let me first apologize for the length of this blog. The issues facing America, as we began President Bush's second term, are many and complex.
Below are the changes I believe we should consider:
Addendum to," Four More For George W?" by Gene P. Abel
Spending
Review discretionary non defense expenditures including “pork barrel” spending to cut our budget. Change legislative procedures to end tacking non related expenditures to bills and require all appropriations to go through the normal process. Any emergency appropriations should be dealt with as stand alone bills
Taxes
Restore the tax rates on the top two income tax brackets to the pre-2000 levels.
Restore tax rates on capital gains and dividends to pre- 2000 levels.
Make permanent the increased child credit, elimination of the marriage penalty, the 10% bracket and increase the level of income that triggers the alternate tax. That increased level should then be indexed to cost-of-living each year so that the threshold for the alternate tax remains constant after inflation.
Retain the federal estate tax with the following changes:
Provide a $2 million exemption per person and increase that exemption each year by the cost-of-living.
Provide deferment of any federal estate tax on family farms or family business so long as they pass to members of the immediate family – children, grandchildren or siblings. If the family business or farm is later sold to a non-family entity, the tax in the amount due at passing would be paid upon sale.
Close corporate loopholes that allow avoiding corporate income taxes by moving off shore. Provide surtax on companies that export American jobs to other countries and provide tax credits to companies who create or restore jobs from overseas to the United States. Insure corporations pay their fair share of taxes.
Consider new ways to help small businesses compete and to fund employee health insurance.
Simplify the progressive tax system by eliminating most of the existing loop holes in the tax code.
Deficit
Establish the objective to bring our general fund expenses and revenues into balance by 2008.
Begin generating a budget surplus of $200 billion annually starting with fiscal year 2009. This annual surplus would be directly applied each year to reduce the overall federal deficit.
Below is a process that should be considered to achieve the fiscal discipline outlined above namely to balance revenues and expenditures by 2008 and generate a fiscal surplus of $200 billion starting in 2009:
Evaluate tax incentives and or expenditures that would increase the growth rate (GDP) in an effort to generate more jobs and create additional federal revenue. Areas to consider should include tax incentives to stimulate such things as alternate energy sources and higher auto, SUV and truck gas mileage. Invest federal tax dollars to begin rebuilding the infrastructure of our country. These expenditures would be paid to private companies to complete the necessary reconstruction projects in order to create jobs and corporate profits.
If the added revenue from the increased GDP growth together with expenditure reductions does not achieve the overall objectives of balancing the budget and then creating a fiscal surplus, the tax structure needs to be examined for additional revenue sources. In no event, other than national emergency or declared war, should the United States spend more than it collects in revenue after 2008. In addition, we need to generate and apply the $200 Billion annual surplus to the repayment of the national debt until it is repaid, (approximately 30 years).
Failure to achieve this objective will have a devastating impact on our needs in the future. Issues such as additional funding for Social Security and Medicare, national defense, education and the rebuilding of our infrastructure make it essential that we end the practice of charging to the future the things that we need for our society.
Energy
Restore the Café standards and make them apply to all cars, trucks and SUVs.
Establish new targets for increased miles per gallon for each type of vehicle over the next 10 years.
Establish tax credits for car manufacturers who achieve the established standards.
Establish tax surcharges to car manufacturers who fail to meet the new mileage standards.
Utilize the additional tax revenue from surcharges to help fund the tax credits to corporations who achieve the new Café standards.
Provide federal subsidies to more fully utilize available coal supplies to create the energy needed wherever possible. Subsidies should be used to help provide for clean air equipment and to research new methods of utilizing coal in a non polluting way. Tax credits should also be used to convert existing oil and gas fired generators to coal and with the cost of transporting coal from the source to the user.
Provide subsidies to help car manufacturers develop cars and trucks using alternate propulsion systems such as fuel cells and hybrid/electric vehicles.
Provide subsidies to develop long-term renewable energy supplies including geothermal, wind, direct solar conversion, cold fusion, fuel cells etc. The objective would be to reduce our dependence on foreign oil as well as provide for the sale of the new technology and equipment to other countries. This would have the obvious advantage of not only solving our energy problem but eliminating many of the political entanglements that our dependence on Middle East oil creates. In addition, a reduction in the purchase of foreign oil would help our balance of trade as would selling the new technology and equipment to other countries. Thus this strategy would be a win-win-win-win situation for our countries by enhancing employment, corporate profits, reduce our trade deficit as well as simplifying some of our political entanglements.
