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November 10, 2016

Some ideas about how to fix America

The Problems

The election showed that large portions of the American public are unhappy with our economy in the wake of the great recession. (To put it mildly.)  The main problems:

  • Not enough good jobs
  • Downward mobility for blue collar workers
  • Only three segments of American society are holding their own economically:
    • The poor: helped by food stamps, SSDI, Medicare, ACA subsidies, etc.
    • Unionized government workers (lavish pensions, job security, little accountability)
    • The rich (benefiting from globalization, ZIRP inflating asset values, the carried interest loophole, etc.)

Some Possible Solutions

We need a bundle of policy choices that encourage employment and domestic economic growth. Here are a few, though there are many others:

  1. Make it cheaper to hire workers by eliminating employment taxes (FICA, FUTA, employers’ SS contributions, Medicare tax.) Replace the $1.1 trillion in lost Federal revenues by instituting a national VAT of between 10 and 15%.
  2. Lower corporate income taxes to internationally competitive levels and allow US corporations to repatriate the $1+ trillion in foreign earnings without tax penalties
  3. Stop the war on the oil & gas industry, allowing the good, high paying jobs in this sector to multiply
  4. Sharply increase infrastructure spending but preempt state and local rules that make public construction so costly and slow. (No union mandates, small business or minority set-asides, faster planning and environmental approvals, limits on litigation.)
  5. Fix the ACA by including real cost reduction measures like eliminating malpractice lawsuits and creating medical review boards to compensate injured patients and penalize bad care providers. Allow low cost, catastrophic coverage plans and inter-state marketing of insurance plans.
  6. Eliminate government defined benefit pensions and replace them with pay-as-you-go 401k plans that are fully vested and portable. Provide Federal support to allow the States and municipalities to finance the (huge) transition costs.

There are a lot of other pro-growth ideas out there.  We need to start exploring them ASAP.

November 10, 2016 at 05:35 PM | Permalink

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