FEB. 18, 2014 -- In the late 1920's John Dewey, the Educator and Walter Lippman, the Pulitzer Prize winner, debated a strong democracy.
a democracy, Lippman suggested that experts in the various disciplines
like defense, finance, foreign policy gather around the table, correlate
the Nations' needs and submit it to the Congress for adoption. "No"
responded Dewey. "Just have the free press report the truth to the
American people and these truths and needs will be reflected by the people's
Representatives and Senators in Congress."
After World War II, the U.S. possessed the only industry. We instituted the Marshall Plan, calling for free trade to open markets. Japan closed its market, subsidized its manufacture, and sold its export at cost, making up the profit in the closed market. Now, China and Japan operate from closed, controlled markets. The competition in globalization is not free trade but controlled markets.
Press continues to tout "Free Trade", "against protectionism".
The United States was built on protectionism - the Tariff Act of 1787.
President Roosevelt protected agriculture. President Truman protected
military supplies with the Defense Production Act of 1950. In 1971, President
Nixon imposed a 10% surcharge on imports when the deficit in the balance
of trade was a miniscule of our deficit today. In 1984, President Reagan
protected steel, motor vehicles computers and machine tools. The President
must protect production vital to the economy.
Obama must make it attractive to produce in the U.S. 160 countries compete
in globalization with a Value Added Tax that's rebated on exports. The
Corporate Income Tax is not rebated - killing manufacture in the U.S.
A successful entrepreneur pays the 35% Corporate Tax and a 17% VAT when
his exports reach China. A competitor can produce the same product in
China, import it tax free and put the entrepreneur out of business. The
President and Congress can replace the 35% Corporate Tax with a 7% VAT.
This releases $2 trillion in offshore profits for Corporate America to
repatriate tax free and create millions of jobs. CBO estimates that last
year's Corporate Tax will produce $288 billion in revenues. A 7% VAT for
2013 would have produced $945 billion - permitting Congress to balance
the budget in two years.
Except for the Post and Courier and Huffington Post, the Free Press reports that the President and Congress are for jobs and tax reform but the Free Press fails to mention the VAT tax cut giving tax reform and jobs. Two years ago, President Obama was begging Russia for helicopters for Afghanistan. Now the New York Times reports (12/20/13) that we are importing uniforms for our troops. The Free Press fails to mention President Obama's failure to enforce the Defense Production Act of 1950.
Press fails to mention the lack of jobs from imports. Economists estimate
that for every $1 billion deficit in the balance of trade, it costs the
U.S. economy 9,000 jobs. Today, our $471 billion deficit in the balance
of trade costs the U.S. 4,239,000 jobs. The Princeton Economist Alan Blinder
estimated in December 2006 that in ten years the U.S. would offshore 30-40
million jobs. The Free Press ignores the offshoring and keeps reporting
the lack of consumer confidence in the economy and the Great Recession.
The recession has been over four and a half years and its lack of consumer
money - offshoring payrolls.
Finally, the Free Press gives the impression that the President and Congress always run deficits. The U.S. paid for all its wars, depressions, recessions and it took over two hundred years to reach a national debt of $1 trillion in 1981. In 1985, we cut spending with Gramm Rudman Hollings. In 1991, President George H.W. Bush broke his pledge to pay for government. In 1993, Democrats cut spending $250 billion and increased taxes $250 billion to give President George W. Bush a balanced budget in 2001.
Bush refused to pay for wars, tax cuts, prescription drugs, stimulation,
bail outs, etc. and increased the national debt $5 trillion in eight years.
President Obama increased the debt $6.5 trillion in five years and CBO
estimates we will add another $514 billion this year. For fifty years,
from Truman through Clinton, Presidents never ran deficits near $500 billion.
Lyndon Johnson's Great Society ran a seven year deficit of only $62.9
billion and gave President Nixon a surplus. We are increasing the debt
$12 trillion in fourteen years but there's no mention of this outrage
in the Free Press.
the Free Press is experiencing hard times but the people can't get on
their government if they don't know.
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).
© 2014, Ernest F. Hollings. All rights reserved. Contact us for republication permission.
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