way to recover from the mess they’ve gotten us in. But one thing is for sure, we’d better address how to pay down our debt because even a stabilized economy isn’t enough at this point; meaning even if we improved our economy and created more jobs we could still crash if we don’t get our debt paid down soon.
Keep in mind it’s not good enough at this point to balance our Federal budget because we need a surplus to pay down the debt; instead were spending more than we’re taking in so our debt is increasing not decreasing. So when you hear politicians brag about creating a balanced budget know it’s a necessary step in the right direction but it won’t save us from an economic collapse.
I would like for you to consider a few things anytime you hear about various economic plans. First of all, collecting more taxes does nothing but throw good money after bad. It doesn’t help our
economic recovery it just keeps politicians from cutting the budget; basically we’ve become enablers to their spending addiction and it’s time for an intervention.
How can we possibly stimulate our economy by giving our money to the government who then turns around and gives the money to someone else? Think about it; what would happen if you gave $100 to your neighbor? Your neighbor will use the money just like you would've like buying
gas and groceries so where’s the stimulus? The only thing that happened was you got negatively impacted. I’m absolutely shocked and scared quite frankly that Obama was able to sell this idea to voters. And did Obama’s stimulus plan work? No. All that happened was money was moved around (a.k.a. redistributed) and in some cases moved to companies that went bankrupt so people didn’t gain jobs they lost them. Bottom line, no stimulus plan is a good economic solution.
We need to keep in mind that giving more money to our Federal Government doesn’t grow our economy but allowing citizens to keep more of their money does; it’s that simple. The fact is most people aren’t good at saving money so they spend it which grows our economy and increases tax revenues at all levels of government (i.e. city, county, state, Federal, etc.). The Federal government is terrible about spending money; they buy votes with it and they waste it. Think of the Federal government like a son who is caught up in using drugs. We wouldn’t want to continue to give our son money because we know it won’t be spent on the right things. Our Federal
government is a userwho needs their money taken away.
Do you think any of the money you send to Washington ever makes its way back to you? Practically every piece of legislation proves that it isn’t the case because politicians send our money to areas with more political clout like California, Ohio, and New York. If you think about it we’re actually donating money unknowingly and unwillingly outside of our communities. Stimulus plans don’t’ help us they hurt us; well unless you live in places like Detroit and San Francisco where stimulus packages are a windfall. The bottom line, please fight tooth and nail to prevent any
tax increases on any income bracket and instead force our politicians to cut the Federal budget down to the bone.
Politicians need to respond to this financial crisis just like you or I would. When were struggling financially we cut non-essentials out of our budget. My guess is if you were really hurting for
money you’d keep your cell phone but you’d drop internet service until you got back on your feet. If you were using a lawn service you’d probably stop and start mowing your yard yourself. This is called being responsible which is exactly what our government isn’t. They’re like a little kid who is spoiled rotten.
Why in the world doesn’t our government do the same things we do to get back on our feet? To me it just goes to show how ineffective they are. Our representatives aren’t addressing one of our greatest concerns as citizens and that’s to have economic security. In the business world if someone isn’t cutting it they’re fired; instead most politicians get re-elected. It begs the question, what’s wrong with us?
Keep in mind that while paying down our debt we won’t necessarily stimulate our economy but it will help prevent a depression. Most of us don’t spend a lot of money when we’re busy focusing on
paying down our debt. But once we’ve paid down things like credit card bills we end up with more money to spend because we’ve reduced our interest expenses.
A good example of the benefit of paying down debt is when someone pays off their mortgage early. A home that costs $200,000 in the end could cost the buyer $450,000 because of interests. In this case if they paid more than their expected mortgage payment they’d pay down their debt faster and pay much less for their home. They’d also increase their cash flow sooner. It works the same way in government; they need to pay down debt in order to reduce the cost of our loans to other countries so we can improve our cash flow. Paying down debt isn’t a quick fix but it’s a critical one.
Debt reduction will help keep our economy from crashing but it won’t solve our need for economic growth and more jobs. We’re in a real catch 22 right now because jobs are created when businesses gain incremental sales but as it is now most people don’t have extra money to spend
especially those living paycheck to paycheck and certainly not those 23 million people who are out of work or underemployed.
We’re in a mess with no good solutions at this point so I decided to analyze various approaches we could take and came up with a few ideas that in my opinion would help. Now you’re probably thinking at this point how John could possibly come up with a plan that expert economists
haven’t; hang in there and you’ll see why.
