Editor's note: This is the last of a six-part series by Matt Horween, CPA, FSO (retired). The previous columns were Iran, Pakistan Biggest Threats, Political Class Choking America, Bring the Troops Home, Fix America First and Immigration System Broken.
We already have a structural trade deficit with most countries of the world and we are spending money outside the U.S. at an alarming rate on two active wars and countless military installations worldwide as well as an expanding foreign aid program.
All of this while we and other countries like Spain are in a jobs depression. We are still losing more than 300,000 jobs a month, and Challenger/Grey said recently that layoffs would get worse in the months ahead going into year-end.
Why are companies going to lay off even more people if the stock market is rising and some economic reports are getting better? I think the reason is the Pelosi/Obama factor and the fact that President Obama likes to lecture and bully the business community and anyone else who disagrees with him. Grownups are getting tired of this act.
Here is my list of job killers, and afterward I will list my super job creators.
1. Trying to change our entire health care system during a very deep recession and extending it to illegal immigrants through their U.S.-born children, who of course are U.S. citizens. The plan includes fines or fees or mandates that will hit small and medium businesses hard. Many very small businesses will fire people to stay under some magic number of employees so they will not have to be under the new plan.
Other employers still have no idea what the plan will really look like since no one can tell them or us at this point, and they will just not hire until they have a clear understanding of the plan. In addition, to the direct hit on small and medium-sized businesses, the Pelosi/Obama team wants to tax the so-called rich to pay for a large part of the cost of the plan. The Obama/Pelosi team should table the plan until we have three straight months of job gains. In the meantime, they can continue to refine it and study it some more to be sure it actually will reduce health care costs and not increase them as the Congressional Budget Office has said that it might do.
2. Cap and trade is an unmitigated disaster to implement during a jobs depression since it will raise energy costs on every business except farms, which gain, and some others like oil companies and utilities. It is still not even clear how the program that Pelosi rammed through the House of Representatives will work. One thing is certain, and that is it will make us even more uncompetitive in exports and will cost us jobs and will increase our trade deficit. It is an amazing piece of legislation to push during a jobs depression.
3. EPA CO2 rules that go into effect next year. These rules will also increase the costs to all businesses, but small and medium businesses will feel it the most. It will certainly cost us jobs and make us less competitive like No. 2 above.
4. Taxing the overseas profits of our multinational corporations and limiting the deductibility of expenses incurred in the U.S. that support overseas operations. This little number will cost us many good jobs as many companies will fire their U.S.- based employees and replace them with foreign workers overseas whose salaries and expenses will be deductible. I think that many businesses will opt to change their legal domicile to an overseas location if this provision passes. While it is on the table, it is a job killer.
4. The so-called card check law that would do away with a secret ballot when a union wants to organize a company is a very dangerous antibusiness piece of legislation. The proposed law has a mandatory binding federal arbitration feature as well. This feature requires that if the new union and management cannot come to terms, then a federal arbitrator will set the wages and working conditions for the business. If this happens, many small- and medium-size businesses will not have the resources to fight the union, and many will not survive. Chrysler and GM set the template for what will happen if the Congress and President Obama pass this law. The union and government will end up owning the company after the government and the unions drive the company out of business. This law will make us more uncompetitive and raise the costs of production, which will increase inflation, and increase our trade deficit at the same time until imports replace the company's former production.
5. The Pelosi/Obama team wants to let the Bush tax cuts expire to help balance the budget while they spend more and more money. Many economists agree that increasing taxes during a severe recession is a bad thing and will lead to lower economic growth.
6. President Obama wants to grant amnesty to 12 million to 20 million illegal residents of the U.S. as soon as possible without regard to the jobs depression or anything else that might be happening. The granting of amnesty will certainly lead to a huge increase in the number of people officially unemployed and will put downward pressure on wages for many Americans. I think we can grant amnesty to people who can speak, write and read English, and maintain wages if we put my plan into effect as stated below.
8. We should end our wasteful ethanol subsidy program and allow Brazilian ethanol, which is made from sugar, enter the U.S. without a massive tax. Ethanol made from sugar is economically feasible while ethanol made from corn is not, and the program drives up food prices. In addition, because corn ethanol subsidies at the state and federal government levels, a lot of farmland is coming out of the land bank to be planted in corn. We might cause another Dust Bowl if we keep taking land out of the land bank and planting corn post to post. We could use the ethanol issue with Brazil to allow our products into Brazil without tariffs.
