MAY 15, 2013 -- I borrowed this title "President Passerby" from Dana Milbank (Washington Post, 5/15/13). I want President Obama to succeed -- to stop just announcing for jobs and do something to produce jobs and a strong economy.
keeps suggesting actions that are occurring or ones too slow. The recession
has been over for four years and still languishes. The economy needs a
jumpstart. Roads and bridges are too slow. The Governors have long since
provided skills. Trident Technical College in South Carolina is providing
the skills to make Boeing's Globemaster. Research and development takes
too long. We've got the best innovation and universities. Federal aid
for policemen, firemen and teachers doesn't build a strong economy. We've
stimulated the economy $1 trillion a year for the past five years and
are stimulating it another $642 billion this year. It still languishes.
All President Obama has to do is to take the Republican suggestion of a tax cut -- eliminate the 35 percent Corporate Income Tax and replace it with a 7 percent Value Added Tax. Both, the 35 percent of profit or the 7 percent value added, are factored in on every transaction. This is definitely a tax cut. 150 countries compete in globalization with a VAT that's rebated on exports. The Corporate Tax is not rebated. An entrepreneur can start manufacture in the U.S., be making a profit, but has to pay the 35 percent Corporate Tax on his production and is levied an additional 17 percent VAT when exports reach China. A competitor can produce the same product in China, import it into the U.S. tax free and put the entrepreneur out of business.
percent difference is killing manufacture in the U.S. Foreign investment,
using the VAT, has long since shipped the parts for assembly in the United
States to stultify U.S. manufacture. Regardless of politics, we've got
to get rid of the Corporate Tax and adopt the VAT for the U.S. to be competitive.
Eliminating the Corporate Tax immediately releases $2 trillion in offshore
profits for Corporate America to repatriate tax free, create jobs and
build a strong economy. This VAT tax cut also provides billions to balance
the budget in two years rather than ten. Since the VAT has no loopholes
we have instant tax reform. Since it is easily administered, we can cut
the size of government (IRS).
Now, all the President has to do is what he's sworn to do -- enforce the law. We've been so anxious to keep NATO together that we've offshored our defense and we've had to beg Russia for helicopters for Afghanistan. If President's Bush and Obama had enforced the Defense Production Act of 1950, we wouldn't be required to beg Russia and the bailout of Detroit would not have been necessary. CEO's must have assurance that their production will be protected. We don't want to protect all production but must protect those items and materiel necessary for defense and a strong economy. If President Obama protected steel, motor vehicles, computers and machine tools like President Reagan in 1984, we would have long since had jobs and a strong economy.
has authority to act against China's devaluing its currency. Don't just
stand there! Do something!
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).
© 2013, Ernest F. Hollings. All rights reserved. Contact us for republication permission.
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