Our best chance of turning our economy around expeditiously is to attack our trade deficits. For example we have a $600 billion dollar trade deficit with China (growing at 23%) and if we would address this deficit we’d create over seven million jobs (I calculated this using a variety of factors like average salaries and benefits, support personnel like human resources, etc).
One of the main reasons this would be so effective at stimulating and sustaining our economy is that the problem I mentioned above regarding the Catch 22 were in would no longer be an issue. If our citizens don’t have the money to spend then we need to change the way we approach trade.
There are two major reasons we have struggled when it comes to our imbalance of imports and exports. Countries like China have a major cost advantage over us because our salaries are substantially higher than theirs. With this in mind they offer us lower priced goods and we gladly buy them. But the good deal we get in buying an inexpensive product from China is truly costing us jobs. I’m going to mention this one more time because I think we’ve become desensitized over the years: every dollar we spend on products manufactured outside of the U.S. eliminates American jobs.
It doesn’t take a math genius to figure out there’s a direct correlation between our increase in unemployment and China’s increase in sales to the U.S. We can point at Washington all we want but what about our responsibility as U.S. citizens to do all we can? The truth is we can fix things without our Federal government’s help. I don’t know about you but I feel like every time the
government tries to help me I take a hit in my wallet.
This is a sensitive topic for a lot of people but it has to be addressed. It’s easy to feel good about buying foreign vehicles when they’re made in the U.S. but we shouldn’t if we care about our
economy. There’s no doubt it helps when foreign companies manufacture their products here but profits go back to their foreign corporate offices providing jobs in accounting, building maintenance, human resources, information technology, janitorial services, office personnel, etc. If we bought vehicles from U.S. manufacturers we’d get these particular jobs back and those people
with these new jobs would help grow our economy not the economies of places like China and Indonesia.
Think about it, there’s no way we can force other countries to change the way they do business. We can certainly be more aggressive at preventing them from stealing our patented technology but we can’t force them to raise their costs. Their citizens are willing to work for much less than we are and that’s not going to change anytime soon.
So in my opinion the greatest way to create jobs, grow our economy, and increase tax revenues is through purchasing goods and services from U.S. businesses. This is the only thing we can do to
drastically and quickly improve our economy. My company strongly believed in focusing our efforts on those things we could control/change and this is exactly what we need to do. The only thing we can control in this situation is our spending habits. This is how we’ll turn things around and the good thing is we can start making a difference immediately.
You might be asking yourself why our Federal government isn’t pushing this idea. Their rationale isn’t a good one in my opinion but it’s understandable because of international politics. When it
comes to trade relations there’s always a concern about protectionism. Meaning in a free trade agreement a country isn’t supposed to push their goods over the country they’re trading with and they’re not supposed to impede the other country’s sales through unfair import taxes. This is why our Federal government is afraid to push the agenda that I’m suggesting; it’s too sensitive an issue because anything we do could be used against us. Meaning if we increased import taxes they’d just turn around and do the same thing so nobody wins.
The reason I think our Federal government is missing an opportunity is there’s nothing in our trade agreement that reads our country can’t recommend we purchase U.S. products. We can’t force the issue but recommending it isn’t a problem. There’s nothing in our agreements that states we can’t educate our citizens on what happens to our economy when there’s a trade imbalance. There’s nothing in our treaties that states we can’t educate our citizens on the economic impact of buying foreign goods. These are the things we could and should be doing. A junior high school student could easily understand these economic issues if explained properly. It wouldn’t even take
long to do it. Hopefully I’ve been able to explain it to you decently in around six minutes.
Lastly, let’s say we make a trading partner mad; China for example. If they don’t want to do business with us they would lose over one trillion dollars in sales which there’s no way they would ever allow to happen. The fact is our trade deficit with them is so bad now that we’d actually improve our economy if we stopped doing business with them. We should also use our significant purchasing leverage at this point to stop them from stealing our patents. As it is now, we’re letting them do it without trying to do anything about it (Romney said he would but I haven't heard any specifics). Of course China is our piggy bank so we might not want to make them mad. This is
kind of like a slave and master relationship because we're pretty much shackled; we need to pay off our debts and set ourselves free.
So to wrap up I’ll repeat the messages I hoped to get across: stimulus plans don’t work, our budget needs to be cut to the bone, we must pay down our debt or we’ll go over a fiscal cliff, and if we want to truly jump start our economy the answer is in attacking our trade deficits and buying more American goods and services. The great news about this is that every citizen could start
making a positive difference immediately. We need to get our patriotic spirit
back and buy only American goods and services anytime we can. Washington can’t
turn our economy around as quickly as we need but we certainly can. The ball is
now in your court.