Encourage the development of natural gas in areas controlled by the United States
Encourage the development of additional oil supplies that are under the control of the United States and do not endanger the environment.
Carefully evaluate any new or renewed agreements to provide United States produced energy to other nations. Our objective should be to first provide for energy independence before pledging our assets, especially oil and gas, to other countries.
Social Security
Stop any attempt to extend Social Security benefits to illegal aliens.
Continue the gradual increase of full retirement to age 70.
Consider limiting the payout to retirees with non-Social Security income above $150,000 per year. When a retired couple has non-Social Security income above $150,000 per year (index this amount each year by cost of living), the benefits under Social Security would end at the point in which the individual’s contribution had been completely returned to the taxpayer. For example, if an individual during their lifetime paid $70,000 in Social Security taxes, excluding their employer contribution, their Social Security payments would terminate if their non-Social Security income exceeded the maximum amount when they reach a total payout of $70,000 in this example.
Should a retiree’s non-Social Security income fall below the maximum amount, the Social Security payments would resume based on their original entitlement so long as their non-Social Security income remained below the maximum amount.
Re-examine the option of allowing workers less than 35 years of age to set aside 2% of their Social Security tax to individual accounts. Issues to be evaluated should include:
Transition costs include the cost to supplant the removal of the younger workers 2 % of their taxes into individual accounts. Develop realistic estimates as to the transition costs. Identify the source needed to fund this transition amount before deciding to implement this change.
Consider the impact on a worker who selects the private account option wherein the value of their account at the time of retirement was less than the total benefits that would be paid under the traditional Social Security amount. Would there be a provision to subsidize the payment of the amount received under the individual retirement option to bring it equal to the traditional Social Security benefit?
Evaluate an alternative to the individual equity account that would allow portions of the Social Security Trust Fund to be invested in stock market index funds. This would provide the advantage of increased earnings equity investments produce without the high cost to maintain millions of small accounts that would be required under the individual account concept. This idea has been successfully used by every state pension fund of the United States as well as many large corporate pension plans. This concept, together with the added tax revenue from expanding the taxable base from the present level of $87,700 to include all earned income, is an option that should be fully explored.
Consider lifting the income limit upon which Social Security taxes are paid to include all earned income similar to the current Medicare tax. This additional revenue would be used as the source for the transition funding that is required to convert the Social Security system to a partially privatized configuration or solve the solvency issue by allowing an enlarged trust fund to be invested in equities.
Medicare and prescription drug coverage
Increase efforts to reduce medical costs waste and fraud without pushing the additional cost to either retirees or legitimate health providers.
Negotiate with drug companies to lower the cost of drugs by spreading the research and development cost to all purchasers not just American consumers.
Allow repurchase of American produced drugs from Canada.
Allow seniors to purchase insurance to cover gaps in their prescription drug coverage under Medicare.
Identify the funding source to pay for the prescription drug plan before taking effect in 2006.
Consider expanding the definition of Medicare income by including such things as interest income, dividends, stock options and tax exempt income to provide the added funding.
Trade deficit
We need to begin negotiating agreements that create a more level playing field. If we are to grant access to a foreign country’s products into our markets, we must insist that our products have equal access to their markets. We need to confront China and any other country that manipulates their currency exchange rate in ways that impact the sale of our products in their country. At the present time, China sets its exchange rate at an artificially low level which makes their products cheaper and our products more expensive. This cannot be tolerated and only the market should be allowed to set exchange rates. We simply cannot ignore the ballooning trade deficit, which in calendar year 2004 is approaching $600 billion
Military
We need to evaluate our military force needs in light of our deployments and the potential risks that exist throughout the world
We need to evaluate our force structures to deal with the ever-changing threat to the United States.
We need to reconfigure the allocation of military units within the active forces, reserve forces and National Guard. The allocation of combat support and combat service support units has always been tilted toward the reserve and National Guard units. This has caused the requirement to activate guard and reserve units whenever active components are to be deployed for any extended period of time. The reason for this is that the combat support and combat service support units that the active component needs for extended deployments are located in the guard and reserve rather than in the active component itself. We need to make the active component, a reserve component, and the National Guard component more self-sustaining by distributing all types of units – combat, combat support and combat service support – to each of them. Utilizing National Guard and reserve forces should be to augment the overall force levels when a conflict demands manpower that goes beyond the available active component. They should not be activated to complete the necessary types of units needed for sustained combat operations of the active forces.
