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Lower government spending; cut the federal budget deficit.

Posted by: Mello at March 5, 2006 06:08 PM

I agree 100% that we need to lower the budget defict, but could you explain how that would help lower our trade deficit?

Posted by: Nathan at March 5, 2006 06:53 PM

Reduce DOD spending to 100 billion per fiscal. Revoke the corporate charter of any company that manufactures off shore for domestic consumption. Force those companies to pay individual income tax like any other citizen. Make the flat tax or the graduated tax equitable. No exemptions for anyone or any company.Stop immediately all corporate welfare.Pin the dollar to gold !
That should right the ship within a couple of budget cycles. Remove the limit on foriegn corporate liabilty for companies that export to the usa. Make risk real!

Posted by: glen at March 5, 2006 07:31 PM

Reduce DOD spending to 100 billion per fiscal.
--How would that decrease our trade deficit?

Revoke the corporate charter of any company that manufactures off shore for domestic consumption.
--I don't think destroying businesses would help.

Force those companies to pay individual income tax like any other citizen.
--Doing that would probably decrease the amount of income an employee would take home thereby devaluating the dollar making our stuff cheaper to export, but are you willing to sacrifice your income?

Make the flat tax or the graduated tax equitable.
--The flat tax does not work, neither does the graduated (progressive) income tax (a progressive tax was avocated by Karl Marx). It becomes too large and cumbersome. That's why I'm in favor of the FairTax (more to come about that).

No exemptions for anyone or any company.
--That would happen under the FairTax too.

Stop immediately all corporate welfare.
--I don't think corporations who can't make it in the free market shouldn't receive welfare. Same go for able bodied adult Americans who choose to leech off of welfare.

Pin the dollar to gold !
--Intriguing.

I think the FairTax would be a good deal because removing the punishing corporate income tax system would allow businesses to come back to the US and we would be an economic powerhouse. Instead of taxing income, why not tax wealth? The FairTax is the way to do that!

Now, like I've said before, I don't think that the trade deficit is all that important to worry about. There are some items that we just cannot produce efficently in the US that other countries can produce at a lower opportunity cost than the costs it would take to make a product over here.

Posted by: Nathan at March 5, 2006 07:50 PM

Government savings = domestic investment plus trade surplus. Put negatively, Government deficit = domestic investment - trade deficit. This is the same thing as a personal budget. My ability to spend is the amount I earn as an income plus the amount that someone will loan me. What's the best way to keep myself from borrowing money (a trade deficit)? Spend less and rely on my own income.

Posted by: Mello at March 5, 2006 07:57 PM

Please note that I am unaffiliated with Glen :)

Posted by: Mello at March 5, 2006 07:58 PM

Unfortunately we are driven by consumption, not fiscal responsibility. I think the U.S. is incapable of restraining spending, too many poeple love walmart. That leaves export as the best(or worst) means of remediation. That won't amount to a pile of "mushroom growing medium" if corporations are allowed(encouraged) to move manufacturing and knowledge(information) to the most efficient port.(read out source)

Posted by: glen at March 5, 2006 08:34 PM

Gross Domestic Product = Consumption + Gross Private Investment + Government Expenditures + (Exports - Imports)

Mello,

I believe that you're confusing a trade deficit (where we import more than we export) with a budget deficit (where we spend more than we take in).

Glen,

I like Wal-Mart. I like our capitalist system. I do not believe that a trade deficit is anything to be worried about. There are products that would cost more, in the terms of opportunity costs, here at home than abroad. Therefore, imports can be seen as getting the stuff that we want for a lower price. With that said, I do try to buy as much American made items as I can when I have a selection (like cars...I'm a big Buick fan).

