Is America a Nation in Decline?

The evidence to support the case is strong. For starters, we face an unsustainable national debt that continues to grow at an accelerating rate. Our job market has failed to support our population growth for over four years. Our increasing income gap has been eroding the purchasing power of America’s middle class families for decades. These are just a sample of the mounting problems we face as a nation.

Through our Constitution, we empower our political leaders to solve our national problems. Unfortunately, our political leaders have become more of a problem than a solution. Neither the Democrats nor the Republicans have offered anything substantively new from their anemic economic playbooks. Democrats once again want to increase taxes and spending while Republicans want to cut taxes and slow down spending. Both approaches are nothing more than Keynesian band-aids that shift pain from one group to another as we continue our gradual decline.

Neither party has articulated a strategic vision that reverses the decades old policies that are responsible for our protracted economic decay. By pitting American against American and group against group, our political class ensures an equally divided, never-ending tug-of-war among the electorate. Neither side appears capable of offering solutions the other side will accept. How could they? If you despise, distrust and believe your opponent is inherently evil, you are unlikely to accept that they could ever have your best interests at heart.

Confronted with an overly partisan and hopelessly gridlocked government that is either unwilling or unable to solve our nation’s fiscal problems, a concerned electorate has learned that we have been chipping away at our economic foundation since globalization began over forty years ago. While our economy declines against the backdrop of an expanding industrialized world, we are being conditioned by our political leadership and our national press to accept our decline as the “new normal”. Well, this is not the new normal. America’s decline is not a foregone conclusion. Our decline is the result of irresponsible mismanagement perpetrated by both political parties, fueled by an ideologically biased media and funded by the inherent corruption of deep pocket special interest groups that have managed to isolate our elected representatives from “we the people”. As President Kennedy said during his speech at The American University on June 10, 1963,

- Our problems are man made; therefore, they may be solved by man.

Our man made economic decline is fully reversible, but only if Americans can forge a solutions-based strategic plan that unifies the majority of Americans around its implementation and allows us to reject the emotional ploys that keep us a nation divided.

Carting out a retread crop of previously rejected solutions will not be any more palatable to the opposition groups then they were in their previous incarnations. We need a different framework. We need a framework designed to appeal to the majority of Americans. A framework that is so founded in common sense that even the deep-pocket media blitz from the status quo seeking special interest groups will find it difficult to demagogue.

Recognizing that the only positive way forward is through consensus building, the Americans United Party has developed a comprehensive economic road map that addresses the root causes of our economic decline and prescribes a remedy that places America back on the path to prosperity.

The AUP Economic Road map appeals to the financial aspirations and common sense of most Americans. Our solutions based approach was not locked into the rigors of any entrenched ideology nor were we forced to settle for middle of the road mediocrity in order to gain widespread acceptance. On the contrary, our strategy transcends political ideology because our plan puts the financial aspirations of Americans, all Americans, first.

The AUP plan addresses the six economic components whose deterioration is most responsible for our protracted economic decline - Jobs, Debt, Safety Net, Energy, Education and Government. Our Economic Road map presents a plan that coordinates and optimizes these six facets of our economy into a cohesive economic model designed to accomplish one simple and universally acceptable economic goal. Namely;

Continuously improve the standard of living of all Americans.

We invite you to review, comment and support our economic road map.

http://americansunitedparty.blogspot.com/2011/07/executive-summary.html

I look forward to hearing your constructive suggestions.

Jim Schneider

CEO Americans United Party

Eliminate the Job Burden

At the request of the Joint Select Committee, on October 5th, 2011 we passed them our thoughts on the Job Burden.

Eliminate the US Job Burden:

It costs more to create and maintain private sector jobs in the US than it does in any other country. We will continue to lose our best paying private sector jobs to the rest of the global economy until we recognize and correct this job killing and economy killing imbalance.

In this highly competitive global economy, our laws, regulations, taxes and policies have made it increasingly less profitable for employers to create jobs in America than in other countries. The unintended consequences of these actions have been to force investors, entrepreneurs and businesses both large and small to take their capital and their jobs and go elsewhere, and they have – in droves.  To reverse that trend and once again foster U.S. based private sector job creation, Americans must seek out and remove the roadblocks that impede U.S. based employer profitability. We refer to the collection of impediments that inhibit employer profitability, and thereby restrict job creation, as the Job Burden.

