9/10/2012 1:59:00 PM Publisher's Column
We need a plan
that could succeed
Well, the conventions are over and the final quarter of the National General Election contest has begun. It is time to get real about making clear the issues that are important to us and demand detailed answers on how candidates plan to address those issues.
President Obama is proposing primarily to raise taxes on income over $250,000 and create jobs by rebuilding the nation's infrastructure and investing in education, a program that sounds similar to that undertaken during the Great Depression. He claims moving forward with the policies that are working now will result in a slow but lasting recovery.
Mitt Romney proposes cutting taxes on those making more than $250,000 and abolishing the Affordable Care Act, his theory being that cutting taxes on the rich will stimulate job creation and undo the damage Obama has done to the nation's economy
There is evidence that Obama's policies are working. According to the job creation report that came out last Friday, 96,000 jobs were created in August, far fewer than anyone would have liked but 846,000 more per month than were being created when he took office.
On January 20, 2009, the day President Obama took the oath of office, the Dow Jones Average was $8,279.63. Last Friday, the Dow Jones Average was $13,306.64, a gain of $5,027.01. American businesses seem to be doing pretty well under Obama policies.
According to the World Bank, the U.S. Gross Domestic Product (GDP), a measure of the overall health of the American economy, is up eight percent since Obama took office, adding more than $1 trillion. The U.S. GDP was experiencing negative growth prior to his taking office.
According to a recent Forbes' magazine article, Average America vs the One Percent, the wealthy and corporate America and have done well under the policies of the past ten years at the expense of the average American.
During the past 30 years, worker productivity has risen by 80 percent, according to Forbes, but worker salaries have not risen. If workers' wages had kept pace with the growth in productivity, the average salary of the bottom 90 percent of American workers would be $92,000 instead of the current $51,000.
Today, the top five percent hold 72% of the nation's wealth, a share that is as it was during the Great Depression, according to the Forbes article.
Many sources, including the IRS, have documented the dramatic increases in income among the top five percent during the past decade since the Bush administration's tax cuts, and the dramatic shift in wealth away from middle class and lower middle class toward the top one percent, where the most dramatic increases have taken place.
American corporations and America's wealthiest five percent are holding the largest treasure trove of sequestered assets in the history of the world but they are not spending it to stimulate the economy, build new industries or create jobs. They are investing to preserve the wealth they have without risking it on ventures that might undermine their current holdings, and that is perfectly understandable and appropriate.
As an example, investment in manufacturing in Minnesota during the period 2007-2011 raised the state's manufacturing output by 13 percent according to the Minnesota Department of Employment and Economic Development (DEED), but during the same period employment in those industries fell 12 percent.
New technology is making it possible for companies to replace several workers with one machine while increasing output. More than four and a half million jobs have been abolished by such technology in the present recovery, jobs that will never return.
Investors are not going to create jobs when they can get the work done by investing in automation, nor can they be expected to do so.
As a result, the private sector by itself is not going to become the job creator we need to get Americans working again and restore economic vitality. If allowing wealthy individuals and corporations to acquire volumes more of wealth were going to work, as Romney proposes, it would have started working years ago. I don't see how his plan can work.
We have enough infrastructure deficits to employ several million Americans correcting them. While the government would be the impetus for creating those jobs, the bulk of them would be in the private sector as contractors, construction workers, etc. These are also employees who will spend their money on consumer goods which will further stimulate job creation and economic growth. This is part of the Obama plan. I can understand how it could work.
Obama also proposes investing in research to create new industries in energy, communications and transportation rather than allowing foreign economies to capture these opportunities.I can understand how that could work.
Obama also proposes investing in education to give Americans the skills necessary to compete in the highly technical world we live today. I can understand how that could work, too.
Creating jobs seems to be the first issue we need to address. I don't understand how the Romney plan could create jobs, but I'm willing to listen if someone would like to respond and explain in detail how it could work.