Figures released Friday on the U.S. economy, and reported in the Wall Street Journal, didn’t bring any good news. The economy is reported to have slowed down in the second quarter of 2012, only growing at a sluggish 1.5 percent.
According to the WSJ, these results came as consumers cut back on spending and businesses grew even more cautious about hiring and investing. On top of that, the national unemployment rate remained unchanged at 8.2 percent and in Georgia the unemployment rate rose to 9 percent.
As people in the government on each side of the political aisle debate what to do to reverse this slow sink into another possible recession, what do you think is needed to get the economy back on the right track?
What needs to be done to reduce financial uncertainty in the U.S. and avoid the country slipping back into recession? Do you think that freezing government regulation on small business, as has been proposed in Congress, will help?
We've spent the better part of the last two years printing money to keep interest rates low, yet have devalued our dollar to the point that oil prices have risen to a point that has caused our economy to slow again. Many economist are now fearing that we are entering a "Lost Decade" of our economy. The Japanese experienced much the same of what we are now going through and their government spent years throwing money at the economy to no avail. Thus the Japanese economy has spent much of a decade trying to recover. So what would have happened if the government had stayed out of things. The big banks would have failed? Perhaps. The automobile industry would have seen a major brand disappear? Perhaps. While there would have been pain from all of this it would have been temporary pain. Out of pain comes opportunity. Big banks would have been split up into smaller banks who tend to know their customers better. A auto brand disappears, but another manufacturer picks up the slack from the demand created. Let the market choose the winners and losers and not the government.
That all changed with the easy money period of the 2000 - 2007 period. Banks and Government created this problem. My home that I bought as a starter home 20 years ago is once again a starter home today. Sorry to say but this glut of homes will be around for a while
On a serious note though, you're exactly right. Government needs to get the hell out of the way. We need to keep the tax cuts and make them permanent, which would provide some stability. We need to do away with corporate income taxes completely. This would help bring jobs and manufacturing back to the US. And in the greater scheme of things, wouldn't cost the government a dime. Actually, it would help increase revenue from the additional incomes it would create. A consumption tax, like, say, the FairTax would really be the way to go, but since that's not going to happen right now, we'll stick with the above....
I really like some of your ideas. My opinion is the ONLY WAY we will get some of these businesses back in the U.S. is to eliminate corporate taxes. That would not reduce the revenue to the government--in fact, quite the contrary. it would increase revenue to federal, state, and local governments because it would create jobs!!!! Just as "foreclosure prevention programs" cannot help people who do not have a job, the federal, state, and local governments cannot raise tax rates enough to compensate for what working Americans could pay in taxes. If they are drawing unemployment, getting food stamps, etc, they can do little to contribute to our economy. In addition, our young people need parents to "show them" how to work and not depend on the government for existence. The future of the U.S. can be very bright but we have to get back to limited government.
If you think about it, what is the effect of corporate income taxes? Simple answer - reduces profits. Raises prices. Limits growth. There's only three things a company can do with money it makes. 1) Taxes. 2) Infrastructure - including software, hardware, buildings, maintenance, whatever. 3) Income for employees, either in salaries, wages, or bonuses. That's it. Those are the only way a company can disperse and money it makes. Both of the second ways are taxed. And higher than corporate income taxes with all its loopholes. And closing loopholes will only serve to raise the tax rate, in effect, so that would do nothing to bring new jobs.