Investment & Tax Policy:

First, productive people need to be the drivers of economic improvement.  I don’t mean to suggest that people who are lower wage earners should not be helped, but if those who are productive, entrepreneurial and innovative aren’t succeeding, than no one will benefit.  In this context, I would propose making the Bush tax cuts permanent thus providing certainty about tax legislation and which will stop or at least reduce the need for “tax strategies” in 2010 that may create aberrations in the current economy.  Uncertainty is the  worst thing that can happen in tough times and the current tax environment only creates further complexity and noise.  Source: thestate.com/business/story/687874.html

Second, take the corporate tax rate down to a cap of 35% from the current 39.3%.  The 35% rate would be 1% lower than our friends to the north (Canada for those of you in Rio Linda) and 2% higher than Mexico.  But if we really wanted to get radical, we could reduce rates to that other English-speaking nation, the UK and cap it at 30%.  Source:  taxfoundation.org

Third, individuals invest for their retirement and are motivated by return on investment just like those nasty Wall Street bankers.  Look at your 401K lately, those money markets?  Well unless you are in various debentures or tax free muni’s, you have either lost money or are earning a whopping 2-3%!  So, let’s rev up the returns engine and take the long term capital gains from the current 15% down to 0%.   This would incentivize investment while allowing people to take the long view.  Heck, you might even buy some of those foreclosed homes, rehab them, lease them out and later sell them, knowing that you would keep all the upside!  No longer would just the big guys play this game but the average investor could do the same!  Oh, and we would be just like that other bastion of democracy and member of the “special status” of the Republic of China – Hong Kong!  Source: lowtax.net

Fourth, instead of all of these bailouts, let the companies fail and allow private equity to come in and buy the assets.  However, we do need to assist the financial institutions through organized bankruptcy and backed by the normal insurance practices of the FDIC.  These exotic instruments that turned an illiquid asset like real estate liquid are to blame for much of the current pain.  But let’s also make sure that the regulatory oversight that was missing in the current environment and the use of a quasi-state enterprise like Fannie Mae and Freddie Mac are no longer allowed to make loans without sufficient down payments and only to home owners, not home “investors”. 

The current bailout tab is $2.2 trillion with a committed liability of $9.9 trillion dollars!  Source: nytimes.com/interactive/2009/02/04/business/20090205-bailout-totals-graphic.html. That represents 70% of the GDP of the United States.  Putting this in context, we could let all of these banks and institutions fail, move them through a planned bankruptcy and pay out those monies to every man, woman and child in the United States.  Now this would mean that an average family would receive a check for over $29,000 based on current expenditures and nearly $128,000 when all liabilities are included.  Of course, this still doesn’t deal with the fact that our currency will be made nearly worthless and result in hyperinflation in the future, but it’s fun to imagine the “rebate” checks you would have until our “chickens came home to roost”.  So, while this might be fun to imagine – I don’t recommend it and would cease any further bailouts or accepting any further liability unless we were able to unwind the government’s position in the asset in a timely fashion.  Interestingly, the government has stopped publishing the M3 money supply but that hasn’t stopped the impact of so much printing resulting in higher costs of goods!  Source: seekingalpha.com/article/83506-rising-money-supply-and-the-economy

Energy & Renewables:

First, we are not getting off oil any time soon.  Oil powers the country and impacts almost every industry that either manufactures something or moves something.  We need oil for the near term and likely for the long term.  However, we must move away from our reliance on foreign production and drive local production.  Current drilling techniques and technology make drilling less likely to impact the environment and allows for deeper exploration with lower risk.  We need to open up off-shore drilling, ANWAR in Alaska, tar sands  - the richest of which are in Utah and California with 60-80 billion barrels and 11 billion recoverable (DOE estimates), and of course friendly country exploration. 

Second, we need new refinery capacity in this country.  We need to incentivize and make available fast track legislation to develop the necessary capacity as no new refineries have been built in this country in the last 20 years.  If you wonder why gasoline didn’t drop as fast as oil over the last 6 months, it’s because we buy so much of our gasoline from overseas refiners.  Since 1982, we have gone from importing 200,000 barrels per day to approximately 1.3 million barrels per day of foreign refined gasoline – an over six fold increase!  Why, because we have insufficient refining capacity.  There is plenty of oil just insufficient refining capacity in this country.  Anybody want a job?  Source: tonto.eia.doe.gov/dnav/pet/hist/wgtimus2w.htm

Third, as it relates to gasoline, as of 2005, we have at least 11 special blends of gasoline mandated by states and metropolitan areas.  When factoring in the various grades of gasoline, we have at least 45 different blends and grades that have to be managed through the supply chain!  Since 2005, this has increased although the GAO of the US government isn’t sure how many currently are mandated.  This fact has increased complexity in delivery of gasoline and the occasional supply interruptions we now see when a storm hits, as did Katrina.  As those of you who remember the fitness guru Susan Powter would say – “Stop the madness”.   The Federal government (yes even I think they have some function in the economy) needs to present a coherent standard for all states, perhaps reducing the grading system and move to fewer blends.  Do any of your actually fill up with 89 Octane versus 87 Octane versus 93 Octane.  Couldn’t we just do with 87 and 93 Octane and one or two special blends for environmental benefits?  This alone would have an impact on distribution and refining costs.  Of course this would create transparency in the supply chain and probably result in the refiners making less money!   Source: Highlights of GAO-05-421, a report to congressional requesters

