Right now the entire country seems to believe that Democrats will save the day on the economy and we're looking at a super majority for Democrats to gain complete control of the United States Government in this year's election results.
I have a premise that the only way to get the United States moving economically is to start producing, saving, exporting and raising up the middle class. I am not alone in this conclusion:
The US has to move toward a competitive, saving- and export-oriented economy. This requires investment in education that boosts incomes and improves competitiveness; in transportation and communication that efficiently move people, goods, and ideas; and in cleaner energy to power it all
and many note our ballooning deficit will be a major drag on these efforts. Yet both candidates keep harping on cutting taxes with a massive ballooning deficit funded by 47wallst.com/2008/10/with-us-budget.html">foreign capital.
A few notes on current economic plans from the candidates:
John McCain Will Establish Permanent Tax Credit Equal To 10 Percent Of Wages Spent On R&D. This reform will simplify the tax code, reward activity in the U.S., and make us more competitive with other countries. A permanent credit will provide an incentive to innovate and remove uncertainty. At a time when our companies need to be more competitive, we need to provide a permanent incentive to innovate, and remove the uncertainty now hanging over businesses as they make R&D investment decisions.
McCain needs to tie this further to jobs going to US citizens due to the WTO, GATS mode 4 agenda, but fundamentally tying investment to jobs is a good connect.
On Trade, while Obama truly is not ideal, simply mentioning environmental, labor standards instead of renegotiating these agreements which are structurally biased against the United States, removing China and India from Emerging Market economic status (which gives Emerging Economies enormous, unfair bias on trade) and truly adopt a much more strategic trade policy. On the other hand, McCain is in economic fiction land on trade, promoting even further more bad deal trade which have already cost the United States 5.6 million jobs and caused our ballooning trade deficit.
While Obama has a series of plans that look promising to invest in America, there is one I find truly odious:
Eliminate all capital gains taxes on start-up and small businesses to encourage innovation and job creation. Obama and Biden will also support small business owners by providing a $500 “Making Work Pay” tax credit to almost every worker in America. Self-employed small business owners pay both the employee and the employer side of the payroll tax, and this measure will reduce the burdens of this double taxation.
Now this is a work of fiction. Most small businesses do not have any capital gains whatsoever. The problem is the self-employment tax which is double, but trying to imply zero capital gains would any effect, when these small businesses have nothing to do with stocks or capital gains is misleading.
Obama now wants a freeze on foreclosures, yet is blasting McCain on a HOLC. There is one valid criticism on McCain's plan in not demanding the original mortgage holders from which the HOLC would buy out, take a loss. It's also kind of dumb because obviously if a mortgage is about to go into foreclosure, the mortgage originator should be highly motivated to recover at least some of their losses, thus sell at a discount. Yet, McCain is onto a direction which is highly recommended by Economists and that is a good thing.
Let us not forget, Democrats generally want to pass massive guest worker Visas and flood the US domestic labor market with even more workers at a time the economy is contracting, so this alone with have a sharply negative affect on wages and the unemployment numbers.
Another very good point from Obama is to reform the bankruptcy laws to allow judges to renegotiate mortgages on primary residences, which is another major factor on foreclosure rates.
What does all of this lead me to conclude? One simply cannot pull the Democratic lever and expect all to be well. The current Democratic party is simply not the party of FDR. Americans need to become hyper vigilant, engaged in the details of trade, economic policy and demand our representatives start representing us, regardless of political party. As one can see just from the few policies presented, both sides have a few good points and corporate/special interests agendas being presented, Getting policy based on what works versus what special interests want is one tough slog.
We should not have to choose who sucks least in our representative Government, yet still in spite of the economic tsunami hitting our shores, this is the current situation.
We need to become much more active during primaries at the Congressional and state level, for when one party has a lock on government, getting those corporate elites out and true representation in becomes only that much harder.
Consider this post an open thread for discussion on economic policy positions as well as the last Presidential debate.