The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.NEW YORK ( TheStreet) -- President Obama wants a big deficit reduction deal -- a long-term solution to the nation's unbalanced finances. Yet, what the president and Republicans propose -- even if both could accept much of what the other offers -- would only delay the inevitable. Like Greece, America's finances will grow worse and worse. The U.S. is suffering from not enough growth. At 2%, GDP is advancing at the pace of worker productivity; hence, jobs creation is near zero, wages declining and tax revenues lag growth in government expenses. The big budget busters -- Medicare, Medicaid and Social Security -- will continue to far outpace GDP and tax revenue. What comes out of budget negotiations could buy time through 2012, but make will make the growth problem worse, not better.
Already, foreign companies, unlike U.S. companies, are not taxed by their home governments on oil they produce outside their home country. If the U.S. follows Mr. Obama's prescription, even more exploration and development abroad will move to competitors like BP and Royal Dutch Shell. U.S. imports from non-U.S. owned corporations will rise, and future U.S. tax revenues will be smaller and budget problems worse. Similarly, all U.S. businesses can receive some tax credit for domestically based production and employment. The president wants that taken from oil companies -- who are also refiners and manufacturers and undertake considerable R&D. Follow that Rx, and future domestic production, employment and tax revenues will be smaller and budget problems worse.
Ever more Americans are employed in tasks that permit folks to work until age 70. Somehow, we have gotten into our heads work is bad for old people -- it's not. A good diet, exercise and work everyday are the best Rx for health and happiness. Readers tell me many blue-collar workers can't work past 60. We can't accommodate the entire retirement system for what is each year a smaller share of the workforce. Instead, find physically less stressful work for older blue-collar workers. Payroll taxes are already too high and destroying jobs. Raising the retirement age to 70 -- then indexing to longevity -- would both make the system solvent and permit some permanent reductions in payroll taxes. Don't expect the president to ask Americans to eat those peas anytime soon. Instead, presidents and pundits will make excuses for slow growth that doesn't have to be. Americans will feast on budget deficits and debt ceiling crises after the next election, and the next, until like Greece, the U.S. finds no way out but default.
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