Additional Points

I’ll cover the next three points briefly as there’s not much new to be said about them.

(4) If we do not have a balanced budget amendment then something needs put in place where borrowing and spending is kept within reasonable boundaries.

It is difficult to create black and white rules that work with consistency.  There always seems to be times when rules need to be broken – as Solomon says, “There is a time and season for all things.”

The problem with our economy, and especially the spending part, is that it must be handled with good judgment and our elected representatives have a dismal record beyond what could have been imagined in this category.

We need to do two things to correct the problem.  First, we must change their job description as written about previously. Secondly, an independent body such as The Committee of Twelve mentioned earlier should approve any budget-busting spending.

And finally citizens themselves must serve as watchdogs and let their representatives know the full force of their will and that will is not to spend toward bankruptcy.

(5) Grow the economy through low taxes and business incentives.  A healthy economy strengthens the dollar.

This is a no-brainer and there has been plenty written on this subject.  Unfortunately, the tax and spend crowd just does not seem to understand that infinite taxation is not possible.

More taxation does not mean more corresponding income to the government, as the Left seems to mistakenly think.  There is a percentage point, which if crossed, brings less income and not more.  I have heard of no definitive study that proves what that percentage is but many guess that the rate is around 20%.  In other words, a tax rate averaging at over 20% may bring a diminishing return and is not productive.

In addition to keeping the tax rate low the tax collection system needs an entire overhaul.  Consider this:  The cost each year to businesses for all the accounting and record keeping to comply with the tax system is estimated to be $338 billion for just one year.  That is an enormous sum equal to over $1000 for every man, woman and child.  Add to this the $12 billion (and growing) to sustain the IRS and the lost production due to the diverted capital and energy we’re talking about some big money here. That’s plenty to cover any Social Security, Medicare, health care, or educational shortfall we can imagine.

Supporters of the Flat Tax claim that this would reduce the compliance expenses by 94%.  If this   is true than that alone makes a great case for implementing it.  In addition to saving all that money business owners would have much greater peace of mind since they do not have to place so much attention on pacifying the IRS.

An even more labor saving idea is a national sales tax.  Not only does this eliminate the need of the many billions spent on compliance but it increases the tax base.  Currently there are many who do not pay taxes, or fudge the books and just pay part of them. This not only includes many business and individuals but drug dealers, The Mob, and many others outside the law. With a national sales tax even the drug dealer who declares no income to the IRS would have to pay the sales tax when making a legal purchase.

It is indeed important to overhaul our tax system but we must not let this goal overshadow the necessity of making spending cuts, which are of equal importance.  We must achieve a working balance in both of these areas.

(6) Reduce the trade deficit. We have had a trade deficit since 1975.  Should we be worried?

The problem with deficits is they lead to us becoming a debtor to the nation that holds our dollars.  If we spend $100 million more in China, Japan or the UK than they do here then that nation’s banks will be just sitting on all that cash drawing no interest. This they do not like to do so they will take that money and loan it back to us if we are willing to take it – and we always are. These loans are usually made in the form of buying U.S. Treasury bonds.  They figure it’s better to have these bonds drawing interest than just sitting on the cash making nothing.

If you buy some tires on credit the problem is that sooner or later the tire company will want payment of some kind.  Even so, our debt to China is over a trillion dollars and this gives them a tremendous economic power and advantage over us.  We are in a similar disadvantage to a lesser degree with numerous other nations.

During the past decade our deficit has ranged from around $400 to over $800 billion.  The interesting thing about this is that the average deficit is not that much more than the cost of our oil imports.  If we were to become energy independent then our deficit would be minimal and very manageable.

Doing more manufacturing and developing resources at home could do a lot to solve the problem, but energy is the big item that could reduce the deficit and that is the core of the next point.

(7) Secure energy independence.  This is another no-brainer but the problem occurs in execution.  The Left and the Right have conflicting ideas of how to achieve this.

Helping the trade deficit is just one of the benefits of securing energy independence. There are numerous others.  Among them are:

• Producing most of our energy at home will create many American jobs and reduce the unemployment rate creating more prosperity and a sounder economy.

• It will reduce power from many who wish us harm such as Iran or Chaves from oil rich Venezuela.

• It will remove the securing of oil in foreign lands as an incentive for us to go to war.

• The United States will be seen as less intrusive which would improve our reputation around the world.

With all these potential benefits it is almost criminal that our fearless leaders have not had the common sense to devise a workable plan for energy independence.  One thing we know for sure and that is the mere speaking of words is not enough.  Here are a few we have heard in the past.

