Even under the motto of "helping
the economy and bursting economic activity", I would be skeptic
and cautious on accolades to popular political moves, when I see that they do not make much
financial sense.
The current problems of the economy are deep. It will
take time to sort them out. Cheap labor from millions and millions of
mainland Chinese might be one of the culprits of our economic problems. We
need to encourage the Chinese to spend more on their development, thus recycling
capital. We need a trade-balanced with that country, and some other
ones as well. And
at the earliest
possible. If everything that we buy these days is going to be made in China, then they will
have
to buy technology from us: airplanes, telecommunication equipment, contracts
to participate in the building of their infrastructure, etc.
The economic downturn -I am afraid- might not go away for some
time. I wish that were not the case. I lost a great deal of money in
the stock market due to this downturn. However, not
paying our national debt, and instead giving tax rebates just because we had a
very good year in 1999, does not cut it! In my opinion, it just
makes things worse. And investors (foreign and national) will be even
more worried and concerned, about our economy.
The present state of
the American economy we all know is not that good. If the future state
were not to be promising, then we are really doomed.
We have a huge debt hanging from our necks, we need to take care of that.
WE NEED FISCAL RESPONSIBILITY, and we need to stop playing election
games!
According to the Congressional Budget Office (CBO) the
surplus that we were going to have during the next 10 years is not going
to happen. The CBO had predicted the entire federal debt would be
paid in 10 years. That was a very optimistic -and irresponsible-
extrapolation based on a couple of years of excellent economic news. Now
they say that the federal debt will increase to $ 4,200,000,000,000
(yeap! $ 4.2 trillion dollars), requiring another trillion in interest
payments. This number is too big to make any sense in most people
minds. Let's divide it by the number of wage earners in America
(around 100,000,000)... now it says that the
American federal debt is equivalent to each American tax-payer owing
$42,000. That is equivalent to a lot of credit cards
max-out to the limit, my friends! Do you see
now why the investors are scared, and the economy is in shambles ?
These
projections are optimistic, and do not include the additional $48 billion
requested for the military and homeland security. It does not include
either a prescription drug program for the Medicare. And it does not
contemplate the $54 billion in tax cuts, scheduled to take effect between
2004 and 2006.
Years ago we also had a huge federal debt (are you
old enough to remember the Nixon/Vietnam days?). But in those days
few countries in the world -if any- could match our industrial and
manufacturing prowess. In 2002 -though- a great deal of our
manufacturing jobs went overseas. And those jobs that have not left our
shores are finding a hard time competing against similar products made in
low-wage countries.
Many of my peers (Plant Managers and Industrial
Engineers) can not find jobs. They are in the prime of their lives,
yet they are fast becoming obsolete, often discriminated by age. And
many white and blue-collar American workers have been displaced
(geographically and professionally). The
base of our economy is moving fast toward "Internet Vaporware" ,
the smoke-and-mirrors stuff (today you see it, tomorrow you don't!).
And this who writes is a Software Engineer, indeed one of the
pioneering visionaries on that field ( for more details please visit www.1stToNone.com/_main_pages/Pioneer.htm
).
Furthermore, on that "Information
Super-highway" field there is a very small "entrance
barrier". Any country can "have a slot, and play". We
will compete with every other country that has people who have brain
power, and most countries have that. Some of those countries have seen
misery pretty close, and they will fight hard. They will see
tremendous rewards to their efforts. We Americans will try hard to
maintain our lead, but no matter what we do we will see the leading gap
becoming shorter and shorter. The same way that AT&T sees MCI
and Sprint getting closer and closer. High-tech pricing will go down
the same spiral as plastic toys did (and not just toys anymore, but all the paraphernalia
of things "Made in China" -or somewhere in Asia- which accounts
for almost everything we buy these days in Wal-Mart, or Best-Buy).
On the software though, the sticker will be "Made in India", or
"Made in Pakistan", or "Made in EEU".
By the way, only 25% of the tax cuts would occur in
2002, yet, all of it will go to the top 30% of income earners, many
of whom have already plenty of toys and households and do not know what to
do with the money. The stock market these days is a "can of
worms", therefore most of the money will probably stay in the
sidelines. Middle and low income earners would have been more likely to
use the tax cuts in ways that would stimulate the economy more. And
it would have been more fair as well. If you have read some of the
factual pages on this site, you will probably agree with me that it is time to
revert the trends in America, and give some relief
to the working family. If it is not money that we could offer, then
it has to be other type of help, such as child care, maternity leave, more
days of vacation with their families, decent health care, ...
As Mr. Alan Greenspan, Chairman of the Federal Board,
has suggested: tax
cuts and other budgetary rules should be made contingent on actual budget
surpluses, and on milestones reached in paying our federal liabilities.
Not too long ago, both
parties had promised not to touch the Social Security surpluses.
But how else can they get those trillions of dollars without causing major
upheaval in the international financial markets? Well, we could
use payroll taxes paid by low and middle-income Americans to finance the
scheduled tax cuts for the 20% wealthiest, whom already amassed as
much income as the other 80% of earners. Where are we going,
America?
It is not good to live at the edge of a precipice.
Because, if something goes wrong (a terrible hurricane, a series of damaging
tornados, or another disaster like the one in September 11) then there is no
slack to move back. And we will move closer to the abysm. For a
robust economy we need to promote investments and more savings (please read my
inedited proposals on capital gains and investments),
and ....
We need to pay our debts, FIRST AND FOREMOST.
And we need watchdogs, to make sure the
National Budget will be balanced. No tricks !!
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