ERNEST F. HOLLINGS, former U. S. senator
2010 -- Washington engages in the grandest fraud on jobs. The people are
led to believe that tax cuts stimulate growth and jobs and that borrowing
and spending money stimulates jobs.
forget as Chairman of the Budget Committee briefing Ronald Reagan with
Alan Greenspan in the Blair House just before Reagan was sworn in as President.
The economy was not good, and I can hear Reagan exclaiming now: "I
promised to balance the budget in a year, and there's no way to do it."
I explained it would take three years, and I would be glad to help in
a bi-partisan effort to try to bring it in balance. The rest is history.
President Reagan launched the policy of "growth" to stimulate
the economy by cutting taxes, giving the United States its first trillion
dollar debt in his first term, with another trillion dollar growth in
debt in his second term. President George W. Bush, bragging that he was
a Reaganite, stimulated the economy by cutting taxes, which increased
the national debt $5 trillion. Instead of growth, the economy lost 673,000
private jobs in eight years under President George W. Bush.
Elected President in November 1992, then Governor Clinton was told in
Little Rock by Wall Street and its economists that he not only had to
cut spending, but had to increase taxes. Taking office, President Clinton
submitted an energy tax increase that was killed in the United States
Senate by the farmers. Then we moved desperately to repair our defeat
in the Senate with a package of tax increases on everything -- income,
beer, tobacco, even Social Security. This tax increase passed both the
House and the Senate without a single Republican vote in 1993, with Vice
President Gore breaking the tie. Wall Street was given predictability,
and the United States enjoyed its strongest economy in history, giving
President George W. Bush surpluses "as far as the eye can see."
cuts and tax increases, President Bill Clinton created 21,814,000 private
jobs in eight years, more than Reagan, Papa Bush and Junior Bush created
in twenty years with tax cuts for "growth." And in the last
eighteen months, Paulson, Obama, and the Federal Reserve have borrowed
and spent over $2.5 trillion stimulating the economy. But the only growth
experienced is in debt, and we're still losing jobs.
We lost one-third of our manufacturing jobs during President George W.
Bush's eight-year term. Corporate America was rushing pell-mell to China.
With a stimulated economy, a manufacturer going to the bank for a loan,
the first question the banker asks is: "Can your product meet the
China price?" If not, no matter how innovative the product, someone
will go to China in a couple of years and import the same article at a
lower price, putting you out of business and making the bank lose on its
loan. Today, it doesn't pay to produce in the United States.
spending cuts and tax increases, President Bill Clinton created
21,814,000 private jobs in eight years, more than Reagan, Papa Bush
and Junior Bush created in twenty years with tax cuts for "growth."
And in the last eighteen months, Paulson, Obama, and the Federal
Reserve have borrowed and spent over $2.5 trillion stimulating the
economy. But the only growth experienced is in debt, and we're still
Ernest F. Hollings
part of the job fraud is to make the people feel like the loss of jobs
is due to the recession, not off-shoring. Long before the recession, South
Carolina lost its textile industry; North Carolina lost its furniture
industry; Detroit its automobile industry, and California its computer
industry, etc. President Obama wants to increase exports, but we have
nothing to export. Today, the United States has the export profile of
an eighteenth century colony, with the only value added products exported
being chemicals, agriculture and airplanes. Last week The Wall Street
Journal announced that the largest chemical producer in the United States
was off-shoring. Most of the job loss is from off-shoring, not the recession.
But Washington acts as if nothing can be done to limit the off-shoring
and protect our economy.
Globalization has developed into a trade war with production looking for
the cheapest country to produce, with fierce competition for industry
and jobs. Necessarily, every country has developed an industrial policy
in this competition to protect its economy. Alexander Hamilton, in his
famous "Report on Manufacturers," founded the United States
in a trade war with an industrial policy of protective tariffs that financed
and built this country into an industrial power. We had the only industry
after World War II. To spread capitalism, we instituted the Marshall Plan
to develop industry and jobs in Europe and the Pacific Rim. At the same
time, we enhanced our industrial policy with trade laws to protect our
economy. But President Obama and Congress act as if these trade laws and
policies don't exist. They would have the people think that all we can
do is stimulate the economy to supplant job loss from the recession. Trade
laws and policies should be enforced to make it profitable once again
to produce in the United States; to limit off-shoring, and protect our
economy. In globalization, off-shoring can't be stopped, but off-shoring
of essentials must be limited to prevent the economy from being destroyed.