“At the end of this decade, in the year 1980, the United States will not be dependent on any other country for the energy we need.”
Nixon 1974 when oil imports were at 36.1%

“We must reduce oil imports by one million barrels per day by the end of this year and by two million barrels per day by the end of 1977.”
Gerald Ford 1975. Oil imports still at 36.1%

“I am tonight setting a clear goal for the energy policy of the United States. Beginning this moment, this nation will never use more foreign oil than we did in 1977 — never.”
Jimmy Carter, July 15, 1979. Oil imports – 40.5%

“While conservation is worthy in itself, the best answer is to try to make us independent of outside sources to the greatest extent possible for our energy.”
Reagan 1981, Oil imports – 43.6%

“When our administration developed our national energy strategy, three principles guided our policy: reducing our dependence on foreign oil…”
George H. W. Bush 1992, Oil imports – 47.2%

“The nation’s growing reliance on imports of oil…threatens the nation’s security…[we] will continue efforts to…enhance domestic energy production.”
Bill Clinton 1995, Oil Imports – 49.8%

Unfortunately, by the time George W. Bush assumed office the rate had hiked to 61% and continued to get worse forcing Bush to act. In 2006 when imports reached 65.5%. He said:
“Breakthroughs…will help us reach another great goal: to replace more than 75 percent of our oil imports from the Middle East by 2025.”

Finally in 2009 when imports had reached 66.2% Obama added:

“It will be the policy of my administration to reverse our dependence on foreign oil while building a new energy economy that will create millions of jobs.”

A couple years has passed at the time of this writing and nothing much has changed.

All of our presidents have meant well, but the lesson we get from them is not how to achieve energy independence, but that words alone without a workable and executable plan is meaningless.

What should we do then beyond just speaking the words – “We must get off foreign oil!!!”  “We must become energy independent!!!”

First we must realize that adding exclamation points to out desires does nothing.  We must have a plan.

A book could be written on a reasonable plan but I just have space here to cover some essence.

The pure essence of our energy policy should be this:

Do everything possible to maximize domestic energy production of current energy products and methods. In addition to this we must encourage practical forms of alternative energy and do what we can to bring forth new energy sources.

It is possible that new energy sources like fusion, or wave energy will be perfected in the next couple years and our troubles will be over but we can’t risk letting down our guard on conventional sources until their replacement is secure.

Right now their replacement is not secure so we must drill for oil, mine coal and build nuclear plants.  The advantages of securing energy from conventional sources far outweighs the disadvantages of discarding them too early.

Without sufficient energy we would wind up polluting our country much more than we would by burning fossil fuels.  If you do not believe me then check out the quality of the environment in third world countries where there is a dearth of conventional energy sources.

Environmentalists do not want us to drill for oil in America because of potential damage to the planet but if we do not get domestic oil then we will get it from some foreign country and that country is still part of the planet.  If we look at the earth as a whole what is the difference between drilling in the United States or Mexico, Venezuela or Canada?

None.

If we can continue to supply the energy we need and advance in technology then we should have viable alternatives to coal (the worst polluter) and oil within 50 years, maybe less.

If we sabotage ourselves and shoot ourselves in the foot by cutting off our energy sources then technology will suffer and it could be hundreds of years before environmentally friendly alternatives are perfected.

In other words, we have to advance to clean energy on the back of not so clean energy.  Sometimes you have to wade through some mud and grime to get to the cleansing current of the river.

Abundant domestic energy is crucial to our economic prosperity and economic prosperity is crucial to achieve a lasting clean environment.

May we follow the sensible path.

 

Read This entire series. Here are the links.

Copyright 2011 by J J Dewey

Copyright by J J Dewey

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7 thoughts on “Additional Points

  1. I had asked for a definition of trade deficits and why anyone would consider trade deficit a bad thing. JJ gave me a fine answer. Basically the trade deficit by itself would not be a bad thing except it leads the country holding the extra money to buy US Savings Bonds and other Treasure Instruments which makes them debt holders. So the real impact of trade deficits is that it encourages countries to buy up US debt. So in itself trade deficits are not bad. But US debt is bad. In fact, the US debt is now so huge that ALL the Income Tax money collected across all of America no longer covers even just the interest on the debt! And that IS bad. Thanks, JJ, for clarifying about the importance of trade deficit and thanks for helping me understand what it is and what it is not.

    Your brother,
    Larry Woods

  2. JJ wrote:
    Right now their replacement is not secure so we must drill for oil, mine coal and build nuclear plants.

    Dan:
    Hasn’t the current Japan crisis has made building nuclear power a lot tougher sell to the masses?

