Political Reform

Improving Our Economy

What works, and what doesn't

Before trying to solve the problems in our economy we need to understand how these problems started.  We also need to understand that our current government is spending a lot of their effort on avoiding the blame rather than fixing the problem.

Check this article which shows the hypocrisy of our federal government desperately laying the blame on banks for only doing what the federal government had required them to do by law.

    Obama added, "We've all paid the price for lenders who sold mortgages to people who couldn't afford them." Now, he suggested, it's lenders' turn to pay the price.
    Of course, it was Washington that ordered lenders to make those risky loans. Now they're being punished for doing too well what they were ordered to do before the crisis.
    It was Democrats who injected risk into the financial system. Bankers were forced to "reinvest" in unprofitable areas, and reallocate capital to people who posed bad credit risks.
    Now that these risky loans have gone bad, the left blames "greedy" bankers and "predatory" lenders.

Outrageously, they want banks to "repair the damages" that the left themselves caused.  

You can also read about Fannie Mae and Freddie Mac on wikipedia.

The way the federal government went about meddling in the housing market was the direct cause of the housing crash, and the resulting recession.  The concept of helping lower income families own a home is a good one, and there are ways to do it that would not cause problems.  

Steps we can take to improve the economy:
1) Get rid of the health care bill, it is inhibiting job creation and has little benefit.  We can reform health care in better ways.

2) Reduce taxes.  Lower taxes is a better way to stimulate the economy than increased government spending.  The reason this is true is that for every dollar of spending you must increase taxes by more than one dollar because the government is not 100% efficient and we can't afford to borrow more money right now since our credit limit is nearly maxed.  Increased taxes depress the economy as well.

3) Right to work laws.  States such as Utah that have these laws are recovering much faster than states that don't.  This is why several states are currently enacting such laws.  Rather than obstructing this process we should be cheering it on.  I realize these laws are unpopular with the unions, but right now the most important thing is for people to get jobs and be able to support their families and pay their bills.

4) Decrease frivolous regulation and the associated wasteful expenses.  These expenses hinder small business start ups a lot more than large companies.  I know of one example where a small start up business was bankrupted because a government agency came in and found them to be violating a regulation that they didn't know about.  Instead of helping the small business become compliant with the law, the federal agency just fined the company so much they immediately went bankrupt.  This behavior by federal regulators is stifling job creation.

5) Tax reform.  Simpler and more predictable taxes would allow people to better plan ahead.  Our current system also prevents the consumer from spending steadily all year round.  Many people lose a lot of money to taxes and then get a lot back in February at tax return time.  This is a bad design for the economy.  If those people were allowed to keep that money in the first place they might spend it, or invest it.  Either option would be good for the economy.  A simplified tax code would allow us to stop overcharging taxes all year, and then filing for a return of the excess.