Economic Suggestions for Our Next President by Edward Strafaci
The campaigning is already getting old however the next President would be wise to consider the following economic policies next January:
Allow the revaluation of assets. –
Let’s face it a newly minted President does not want to see a market sell off during a honeymoon period. Despite this, if the markets continue to revalue, it would be better for it to happen at the beginning of a term. In 1994, at the start of Clinton 1, Greenspan raised rates six times and the bond and equity markets were rattled. Painful as it was, it set the stage for a longer term recovery. With interest rates artificially low due to QE 2, the true, adjusted required rate of return should be much higher. A revaluation is required if home buyers and investors will begin buying anew; thus spurring some meaningful capital spending.
2. Supply Side Theory is appropriate now.-
Despite abnormally low interest rates financial intermediaries are too chafed to lend while borrowers are too shell-shocked to borrow. Broad based tax credit incentives might go far enough to jump start this economy. The deficit hawks will cry foul yet nothing else is working. Running up some additional borrowing is a small price to pay to begin economic regeneration. With lower commodity prices and a strong dollar this would be easier to enact. Some of this capital largesse should go toward Education, infrastructure and targeted social programs. Continue to aggressively forgive student loans. to those graduates working and paying taxes. Create public works projects that enhance transportation .Pursue social programs that educate, and create an atmosphere of opportunity for those not fortunate enough to have a solid support system .These policies seem to have the greatest multiplier effect and can create huge economic benefits.
3. It is time to rethink regulations.-
Regarding regulation I would suggest the following:
Sarbanes Oxley. and “The Volcker Rule” were among the type of regulations that were politically important in light of Enron, WorldCom etc. However it may be time to rethink these rules and allow financial firms to profit if they truly risk their own capital. We should never inhibit entrepreneurship …only chicanery.
The Health Care law should be kept; it would be prohibitively expensive to gut it. Those in the medical profession should be given a tax break. Continually penalizing them will only encourage talented students to pick another profession. A solid health care system is part of the back bone of sound economic policy. Well trained, fairly compensated medical professionals are essential to public health and welfare. However Obamacare should be modified to allow for employers to accept full time employees who want to opt out of company sponsored health plans. The current plan penalizes employees who would work without company sponsored health care.This has a seriously negative effect on employment levels.
Donald Trump’s idea of a onetime repatriation of foreign earnings is well founded. It will raise billions of tax revenue and bring that currency back home. We also need to stop the double taxation of dividends. Finally we need to seriously resurrect challenged areas like Flint, Detroit and other cities affected by the deindustrialization of the United States. We can do this with accelerated depreciation benefits for those companies entering these markets creating a version of a free enterprise zone.
While some of my suggestions can be criticized for being too spending-centric we need to be proactive. American are plain old beat up. Confidence must be restored, and the average American needs a reason to envision the possible again. This is a start, stay tuned for further missives.
