On March 14, 2013, Eric Pianin and Josh Boak write in The Fiscal Times:
The release of the Senate Democratic budget Wednesday afternoon initiated
another bruising battle over the economy – pitting the long-standing Republican policies of cutting the Federal budget against renewed efforts by Democrats and the Obama administration for additional government stimulus.Republicans are betting that a restless public will cheer their call for a balanced budget in ten years and a dismantling of President Obama’s signature achievements in health care and financial reforms. Democrats are gambling they can sell a more complex approach of strategic program cuts, $1 trillion of additional new tax revenues over 10 years, and increased domestic spending to provide another boost to the economic recovery.
The Democrats’ new budget – the first they have promulgated in nearly four years — calls for $100 billion of fresh economic stimulus initiatives for job training and repair to roads, bridges and school, projects that they say they would be easily paid for by ending tax loopholes that largely benefit the rich and corporations. Their estimates assume $1 trillion in new revenues from weeding out those loopholes in the federal tax code.
“Millions of workers continue struggling to get back on the job; middle class families are still having trouble keeping their heads above water; and we have some very serious challenges when it comes to our medium and long-term deficit and debt challenge,” said Sen. Patty Murray, D-Wash., the new chairman of the Senate Budget Committee, in outlining her proposal.
“The highest priority of our budget is to create the conditions for job creation, economic growth and prosperity built from the middle out, not the top down,” Murray said.
By contrast, Republican House Budget Committee Chairman Paul Ryan favors $4.6 trillion of long term spending cuts, eliminating Obama’s health care reform, overhauling and downsizing Medicare and Medicaid and cutting tax rates – even though many of these austerity measures could stifle an economic comeback. Despite the encouraging jobs report for February, the labor market is far weaker than it has been at similar points following previous recessions.
Ryan’s plan extends all of the new tax revenues from Obamacare and this year’s fiscal cliff deal yet chops hundreds of billions from federal spending each year. Ryan argued that balancing the budget in ten years is critical to putting the economy back on a “path to prosperity,” even though the markets have yet to register concern about the $16.6 trillion national debt.
Before meeting with GOP lawmakers, Obama was much more dour in an interview with ABC News.
“Ultimately, it may be that the differences are just too wide,” the president said. “It may be that ideologically, if their position is, ‘We can’t do any revenue,’ or, ‘We can only do revenue if we gut Medicare or gut Social Security or gut Medicaid,’ if that’s the position, then we’re probably not going to be able to get a deal.”
This is the wrong approach in both proposals.
Our economy’s recovery is impeded by structural factors whose components are not susceptible to a Keynesian diagnosis or to a Keynesian remedy such as strictly more stimulus financed by debt without stipulations as to who owns the resulting new productive capital output capacity. Structural changes have been exponentially occurring in the U.S. economy due to tectonic shifts in the technologies of production. We suffer a demand shortfall because the base of “customers with money” is being depleted because of these tectonic shifts, large-scale offshoring of jobs, decline in the demand for low-skilled workers, skill inadequacies, broken and/or outdated infrastructure and the impact of rising fossil fuel energy costs not yet off set by sustainable, renewal clean energy production. Structurally, the shortfall in aggregate demand is due to the exponential disassociation of production and consumption, and the reason that ordinary citizens must gain access to productive capital ownership to improve their economic well-being and become “customers with money” to support the full potential of the future economy. Yet ownership of productive capital is never discussed out in the open and addressed as an issue in the national media or by academia or our elected governmental representatives. Without a policy shift to broaden productive capital ownership simultaneously with economic growth, further development of technology and globalization will undermine the American middle class and make it impossible for more than a minority of citizens to achieve middle-class status. What is needed are various kinds of targeted public investment spending that simultaneously expands private ownership of productive capital formation and creates “customers with money,” not simply aggregate demand financed with debt that benefits only the few who already own America.
The purpose of production in a market economy is the consumption of products and services by the consumers who make up the economy. But without income, the non-capital ownership class, the 99 percenters, cannot afford to purchase the products and services they desire. But when incomes rise among consumers who have the need and desire to improve their material standard of living, the market demand for products and services strengthens, which in turn increases production and results in a growth economy.
