On the Deficit

The deficit will be one of the major problems facing the United States as China becomes the largest economy in the world.  The US has been acting like an irresponsible teenager with a credit card who has run up a big debt and wants to just pay the minimum balance.  The US should make it a priority to pay off the deficit.  Yes, this will be painful but it is needed.

Many in the TEA party are calling for this but the main idea of the TEA part (Taxed Enough Already) is flawed.  Paying off the deficit will require us to increase taxes.  It will also require cutting back on expenditures especially the military.  We will also have to cut back on government spending for social security and medicare as unpopular as that sounds.  The least painful way to do this is to increase the retirement age.

Both democratic and republican administrations have voted for the huge deficit we are faced with now. It will be up to all Americans to accept the responsibility to pay off this deficit.  The Baby Boomers have been the most selfish of all generations.  If we fail to pay off this deficit then future generations will look back at us as the most irresponsible of generations.

On Corporate America

I think if your company still has its first CEO he or she is probably doing a good job.  By the time you get to the third CEO of a company they are most likely a crony of the board of directors.  They come in and looking at the costs of the company, see that employees are one of the major ongoing capital expenditures, so they have a layoff that makes them look good.  After a couple of years they leave with a golden parachute taking millions in bonuses.   Those bonuses could probably have provided the salaries for all the people who got laid off.

The most important societal contribution of a corporation is to provide employment for its employees.  Making a profit for its investors has very little benefit for society.  Many companies lose sight of the significance of paying their employees a good wage.  They just see it as a capital expense.  What they often fail to realize is that by paying their employees a good wage they will earn enough money to buy the company's products or buy products from someone else that can then afford to buy the company's products.

It may seem at first that outsourcing or offshoring make economic sense for a company because the can get the work done cheaper in another country.  This may be true if only a few companies do this.  If all the companies do this and the primary market for the product is in the US then the consumers will eventually no longer have enough money to buy the products anymore.  If everyone outsources work then the US loses in the long run.

On Taxes

I hear a lot of complaints about taxes:  Taxed Enough Already!  This statement is ridiculous.  Taxes are lower now than they have been for 30 years.  Besides we get many benefits from our taxes including roads, public education and social services.  The spending of these public dollars is open to public scrutiny so the dollars are rarely wasted.

There is no direct public oversight on the behavior of companies.  Even investors have become disembodied mutual funds with money drawn from 401k accounts so that nobody has any real oversight over a particular company.

Compare this to corporations where they routinely waste money.  Much of this money is wasted on executive salaries.  Corporate CEOs are receiving most of their salaries as capital gains.  Since the capital gains tax was lowered this results in corporate executives paying a much lower percentage of their income in capital gains than most American workers.

Everyone is concerned about the national debt but know one wants to do anything about it.  At one time I thought the republicans were interested in fiscal responsibility.  Reagan proved this was not the case.  He just ran up the debt spending money on building up the military rather than on social or scientific programs.

So now we are faced with a massive debt and neither the democrats nor the republicans are willing to raise taxes to deal with it.  The solution will have to involve raising taxes as well as adjusting entitlements.  People will not be able to retire at age 65 and go on without working.  Retirement age will have to be increased.  Taxes will have to be increased particularly on corporate executive salaries.  Military spending must decrease substantially.  We should not be considered the police force of the world.