It's the economy stupid. Forget about Iraq. The unemployment rate is growing, factories are moving to Mexico and China in unprecedented numbers, bankruptcies are at record levels. Interest rate manipulation will only do so much.
1. Immediate Tax Cut Changes. The poor should not pay income taxes. If you earn $10 an hour in this country you are poor. That translates into $20,000 per year. A tax cut at the lowest income range increases economic activity more than a tax increase at the wealthy range. This happens for one simple reason -- the poor spend every penny they get, while the rich don't. An immediate tax cut change, with corresponding withholding changes, will give the economy a shot in the arm, while helping those that need it the most.
2. Social Security Tax Reform. The poor should not pay Social Security or Medicaid taxes either. Bill Gates pays a lower rate of Social Security taxes than all other Americans. This is because we have a cap on social security taxes. We should eliminate the cap and institute an exclusion on the first $15,000 of income. This would increase revenue to the Social Security Trust Fund by $20 billion or more per year while pumping money into the economy.
3. Prescription Drugs for Elderly. No one in this country should go without prescription drugs that are necessary for his or her health. Why don't we issue prescription stamps, like food stamps, to the elderly and sick who can't afford prescription drugs? Preventive care usually costs less than treatment later. Paying for prescriptions out of the Medicaid budget will probably save the government money in the long run.
4. Health Care. Canada and Europe have a cost advantage over the United States in manufacturing because they have national health care. Health care is an economic competitiveness issue. All Americans should be provided with basic health care so that the United States can compete on a level playing ground with Canada and Europe.
5. Gasoline Mileage. The auto companies can do better. Most Americans agree that the CAFE (Corporate Average Fuel Economy) standards should be increased dramatically, even doubled. Automobile prices may go up as a result, but the economy is better off with higher car prices and less dependence on foreign oil.
6. NAFTA Reform. Ten years after NAFTA was forced down our throats, against the American will, it has been proven to be a dramatic failure. The United States has lost one million jobs to Canada and Mexico, while the Mexican standard of living has actually diminished. Now, we are going to have unsafe Mexican trucks driving across the United States in oversized vehicles with bad brakes and drivers who don't speak English. We should amend NAFTA to require Mexican minimum wages in exporting industries to increase and require Mexico and Canada to adopt the US dollar as the North American dollar. Since NAFTA was passed, the Canadian dollar has decreased 30% in value, the Mexican peso has decreased 70% in value, all while the US balance of payments to our neighbors has shot up dramatically. Only with a fixed currency, like the Euro, can North America truly have a free market.
7. Minimum Wages. The minimum wage has not kept pace with inflation. The minimum wage in 1968 was $1.60 an hour. According to the US Department of Labor, prices have gone up 450% since then. Based on these price increases, the minimum wage should be $9 an hour, not the $5.15 rate set by current law. The minimum wage was first set in 1938 at 25 cents an hour, and was raised to $1.00 an hour in 1956. In its first 18 years, the minimum wage quadrupled, while prices had not even doubled. This means that in the early days of minimum wages the standard of living for those earning a minimum wage improved dramatically.
8. Excessive Bank/Credit Card Charges. Bank fees have gone up even more than inflation. Banks now routinely charge $30 for an overdraft item even if they pay it. Less than ten years ago the fee was $5 or less. It costs banks only $1 to handle an overdraft and they should not be allowed to charge more than that. These bank fees take from the poor and give to the rich. Reversing this pattern will put more money into the hands of those who really need it and help the economy overall.
9. Credit Reporting Reform. Have you ever tried to get errors on your credit report corrected? It is nearly impossible. Bad credit caused by inaccurate reporting has hurt the economy overall. Why don't we require credit-reporting agencies to get rid of old data? I propose that after three years credit information be deleted automatically. That late payment that you made in 1992 when you were injured should not affect your credit worthiness ten years later.
10. Global Warming Initiative. The United States is the only major nation not to accept the Kyoto global warming treaty. As the world's only superpower, and the world's richest nation, we have an obligation to come forward with a new proposal to cut greenhouse emissions. Kyoto had large flaws: It allowed China and other developing nations to continue to pollute. This would shift even more industry to China and Mexico. I propose that we develop international environmental standards for power plants, for steel mills, for oil refineries and for other facilities no matter where they are located on the planet. If China can afford a new power plant, it should be a state-of-the-art facility that does not pollute the rest of the world.
Well, there are ten suggestions for getting the economy moving. It is ten more than the Democrats put forward during the past election campaign.
Joel Joseph is chairman of the Made in the USA Foundation. Email firstname.lastname@example.org.