You can’t have mass production without mass human consumption. It is the exponential disassociation of production and consumption that is the problem in the United States economy, and the reason that ordinary citizens must gain access to productive capital ownership to improve their economic well-being and consumer earning power.
The ONLY viable solution to the economic decline of America is for our leaders, academia and the national media to recognize that all individuals to be adequately productive cannot do so when a tiny minority (capital owners) produce a major share and the vast majority (labor workers), a minor share of total output of the economy’s products and services. The system must be reformed to create a world in which the most productive factor of the FUTURE—physical capital—now owned by a handful of people––is owned by a majority—and ultimately 100 percent—of the consumers, while respecting all the constitutional rights of present capital owners.
A balanced Just Third Way approach to building a FUTURE economy that supports affluence for EVERY American is presently not in the national discussion. It appears that the President of the United States, the elected Congressional representatives and Senators, academia, and the media are oblivious to this principled solution that has the ingredients to power economic growth at double-digit GNP rates.
This goal requires investment in FUTURE income-producing productive capital assets while simultaneously broadening private, individual ownership of the resulting expansion of existing large corporations and future corporations. Not only is employee ownership the norm to be sought wherever there are workers but beyond employee ownership the norm should be to create an OWNERSHIP CULTURE whereby EVERY American can benefit financially by owning a SUPER IRA-TYPE Capital Homestead Account (CHA) portfolio of income-producing, full-voting, full-dividend payout securities in America’s expanding corporations and those newly created to produce the future products and services needed and wanted by society.
If I were in a position of influence, I would reach out to President Obama and the leadership of his Organizing for Action as well as to other political leaders, and call for them to convene a national discussion using the national media and social media, and our educational institutions, to open up a discussion on EVERY CITIZEN AN OWNER opportunity. We need fresh and inspired leaders who can educate on this issue at this time because academia, the media, and our so-called leaders are not addressing how people make money and the significance of OWNING income-producing productive capital assets. We need to get people to understand that as with today, in the FUTURE we will continue to experience tectonic shifts in the technologies of production, which will destroy and devalue jobs. This is a crucial understanding because at present for the 99 percent of the nation a JOB is the ONLY source of income to support themselves and their families. We need political leaders who will commit to a government policy focus on OWNERSHIP CREATION, not JOB CREATION, which will result and naturally follow as the economy revs up to double-digit GDP growth and fully applies technological innovation and invention to shift from unnecessary labor toil to human-intelligent machines, super-automation, robotics, and digital computerized operations. The Federal Reserve to stop monetizing unproductive debt, and begin creating an asset-backed currency that could enable every child, woman and man to establish a Capital Homestead Account or “CHA” at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. Steadily over time this will create a robust economy with millions of “customers with money” to purchase the products and services that are needed and wanted.
Our leaders need to put on the table for national discussion this SUPER-IRA idea and the necessary reform of our tax policies that would incentivize corporations to pay out fully their earnings in the form of dividend income and issue and sell new stock to grow. The CHA would process an equal allocation of productive credit to every citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets,
The shares would be purchased on credit wholly backed by projected “future savings” in the form of new productive capital assets as well as the future marketable goods and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy.
Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance (ala the Federal Housing Administration concept), but would not require citizens to reduce their funds for consumption to purchase shares.
Essentially, the pressing need is for everyone in a position of influence to encourage President Obama to raise the consciousness of the America people by making his NUMBER ONE focus the introduction of a National Right To Capital Ownership Bill that restores the American dream of property ownership as a primary source of personal wealth.
This is the solution to America’s economic decline in wealth and income inequality, which will result in double-digit economic growth and simultaneously broaden private, individual ownership so that EVERY American’s income significantly grows, providing the means to support themselves and their families with an affluent lifestyle. The Just Third Way Master Plan for America’s future is published at http://foreconomicjustice.org/?p=5797.
Support the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm
