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Solving America’s Debt Crisis by the Numbers

by John Brian Shannon | February 28, 2016

The biggest risk to America these days is high government debt and containing and reducing the national debt should be Priority #1 for the next U.S. administration.

It’s stunningly simple to solve this problem; What we need is bi-partisan backing of politicians to pass such legislation. And strong support from voters.

How to solve high government debt 101:

1. Decrease government spending
2. Increase government revenue


Decrease Government Spending

1a) We can reduce government spending by legislating a maximum deficit of 4%-of-GDP in any given year.

That way, we aren’t into a cycle of higher taxes in order to fund ever-increasing programme spending.

1b) Legislate that each federal government department cut their budget by 5% and freeze their spending at that level for the next five years.

We all know that every organization on the planet, including government, has at least 5% ‘fat’ built into their system. It won’t be half as traumatic as it sounds.

(Now, if some government departments can raise additional revenue to replace that 5% cut, that’s a good thing. Maybe NASA could allow their logo to be used and collect the royalties on a GAP clothing line, for example)

1c) Lower healthcare, agricultural and infrastructure maintenance costs by $500 billion per year by legislating the end to coal-fired power generation.

Harvard Medicine has calculated that burning coal in the U.S. costs taxpayers a minimum of $500 billion per year. — Harvard Medicine


Increase Government Revenue

2a) Raise government revenue via the use of a Goods and Services Tax of 7% (a federal tax on retail items) as Canada and other nations have done.

Yes, the federal government would share the tax 50/50 with the states, which nicely covers the collection cost of those taxes by the states and remitting the federal portion of the revenue to the feds.

Not only will the federal government raise significant revenue via this method, it would be a simple case of writing the legislation — while the individual states do all the collection work and remittances to the federal government.

Bonus: All 50 states will love the federal government as they collect significant additional revenue via the federal GST. States with an existing sales tax might choose to harmonize their tax with the federal tax to avoid duplication — or not. Their choice.

Another positive point; The GST tax rate can be adjusted on an annual basis depending upon the then-prevailing economic conditions.

Finally, in countries with an existing GST program, those who live under the poverty line receive a GST refund after they file their income taxes. So it is never a tax on the poor. The U.S. would be well advised to adopt similar policy.

2b) The United States — while keeping NAFTA, (TPP assuming it passes) and other trade agreements, should begin charging a 5% simple tariff on every imported and exported item, with no exceptions.

All countries need revenue to fund their operations — and a simple and small tariff can add billions of dollars of tax revenue per year.

Eliminate Annual Deficits / Operate in Annual Surplus Mode Indefinitely

Every year (with otherwise prudent economic policies) there will never be an excuse for the feds or the states to run deficits and instead, governments will always show a surplus.

THAT YEARLY SURPLUS is the amount that (by legislation) will paydown the federal debt.

In less than 25 years, the federal government would become 100% debt free

NOTE: 10% of each yearly surplus could (optionally) be used by the federal government for discretionary spending as authorized by the President.

Such as; Upgrading all federal buildings to 100% energy self-sufficiency (a microgrid) which is useful during blackouts, but mainly serves to save millions of dollars in annual electricity costs, compared to purchasing electricity from the grid. It is worthwhile to note here that many office towers cost more than $1 million dollars per month to heat and light.

During Hurricane Sandy for example, certain government buildings were completely immune to electricity interruptions due to their on-site microgrid (solar panels on the roof with natural gas-fired generators for nighttime power) and the upgrade itself is a jobs creator.

SUMMARY:

  1. No federal or state government debt within 25 years
  2. Additional revenue stream for the feds and the states
  3. Eventual elimination of all non-GST taxes — while not punishing the poor
  4. After the U.S. debt reaches zero dollars and zero cents, the complete elimination of income tax

It’s the fastest and easiest way to permanent prosperity for American states and for the U.S. federal government.


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President Ike Eisenhower

President Ike Eisenhower was the last Republican president to balance the federal budget. He paid down the national debt. He spent money to create jobs. Eisenhower’s Interstate Highway System (begun and completed on-time and on-budget during his first term) returned more than $6 in economic activity for each $1 it cost. He did not lower taxes, cut spending, kill jobs, or increase the national debt. President Eisenhower was America’s last fiscal conservative!


The Silver Bullet for the U.S. Economy

by John Brian Shannon | January 28, 2016

How balancing the economy can give us the best work/life balance. Or is it the other way around?

U.S. work, life, balance

For those of us fortunate to be born in a Western nation, life is mostly about balance, and for our elected leaders it’s about how to achieve balance in the wider economy, and about the kinds of policies we’ll need for the future.

Thus far, our political and economic model has evolved. But let’s never forget that it wasn’t designed, it evolved. Big difference. (It might be the best Model T Ford ever built, but it’s still a Model T, if you catch my meaning)

And that’s exactly the conversation that we need to have

Here in North America, it requires only 1% of the workers (and presumably 1% of the total available investment pool) to produce enough food to feed everyone on the continent. Yet, we see major food distribution problems and it’s getting worse.

With regards to agricultural output and distribution, our North American model is the best devised but it’s far from perfect. And that is my point, instead of waging trillion dollar wars we should have continued to improve our economic model, especially in regards to the food distribution aspect.

I don’t think that we should be giving food away for free (except in emergency situations) but there are far too many Food Banks in operation for such an affluent society, and there is constant demand for more of them.

Q: And why do we have this particular symptom that I’ve singled-out for discussion?

A: There are far too many idle hands, and it’s because their jobs picked up and went to Asia — a process that began in 1973.

We could put an end to many social ills by employing every worker for a minimum of 6 months per year

By legislating mandatory job-sharing, every worker in the U.S. would be guaranteed a job appropriate to their particular skillset for a minimum of 25 weeks of full time employment, annually.

That means every worker has a full time job for a minimum of 6 months of every year and is then eligible to receive automatic unemployment insurance benefits during their (short) layoff period.

Mandatory job-sharing eliminates the need for ‘Welfare’

We know that long-term unemployed individuals eventually turn to welfare in order to be able to eat, have shelter, etc. once their unemployment insurance payments run out.

We also know that long-term unemployment eventually turns into substance abuse, crime, homelessness, and other social ills.

More crime = bigger policing budgets = bigger insurance claims/higher insurance rates = more citizens injured or terrorized by crime, etc… all of that are the symptoms of high and long-term unemployment, progression to welfare, and changes in the thinking of the individuals in such circumstances, including long term depression, withdrawing from society, anger, resentment, and more.

But with mandatory job-sharing the yearly unemployment rate would be 0% — that is, over the course of the year, every worker will have worked a minimum of 6 months. However, at any given point throughout the year the nominal unemployment rate would settle at 2.5%-3.0%.

With a job (and full unemployment benefits during layoff) long-term unemployment would become a thing of the past.

Keeping workers in a state of long-term unemployment brings on an OCEAN of troubles

Job-sharing is the answer.

By legislating that every healthy worker in the U.S. has a job for a minimum of 25 weeks annually, we could solve the worst inequality, poverty, other social ills, and dramatically and positively lower crime rates, insurance rates, policing and court costs, and enjoy a safer, more egalitarian society.

It’s so simple.

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President Ike Eisenhower

“I have only one yardstick by which I test every major problem — and that yardstick is: Is it good for America?’” — Ike Eisenhower