An Economic Vision for South Carolina
It is time for the wealthy to pay their fair share in taxes to fund new investments in America.
The digital revolution has shrunk the oceans to lakes. South Carolina is now closer to China in terms of trade, transportation, communication, investment, and environment, than South Carolina was to New York when the Constitution was signed. We now confront transnational corporations that often pledge allegiance to the best investment opportunity. We must incentivize them to invest more in America, and help build any economy that increases opportunities, dignifies workers, and protects the earth.
Our economic recovery since the Great Recession has been steady but now faces some global and political headwinds. Outsourcing, new technology, and a weak national investment in infrastructure, human capital, and sustainability, have contributed to our shrinking middle class. The official unemployment rate looks good, at 4.3%, yet it counts people who work 20 hours a week as employed and fails to include people who have stopped looking for work. The real unemployment rate is about double the official rate, and tens of millions are underemployed. It fails to reflect the despair of those working minimum wage jobs, the 1 in 5 children who live in poverty, or the 60 million who lack decent health coverage.
We spend less on infrastructure than most industrialized societies, which make us less competitive and less safe. We see from Hurricane Harvey that the longer we wait the more dangerous and costly this becomes. Investments in infrastructure yield about $2 for each $1 invested. Recent floods last make clear the need to repair our roads, bridges, dams, water systems, and levees. Investments in rebuilding public schools, public buildings, public housing, the electrical grid, and our railroads also need to be made—interest rates are low and millions of good jobs will be created.
Let’s talk about climate change for a moment. Back in 2003 the Pentagon issued their Quadrennial Report which declared that climate change is a greater threat to national security than terrorism. The increase in the severity of floods, fires, drought and famine will cause mass migrations and political instability. Syria, Yemen, Southern Sudan--Climate change is forcing rapid growth in sustainable energy-up 88% last year in America—and can create millions of good paying jobs in solar, wind, conservation, and biomass. The cost of solar panels has plummeted and is much cheaper than coal or natural gas. Some conservative Republican cities in Texas are using 100% renewables because it is fiscally sound. More government investment in research and development for sustainable energy will allow us to produce more windmills and solar panels here, rather than buy them from China and Europe. Can you imagine a research center at CCU for tidal power?
Almost every advanced industrial country is making major investments in high speed rail networks to transport people at speeds of 150-200 miles per hour. Rail travel is safer than airplane, powered by electricity not fossil fuels, and creates millions of good jobs. I can imagine a light rail system connecting the low country to the beach. High speed rails has wide popular support—(but not yet from a majority of Republicans in Congress.)
Manufacturing jobs now make up a smaller share or our economy than at any time since WWII. They pay 15% more than service jobs, and create on average another 4 or 5 support jobs in the economy. We must end tax breaks for companies that relocate overseas, strengthen tax breaks for companies that invest in America, and require “buy American” provisions to federal contracts. A one-time tax incentive to attract the $2 trillion in tax havens to invest in American factories, R&D, as well as infrastructure, seems practical. High tech jobs will require more technical education-- so federal support for education must increase-- from early childhood programs to making college affordable. To stabilize families we must make the minimum wage a living wage—A practical compromise will create more opportunity for children, lower crime and increase aggregate demand. Under President Reagan, compromise was seen as common sense, and gridlock was seen as grandstanding. We have to move the ball down the field.
Trade policies can create jobs, yet our recent trade agreements have lost jobs and have not protected the environment. The Trans Pacific Partnership was written in secret by corporate lawyers-- and President Trump was right to kill it. Under NAFTA we have lost 61,000 factories—so NAFTA needs to be renegotiated to end the Investor-State Dispute Settlement. I oppose a Border Adjustment Tax-- which could trigger a trade war, and would increase prices for our businesses and consumers.
Our current healthcare hurts families and businesses. Conservative businessmen in Canada strongly support their Medicare for all system because everyone is covered, it costs about 60% as much as ours and they live 3 years longer than we do. Their businesses have higher profits, and families have more security and money to spend. This increases aggregate demand—and the national debt finally shrinks.
Our banks are still too big to fail, but also too big to understand and regulate. Senator Durbin (D-Ill) has said that, “this is a government of the banks, by the banks, and for the banks”. The big banks might need to be broken up. The Glass-Steagall Act, which separated commercial from investment banking, must be restored. Main Street must never again have to bail out Wall Street. And publicly funded credit unions, run by the community, Like those proposed by Senator Bob Dole, will take more risks on small businesses and the public, and create thousands of jobs.
Unemployment in our inner cities is higher than during the Great Depression. Back then the Civilian Conservation Corps provided jobs to millions in developing our national and state parks, while providing educational opportunities. A modern CCC can be established to create jobs, opportunity, lower crime, and to preserve God’s creation.
How can we afford this with a large national debt? The wealthiest 1% must pay their fair share in taxes. Under President Eisenhower the taxes on the wealthiest 1% were 90%, and we built an infrastructure that was the envy of the world. Now the taxes on the wealthiest 1% are about 38%, before loopholes. We can also implement a modest financial transaction tax, used already by 40 countries. I submit that the proposals to markedly cut corporate taxes and taxes on the wealthy. Current corporate taxes are already competitive when we count all of the loopholes. More than 2/3 of current corporate profits are used for stock buybacks and increased dividends. In the past, large portions of the tax cuts for the wealthy were invested overseas, or in hedge funds that were invested overseas, or used for mergers and acquisitions.
These investments in America, to create jobs and security, are fought by the wealthiest 1%-- who put 98% of the money into our political campaigns. Our elections have become auctions. A constitutional amendment is needed to change our campaign finance laws. Public pressure can create these changes, which will strengthen businesses, families, communities, and the American Dream.