Getting something done

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


JULY 9, 2014 -- Dana Milbank in the Washington Post (7/2/14) writes about "the do nothing Congress" and when Congress leaves for the month of August, asks: "…will anybody notice that they are gone".

On Morning Joe (7/7/14) Mika Brezinski observes: "More industries are leaving the country." Both are because the President and Congress get most of their contributions from Wall Street, the Big Banks and Corporate America. Wall Street, et al wants to keep the China profits flowing and don't want Congress to do anything to disturb China or offshore production. They contribute to the President and Congress to do nothing. The President and Congress do nothing. The political parties in Congress blame each other. The voters don't know who to blame or blame both parties. Nothing gets done.

Last night (7/7/14) on Hardball, one of my favorite politicos, Chris Matthews, was ranting and raving about us Democrats not being more upbeat about Obama's record.

What record? No Senator up for reelection is campaigning on Obamacare. The bailout worked well for Fiat of Italy to buy Chrysler; for General Motors that is engaged in 25.7 million recalls; and Ford that was forced to buy Chinese parts to compete. You still can't get a job in Detroit. What Democrats want is for President Obama to compete in globalization. What Democrats want is for President Obama to make it profitable for Corporate America to produce in America.

What Democrats want is for President Obama to enforce our trade laws against Japan and China's closed markets and predatory practices. What Democrats want is for President Obama to enforce the Defense Production Act of 1950. The President overrides Congress to buy $690 million of Russian helicopters for Afghanistan (Frontpage Magazine, 4/8/13) and The NY Times (12/20/13) reports that the U.S. imports uniforms for our G.I.'s. Most of all, Democrats believe in paying for government.

In 1993, Democrats, without a single Republican vote in the House or Senate, cut spending $250 billion; increased taxes (even on Social Security) $250 billion and gave President Bush a balanced budget in 2001. The U.S. has always paid for its wars, depressions, recessions and it took two hundred years to incur a national debt of $1 trillion in 1981. President Bush opposed paying for tax cuts, wars, prescription drugs, stimulation and bailouts - increasing the national debt $5 trillion in eight years. Now President Obama prepares to add $7 trillion to the debt in six years. Democrats want President Obama to stop the borrowing and make a strong effort to pay for government.

160 countries compete in globalization with a Value Added Tax that is rebated on exports. The Corporate Income Tax is not rebated on exports. Not having a VAT stultifies manufacture in the U.S. An entrepreneur producing in the U.S. must pay the 35% Corporate Tax and is levied a 17% VAT when his exports reach China. A competitor can produce the same product in China, import it tax free into the U.S. and the 52% tax difference puts the entrepreneur out of business.

To get something done, all the President and Congress have to do is submit a tax cut that the public supports so that we can fix the blame and break the gridlock. The public, President Obama and Republicans and Democrats in Congress are all for tax cuts, jobs, tax reform, cutting the size of government and helping small business. Replacing the 35% Corporate Tax with a 7% VAT immediately releases $2 trillion in offshore profits for Corporate America to repatriate tax free and create millions of jobs.

With loopholes for the multinationals in the Corporate Tax, GE and Caterpillar pay little tax but the Main Street merchant or small business pays the full 35% Corporate Tax. Replacing the 35% Corporate Tax with a 7% VAT helps small business. This VAT tax cut closes all loopholes, giving instant tax reform. The VAT is self-enforcing. You either pass it on or pay it. This permits downsizing of government (IRS). Last year's Corporate Tax produced $288 billion. A 7% VAT for 2013 would have produced $945 billion. The VAT tax cut permits Congress to balance the budget in two years rather than ten.

The President, the Congress, the politicos like Hardball, Morning Joe or The O'Reilly Factor all refuse to mention the VAT tax cut that fixes the blame, breaks the gridlock, and gets something done.

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.

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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