As many people struggle to find a job, politicians everywhere are desperately trying to pick up the pieces of our staggering economy. While President Barack Obama and his administration continue to spend more and more money in an effort to increase job growth, Republicans are offering their own solutions to our economic woes.
According to schweikert.house.gov, on Feb. 8 Rep. David Schweikert, R-Ariz., introduced a “balanced budget” amendment to the Constitution.
The amendment isn’t particularly colossal; it would only require the federal government to balance its budget every year, to limit its spending to below 18 percent of its gross domestic profit and would require a two-thirds vote in the House and Senate in order to raise taxes, according to politicalaz.com.
It’s about time, isn’t it?
The Obama administration has had a good two years to begin generating economic growth. Remember when the president promised his economic recovery plan would keep unemployment around eight percent? Earlier in this recession, in October 2009, the unemployment rate hit 10.2 percent, according to CBS News. Clearly, something has gone awry.
Fixing our economy is undoubtedly a complex and challenging task. It is, however, one that can be accomplished; here is how.
First of all, the president needs to stop the excessive spending. The task is as easy as it sounds.
The $787 billion stimulus package has failed to adequately reboot our economy. Instead of discussing its success, the president has constantly reminded us about how devastated the economy was when he took the reigns from former President George W. Bush — and how our lives could have been so much worse, had the stimulus not passed.
While this might be a valid point, it doesn’t excuse his plan’s lack of success. Spending more money — and money you don’t have, at that — won’t get you out of debt, no matter how much you spend or how fast you spend it.
The next thing on the administration’s to-do list would be to reform our tax system. It’s not enough to cut taxes if our tax system is flawed. What America needs is a flat tax; it’s time to do away with the frustrating tax brackets and special loopholes.
With a flat tax policy, the government sets a constant tax rate, and everyone, no matter what their income, pays that rate in taxes to the federal government.
This isn’t a new idea; the flat tax has gathered support from numerous political groups and politicians all over the world.
Eastern European countries are the nations that have most prominently embraced the flat tax. Estonia, the so-called “pioneer” of the flat tax, has had immense economic success since reforming its system. According to indexmundi.com, Estonia has grown in GDP from 1997 to 2008.
Seeing Estonia’s success, Lithuania, Latvia and Russia, the largest economy to enact the system, have all seen tremendous economic success. Russia even saw its revenue skyrocket 26 percent during the tax system’s first year of implementation, according to the Institute for Fiscal Studies.
A flat tax not only encourages economic growth and stability, but also simplifies the tax system to its most quintessential form.
After both of these are enforced, the next thing Obama should do is much simpler: wait. He needs to become a reactionary rather than an ideologist. Instead of forcing his ideology on the American public, as he has done, he needs to change his economic policy to perform on a case-by-case basis, depending on how the American economy reacts to these changes.
While he’s waiting, he should also study former President Ronald Reagan’s economic policy. There is so much to learn from previous recessions, and excessive spending solved nothing.
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