debt, we must cut government spending and increase our yearly GDP – what we produce, which is the only thing that will cut unemployment.

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.

Although 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 America to lay off more people and reduce any planned expansion. 

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

9. Greece, Portugal, Spain and maybe Italy will default on debt OR drop drastically in GDP.

10. The Euro may collapse.  It has already dropped 30%.

11, The Israel – Iran problem will explode sometime this year but at least in 2011. 

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.

When Ronald Regan inherited Carter’s economic mistakes, he was blamed until he fixed it three years later.  When Clinton inherited the great economic growth Regan caused he took credit for it, even though he had nothing to do with it.  When Obama inherited the crash of the economy, however, we continue to blame Bush, even though it was Democrats who caused it.

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.

Fixing America’s Economy

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.

Principle One:

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. 

It is not labor costs. Japan and Germany have higher labor costs than the United States, but they sell more cars than we do.  We have to add $3000.00 per car for health insurance and retirement, retirement of people who are no longer working. 

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. 

India makes a brand new car for $3,000.00.  When Henry Ford first made the Model T Ford, everyone in America could afford it without finance, even the poorest worker, and he paid his workers more than any other company.

Do 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 tape.  In Houston, which has gone from one of the worst cities for business to one of the best,  it takes one day.  Rules and Regulations has driven thousands of businesses out of California and into Arizona, Nevada and New Mexico.

Principle Two:

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. 

Principle Three

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.

Principle Four

Competing with overseas jobs! Why does Nike make shoes in China?  In order for Nike to make shoes in China, it must ship designs, some raw material and manufacturing equipment around the world. They then have to go to China to check quality control before shipping.  Then pay for shipping to send the product back to America and move it from the coasts to all around the nation.

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. 

For example, Caterpillar and Boeing are competing well in America even though their competitors are aided by the governments. Both have said that these new Health Care regulations and the increase taxes that will come in January may drive them out of the country or at least force them to lay off many thousands of workers. Boeing’s competitor (Air Bus) is a joint venture with most European Nations, a government owned company. (Just won a law suit against Air Bus)

We can bring all these jobs back to America simply by eliminating business tax, and reducing the stupid rules and regulations. Some Government regulations are needed but only those that create a fair and equal playing field like in sports. This includes an equal playing field in foreign trade.    

Make America the most business friendly nation in the world again, like it was in 1910. 

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?

Principle Five

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 up America’s GDP back to $17 Trillion and then to $34 Trillion per year?  No! And in most cases you are not going to correct the past problem.  These people are going to be left behind and there is little or nothing you can do about it except make room for them on the farms, in their mother’s basement or in the jails.

Thomas Jefferson said the greatest asset to a nation is an educated people.  We have gone from the greatest educated to almost the worst in the civilized world. 

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. 

Government 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 America now, and work out the educational system later. 

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.

Principle Six 

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 America. The government had more tax income under Regan (low tax rate) than under Carter (high tax rate) because Regan made a bigger pie to take from. 

It 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 America. My goal of reaching $34 Trillion in Gross Domestic Product (GDP) takes cutting the size of government so that we can eliminate the national debt.  We can do this by the following:

1. Sell almost all Federal Property inside America

The 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 Arizona, Nevada, North and South Dakoda, California, Alaska and others, the Federal Government owns from 20% to 90% of these states. 

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.

There is a small peace of land in San Diego country that belongs to Camp Pendleton, a large Marine Base.  This land is about 50 miles of ocean front property between the beach, the rail road, and cliffs.  It was originally used for beach landings but is no longer used.  I have estimated that this property alone is worth a $200,000,000 right now.

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.

Considering 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 Brazil, and we have loaned Brazil money to drill, what environmental common sense does this have. 

6. Eliminate all EPA rules for on shore drilling and oil shale. 

Except 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 America just by accessing Oil and Gas Shale. Canada is doing this and we are buying that oil and gas from them.  Even if it was true (which it is not), what difference is it to GW if we do it or Canada does it and sells to us?   What has more visual and actual land pollution, an oil well or miles of solar panels?

