Lazy is not our problem

By ERNEST F. HOLLINGS, former U. S. senator

NOV. 22, 2011 -- Robert E. Lee stated: "Duty is the sublimest word in the English language."


The duty of Corporate America is to make a profit. To make a profit, Corporate America plays the economy any way it's fashioned by a free or a communist government. But the government, i.e. the President and Congress, are charged to develop a strong economy for the United States. To a question in Honolulu about China investing in the United States, President Obama responded: "But you know we've been a little lazy…. We aren't out there hungry selling America and trying to attract new business into America." (St. Petersburg Times 11/17/11).

The President is completely oblivious to our predicament. He can create jobs with federal aid, but he can't build a strong economy. It takes private investment. Globalization is nothing more than an economy war with private investment looking for a cheaper country to produce. In order to retain a strong economy in globalization, the nation's tax laws must be competitive and its trade laws must be enforced.

Governors are working around the clock to attract investment, domestic and foreign. But domestic industry is off-shoring like gangbusters. The President is the principal reason.
Instead of making our tax laws competitive, President Obama continues the tax benefit to off-shore or get rid of jobs. Instead of enforcing our trade laws, like he is sworn to do, the President ignores them. Instead of paying for government, President Obama continues to run deficits in excess of a trillion dollars, telling Corporate America it's taxes will be increased. Corporate America sits on a $2 trillion surplus waiting for the President and Congress to determine the increase.

"Enforcing our trade laws not only protects established industry but attracts new investments. When the Court found a dumping violation of over 300% against Fuji Film, Fuji located in Greenwood, S. C. Lazy is not our problem."

-- Hollings

The solution is easy. All the President and Congress have to do is to take the tax benefit to off-shore jobs and give it to Corporate America to on-shore jobs; i.e. replace the corporate income tax with a 6% value added tax. Last year the corporate tax produced revenues of $194.1 billion. A 6% VAT for 2010 would have produced $700 billion. Exemptions for the poor leaves billions to pay down the debt. 141 countries compete in globalization with a VAT that's rebated on exports.

Germany uses its 19% VAT to create green jobs in the U. S. Manufacturing the parts at high cost in Germany to avoid any tax, shipping the parts at 3% cost, and assembling the parts at 3% cost, Germany produces windmills in Charleston, S. C., 13% cheaper than any domestic production.

There are no loopholes in a VAT -- instant tax reform! The VAT eliminates tax lawyers and half of the lobbyists in Washington. Grover Norquist will howl, but, since the corporate tax at 35% is replaced with a 6% VAT, this is a tax cut. Since the VAT is self-enforcing, much of the IRS can be eliminated, cutting the size of government. Now $1.2 trillion in off-shore profits can be repatriated tax free to create millions of jobs. This tax cut produces billions to pay down the debt and millions of jobs. Lazy is not our problem.

Admiral William Crowe, former Chairman of the Joint Chiefs, warned us in Congress in 1991 that we were becoming too dependant upon foreign favor to defend the country. We were off-shoring our defense industry. Twenty years later, we're begging Russia for helicopters in Afghanistan, having defeated Russia in Afghanistan. It's embarrassing.

If President Obama would enforce the Defense Production Act of 1950 like President Kennedy did in 1961, it would create millions of jobs. If President Obama would enforce our trade laws like President Reagan did to protect steel, motor vehicles, computers, and machine tools in 1984, we wouldn't have had to import eight miles of steel for the Bay Bridge in San Francisco. Rather than a bailout for Detroit, President Obama should have imposed a tariff or import surcharge on motor vehicles like President Nixon imposed in 1971. Safeguard provisions in Article XII of the WTO permits this.

Enforcing our trade laws not only protects established industry but attracts new investments. When the Court found a dumping violation of over 300% against Fuji Film, Fuji located in Greenwood, S. C. Lazy is not our problem.

The President says we are "not trying to attract new business in America." Today, the Obama Administration gives Boeing a tax benefit to invest in China or Japan, but the Obama Administration sues Boeing if it invests in America. Lazy is not our problem.

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 Making Government Work (University of South Carolina Press, 2008).

© 2011, Ernest F. Hollings. All rights reserved. Contact us for republication permission.

About Fritz Hollings

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 Representatives.

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