Fourth, we need to leverage our coal technology and figure out how to improve and reduce environmental impact.  We are already seeing a delay in the development of coal fired plants which will impact electricity availability in the future unless and until this government gets clear on policies and regulations proposed to the utility providers.  How can we create such lack of transparency in the regulatory environment without an alternative?  Encourage improved coal fired technology through tax policy and work with the utilities on the best know and future technologies to reduce carbon emissions.  Provide a certain regulatory environment and get electricity production moving forward.  With over 20 plants cancelled or delayed, parts of the west and southwest will see rolling brownouts and blackouts in the future without further electricity production.  Source: articles.latimes.com/p/2008/jan/18/nation/na-coal18

Fifth, we need to go nuclear.   Of the 30 countries with nuclear power, the percentage of electricity supplied by nuclear ranged widely: from a high of 78 percent in France; to 54 percent in Belgium; 39 percent in Republic of Korea; 37 percent in Switzerland; 30 percent in Japan; 19 percent in the USA; 16 percent in Russia; 4 percent in South Africa; and 2 percent in China.  Present nuclear power plant expansion is centered in Asia: 15 of the 29 units under construction at the end of 2006 were in Asia. And 26 of the last 36 reactors to have been connected to the grid were in Asia. India currently gets less than 3% of its electricity from nuclear, but at the end of 2006 it had one-quarter of the nuclear construction - 7 of the world´s 29 reactors that were under construction. India´s plans are even more impressive: an 8-fold increase by 2022 to 10 percent of the electricity supply and a 75-fold increase by 2052 to reach 26 percent of the electricity supply. A 75-fold increase works out to an average of 9.4 percent/yr, about the same as average global nuclear growth from 1970 through 2004. So it is hardly unprecedented.  So, let’s get on with it and stop acting like a third world country and at least meet the goals established by those French Europeans Obama is always talking about!  We are at least as smart as the French and the Belgians, are we not?  Source: iaea.org/NewsCenter/PressReleases/2007/prn200719.html

Finally, we need to keep working on green technologies to include wind and solar.  But these should be developed in concert with the aforementioned approaches.  If tax incentives are to be used, they should be capped and limited to a maximum of 10 years.  If we can’t make it feasible in that time (remember we sent a man to the moon when we set that goal), then let the technology evolve on its own why relying on traditional approaches.

Healthcare & Education:

Okay, I have lumped the last two into one box because I am tired of fixing all the other problems government has created!  So here goes.

First, Healthcare costs are out of control due in part to litigation and insurance. Litigation requires doctors to do more tests, through which they make money – MRI’s are ordered by doctors who own the MRI machine and lawyers would sue if the doctor missed something that would have been caught by an MRI.  See how well this loop works?  Additionally, doctors have been loath to implement new patient care technologies and office automation.  We need this to change to enhance outcome based services and reduce the inefficiency of medical records and diagnostics.  As such, both litigation needs to be dealt with through tort reform and for this; doctors will need to commit to embracing these proven technologies.  With lower malpractice insurance and improved patient care, doctors will make more money, patients will be better cared for and the lawyers won’t be as busy taking one third to one half of your settlement.  I would rather keep my life in any case rather than have my heirs get my half of the settlement.  Technology is key here and as a technologist, I have sold and deployed these capabilities in the past.  They work and the doctors need to get on the band wagon.   Source:  ncpa.org/sub/dpd/index.php?article_id=3047

Second, insurance must be made transportable.  Existing conditions should not be a deal breaker and mandating that anyone who needs insurance can get insurance is a requirement of this policy.  To be sure, we need to manage the charges for this approach and while I am not prescribing an economic model, people who want to pay and often can pay are not able to buy insurance.  In addition, I would go back to President Regan’s approach to a “catastrophic health insurance plan”.   He was right then and it is right now.  This approach would allow for an effective method of reducing the destruction of wealth that occurs in the uninsured while enhancing the insurance people are able to purchase at a lower rate.  I would expand this to all uninsured.  Source: nytimes.com/1987/02/13/us/text-of-statements-by-reagan-and-white-house.html?sec=health

Ok, now here comes the one bit of social policy I will prescribe.  No amount of money is going to correct for the amount of single parent families and the poverty and developmental problems this creates in educational outcome.  This does not mean that all single parent families are failures or that children from single family households can’t succeed.  It is simply a fact that the research finds that these households are at greatest risk in terms of poverty, lower educational success and delayed emotional development in general.  Source: Living arrangements of single-mother families: Variations, transitions, and child development outcomes 

While mixed families and transitional arrangements tend to see improved outcomes, the traditional mother and father working with their children has the greatest propensity for success.  The current report on births in the USA stated that 4.5 million children were born in the country last year.  Over 40% were to single mothers!  While some choose to have children and simply live together (think Hollywood), most are out of wedlock births.  Source: abcnews.go.com/Health/ReproductiveHealth/wireStory?id=7111878 

So with such staggering statistics evident in our society, what is my prescription?  Well, first, get the message out and share the statistics.  Second, continue to invest in outcome based education such as the “No Child Left Behind Act”.  Third, encourage marriage and the family – stop accepting the current behaviors and promote the traditional family as a source of benefit to children.  Divorce is too easy and men are too eager to ditch their responsibilities.  For until we unite financial, moral and spiritual elements of education and family development, these trends will result in further degradation to our children’s lives and their success – at school and in their adult life!

So there it is – my domestic agenda and my specific actions if I were king – I mean president.  It is an alternate vision to this country over the current track President Obama is taking us.  Each of these ideas can be personally felt, determined in the household and evaluated in context of your own life and outcomes.  There is little ambiguity here and it is a transparent approach to those things that have motivated the American dream for centuries – self worth, self action, collective creativity and a unified nation through its traditional family structure.  Would it work? Can’t tell you for we won’t ever get to try.  But ask yourself this one question, if these recommendations took place immediately, would you do better financially, would job opportunities in energy, manufacturing, health care increase, would your family be better off financially, would you feel more secure about your future and would you appreciate the value placed on your family and its values?  

Thank you for listening!