Money is the cancer
By ERNEST F. HOLLINGS, former U. S. senator
2009 -- The President's address last night to Congress on health care
looked like a home run -- until he got to costs - and then the ball hit
the back fence and dropped back into the field.
Paying for reform by eliminating waste, fraud, and abuse in health care is the typical cop-out. I served on President Reagan's Grace Commission to eliminate waste, fraud, and abuse in government. We saved a lot, but President Ronald Reagan added a trillion dollars to the national debt. It might work now, but not in President Obama's time.
We submitted the solution of a value added tax to the administration weeks ago, but Axelrod has the President campaigning still for the money. All we have to do is eliminate the corporate income tax and replace it with a 5% value added tax. A 3% VAT replaces the revenues from corporate tax, 1% more pays $1.3 trillion for health care, and 1% more brings in enough revenue to start paying down the debt. With the average corporate tax at 27%, the 5% VAT cuts taxes by 22% for domestic sales and eliminates taxes for Corporate America's exports.
removes the 44% tax advantage to off-shore Corporate America's production
and jobs to China. China has a 17% VAT so that U. S. production pays on
an average of 27% corporate tax and, when its export reaches Hong Kong,
China adds its 17% VAT - for a total of 44%. With a 5% VAT the U. S. begins
competing in globalization, which is nothing more than a trade war with
production looking for a cheaper country to produce.
So the present policy in Washington is to off-shore production and jobs -- not create jobs. The Princeton economist, Alan Blinder, estimated in February 2007 that in ten years the U. S. would lose thirty to forty million jobs to off-shoring. This is an average of three to four million jobs a year - which we are exceeding. The President's stimulus creates at best four million jobs in two years. We're losing more jobs to off-shoring than we are creating. But Wall Street, the big banks, the Business Roundtable and the U.S. Chamber of Commerce love those China profits and oppose the U.S. coming in from the cold in the trade war and begin competing with a VAT. And Congress, needing the contributions from these financial interests, refuses to introduce or even consider a VAT.
Money is the cancer on the body politic. It can easily be excised with a one-line Constitutional amendment that "the Congress is hereby permitted to regulate or control spending in federal elections." This is what we intended in a bipartisan vote in 1971 and 1973 before the Supreme Court found that money is speech.
With a Constitutional amendment, Congress could limit the money, limit the fund-raising for money, limit the time Congressmen and Senators spend traveling the country for money and limit the influence of the lobbyists and Corporate America. I worked with Corporate America for thirty-eight years trying to protect their investment, production, and jobs in-country. But now Corporate America is interested in its investment and the economy of China.
you can't manufacture for a profit in the United States -- Corporate America
is forced to China or India. Article I, Section 8, of the Constitution
says it's the duty of Congress to regulate trade. Congress could put in
a VAT in place of the corporate tax and begin regulating trade and creating
jobs. But jobs and health care - and the economy - are all sacrificed
for campaign contributions. "Free trade and get the money" is
the only bipartisanship in Washington.
Senator Hollings of South Carolina served 38 years in the United States Senate, and for many years was Chairman of the Commerce, Space, Science & Transportation Committee. He is the author of the recently published book, Making Government Work (University of South Carolina Press, 2008).
© 2009, Ernest F. Hollings. All rights reserved. Contact us for republication permission.
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