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Friday, July 22, 2011

Fixing the US economy as one would fix their life

~ Actress Gywneth Paltrow as she normally looks, and in a 'fat suit' for a movie she made a while back called "Shallow Hal"-- which would you hire?

The debt ceiling - debt reduction debate is the topic du jour of the week, and it will continue growing and growing-- the scare tactics, rhetoric, etc. until either at the last second a magical solution is reached or a couple days of market selloff Panic will scare the politicians into passing something.  What will be passed is still up in the air but it is safe to say the debt ceiling will be raised at some point around or soon after Aug 2nd, and Congress & the President will hammer out some budget compromise that angers everyone and hurts the poorest and sickest the most.

There are some that believe (rightly or wrongly depending on your politics) that the US spends too much money. And in order to fix what ails this nation, we need serious and drastic reductions in spending.  This would mean serious and drastic reductions in social services and institutions like social security, food stamps, medicare, welfare,etc (I hate the word 'entitlements' because its a loaded word with negative connotation).

But I propose an argument that the opposite needs to occur to get this nation track; a concept shared by economist Paul Krugman and former Labor Secretary Robert Reich among others--  That to get out of the economic malaise we're in, the nation needs to dramatically INCREASE its spending, but not just simply spend for the sake of it.  It needs to be targetted far more effective and efficiently to areas where economic growth can occur and do so quickly.

To make my point, I will bring the argument to an individual level.  Example:  A woman is in her early 40s and unemployed.  She has limited skills and in the open job market, there's nothing exceptional to make an employer want to hire her-- she has a couple basic skill sets.  No big deal.   Her outward presentation is also blehh.. The woman is overweight, plain, frumpy and dresses very dull. She's massively in debt and in a rut with no realistic chance her life will improve economically as things stand.  

So what can she do to prevent freefall?  In order for her to get control and springboard back into a position where she can take care of herself and pay down her debts, she has to invest financially in herself.  Not money to spend on vacations and a fancy car.  Instead, money to pay for education to acquire real job skills and a real career path in a field that is needed.  Money to pay on fitness spas, new clothing, cosmetics, etc,, to present herself in job interviews as an energetic person full of energy  (No matter the economic climate, employers want people who appear to have positive, winning attitudes in their company, even if they have to fire someone else to make room)

Now the woman in the example has dramatically increased her debtload via education and an overall rebuilding of her self-worth and self-image.  But this debt increase serves a purpose-- not to find a lover or  simply to 'feel good'..  the expanding of her personal debt was a necessary component to the overall strategy of improving one's economic circumstances and empowering oneself to make the changes needed to succeed.

This works both on an individual level and nationally as well.  The US govt, has spent trillions since the 2008 crisis but its pissed that money away on the wrong things-- banks, other financial entities, both nationally and abroad.  Money given to entities so quickly that no effort was made to keep track of where the money went.  No desire to place conditions that upon receipt of funds, it was meant for specific purposes.  Corrupt people gave taxpayer money to their corrupt cronies on Wall St. which increased the National Debt but had zero impact on job creation, house price stabilization or any other problem area needing addressing.

In other words, instead of using the hose to water the grass and the flowers, government watered the sand and from it, created a quicksand which is our current debtload.

But if we had leaders with the courage and will to increase spending to a point necessary to turn around this recession, the nation could actually start feeling a Real recovery. Money to be used for Main Street; small and medium sized businesses; grants to start up businesses in bricks & mortar locations..  very low interest loans for people to go back to school and re-educate themselves in career paths that won't disappear or be outsourced...  And while you do not lower taxes on corporations, you let them know you won't increase their taxes for a few years so they can factor this into their budgets.  But.. this is with conditions that they start expanding their hiring or it will trigger tax increases  (called carrot & stick)

I believe more and more that the only way this nation has any chance of returning to a pillar of economic strength as we're all accustomed to seeing it, is with a serious hard jolt of spending that is targeted specifically in job creation and rebuilding of infrastructure.   When good paying jobs are created along with stabilization of home prices without government propping, those two things make the basis of a long and sustainable recovery, and from that the necessary tax revenues to pay down the debt while maintaining a quality standard of life, to which most Americans are accustomed.

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