I am happy and relieved that you got re-elected. You were the more trustworthy candidate. For these reasons however, I believe your policies are continuing to take us down the road of financial ruin. It’s the same thing that’s been happening for the past 20-30 years, so I don’t blame you.
However we have now hit a point where our debt is so large, our burden so great, that we cannot keep spending borrowed money to grow the economy. The coffers are empty. The Federal Reserve owns almost all debt dated longer then 10 years. We borrow 45% of what we spend. Every man, woman and child would need to dedicate 10% of their income for the next 40 years just to pay off our debt, as it stands today. And that is without accounting for the $1T annual debt increases for the next decade that are forecasted by your office.
You can’t solve this problem by higher taxes. The wealthy already have accounts in the Cayman / BVI / Offshore and they pay 0%. Mitt Romney only paid 14% because he was running for office. If he wasn’t, he’d pay 0% like most other rich people. Raising taxes will only burden the middle-class and poor who don’t have fancy lawyers & accountants to find them loopholes. Raising taxes will also force small businesses to shut down or move offshore. I am an entrepreneur – I’ve built 3 tech companies in the past 8 years. Take it from me that the Effective tax rate (Federal tax, State tax, Local tax, Payroll tax, Unemployment Insurance, Social Security payments, Medicare payments, Mandatory Health Insurance under Obamacare, cost of regulation etc) is already 50%+ today. How much more is there left to take? Do I not deserve at least half of what I labored and risked all to make?
You can’t solve this problem by dramatically cutting spending, as Ron Paul and others have popularized. You know that the special interests will never let you get away with it. They will impeach you, stop you, smear you in any way they can. You can’t cut spending in the areas that matter – Social Security, Medicare, Defense – fast enough for it to matter to our budgetary impasse. In your bones, you know that to be true.
We are bankrupt. We are financially insolvent. Our government accounting is a fraud, not run on GAAP or any other accounting standards. I could write a 50-page report, item by item, on how shady our government numbers are. You and I both know that, although I understand you cannot admit it publicly. If our government was a company, it would be sued by its shareholders for accounting fraud. It would’ve been bankrupt 10 years ago for unsustainable debt burdens by its creditors that could never be repaid. And yet, since you are a government and the world’s reserve currency, you can get away with it, for a while.
Do not forget that the United States has defaulted on its payments twice before – in 1790, and 1933. The United States has had two Federal Reserves that have failed previously (The First American Bank – 1791, The Second American Bank – 1837). A currency crisis in the US Dollar is the next collapse waiting to happen.
So what, then, are our options realistically Mr. President? We need an economy that is growing at 5% or more to manage our debt. And we need to get there without spending any more money. And we have, by my estimates, less than 4 years to do it before s*** really hits the fan and foreign creditors stop buying our bonds altogether. How do we get there?
If I was in your shoes Mr. President, these are the 4 things I would do immediately that will grow the economy by 10%+ in the next 2 years without you spending anything extra:
1. Simplify the Tax Code: The current tax code is 72,000 pages long. Yes, really. Not only is it complex, it is regressive. The rich, because of the complicated loopholes, pay far less than the poor (most rich people I know pay 0%). Get rid of ALL exemptions, loopholes and deductions bar none, immediately. Set a flat tax of X% on all income, for everyone. X% is the amount needed to keep current tax revenues the same, so it won’t cost you anything extra to do. Let’s start with a fair tax plan that is 1-sentence long. You can make the rich pay more later AFTER you’ve gotten them to pay at least the same as the poor. This costs you $0.
2. Make Saturday a legal working day: The Chinese, the Koreans and the rest of the world are beating us because they work 6 days a week, longer hours, and harder than we do. Make it legal for businesses to work 6 days a week instead of 5 without paying overtime. This will allow labor costs to drop 18% since businesses can now get an extra day of work in for free. Our goods will become cheaper, manufacturing more competitive, and we will export more. We’re only going to compete with the rest of the world by at least working as hard as they currently do. This costs you $0.
3. Give Green Cards (Resident Alien Permits) to Immigrants investing $100k or more in US assets: Allow foreign entrepreneurs and investors to get green cards and move to the US by investing $100k in any American asset (business, stock, real estate) for at least 10 years. This will bring (a) A+ talent to the US that creates jobs, (b) much needed capital to prop up the Dollar, (c) reverse falling home prices, (d) increase tax revenues by bringing in more rich people. Currently the bar here to do this is $500k, which is too high for most entrepreneurs. Lowering this will bring in a lot of smart, talented, rich people to the US that you can then tax for the next 10 years. Tens of millions of people abroad still want to move to the US because of the American dream. Lets take advantage of this before our economy and our world image collapses. This costs you $0.
4. Implement and pass the JOBS Act into law immediately: Get the SEC to finish their review in the next 30 days and pass this into law. Don’t wait until 2014. This piece of legislation, spearheaded by entrepreneurs, will allow tens of thousands of new small businesses to get new funding and open shop within months. And both of us know that small businesses provide more than 50% of the total jobs in the economy. This will create millions of new jobs. Wouldn’t you want that as your legacy? This costs you $0.
I understand these things aren’t easy to do, and the political battles will be hard-fought, but ultimately each of these measures will aggressively grow the economy without you having to spend a dime.
Here’s hoping there is still enough wisdom and courage left in Washington to do the right thing before its too late.