On Politics and the Economy
Since we try not to delve too deeply into political issues in our fool.com articles I'll use this as a forum to give a few thoughts and see what fellow Fools think.
- Tired of Hearing About Spending
I am all for cutting budget deficits but the talk in our nation's capital is absolutely absurd these days. If you were going to cut your monthly spending would you focus on how to lower your utility bill every month or big expenses like groceries, car, gas and housing? Yes, cutting a few bucks by shutting off the lights is a great idea but it isn't going to save anyone from bankruptcy.
On the same line I would like both Republicans and Democrats to stop talking about domestic spending until something is done about Social Security, Defense and Medicaure/Medicaid. We have seen in recent months that cutting government spending has a real impact on unemployment (private sector has been adding jobs while state and local gov'ts have been cutting) and I'm afraid we'll send ourselves into a double dip if we cut domestic spending too fast.
If we want a recovery we need to have more people employed, not more money at the top of the food chain. The rich have demonstrated over the last ten years that lower tax rates doesn't lead to a trickle down to Joe the Plumber.
As for the thought that investment would increase in the US if we lowered taxes I say, "sure a little bit". Do you think money is going to start flooding back to be invested domestically when emerging economies are growing much faster? I highly doubt it. The money will always flow where the growth is. That doesn't mean I wouldn't love to see a lower tax rate for less subsidies trade off. I think that would be great.
- We Need Regulation
Today 3M CEO George Buckley is in the news for ripping Obama as "anti-business". Buckley would like less regulation and lower taxes to justify building plants here.
Let me remind you that 3M is the same company who poisoned the water around its headquarters and the effects weren't even discovered until ~30 years later. The EPA (one of the agencies Republicans want to cut) was formed for a reason. If there's profit to be had, corporations don't care about the health of consumers. That's why lead used to be used in paint.
I used to work as a research engineer at 3M and have worked in one of it's US plants so I have a little credibility when I say, you don't want companies like 3M to be able to put whatever they want in your products. Some of the chemicals I worked with were extremely dangerous and one in particular I advised not using at all because I felt the risk was too high (no one listened). If 3M had its way we would be using all kinds of toxic products and our rivers would be green like they are in China.
Again, I am not saying things couldn't be done more efficiently. I am saying blanket cuts to regulatory agencies is dangerous. (see financial meltdown)
- We Need a "somewhat" Big Government
I love the talk of how big government is bad. It has it's downside and government is anything but efficienct, but government is also the reason we didn't have a 2nd Great Depression. One of the reasons we had a 1st Great Depression is that government spending was such a small portion of the economy that when companies started cutting jobs there was no end in sight. Government provides a base line of demand and economic activity. It's a balancing act and government probably needs to be smaller than it is today but let's also appreciate the role the government played in saving us from disaster.
- On Wisconsin
How stupid are Republicans these days? You win back power and then you go after the little guy for everything they've got? I'm not saying unions are great but when you try to take away people's rights, that pisses them off. Apparently Republicans only want to be one-term elected officials because the Democrats haven't been able to rally their own base the way Republicans have.
Take the concessions they gave and put this issue to bed. It's in your best interest.
- Final Thoughts
It isn't likely we will be able to cut our way out of budget deficits. We haven't done it in the past and we won't this time. We will slowly grow our way back to break even with cuts to domestic spending playing a small role in the process. Bottom line is we should focus on the SS, Defense and Medicare/aid before taking a hatched to the rest of the budget. I drive over enough potholes the way it is.