Posted by: Nathan at March 5, 2006 10:00 PM

WE are the economic powerhouse of the globe. 5% of the worlds population consumes 25% of the worlds resources. We are the economically the most powerful nation this glob has ever seen! The problem inherit in that is the 1 percent controls 80 percent of the capital. That control is the problem in the economic pie. Those defecits are risk that has been dumped on the citizen of the U.S.Were the country to remove personhood from corporations that risk would be very real. I would argue that a country(USA)that treats corp. as people and assummes the risk of those corps(deficit) cannot be driven by consumption(imports)long term.

Posted by: glen at March 6, 2006 06:40 AM

No, I'm telling you how they are related.

Posted by: Mello at March 6, 2006 09:07 AM

http://minneapolisfed.org/pubs/ar/ar1986.cfm . Here's some outside help. It's fairly neutral; it's a speech written by the president of Federal Reserve Bank of Minneapolis (interestingly in 1986). Obviously I agree with some but not all. It should help you understand how the trade deficit and budget deficit relate.

Posted by: Mello at March 6, 2006 09:22 AM

I know you like the capitalist system, nathan. I wasn't proposing anything new here. The courts gave corporations personhood at the beginning of the 1900's.Before that charters were for a specified time.Risk was an individuals responsibility.
Check in the law library
http://www.law.cornell.edu/wex/index.php/Main_Page
for more info.
It is worth pointing out, our country has been running a deficit to pay for war since the seminole wars of the early 1800's. That capital is financed by foriegn investment. Our response to that investment, is more importation of goods. We strengthen the value of the dollar worldwide each time. Mello's reference to trade and budget deficit policy being related, intertwoven is partially correct. A good example is walmart. Without a cheap manufacturing country like china,walmart could not exist. The very efficient inventory systems they use to dominate the retail scene falls apart if they have to assume risk.

Posted by: glen at March 6, 2006 09:50 AM

Ok, thanks for the site. I'll be sure to check it out.

Posted by: Nathan at March 6, 2006 10:41 AM

Glen, if corporations were no longer allowed to "outsource", we would actually lose jobs here in the U.S. More jobs are created here by foreign companies than U.S. corporations create elsewhere. Do you want to kick all of the Japanese carmakers out of the U.S.?

Posted by: Mello at March 8, 2006 06:49 PM

Mello,
I do not want to stop outsourcing. I want to stop outsourcing manufacture for u.s. consumption.It corrupts the capitalist model, forcing it to skew away from real efficiency. I also think the risk for business should be real. If say "dupont" hypothetically poisons and kills 10000 people then the state should assess that corporation and its owners with the responsibilty.
The corporate charter should only be granted where the benefit for public good is clear,prior to Santa Clara County v. Southern Pacific Railroad Company (118 U.S. 394 (1886). It would give people an even playing field.
All those affect I stated previously must be packaged together. Any one seperately would skew the model.
Like the system we currently have, manipulating currency lets corporations(and governments) shift(transfer) the risk to consumers.
best regards

Posted by: glen at March 8, 2006 07:20 PM

So we are banging against the 8.2 trillion dollar cieling.
Raise the roof? Or further manipulate the currency market?
We will see?

Posted by: glen at March 8, 2006 07:22 PM

Capitalism is driven by consumption, Glen. I have no problem with that, and if corporations want to outsource to meet the market demand, that's just fine.
The problem I have is with debt. It is just basic common household knowledge that it is stupid to go into debt for anything other than appreciating assets, and the country should be run the same way.
Label me a "fiscal conservative" and a "quasi-supply-sider".

Posted by: Mello at March 9, 2006 10:28 AM

I am not sure anyone has clear idea about the best way to address the trade deficit. I would say there are many ways to go forward. I favor the green ideas in our platform as a means.
http://www.gp.org/platform/2004/economics.html#241710
If sustainablility is not considered then the finite nature of resources is going to rear its ugly head.The petroleum economy is rapidly rushing down hill. Trade deficits become less worrisome when you have to sail 10 days to collect. Just a thought.
best regards

Posted by: glen at March 9, 2006 11:01 AM

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