Your editorial in the May 13 edition of the Colorado Springs Business Journal deserves comment. My response is as follows.
In the 1980 presidential primary, George Bush Sr. described Ronald Reagan’s supply side economics policies as voodoo economics.
The theory was (and is) that tax cuts for the well off and their increased spending fuels the economy and increases taxes, with benefits trickling down to the average family; everybody benefits and the budget gets balanced in the process.
Although taxes were cut in the first Reagan term, they were raised again in the second term when it was apparent that the process did not work.
Present circumstances should be compared, through a prism of personal judgment about the type of world that we want to live in.
Tax cuts and increased military spending have upended balance in the federal budget. The Social Security program has a projected deficit that will require either benefit cuts or higher taxes – probably more of both if accounts are privatized.
Medicare and Medicaid programs have deficits much more severe than Social Security and nearly 50 million people in the U.S. do not have health coverage – a devastatingly high proportion of children.
Education and research and development spending are being stunted at all levels of the economy and students do not rank engineering and science among the top 10 academic interests – the economy is not creating these jobs, many have been laid off in these disciplines in the last five years.
Trade deficits are sustainable only so long as those buying U.S. currency are willing to fund the debt. When (not if) China, Japan and Korea back away from the treasury note window, U.S. interest rates will soar and the home equity that people have been spending to fuel consumer demand will vaporize overnight.
Since most U.S. consumers have no other savings, it is hard to see anything optimistic from the economic corner that we have painted ourselves into. Unresolved TABOR (Taxpayers Bill of Rights), Gallagher and Amendment 23 tax policy conflicts create an added level of structural and competitive difficulty in Colorado.
I do not believe that the present U.S. lifestyles, attitudes and socio-economic behaviors are sustainable.
While it is great that Toyota sees enough potential in the U.S. market to continue building plants here, it is a problem that General Motors and Ford are paying billions more than Toyota for health care and pension benefits that Toyota does not.
It is a fallacy that buying at Wal-Mart’s everyday low price is good for the economy as a whole – where half of Wal-Mart employees must get public health care and where the wages and benefits of those producing goods do not support a lifestyle which we seek to sustain.
I, too, have great faith in the ingenuity of the American people.
What I want to see is everyone selling in the American market playing by the same set of rules. If we don’t require that, with conscious protection for intellectual property, the environment and social welfare, we will not be able to sustain that lifestyle to which we have become so accustomed.
Attitudes and socio-economic behaviors deserve separate recognition, as American perspectives must change out of proper respect for the capabilities and cultures of others.