My solutions include delaying a vote on the Pelosi/Obama programs listed above until Congress and the American people can analyze and debate them in public, and not before we have three consecutive months of job growth. I am suggesting a realistic policy that any prudent government would take at this time. However, we live in a country where the legislators do not really debate the new laws in public and the legislators do not even read or understand the laws before voting on them. Therefore, the chances of any Congress or president to create good national policies is severely limited because the lobbyists write most of the legislation and the legislators just vote as they are told to vote.
1. Cut back 50% on all foreign aid, reduce our contribution to the U.N. to 5%, and make the richer countries of the world, some of which were not independent when the U.N. was created, take on some of the load. I can assure you that the U.N. will conduct its operations more efficiently if this happens. Redirect all the savings from foreign aid cutbacks into physical infrastructure in the U.S. and college scholarships for American citizens.
2. We can reduce our balance of trade and current account deficits by huge amounts if we convert all of our vehicles to an interim and abundant fuel that we have right here in the U.S.: natural gas. Battery power is not a good solution because manufacturing and disposing of batteries, as well as creating the electricity for recharging them, cause pollution. Nothing in life comes free. Cap and trade kills jobs, as has been proven in Spain, which tried it and where unemployment now stands at 18% because they lost two regular jobs for each green job they created.
Natural gas is a gift from heaven that can be used as a massive jobs creation machine. It also reduces pollution. Think of how much we could cut pollution if we eliminated the use of all the heating oil now used to heat homes and businesses and heat water. We have the natural gas to accomplish this and much more. We have enough natural gas to convert all of our coal-fired electric power plants. We should follow the lead of France and eventually get 90% of our electricity from nuclear power, and we must start to reprocess commercially spent nuclear fuel as the French do. This would help solve our nuclear waste disposal problem.
We need to power all of our vehicles using natural gas in order cut pollution and to reduce our trade and current account deficits. We will need to build pipelines to every existing gasoline station. This will create millions of new jobs.
The way we can accomplish this would be to drill aggressively for natural gas on all our coasts and in the interior of our country and to construct pipelines and feeder lines to every street and existing gas station in the country. We would convert or replace all furnaces for heating that now use heating oil along with all water heaters and try to switch all coal-fired electric power plants to natural gas. The coal industry could then export all the coal we now use. (Among the companies to consider if natural gas usage becomes more prominent are
3. Install solar electric panels on every roof in the U.S. The federal government would issue solar panel bonds and would then use the money to fund the purchase and installation of the panels, with 25% of the power sales going to the owner of the building and 75% to the government to pay off the bonds. If the sale of electricity were not sufficient to pay off the bonds, then the federal government would have to make an appropriation every year to make up the shortfall. Solar panels degrade over time, and science will develop better technology to replace the initial panels. The solar panel part of the plan will create millions of new jobs and a much cleaner environment.
Between nuclear power, solar power, natural gas replacing coal-fired power plants and gasoline and heating oil, our asthma rates and other respiratory illness rates should decrease dramatically, and we should see a huge reduction in smog.
4. Natural gas costs much less per mile than gasoline does. I suggest that the federal government impose an equalization tax on natural gas used as a vehicle fuel to fund the maintenance of infrastructure and the creation of new infrastructure. I would like to see the construction of several high-speed railways. In addition, we should use some of the infrastructure money to fund basic research in alternative fuels.
Here are my proposed high speed rail routes:
- Boston to Miami
- New York to Chicago to Los Angeles
- San Diego to Seattle
- San Antonio to Chicago
- Jacksonville to San Diego
5. After we have developed a smart grid for electric power and switched to cleaner sources of energy, we could start to dismantle some of our hydroelectric dams that have had unintended negative environmental consequences.
6. The last part of my plan is a real shocker. I suggest that we use our now obsolete refineries to export heating oil and gasoline to the rest of the world and to become a net exporter of petroleum products including crude oil. This will help with our trade deficit and our current account deficit.
In closing, I want to say that all of the above is possible. The plan will result in better air quality and tens of millions of new good jobs that will last for several generations. The jobs cannot be outsourced. The plan will solve our angst over the illegal aliens and future immigration as well. The U.S. will emerge in 10 years as again the most powerful country on earth economically and militarily. We will have fixed America together, and we will be healthy, wealthy and wise together.
One last thing, I would abandon new wind power. Wind mills kill birds and are unsightly; they make noise and require lots of maintenance; and they are located in remote areas, which requires unsightly transmission lines.