For the country

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


NOV. 19, 2014 -- The country is wound tight. To calm down and think rationally, President Obama and Congress can help by:

1. Stop thinking and talking about the middle class. Think and talk about the country.

2. The President can only act as authorized by Congress. President Obama should cite the authorization, and fulfill his commitment on immigration.

3. The Supreme Court is gearing up to make a mess of Obamacare, and Tea Party Republicans are gearing up to impeach President Obama for his changes in the Obamacare law. Have the Senate take up the House repeal of Obamacare, pass it, and sign the repeal. Then have the Senate introduce a bill: a) extending Medicare incrementally, or in steps. Have actuaries determine what increments the economy can stand; b) Appoint a panel of doctors to limit the cost of Medicare. Doctors know items for change and excessive costs.

4. Harold Meyerson states in The Washington Post (11/12/14), "…Democrats have detected a deficiency in their 2014 midterm campaigns: They didn't really have an economic message." Democrats didn't have an economic message because they had done nothing for the economy. Globalization is nothing more than a trade war with production looking for a country cheaper to produce. David Ricardo's Comparative Advantage in globalization is China's closed market and predatory practices. China sets the competition in globalization, and this requires countries to protect their economies and act against predatory practices. The Founding Fathers pointed the way. The United States was born in a trade war (Boston Tea Party), and the U.S.'s strong economy was built on protectionism by Congress passing the Tariff Act of 1787 - two years before the Constitution and four years before Madison's First Amendment rights. But, the President and Congress call for free trade and do nothing. President Obama fails to enforce the Defense Production Act of 1950 and fails to protect items vital to the economy such as steel, motor vehicles, computers, and machine tools - items protected by President Reagan in 1984. Economists estimate a loss of 9,000 jobs for every $1 billion deficit in the balance of trade. Last year's deficit was $471 billion, costing the loss of 4,239,000 jobs. President Nixon acted to repair the deficit in trade balance in 1971, but President Obama and Congress fail to act. Congress can do something - institute an infrastructure bank to repair our roads, bridges, and build a "fast-track railroad" from north to south and east to west.

5. Replace the 35 percent Corporate Income Tax with a 7 percent Value Added Tax (VAT). 160 countries compete in globalization with a VAT that's rebatable on export. The Corporate Tax is not rebatable on export. An entrepreneur in the U.S. has to pay 35 percent Corporate Tax on his production, and when his exports reach China, a 17 percent VAT. A competitor can produce the same product in China, import it tax-free, and put the entrepreneur out of business. Not having a VAT stultifies manufacture in the U.S. The VAT has no loopholes, giving instant tax reform. The VAT is self-enforcing - pay it or pass it on. You can downsize government (IRS). The Corporate Tax is full of loopholes for the multinationals, so they (GE) pay no tax and oppose a VAT. The Main Street merchant pays the full 35 percent, so this VAT tax cut helps small business. The VAT tax cut releases $2 trillion in offshore profits for Corporate America to repatriate tax-free, invest and produce in the United States, creating millions of jobs and jumpstarting the economy. The 2013 Corporate Tax produced $288 billion in revenues. A 7 percent VAT for 2013 would have produced $945 billion - billions more to balance the budget in two years rather than 10.

The people are for tax cuts, jobs, closing loopholes, tax reform, downsizing government, helping small business, and jumpstarting the economy. When either Republicans or Democrats do something for the economy that the people are for, you can break a filibuster. Have Senate Democrats introduce a Corporate Tax replacement, debate it, and break the filibuster. I know, I know. Under the Constitution, all revenue measures should derive in the House of Representatives, but at least Democrats will have done something for the country by pointing the way.

Senator Fritz 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.

Today, Hollings continues to be influential in public affairs and offers this website as a compendium of current and past positions on public issues. Learn more about Fritz Hollings.


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