We propose that America begin her economic recovery by reversing the forty-year journey that has forced American employers to pay for our nation’s historic social ills and economic inequities at the expense of our jobs. The unintended consequences of these policies have been to undermine the very business climate that was responsible for elevating America to lone economic superpower status and producing the highest standard of living the world has ever known. We argue that by continuously increasing non-business related costs on our job creators, we have forced them to take their capital and their jobs to friendlier shores. We show that by burdening our employers with a host of social safety-net costs, uncompetitive government regulations and the world’s highest business tax structure, the once most job-welcoming nation in history has deteriorated into one of the most job unfriendly counties in the world.

We use Bureau of Labor Statistics data to quantify several of the safety-net programs that contribute to the U.S. job burden. Our analysis reveals that safety-net costs such as Social Security, Medicare, Medicaid, employer-based healthcare, and pension plans add 30% to the cost of U.S. manufacturing labor. A thirty percent labor premium is an unsustainable handicap for American based employers to overcome in an ever-growing global economy that continuously improves in production quality, process efficiency and the education of its labor force. To add insult to injury; we reveal that consumers and not businesses actually pay for these programs by way of increased prices. The sad irony is that the increased prices merely make American made goods less competitive, which costs us our jobs and puts our safety net programs at risk.

While we condemn the job-killing aspects of the job burden, we underscore the critical importance that our safety-net programs have on American society, however; we demonstrate that funding our safety net programs through our businesses not only destroys our jobs but consequently places our job-funded safety-net programs at risk. Keeping both our safety-net programs and our jobs requires an alternate means of funding our safety-net programs. We recommend we address that dilemma through a revenue-neutral National Retail Sales Tax that we have named the Safety-Net Tax. The Safety-Net Tax not only frees U.S. employers from the job-killing ravages of the job burden, but since it allows improvements to overall business efficiency, it will reduce aggregate costs (prices + Taxes) to consumers and taxpayers. All Job Burden costs are passed along to consumers and as such are regressive in that the poor pay a higher percentage of their wages for Job Burden costs then do more affluent consumers.

In any free-market economy, profitable, private businesses are the only economic growth engine we have. The jobs those profitable businesses produce are the most effective way for Americans to contribute to and benefit from that growth engine. In this global economy, American labor must unite and commit to winning the global competition for jobs. American workers must provide employers, both foreign and domestic with reasons to invest their capital in America and create their jobs in America. As a labor force, America must structure an approach designed to entice employers to bring their jobs here not punish them with costs and regulations that reduce their profits and inhibit their success. American labor must assume responsibility for restoring America to the most job friendly country in the world. Our politicians, labor unions, press and special interest groups must unite behind this American self-interest objective. The only way to “jobs-jobs-jobs” is to help business and capital be more profitable here than anywhere else. Americans must demand that our political, business and labor leadership reject the economic destructive strategies that pit labor against business for the purposes of advancing parochial self-serving interests.

Eliminating the Job Burden does not mean we have to relinquish the gains made by organized labor. On the contrary, the AUP wants to protect and even enhance the quality of work-life gains that organized labor has achieved over the years. In fact, we want to take it a step further. We want all Americans, not just a select few, to benefit from the benefits and protections forged by organized labor. Our philosophy in this regard is simple: As a nation, we can have any safety-net program, benefit plan or quality of work-life standard we want! All we have to do is pay for it! And, equally important, we must guard against attempts by our politicians and special interest groups to hide or postpone the costs of our programs in various tax and debt schemes that eventually come back to bite us and put our nation’s financial future at risk.

What we have to do is stop pretending that our businesses pay for any of our safety-net programs – they do not. "There is no free lunch". We must recognize that we pay for them as consumers, taxpayers and employees. Once we realize this fundamental economic truth, we can free our businesses from the job burden, which will allow business to create American based jobs as we continue to pay for our safety-net programs through our purchases.

One way to portray private sector job creators is to compare them to the fabled “Goose that lays the golden eggs”. While the job creators symbolize the goose, the golden eggs denote the jobs they create. Until we unshackle our employers from uncompetitive, non-product related costs, the United States will continue to hemorrhage jobs and industries to the rest of the global economy. It is a simple formula: The more we ask our businesses to pay for our social programs and other non-business related costs, the more jobs we will lose to foreign competitors who are eager to keep their costs down and take our jobs. In essence, we are purposefully killing the goose that lays the golden eggs. Why? Consider recent Congressional actions either passed into law or pending Congressional action e.g. PPACA (Obama Care), Cap & Trade, Financial Regulations. Each of these programs adds to the job burden and will no doubt force more jobs overseas. The question that every American should ask is “why is Congress killing the goose that lays the golden eggs?” Attempts by some in Congress to “shame” American business leaders who outsource or relocate to less costly shores as “un-American” are ridiculous demagoguery. By definition, capital must follow the path of least resistance or risk being lost. It would be a violation of a business leader’s fiduciary responsibility not to do everything in their power to maximize the return on any owner’s capital investment, even if that means going offshore. It is the responsibility of Congress to ensure that investors, entrepreneurs and business leaders do not perceive their best opportunities lie offshore. Any Congressperson who does not understand and accept these fundamental economic truths is not qualified to set economic policy for a country founded on free-market principles.

