Economic Recovery

August 20, 2011.

Economic Recovery

By T.S.Khanna, August 20, 2011.

Some quick steps for economic recovery are suggested:

• Bring back the outsourced jobs by competitive wages and taxes;

• Eliminate all tax loopholes and adopt a 20% flat rate federal tax and 5% state tax for all income groups

Those who pursue wealth within the legal and moral framework create more wealth than they consume, making the society wealthier. Higher tax rate for higher income is a disincentive. Flat rate tax will be fairer, simpler and increase the revenue.

• Allow tax free income of fifty thousand dollars for everyone (husband-wife $ 100,000) for greater expendable income for shopping and household expenses;

• Disallow voting right to non-taxpayers. 47% of Americans are not paying any tax, due to the loopholes or low income. Free loaders must not be allowed to steer the economy. Only the citizens in good standing who have paid taxes for at least five consecutive years may have the right to vote. This would be constitutional, except for Amendment 24.
  

• Adopt a balanced budget amendment to the Constitution;
  

• Suspend property tax and mortgage deduction from income tax, for personal homes;

• Provide free education only up to primary school. Thereafter, only for those who are scholarship good at studies. Those who do not wish to pursue studies may be picked up for employment training by corporations. The current system of public education is a huge waste of taxpayers' money.
  

• Reduce the salaries and perks of all elected officials by 50% , until the economy recovers. They should be more connected with the people and take a voluntary cut in their compensation and perks.
  

American Wages and Foreign Competetion

American Wages and the Foreign Competition.
By T.S. Khanna

It has been a tradition in the US economy for the unions to increase their wages free of competition and regardless of the effect on the overall economy. Since the early twentieth century, the US had been foremost in industrial development free of foreign competition and could sustain such increases.

Now the foreign competition is getting to be stiff and real. The traditional approach to wage increase spiral has been inflationary, more like chasing a mirage to quench thirst.

United Auto Worker’s recent strike against General Motors, Chrysler Corporation, or Nurses strike against hospitals must not be viewed merely as a dispute between the “poor workers” and the greedy corporations. The US wages are already way too high to compete in the world market. Each time the wages or benefits are increased through strike, the US economy falls behind that much more in competition.

Now it seems imperative that the wages in the US economy be adjusted and enforced to be consistent with the public interest in economic growth, monetary stability, and foreign competition.

Outsourcing of jobs cannot be blamed on the President, or NAFTA; the unions must take the blame. By ignoring the wage adjustment, the US economy will become like third world economies with poorly paying service jobs only. The very unions now forcing wage increases will be seeking those jobs with a greatly depreciated dollar value.

The President and the Congress must examine the matter on high priority.