by Thomas Hinton
The lame-duck Congress reconvened this week in Washington following the November 2nd election. You would think Congress would have a sense of urgency to act on major issues affecting our economy and consumers, but it appears not much will get done in the next six weeks. This is unfortunate because there is a sense of urgency among millions of consumers who are unemployed and cannot find work. It’s unfortunate because there are millions of homeowners who face foreclosure as well as declining home values and cannot sell their homes.
While many economists proclaimed the recession is over, if you look around at the shuttered storefronts and discontent among voters, it apparent our economy is not improving fast enough for most consumers. Regrettably, there is a growing sense of resignation among millions of Americans that things will not get better in the near term.
What can Congress do in the short-term to get our economy back on track? I recommend the following five steps:
1. Make the Bush tax cuts permanent. The more money we can place in the hands of consumers, the faster are economic revival will happen. Yes, we have a serious national debt, but once our economy gets back on track, federal revenues will outpace borrowing and the debt will decline. Also, it’s time to seriously reconsider the flat tax idea so everyone (and every corporation) pays their fair share. Congress should eliminate tax deductions (except for charities and college tuition) and simplify the tax laws so all Americans can pay a fair tax and feel good about it.
2. Incentivize Small Businesses to hire people. Congress should enact legislation that provides small businesses with a $15,000 tax credit for each person they hire to work for 35 hours or more a week. Small business is the backbone of America’s economy and until small businesses start hiring people, our economy will crawl along.
3. Solve the Foreclosure Mess. Congress should redirect already-approved stimulus funds to homeowners-in-distress to help them remain in their houses. In does no good to throw families out on the streets. It’s bad for the families, it’s bad for the city tax rolls and abandoned homes cause serious legal problems for lenders and neighborhoods. Reduce mortgage payments by 50% for a five-year period until homeowners can get back on their feet and the economy rebounds.
4. Cut Government Spending. There’s too much waste and duplication at the state and federal levels. Government must provide the basic needs of fire, police, roads, parks, education, courts/prisons, child protection and the DMV. Beyond that, everything else needs to be re-evaluated based on our ability to pay for it. This includes salaries and benefits for elected officials at all levels of government as well as reducing pensions and matching pension contributions to reasonable levels.
5. Cooperate. Americans are sick and tired of the in-fighting and political posturing that takes place in Washington and the state capitals. Consumers want results. We really don’t care who gets credit as long as our elected officials get the job done. So, check your egos at the doors, roll up your sleeves and start doing the job you were elected to do.
Finally, we should be reminded that earlier this year, President Obama appointed the Debt Reduction Committee to examine the national debt and bring forward recommendations on how to close the gap. The Commission’s plan calls for deep cuts in domestic and military spending, a gradual 15-cent-a-gallon increase in the federal gasoline tax, limiting or eliminating popular tax breaks in return for lower rates, and benefit cuts and an increased retirement age for Social Security.
Those changes and others, none of which would take effect before 2012 to avoid undermining the tepid economic recovery, would erase nearly $4 trillion from projected deficits through 2020, the proposal says, and stabilize the accumulated debt.
Both liberal and conservative groups will condemn much of the Debt Commission’s plan because no one likes to disrupt the status quo. But, that’s precisely what’s got us into this mess and, frankly, it’s why voters rebelled on November 2nd and re-structured Congress.
So, it would serve the current lame-duck Congress well to remember what voters want and need. To delay action on these vital issues will only exacerbate our problems and stall a meaningful economic recovery for all Americans.
About the Author. Thomas Hinton is president & CEO of the American Consumer Council, a non-profit consumer education organization with over 100,000 members in all 50 states. Contact: firstname.lastname@example.org
Wednesday, November 17, 2010
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