The Fiscal Cliff Vs. America’s Growth, Jobs, and Future!
News item, November 14, 2012:
“President Obama was reportedly planning to reach out to House Majority Leader John Boehner today to begin negotiating a deal to avoid the so-called fiscal cliff, a series of spending cuts and tax hikes scheduled to take effect unless Congress rescinds the laws that created it.”
Note there’s no mention of also exploring what can be done to increase growth of America’s economy and jobs. Our leaders will be arguing about how to divide up the “pie” of our present $15 trillion economy between needed services and retiring our excessive national debt. Why is so little attention being given to adding to the size of the “pie” so we can meet both needs? Our annual Gross Domestic Product (“GDP”) will be about $15 trillion this year, at very best an increase of about $500 billion over last year.
It’s America’s business sector, not government, that creates the growth of our GDP. What can be done to accelerate that growth? Some say to start by giving tax cuts to wealthy investors and big companies, but that only adds to current income shortfall. A better answer is to realize that there’s been a major structural change in our domestic economy. Massive import competition from a half million exporters all around the world has eliminated thousands of U.S. manufacturer and business income that will never return unless we cut the annual $2.5 trillion flow of imports into the U.S. by about 25% and turn again to more of our own production.
A 25% cut doesn’t sound very difficult or extreme. What would we gain? Answer: We would double our GDP growth rate, eliminate our current annual trade deficit of $500+ billion, and rebuild our domestic industrial base that we need for national strength and security. We’d create several million good jobs and add $500 billion of taxable income to the U.S. income “pie”. That additional income should make it much easier to solve the “fiscal cliff” problem.
What’s missing most in America today is the feeling that we’re on the right track. We’ve always been an optimistic, high growth country. Replacing some imports with American products and jobs in a “Make It In America!” program is a sure way to get back on a high growth track! We would still be the world’s biggest importer. That’s not protectionism – it’s our market and it’s up to us to roll up our sleeves and get back to making more of the things we need.
Mr. Davis was a former U.S. Assistant Secretary of Commerce, and also a former IBM Corp. V.P. and Chief Financial Officer.