  3. I understand the basics here about you are writing about, but what then is this administration doing loaning $2 billion to Brazil to drill for oil so we can then buy it from them? I read where the leader of Brazil was a marxist guerrilla in her younger days. Is this in line with Obama’s world view as well, to level the playing field so to speak and work toward a one world open society government? Energy is key to growth and development in todays society and yet our fearless leaders appear to be bogged down with other issues. Almost like they are using the magicians slight of hand. May we receive some answers on these questions?

    Matthew

    Sharon asks an interesting question as well.
    Question:
    Obama has been running all over South America. There has to be a
    purpose. Could it be that he is making the final deals on devaluing
    our dollar and is getting ready to implement the Amero, and he is just
    finalizing a few pieces of that transaction? What else makes sense?

    Sharón

  4. JJ Quote from the Archives for Today

    Qualities of the Soul

    “Every living being has a consciousness that it owes to soul energy and has a
    certain frequency. Through soul contact any individual can tune into the
    frequency of any other being. Sometimes we do this without realizing it.

    Many times when people think they are contacting the dead when they are merely
    tuning into the person’s frequency. When an entity’s frequency is contacted then
    one can receive from such frequency – very similar information to that which he
    would receive from the real person.”

    http://www.freeread.com/archives/1720

    Copyright 2010 by J J Dewey

  5. And now a question from your naive brother.

    I don’t understand “trade deficits”. Who owes this money to whom? If I purchase a window from you for $100 and pay you, then our transaction is done. If you then purchase a saw from me for $50 and you pay me then our transaction is done. I don’t owe you and you don’t owe me. The fact that I imported more from you than I exported (trade deficit?) does not mean that I owe you anything.

    So you can see I am missing something here. Something pretty big if the US owes China over a trillion dollars for it. Who owes this money to China? I assume that Walmart and all the other “big box stores” pay as they go just like my example above. If not then China will eventually demand payment and those stores may go bankrupt. Then other stores will arise to take their place and learn from their mistakes. But is there some scenario where our government owes them money? Has our government been purchasing from China while failing to pay? Obviously I am missing something here. Who owes this money to China and what did they purchase from China to evoke this debt?

    Further, if I owe money to someone, there is a contract to account for those transactions. Every contract spells out who pays to whom and for what and further defines when payment comes due. Where is the contract? What terms does it define? We need not wonder when it may eventually come due, let’s just read it and see.

    Now quite separate from any “trade deficit” we see the National Debt. The US borrows money from folks all over the world by selling US Treasury bonds and other treasury instruments. The US borrows money also directly from the Federal Reserve Bank. I understand that many of the bonds and securities are purchased by foreign governments such as China. I also understand that the entire income from Income Tax no longer covers even just the interest-only payment on the national debt. So all the money you pay in Income Tax – not one drop of it goes toward helping anyone who needs help. It does not even cover the interest on the stupid debt our Congress racked up. Should we do something about these irresponsible rascals who created this insane problem? Why do you keep voting in these insane incumbents? Can you not see how stupid they are? My brother, Stu, makes $9/hour working at Walmart. From that meager income which barely keeps Stu alive from week to week, our Congress extracts thousands of dollars per year in the form of Income Tax. They also extract even much more when you count Social Security and a bunch of other stuff. Why? So our Congressmen may squander it? They now take Stu’s money and similar money from every family across America and even that is not sufficient to even service only the interest on the massive debt they created! Our question to every Congressman forever more should simply be, “Did you EVER vote for any spending bill beyond the very most basic operations of government as required by our Constitution?” If the answer is yes, then we should never vote for that asshole ever again. AND EVERY SINGLE ONE OF THEM, with a very few exceptions, DOES NOT DESERVE OUR VOTE EVER AGAIN! Republican or Democrat, Conservative or Liberal, it does not matter. Just only answer this one question, “Did you ever increase spending?” So I understand the origin of the “National Debt”. But that does not account for this other thingy, “trade deficit”.

    Will someone please enlighten me on the terms of this trade contract which evokes this huge debt? Who are the parties? What is the debt amount? How was that debt evoked? When is it due? Exactly what does it pay for? Who signed that contract? Don’t answer with some nebulous ideas. Give me specifics.

    Your brother,
    Larry Woods

    1. Thanks for bringing this up Larry. I rewrote part of the post to clarify. here is the important paragraph:

      The problem with deficits is they lead to us becoming a debtor to the nation that holds our dollars. If we spend $100 million more in China, Japan or the UK than they do here then that nation’s banks will be just sitting on all that cash drawing no interest. This they do not like to do so they will take that money and loan it back to us if we are willing to take it – and we always are. These loans are usually made in the form of buying U.S. Treasury bonds. They figure it’s better to have these bonds drawing interest than just sitting on the cash making nothing.

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