President Obama and the Congress should immediately take the following
a $5.8 trillion dollar trade deficit in the last ten years, President
Obama should levy a 10% surcharge on imports like President Nixon did
wait for a basic industry to go bankrupt like General Motors, but once
production is endangered, institute import quotas or tariffs under Section
201 of the Trade Act.
the 1950 War Production Act reauthorized as the Defense Production Act
of 2009 (S.1677). This requires the nation to have a ready supply of
materiel necessary for our national security. Today, we can't go to
war save the favor of some foreign country for supplies. Stop the off-sets
for military sales and activate this law and policy, creating millions
of jobs. President Kennedy used this law in 1961 to launch his 7-point
program, saving the textile industry. Hearings before a Cabinet Committee
determined that next to steel, textiles were the second most important
to our economy. The Committee found in 1961 that "we can't go to
war in Japanese uniforms."
subsidizing off-shoring and cancel the exemption of off-shore profits
equivocating on "Buy American" and institute a "buy domestic"
program like other countries competing in globalization.
Obama can boost exports, pay for health reform and start paying down
the debt by replacing the corporate income tax with a 5% VAT. Three
percent will more than replace the revenues from the corporate income
tax; 1% will pay for health reform, and 1% will start paying down the
debt. The ox is in the ditch. We don't have time for a study commission.
canceling the corporate tax and replacing it with a 5% VAT to the Administration
a year ago. It's a winner, but the President refuses to act. Why? To begin
with, President Obama is inexperienced on trade and does generally what
Larry Summers advises. Larry Summers is of the bail-out and bonus crowd,
and he and Wall Street insist on continuing off-shore profits. They could
care less about the United States economy. So Summers' and the Democrats'
favorite economist, Paul Krugman, give the silent treatment to the off-shoring
of investment, research, development, technology, production and jobs.
They act as if nothing can be done to limit the off-shoring and strengthen
our economy. The CEOs of Corporate America are interested also in continuing
off-shore profits so they and their entities, such as the Business Roundtable,
the United States Chamber of Commerce, and Americans for Tax Reform, oppose
any move to compete in globalization. Any move by the President and Congress
to compete is met with chants: "Free trade," "Protectionism,"
"Don't start a trade war." Like Tom Donahue of the U. S. Chamber,
Corporate America threatens to cut off contributions.
The United States is not organized for profit, but for the common good.
Under Article I, Section 8, of the Constitution, Congress is charged with
regulating foreign commerce and protecting our economy. The Constitution
also requires all trade measures to originate in the House of Representatives.
So members of the Senate are given a free ride. They give trade and the
economy the silent treatment - and get the contributions. And Members
of the House are not about to introduce a trade measure to create jobs
and protect our economy unless approved by the White House. House Members
also give off-shoring jobs the silent treatment and get the contributions.
Nothing gets done.
One grand fraud!
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,
Government Work (University of South Carolina Press, 2008).
Ernest F. Hollings. All rights reserved. Contact
us for republication permission.
Ernest F. Hollings served
the public for 56 years -- 38 years in the United States Senate and as South
Carolina's governor, lieutenant governor and a member of the S.C. House of
Today, Hollings continues
to be influential in public affairs and offers this Web site as a compendium
of current and past positions on public issues. Learn
more about Fritz Hollings.
Hollings receives French honor
France honored retired
U.S. Sen. Fritz Hollings on in 2013 by awarding him the Legion of Honor for
his World War II service. More.
commentary via The Huffington Post
Please visit Sen.
Hollings' section of The Huffington Post where you can get an RSS of his
columns, subscribe by email or use social media.
here to learn more about Hollings' impressive and distinguished record
of public service.
the new book
University of South Carolina Press in 2008 published Making
Government Work, a new book by Sen. Hollings. Learn