The policy of contracting combat support and combat service support functions to private contractors needs to be eliminated. This concept was intended to increase the level of combat forces available without increasing the overall end strength of the military.
Two problems have been documented from this policy. First, the salaries private contractors need to pay are substantially higher then we pay our military in order to attract the civilians to work in a combat zone. One example is that truck drivers in Iraq were receiving as much as $80,000 per year in salary which was far greater than the equivalent salary we were paying to military truck drivers. Add the overhead and profit for the private companies and the cost of providing combat support and combat service support functions via private contractors in a combat zone is actually greater than by just employing more military.
The second issue is that when the civilian contractors come under attack in a combat operation, they are unable to defend themselves and require the active military to divert resources in order to protect them. This is essential not only from a humanitarian standpoint but to also protect the services that they are providing such as logistics or food preparation.
Therefore the concept of contracting military support functions to private contractors has both increased our costs and created operational problems in the area of combat when these units come under attack by the enemy.
We need to discontinue development of the point-to-point anti-missile system. This system has an estimated cost of approximately $100 billion which does not count the large ongoing expense of maintaining and operating the system. The system has proven unreliable in almost half of the tests to date and provides very limited benefits in terms of a defensive system. First, the system can only be used against incoming missiles as a one time application. If the missile we launch does not disable or destroy the enemy incoming missile, there is no second chance option. In addition, the system cannot be used against other types of targets such as water or ground targets.
The money from discontinuing this point to point missile defense system should be used to help develop the airborne laser system. This application utilizes a 747 as a generator and powerful laser weapon that can be used against incoming missiles on a repeated basis as well as on air, land or sea targets. It has far greater flexibility and application than the point-to-point Star Wars system and should be the primary anti missile weapons system.
We need to provide the necessary funding to bring our troops strength into alignment with our current and projected needs. At the present time the active component is insufficient to meet the missions it has been assigned and it needs to be brought to a level that enables it to meet its requirements with minimal or no use of reserve or guard forces. This needs to be done but not at the expense of new weapons development or in the replacement of equipment necessary for the active, reserve and guard components. It is clear we have not equipped our reserve and guard forces with the necessary equipment to enable them to meet their federal mission. This will require an overall increase in the defense expenditures to provide the manpower, equipment and training needed in the future.
Accelerate the repositioning of American forces from Germany, Japan and South Korea to the United States. Maintain pre-positioned stocks of heavy equipment and supplies to facilitate future deployments. This repositioning together with the increased troop levels of both the Army and Marine Corps will require revisiting the base closure planning to provide the needed facilities for the increased military stationed in the United States. Re-examine the airlift capability to enhance our ability to project ground forces into the areas of need in the future.
Illegal aliens
We should not allow legislation to pass that grants legal status to those who have broken our laws by illegally entering or remaining in the United States. We need a legal guest worker program that provides manpower needed to do jobs that cannot be done by Americans. The system should allow the needed manpower to enter the country, keep track of where they are and insure their return to their country of origin when the work is completed.
We need to staff our border patrol with both personnel and equipment to deal with the magnitude of the problem that faces us along our border with Mexico.
We need to control all those who visit the United States to ensure we know who they are prior to coming into the U.S. We need to make sure that they depart the United States when their authorized visit has ended.
Homeland Defense
We need to do more to close the loopholes that exist in our security system especially at our ports and small airports.
We need to fully fund the first responder elements with the equipment and training needed for them to do their job.
We need to fully fund all essential homeland defense requirements. It is not enough to tell the American public how much more we are spending but rather that we are fully meeting the needs to provide for homeland defense.
We need to enhance the cooperation with friendly countries to include intelligence, financial transactions, communications as well as police and law enforcement. The decentralized nature of terrorism in the world makes it impossible for any single country to effectively control the terrorist elements that would do them harm. It is in the best interest of every country that is threatened by terrorism to cooperate with each other in order to make sure that these elements are located and destroyed throughout the world. That does not mean we need to give up our sovereignty or our right to act but it does mean that we need an atmosphere of cooperation among countries to effectively control this growing threat.
The above are some of the specific actions needed to be taken to address the issues that face this country. There are certainly others that will need to be considered but these are the more essential issues that need to be addressed in the immediate future.