What's wrong with Washington
ERNEST F. HOLLINGS, former U. S. senator
2011 -- People
keep asking me: What's wrong with Washington? Nothing gets done. To understand,
Washington has two problems: No one wants to pay for government and the
economy is being off-shored.
We haven't paid for government in eleven years. We didn't pay for President
Bush's tax cuts, his prescription drugs for Medicare, and his wars in
Afghanistan, Iraq, and Pakistan. President Bush borrowed and added $5
trillion to the debt in eight years. If the CBO estimate is correct, by
the end of September President Obama will have added $4.5 trillion in
three years. We had a strong government and a balanced budget in 2001.
Now that everyone wants to start paying for government, spending cuts
can take care of the regular increases in government for eleven years,
but we'll need tax increases to pay for the tax cuts, prescription drugs,
and wars. You can't pay $9.5 trillion for these things with just spending
cuts or just tax increases. We need both.
We've been hemorrhaging investment, research, technology, manufacture,
jobs - the economy for eleven years. It's not an economic cycle with the
economy coming back. The economy is hemorrhaging off-shore. We've off-shored
our defense so much that we are now begging Russia for helicopters for
Afghanistan. And it has become difficult to produce for a profit in the
United States. In this week's Time, Fareed Zakaria lists "five ways
to bring unemployment down." He cites Germany's technical education
that brought unemployment down "to an astonishing 20-year low in
the midst of a global recession."
have yet to field a winner against President Obama. But next year
it's going to be "the economy, stupid." Unless the President
leads on the economy, jobs, and on paying for government, he could
Governors realized the need for technical education when we carpetbagged
the North for industry. Fifty years ago I instituted a technical education
system in South Carolina that today produces Germany's BMWs and Boeing's
Dreamliner. The country has technical training galore. Zakaria and Washington
totally ignore the value added tax that 136 countries rebate on exports.
Our corporate income tax is not rebated. Germany's 19% VAT is added when
U. S. exports reach Germany. It's not just losing jobs to China, but Germany
uses its 19% VAT to produce the President's green jobs or windmills in
Charleston, S. C. Parts are manufactured at high cost in Germany; shipped
to Charleston at 3% cost; assembled in Charleston at 3%, selling windmills
13% cheaper than any U. S. production.
Both problems can be solved by eliminating the corporate tax and replacing
it with a 5% VAT. Revenues for 2010 corporate tax amounted to $194.1 billion,
whereas a 5% VAT for 2010 amounts to $583 billion. Give $83 billion in
exemptions for the poor and we still have $300 billion to pay down the
debt. Spending cuts that Congress can agree upon gives us more than $300
billion to pay down the debt. This immediately makes it profitable to
produce in the United States; makes the United States competitive in globalization;
stops the hemorrhaging of the economy; promotes exports, and releases
$1 trillion in off-shore corporate profits that can be repatriated for
production and jobs.
Here's a winner for all interests. With an average corporate tax of 23%
being replaced with a 5% VAT, those looking for tax cuts are enthralled.
But President Obama ignores the VAT solution. Why? A friend who knows
the President tells me it's because of Grover Norquist and the Americans
for Tax Reform. President Obama doesn't think he can get the votes for
a VAT. But the pledge to Norquist by a majority of the House Members and
forty-one Senators is against tax increases. If Norquist objects it's
because his lobby will lose control of the Congress. That makes the VAT
more than a winner.
President Obama led from the front on getting rid of Osama bin Laden.
But he leads from behind on jobs and the economy. When the debt was reaching
its limit in May, the President moved the debt limit to August; let the
Vice-President talk to Congress about the debt limit, and he went fundraising
in Texas. The country doesn't need a candidate traveling the country raising
$1 billion. It needs a president in the White House who leads to pay for
government and rebuild the nation's economy. The CEO of Corporate America
is responsible to build the company. The President is responsible to build
the country. President Obama needs to lead the Congress against his G.E.
Job Czar who has off-shored a majority of his production and is now off-shoring
his research. President Obama needs to lead against the big banks, Wall
Street, and the multi-nationals off-shoring for easy profits.
The lesson of Vietnam was that you couldn't spread democracy militarily.
Apparently, the lesson of China is that you can't spread democracy economically.
If China had U. S. democracy and freedom, it would come apart as a country.
To remain a country, China has to remain totalitarian with controlled
capitalism. Rather than the United States developing democracy, China
is impoverishing the United States. The President has to lead against
the Council on Foreign Relations spreading democracy.
Presidents know how to get the votes in Congress. Without a single Republican
vote, President Clinton cut spending and raised taxes, even on Social
Security, in 1993 that gave us eight years of the strongest economy and
a balanced budget. We had the vote count in 1994 to defeat NAFTA, but
President Clinton gave Jake Pickle a cultural center; another Congressman
two C-17s, golf rounds and other freebies, and passed NAFTA. The New York
Times listed the twenty-three freebies.
The Republicans have yet to field a winner against President Obama. But
next year it's going to be "the economy, stupid." Unless the
President leads on the economy, jobs, and on paying for government, he
could defeat himself.
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,
Government Work (University of South Carolina Press, 2008).
Ernest F. Hollings. All rights reserved. Contact
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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.
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