The American People Have Spoken--November 5, 2010

It’s Nov 5 and the American people have spoken. What did they say? Seems like everyone agrees with three messages they sent: Cut spending, cut taxes and create jobs! That’s what the American people want, according to almost everyone, especially from the Republicans and the Tea Party. And, surely many Democrats feel the same way.

But, where are the specifics? Republicans and Tea Party candidates rode in to a majority in the House, based on criticism of the Obama administration as it relates to these three things. Purposefully, few offered any specifics whatsoever about how to cut spending or to create jobs. When asked by newscasters to be specific, they offered only examples which intelligent Americans should have seen to be inconsequential in terms of real meaningful impact—none representing even 1% toward closing any of the gaps. And no one—that’s for sure—no one—has offered a comprehensive solution to the problems.

Why is that? On the surface, it would seem to be a great opportunity for those opposed to the current administration and its policies. And, it would seem that the American people would demand this of anyone new who promised solutions—before electing them. But, we didn't.

Could it be that most of these hundreds/thousands of vocal critics in leadership who provided us the passionate interpretation of what the people want—cut spending, reduce taxes, create jobs—could it be that they don’t really understand the problem with all of this? Surely a few of them do not--they seem so ignorant in their remarks, that one would think most of this mass they call the homogenous “American People” would also see their lack of understanding. OK, I will name one name—Donald Trump, who trumpeted in a business channel interview since the election that we should solve the problem by charging a 25% tax on everything coming from China!

No, that’s not the real answer. Most of the critics are intelligent enough to understand the problem with all of this (below). Most of the critics probably understand the problem is so difficult and complex that the American public will not sit still for the long explanations of trade-offs and dependencies. And, those who do understand this perhaps fall into one of three categories: (a) those who know the problem cannot be solved and yet they want to gain personally and for their constituency by occupying a place of power—e.g., a Congressman is surely able to general millions of dollars of pork for his or her District, and thisis not too bad for his own ego and future wealth predictor either—these types don’t really expect to effect any significant change when they get to Washington; (b) those who understand the difficulty of the problem, want to try to fix it when they get there—somehow--but have no idea how to do it, yet; and (c) maybe there area few—very few—who have plans and don’t reveal them yet because the specifics are so egregious that they would never have been elected if they had revealed them to the American people during the campaign—so, stay vague, get elected, and then do your best! See The Candidate, Robert Redford, 1972.

What’s the problem? It’s really quite simple. Our budgets (city, state, and federal) have evolved to a state where so much is committed relatively irrevocably, leaving what can be considered truly “discretionary” as a very small percentage of the total—something like 16% of the total, only. So, we can, with great difficulty, cut 10% of discretionary, but that’s less than 2% of the total. For cutting spending, the hard work and the meaningful gains are in reducing the non-discretionary items, such as military spending, social security, and medicare. However, to the candidates, it doesn’t seem likely that’s what the American people had in mind.

Then, as to cutting taxes, the key is that when taxes are cut, government revenue disappears, revenue that will no longer be available to help with the budget deficit. The theory of tax cutting is that lower taxing motivates business folks to start or grow their businesses, and when that happens, eventually tax revenue goes up because eventually sales and profits go up, and there’s also increased employment along the way. However, there is debate as to how well this theory works. If your taxes were cut, would you go out and spend it, or would you save it or use it to pay down your debts, considering the times we are in? There is also a delay of a year or two—or longer. Can we afford this at this time of huge deficits and crisis?

Jobs—that’s the biggest problem. Donald Trump does not have the solution. He fails to recognize that we have a minimum wage of $7.75 per hour and that’s more than most Chinese blue collar workers make in a day, so it is very simply far more efficient for many things to be made there—we benefit because we pay far less for clothing, furniture, and even the Bay Bridge expansion, all of which was built in China and shipped here. And, if we shut out China, what about India, Bangladesh, Mexico and most of Africa? Can we shut out the rest of the world?

We still have millions of skilled factory workers in a country less and less able to compete globally in the factory arena, with few exceptions that will sustain. Our workers need new skills in areas like technology, marketing, research in areas like medicine and health, financial services, media, and many others. My father’s skills running a machine in a textile mill would be worth nothing in today’s American marketplace. The factory in which he worked in High Point, NC, has long since been shuttered.

It is useless and dangerous for us to try to turn the clock back to a kind of isolationism, when we have so much to gain from globalization. It’s also useless for us to occupy ourselves with blaming politicians for problems we don’t want to face. It is useless to elect candidates who do not offer solutions, however harsh and painful they may be. We need to face the challenges, and forge ahead .We have a strong position in the evolving world, if we don't try to turn back. We need to move forward, to rise to our potential. The fixing of jobs for the American people will take years—and there is no wise critic who can find a solution within the next two years—so many of us need to go back to school and re-engineer ourselves.

So, we have a new power group in Washington and Sacramento, and the rhetoric is flying, around budget cuts, tax reductions, and jobs creation. That’s what the American people said they want—and right away! They might as well have said they want what they had 30 years ago, when we had the world all to ourselves. Progress will be difficult and slow, because the solutions are complex and require sacrifice and change, and because our political landscape is polarized. It’s quite likely the American people will end up throwing this new group of leaders out in 2 years. That seems to be the limit of our patience these days.

I’d like to offer a more optimistic outlook, but it’s not valuable or relevant at this time. For the next few years, we face the challenge of telling and persuading “the American people” of the painful truth our rhetoric has hidden. We have been implicitly promised vague approaches to solutions to major problems which we must soon face and address.

And, by the way, we’re not a homogenous American people who all said the same things in the election. We are now the most ethnically diverse and heterogenous nation in the world and this is indeed not just one of our problems, but also one of our greatest assets—to be developed.