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By Ellis Goodman
What killed the Roman Empire? Corruption, Greed and incompetence in Rome, leading to a financial crisis and the inability to pay for the Roman armies that were maintaining the far flung empire.
What led to the collapse of the British Empire? The cost of two World Wars in twenty-five years, with a world-wide economic depression in between, bankrupting Great Britain and leading to uprisings and demands for independence from its colonies and dominions.
What led to the decline of the American Empire? The cost of being the “World’s Policeman,” embarking on unnecessary wars financed by borrowed money without even including the costs in the budget. Exploding deficits, corporate and personal financial greed, leading to the near collapse of the financial system, all compounded by a corrupt and incompetent Congress in the pockets of an army of lobbyists. What does all this mean?
Well, it seems to me that the self-inflicted problems of the US are not insurmountable; a country with $14 trillion of GDP could easily solve its debt crisis. After all, when Bill Clinton left the White House, the US had a surplus of $5 trillion. Greenspan and the Fed’s concerns at the time were how to use these surpluses while still maintaining a regular flow of US Treasury Bonds. Our current deficit can easily be reduced. Our legislators know it, but they haven’t got the will or the strength to tell the truth and tackle the problems in a substantive way. The circus and arguments that nearly shut down the government recently over a trifling $38 billion is a case in point. As usual, the ax fell on those least able to pay or make ends meet.
If we want to tackle our deficit problems, let’s tackle the main part of the budget – Health Care, Taxes and Defense. Soaring, Medicare and Medicaid costs are definitely a major problem. Healthcare Reform is hopefully going to be able to tackle some of that problem, although in the end, the final Bill had far less teeth than it should have. We will have to raise the retirement age to 67 and the earlier we face that and do something about it, the better. We will have to raise contributions to healthcare premiums by employees in many organizations. We will have to tackle the pharmaceutical industry’s charges for drugs. Why are drugs in the US, double the price of those in Canada or any other developed country?
We will have to tackle corporate tax abuses. It is often pointed out that the US has one of the highest corporate tax rates in the world at 35%. That is true, but the focus should not be on the rate of tax, but on the amount of tax that the US collects from corporate profits. This according to latest records is only 21% – one of the lowest in the developed world. We need to have a minimum corporate tax rate so as industries such as the oil industry or even companies like General Electric can’t use loopholes to avoid taxes, because they are able to move their profits into tax-free or low tax areas.
We need to have contributions to the deficit reduction by those that can best afford it. These include Wall Street and the banking community, who got us into this economic crisis. Why not a 0.25% tax on all financial transactions (excluding Bonds) through the stock markets or banks, e.g., equities, mutual funds, hedge funds, derivatives, traded mortgage securities, and other products? This would bring in over $2 trillion over the next decade which would be painless for everybody. We have to raise capital gains tax on those that garner capital profits in excess of, say, $1 million per year. There are a lot of people in that category. We have to raise income taxes on a sliding scale for those who earn over a quarter of a million dollars a year and cancel the Bush tax cuts for those people.
We have to cut the defense budget. We’ve had a clear illustration over the past decade that massive military strength and technology is no match for roadside bombs and Guerilla warfare. We’ve got a whole army bogged down in Afghanistan, fighting a collection of untrained and poorly equipped insurgents.
We cannot be the “Policeman of the World” anymore. We have to look to cutting our generous aid to many foreign countries. Our own citizens need aid. Egypt appears to have wasted the $1.5 billion that we’ve been giving them for the last thirty years. Israel, which has a standard of living that ranks in the top fifteen countries in the world, does not need US aid anymore.
I don’t believe you have to be a “rocket scientist” to recognize that these pragmatic suggestions would have a massive impact on the deficit without hurting those that need help most – the middle class and the 25% of the current population of the US that live at or just above the poverty line. That statistic alone is disgusting.
So, will we see our Congress “biting the bullet” and actually passing legislation that will be meaningful to our current economic problems? It doesn’t look good at the moment.
Winston Churchill said, “The Americans do everything wrong until eventually they do it right.” Let’s hope we’re not too far away from the “doing it right” part.
Ellis M. Goodman, author of Bear Any Burden: www.bearanyburden.com