What will it take to turn our economy around and when will we know it?
Much has happened in the last several years between multiple administrations. The problems we face as a country has created a sluggish economy and it will continue until there is a concentrated effort to address the true causes. This does not mean there have not been some proposals in Congress but neither legislative house has been able to come to an agreement on what needs to be done.
Some look to the stock market as an indicator of the economy but not everyone participates in the stock market. It can be an indicator with regards to business confidence or confidence in some businesses but it is not a reflection of the perception or confidence of all citizens. The ups and downs of the stock market may impact individual perception of the economy but it is not the only driver of consumer confidence in the economy or the lack of it.
Many things affect our perception but one thing which seems to be on everyone’s mind is the actions or inactions of Congress. Many problems face our country not the least of which is our national debt but the figures being represented is not a reflection of who actually is owed the amount of debt we have. There have been conflicting reports but the focus on our debt as it is being reported is the debt we owe to foreign countries such as China. This however by some reports is not the bulk of our debt. The bulk of our debt is owed internally. Programs such as Social Security, Medicare and Medicaid and the funds to support them have projected deficits in the future. Part of the reason for the debt is that the funds for Social Security were used for other programs and projects in the past and not left where they should have been. Turning our economy around involves making these programs solvent now and into the future. Funding shortfalls for these programs must be resolved as part of turning our economy around.
Another area involves the number of regulations and laws which are generated each legislative session. Each legislative session has issues it needs to address but the same issues seem to be constantly on the shoulders of each legislative session simply for the fact that previous legislative sessions have not taken the action for which they were responsible. The method or culture seems to be to leave it for the next legislative session as the issues are too difficult to address. Part of this stems from the fact that each political party wants to wait in the hope they will have control of Congress to push their agenda. What needs to happen is for both political parties to diligently work to resolve the critical issues facing our county and our economy. Having this type of cooperation will be an avenue to start turning our economy around.
I mentioned regulations and laws generated by Congress each session. Our system of government requires that laws and regulations be generated to address the responsibilities of the federal government as defined under the Constitution. Many of the laws and regulations serve a useful purpose and are in agreement with the responsibilities Congress has been given under the Constitution but some of these are questionable at best. Laws and regulations which are generated need to be a support function for citizens as the Constitution was originally intended. Laws and especially regulations should not be so complex to be a burden on the private sector. Currently there are laws and numerous regulations which require businesses in the private sector to have dedicated individuals to ensure regulations and laws are not violated. These dedicated individuals sometimes include lawyers who can understand the language of laws and regulations.
Additionally laws and regulations sometimes create additional costs to businesses and cause changes in the way they operate such as hiring additional employees or reducing the number of employees they have to get out from under specific laws and regulations. Laws and regulations should encourage business expansion rather than causing businesses to contract their operations. One example is the definition of a full time employee to be an individual who works at least 30 hours or more each week. While this definition has been around for years under the new healthcare law businesses who have a certain quantity of full time employees must provide healthcare. What we have seen as a result is a reduction of full time employees and an increase in part time employees. This coming year many businesses will make decisions on whether to continue to provide healthcare for their employees or drop the benefit forcing employees to find other sources of healthcare.
Turning our economy around also involves our tax system which is cumbersome and hard to understand in many cases to say the least. There has been much talk during election years from incumbents and those wanting to replace them that the tax system needs to be revamped. Everyone talks about this kind of change but no agreement has yet surfaced between the political parties as to the necessary changes. Our tax structure needs to be simplified and the rates currently in place need to be modified to encourage the expansion of businesses. Earning more money under our current tax structure appears to penalize individuals and/or businesses for being a success. The action is a higher tax rate.
Another hindrance is the unknown factor in doing business from one year to the next. Business with the current culture in Congress face uncertain costs from one year to another and in that environment they hold back from expanding or hiring new workers. Regulations sometimes add additional costs and these costs can change from one year to another as new regulations are generated or others revised. Congress needs to create a consistent system with respect to costs impacting businesses from one year to another.
Unemployment and the causes also add to our economic woes as a country. Increasing the number of individuals who are working and paying taxes increases the funds the government receives to pay for its responsibilities. This reduces the burden of borrowing money to pay for services and benefits being managed by the federal government. Individuals receiving unemployment benefits have the initiative to look for jobs rather than continually receiving these benefits. This is not meant to imply that individuals receiving unemployment benefits are not truly searching for work. The current level of support through unemployment benefits does not create an incentive to search for a job. Individuals who can make more on unemployment than they could when they work will choose in many cases to stop looking for work. While unemployment benefits are necessary they should be short term not long term.
Our energy sector is one area where policies, regulations and laws need to change. Today it is well known that our energy reserves exceed those from whom we are currently importing the supply such as Saudi Arabia. Success has been seen on private land where tapping into our energy reserves not only by providing more supply for our country but the unemployment rate in these areas is low. With this example of success why are the resources being tapped on government property? It is known there are environmental concerns associated with tapping our energy reserves but it seems to be working on private land but not action is being taken at the federal level to tap reserves on government property. The restrictions now in place concerning our energy resources we have available is hurting our economy and economic recovery. There needs to be a defined energy plan which addresses the utilization of our energy reserves such as coal, oil and gas. Removing restrictions will not only increase our supply and reduce our dependence on foreign oil but it will increase the number of jobs and the income to the government through taxes paid.
The subjects discussed above and the information presented is critical issues to turning our economy around. Resolving the causes of unemployment in our current economic situation must be addressed through firm action from Congress. Accessing our energy reserves would also create a positive perception that we as a country are doing everything we can to achieve energy independence. Energy independence has had much talk during election years and years between elections but no action ever seems to be taken to put a plan in place with a goal to achieve energy independence. While there may be some proposals in some respects to change our level of dependence on foreign sources of oil, nothing seems to make it into law. Government must back up their rhetoric with action not only with our energy needs but with other critical issues facing our country.
The last point to emphasize is the need for revamping our tax system. In the past a reduction of tax rates resulted in more money being received by the government. This has been reported many times when taxes were reduced in previous administrations income increased, not decreased. Today there seems to be a focus on creating more taxes to increase income rather than focusing on how to reduce costs to match the income being received. There are critical government programs which individuals of all ages depend not the least of which is Social Security. Individuals who have paid into Social Security along with their employers deserve to receive the funds they were promised. In respect to Medicare and Medicaid individuals who truly need these benefits should receive them while those who legitimately do not logically qualify should not receive them.
Granted these seem insurmountable to resolve but two things bring the possibility of achieving the necessary changes. One involves the laws and regulations generated or revised each year in the legislative session. Changes in laws and regulations can have a dramatic impact on turning our country around. If laws and regulations involved a support function rather than a dictatorial philosophy there would be a dramatic change in the perception of Congress and our economy. Granted there are times when dictatorial laws need to be generated in areas such as environmental issues but these types of subjects are the exception or should be the exception rather than the rule. In the area of taxes this also can have a dramatic impact on our economy. If our tax system were revamped to make it more business friendly the impact would also be dramatic. Changing our tax structure including reducing tax rates and potentially reducing the tax rates or eliminating some would provide more income to each individual and business. This makes more money available to purchase necessities and wants which increases the income of those businesses involved and increases tax revenue. Regulations and taxes are interrelated to other areas of our society and our economy and making changes in these areas as suggested would impact every area of our society.