On December 7, 2012, Travis Waldron writes on ThinkProgress.org:
Yet another report has found that the spending cuts pose a major threat to economic growth, while small revenue increases won’t.
The study, from the International Monetary Fund, found that the negative impact of spending cuts during economic downturns in the United States are “statistically significant and sizeable,” while the impact of new revenues is “very small and not significantly significant.”
For each dollar of spending cuts during an economic downturn, the IMF found, the United States could lose as much as $1.80 in economic activity. A one percent rise in revenues, meanwhile, would shave just 0.1 percent of growth from the nation’s gross domestic product (the left side represents the effect of spending cuts; the right, tax increases)
This is more of the same advocacy for more stimulus via taxpayer government spending fueled by incurring more national debt, without the stipulation for broadening ownership of the resulting productive capital assets created as a result of economic growth.
Former Reagan adviser Bruce Bartlett also is advocating more stimulus without tax rate cuts, but as with American economist Paul Krugman and Australian economist Steve Keen he does not address the issue of OWNERSHIP CONCENTRATION and discusses national debt without ANY stipulation of new OWNERSHIP CREATION. Thus Keen fails to address the issue of Who Should Own America. Keen does acknowledge that government stimulus via debt is crucial to further economic growth, but does not address who will benefit in terms of ownership creation.
Bartlett states “Republicans have talked themselves into believing that that the only thing that matters to a business is its tax rate and that its sails, its customers and things of that sort are irrelevant. And that’s absorb!”
Paul Krugman states “…despite years of warnings from the usual suspects about the dangers of deficits and debt, our government can borrow at incredibly low interest rates — interest rates on inflation-protected U.S. bonds are actually negative, so investors are paying our government to make use of their money. And don’t tell me that markets may suddenly turn on us. Remember, the U.S. government can’t run out of cash (it prints the stuff), so the worst that could happen would be a fall in the dollar, which wouldn’t be a terrible thing and might actually help the economy.”
The result is deficit financing and ever-growing national debt prop ups the economy in the name of JOB CREATION. The national debt that appears to be never-ending will never be paid down to elimination under current Democratic and Republican leadership. The system must be reformed to eliminate deficits and reward growth. At present, further borrowing, even at 0 percent interest, will ONLY work if new OWNERS of the productive capital asset growth are created. Neither Keen or Krugman address this scenario.
What is required is to focus on OWNERSHIP CREATION with respect to the formation of new non-human productive capital assets as a means of realizing economic growth and enriching EVERY child, woman and man through capital ownership. As tectonic shifts in the technologies of production march on jobs will be destroyed and degraded due to the injection of human-intelligent machines, superautomation, robotics, digital computerized operations, etc. in the processes that produce our products and services.
The following is a Letter to The Washington Post from my colleague at the Center for Economic and Social Justice (www.cesj.org) that I think is pertinent to this thread discussion:
Letters
The Washington Post
1150 15th Street NW
Washington, DC 20071
Letters@washpost.com
Dear Sirs:
George Will raises important issues in “Bewitched by Obama” (The Washington Post, 12/06/12, A19), but misses the point, compromising fatally on principle. The goal is not deficit reduction, but elimination. Obama is not responsible for the deficit, nor the size of it. The system encourages deficits and penalizes growth. Republicans offer a stopgap. Democrats offer more debt.
A way to balance the budget and pay down the debt is to implement “Capital Homesteading.” According to the Coalition for Capital Homesteading (http://capitalhomestead.org/), the Federal Reserve should stop monetizing government debt, and start funding private sector growth — but only if everyone shares in that growth as owners of the new capital.
To encourage financing in ways that create new owners, dividends should be tax-deductible at the corporate level, but treated as ordinary income at the individual level, along with all other forms of income, including inflation-indexed capital gains. All personal taxes (including FICA) should be merged into a single rate levied on all income above a meaningful exemption large enough to cover ordinary living expenses, including education and healthcare, possibly $100,000 for a family of four.
Most important of all, everyone should have a “Capital Homestead Account,” a “Super IRA,” in which dividend-paying shares can be acquired on credit on a tax-deferred basis, repaid using the dividends on the shares, which can thereafter be used for consumption.
Yours,
Michael D. Greaney, CPA, MBA
Director of Research
Center for Economic and Social Justice
http://just3rdway.blogspot.com/