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 California, the garden of America, some farm regions have 40% unemployment and trees that took years to grow are dying off permanently. Northern California has a huge excess of water that is going to waste.  But because of EPA stupidity, this water is being wasted out to the sea. At one time our biggest export was food and it could be again.  But we need to have a national water program bringing water from the north (San Francisco Bay, the Great Lakes, the Northern Mississippi, Canada) and bring it to the south, where the good soil and long hot summers could make us the great exporters again.  With water in the hot deserts we could even grow sugarcane.  Look at what Israel has done. 

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. 

Some will say that Europe is partially socialist and gets along OK.  But that is not true.  Europe is dying.  Last year the four major nations had a decline in GDP from 1% to 3%, and their standard of living has declined because of the high costs of living – they pay 20% sales tax and have a continuous 10% to 20% unemployment.  You also cannot compare Europe to America for another reason – most have no mortgage because they have owned their homes for 10 to 20 generations and have a declining population.  Four of these nations are going bankrupt.

We are still 7th in the world of GDP per person, and Germany is 28th meaning that they cannot produce like we can. 

12. Immigration


One thing about retired people like me is that we spend money in the system but do not take up any job.  We produce jobs.  There are many retired people in other nations that make more money per month than Americans do because they come from very socialist countries.  By proper incentives we could attract these people to retire here, and that will help the economy and sell more homes.  One of the great booms to Panama is retired people from America, Germany, England, France and Canada. We can do the same.


Where I may differ from many conservatives is that I want more immigration and not less, but I do not want illegal immigration. Nor am I willing to reward those who broke the law to get any road to citizenship at all.  I am sick at American Catholic Bishops for promoting citizenship for those who came here through the criminal road. 

I watched this as a child when I lived in a Mexican village in San Diego county, where traffickers made millions abusing immigrants and taking years of their income to smuggle them packed in trucks where some died.  The minute we justify this, we encourage more of it. 

Wake up Catholic Bishops, you are justifying sin for the expediency of filling your pews with numbers. When President Regan gave amnesty for all immigrants (seemed like the moral thing to do), we went from two million to twelve million because the new ones expected that someday we would do it again and again forever. You cannot justify the slightest sin because it leads to bigger sins.  The law of the Church is “You cannot do evil that good can come from it.”

However, we need to open up our immigration because we simply are becoming an old society because we are not having the babies that sustain economics and growth.  To reach 24 Trillion GDP (which is the only thing that can save us), we need more people, and educated people.  If you want to see what reduced population does to a government, look at California. 

No border control can stop these people but three things can:

1. We have already passed the National Tamper-Proof ID Card, but congress has refused to finance it and it has died off. For those who think this is an invasion of privacy, you are blind to the fact that we have no privacy now and we do not need it compared to the benefits we get from knowing who the criminals are and where they are. If we could not hire anyone without this card, millions of immigrants would just go home.

2. All immigrants from anywhere in the world should have to be sponsored by a Business and not a family.  That business would be responsible for bringing them here, seeing to their American education (English, Constitutional Laws and loyalty to America) and their citizenship.  

3. Many large Businesses will set up education centers in other countries teaching them the trade they need and the citizen requirements before sponsoring them to American because of the risk of mistakes.

4. Those here now, could find a business sponsor but would have to leave the country and then come back with the business sponsored paper.

5. Change the minimum wage law to allow deductions in the cost for room and board.  This would allow the average American to afford Domestic Help, and get many people off the streets. Allow farmers to do the same, but regulate the conditions of this room and board.


 Can we double our GDP to 24 Trillion per year?  Yes we can. 


"It has been said the greatest volume of sheer brain power in one place occurred when  Jefferson dined alone..."  John Kennedy        


Thomas  Jefferson: 

"IT IS TIME TO WATER THE TREE OF LIBERTY.  When we get piled upon one another in large cities, as in Europe, we shall become as corrupt as Europe.  The democracy will cease to exist when you take away from those who are willing to work and give to those who would not.

“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.”

Mark Twain:

“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.

Return to

 Ideas to Save America: 1. Line Item Vote

Ideas to Save America: 2. Social Security

Ideas to Save America: 3. Medicare

Ideas to Save USA: 5. Get Congress out of DC

Ideas to Save USA: 6. Repeal the 17th Amendment


Stop Federal Growth Now - Not Later

Predictions and Solutions for America

Science Predictions Related to Politics

A New Contract with America

Getting away with Unconstitutional Laws