Monday, May 4, 2009

Fandango Side-Step

Chris, I think you’re a little guilty of reading between the lines on me. You seem to think I’m bashing the Obama administration in favor of the Republicans: Not hardly, although I can see why you might think that...

1. It is clear, the economy started slowing down last summer. I don’t contribute that solely to small business, but yes, they’re part of it. The monthly single-digit tax revenue losses were a signal ignored by ALL.

2. The *BIG* reductions in tax revenue started in December (check the numbers). That’s after the election. With the euphoria surrounding the election, why did that happen? Once the decision was made, it was time to act on the outcome. Maybe I’m assigning too much ‘credit’ to small business for making moves. If so, mea culpa. (“But, it still moves”).

3. At no point did I assert that if Republicans had won in November, this fiasco would not have happened. That said…

4. I deliberately *did* imply that the Democratic win probably accelerated the process. I’m also stating rather forcefully that the policies being promoted by the PRO’s will likely prolong the recession. Once again, I’m not trying to assign blame for precisely how we got here, but where I see us going will NOT get us out of this mess – and I think that’s the type of discussion you want to have, anyway.

Now, commenting on your “Stark Reasons”:

Point One – Mostly I agree. Yes, the recession was inevitable. I think there has been more to it than simple trade deficits - runaway spending comes to mind, among other things. And please don’t waste time pointing fingers at which party spent the most: Focusing on assigning blame gets us nowhere.

Point Two – I respectfully disagree. Yes, you raise a valid point about “losing out for years”. I agree with that. However, I contend that small businesses *do* make decisions based on their legitimate interpretation of government policy and what it means to their business survival. They delay as long as possible before making that decision, but when it becomes obvious, they MOVE and take action quickly – and the results show up in the economy fast, too.

Point Three - It is hard to argue that based on the announced proposals and policies of the PRO’s that business in general (and small business specifically) have a target painted on them. Whether those policies are proposed by President Obama or a theoretical “President McCain” is not the point.

I’m not arguing about the WHO; it’s the WHAT THEY ARE DOING that is Wrong. Do I want OBAMA to fail? No. Absolutely Not... I WANT THE POLICIES HE IS PROMOTING TO FAIL. (OK. There. That should be clear. You want to “have at it”: Let’s rock.)

First, We’re going to agree that SPENDING is a BIG part of the problem. As far as the current administration - I don’t see any attempt, even marginal ones, to try and rein in the spending. If anything they are SPENDING MORE. This is BAD.

Second: Is *some* spending necessary? Absolutely. But you cannot "spend" you way to a recovery. You must begin by acknowledging that any spending on government programs by government employees, it is an EXPENSE, not INCOME. If a policy does not generate or promote Private Sector revenue - or at least not get in the way of making it possible - IT WON’T WORK in the long run. There is *way* too much pork and unnecessary (so-called ‘discretionary’) spending coming out of D.C., and you can put that 100% at the feet of the PRO’s. And, please remember, whether the Republicans or “President McCain” would have done the same is immaterial.

Third: You mentioned the current administration “are taking some initiatives” – Really?

- Spending Billions of dollars on corporate bailouts which run up TRILLIONS of dollars in U.S. debt. (Where is the exit strategy for this spending? When does it stop?)

- Changing how student loans work (from loans to direct payments)…

- Suggesting criminal prosecution against Bush-era lawyers for ‘interrogation techniques’…

- ‘protecting’ the Health Care proposal from Republican filibuster

Whose head is in the sand when it comes to working on what is Truly Important? In other words, would you please point out these policies and “initiatives" designed to foster and improve competition in the world marketplace? I can’t find ‘em.) Yeah, it's only been "100 days", but you would THINK that he would be focused on the Most Important issues first - and, seeing where the PRO's have been working on - it doesn't look good. What they are doing is like pounding imaginary ants with a banana - no matter how much you enjoy it, it is ultimately messy and unproductive.

Look, even if the economy shows huge gains later this year - I seriously doubt it, but I admit it’s possible - the PRO’s economic policies represent a HUGE shift toward government expansion and intervention. They need TAX MONEY to support all this spending - and all these government contracts and 'new workers' – where are they going to get it? from WHO?

What can be done? (regardless of WHO is in the Oval Office)… Here’s some EASY ones:

1. Suspend ALL Salary Increases (including COLA) for all non-critical, non-emergency federal government employees for the next three years (e.g., military, FEMA, etc., are exempt – this is a cut on bureaucratic / office positions only).

2. Rollback the last TWO rounds of Congressional pay raises.

3. Require that all Congressional and Executive staff budgets be reduced by not less than 10%. Cut the people or cut the salaries, whatever it takes.

(Harsh? Maybe. But those are the kinds of CHANGES that businesses have to make when times get tough…)

4. Suspend all direct payments in “foreign aid” for one year: not just our ‘enemies’, not just our 'friends', ALL of them. While we're at it, send the UN a BILL for the cost of supplying US troops for all these UN 'peacekeeping' tasks. Being the world's policeman has a price, but not just paid out of our pocket...

One more; I'm on a roll...

5. (I call this the “tit-for-tat” rule; wish it was my idea). All imports coming into the US are immediately subject to the “mirror image” of tariffs, fees, inspections, etc., which are applied to US Exports headed to that country. In other words, if you make it hard for OUR products to come into YOUR country, it will be just as hard for YOUR products to come into OUR country. Make it easy for us; it will be easy for you… Translation: Level the Import/Export playing field. (Asia will have a well-deserved fit over this one.)

There you go. Chew on ‘em.

- Steve

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