We conclude by asking the President and both houses of Congress to recognize the job killing nature of the U.S. Job Burden and to issue a “Sense of the Congress” declaration advising the world that the United States is committed to eliminating the U.S. job burden and is once again open for business. The force of this simple declaration would immediately ease the economic uncertainty holding back our business expansion and job creation. That economic expansion and job creation would continue provided Congress actually implements on a timely basis the policies that eliminate the U.S. Job Burden.

Please review our plan to eliminate the Job Burden and the rest of our economic roadmap at http://americansunitedparty.blogspot.com/2011/07/executive-summary.html Thank you for taking the time to read our thoughts and we wish you good luck and great success on your journey to restore our economy.

The Moral Argument against Unfunded Liabilities

September 13, 2011: By James W. Schneider

According to the National Debt Clock as of September 9, 2011, the U.S. National debt was $14.7 trillion and rising at a rate of over $1.3 trillion per year. The national debt represents money our federal government has borrowed and still owes to others.

Our $14.7 trillion national debt does not include our nations’ unfunded liabilities. Unfunded liabilities represent promises to make future payments for which there will not be enough money to pay those benefits under current law. The obligation to pay those benefits will fall upon the labors of our children. The two programs with the largest amount of unfunded liabilities are Social Security and Medicare. Depending on which future assumptions are used in the various projection models, the dollar value of our nation’s total unfunded liabilities range from $54 to $115 trillion. The National Debt Clock computes our unfunded liabilities at $115 trillion or over seven times our national debt. In August 2011, the USA Today reported that our unfunded liabilities were $61.6 trillion or over $528,000 for every American household. Regardless of which projections are right, if America survives her rapidly approaching fiscal crises, then, unless we make significant changes to our unfunded programs, you will pass your portion of the debt to your heirs.

The financial site www.finweb.com defines an insolvent estate as follows.

Insolvent estates are those where the decedent’s assets are not sufficient to cover debts after death. As a result, there will be no inheritance left to the beneficiaries of the estate, and those beneficiaries may further have a legal obligation to help resolve the debts. Thankfully, less than 10 percent of all estates are insolvent, so it is not likely you will have to face the problem.

In our personal lives, most Americans would be thoroughly disgusted and completely embarrassed at the thought of leaving huge debts to their children. However, in our public lives, we the people of the United States have mandated that 100 percent of our beneficiaries have a legal obligation to resolve our debts. Why is it unacceptable in our personal lives but perfectly acceptable in our public lives? It is not!

The economic history and political conditions surrounding the decisions that led to the inadequate funding of these social programs may have made their enactment understandable; however, with the clarity of 20/20 hindsight, we can now safely argue that the entire category of unfunded future obligations should forevermore be banned as not only fiscally irresponsible but morally reprehensible.

It is time that all Americans stand up and acknowledge that it is wholly immoral to saddle future generations with the greed and poor fiscal management decisions of current generations. If we do not rectify our fiscal malfeasance, our progeny may justifiably cut us off at the knees and leave us without recourse. Considering the profligate mess we have left them, who could blame them? The Baby-Boom generation and the representatives we have elected to do our bidding in Washington have shown our true colors as self-serving, over spenders unconcerned with the condition of the legacy we bequeath to our heirs. Shame on us for destroying the inheritance the Greatest Generation left us. If we wish to restore our honor then we must restore the legacy bequeathed to us and restore the American tradition of leaving the next generation better off then the previous one – not chain them to an unsustainable anchor of debt. It is sad when we recognize that with a little forethought, common sense and moral leadership we could have completely avoided this fiscal problem. The good news is that with a concerted effort we may still have time to correct our profligate mistake without reducing the benefits promised to our seniors.

We the people can have any safety net program or benefit plan we want. All we have to do is pay for it during our time and never expect or allow any future generation to pay for it on our behalf. Just as it will become our children’s job in their time, it is our job in ours to take care of ourselves - and our children. We have no right to borrow against our children’s future. How did we ever let such a notion take hold in America?

Unless the majority of Americans have the courage and moral fortitude to rise up and say “enough”, this generation will be responsible for the greatest undesirable transformation of the American experiment in history and may in fact lead to America’s destruction. What a legacy! We may already be too late, but if we wait any longer, we surely will be.

We need two strategies to deal with the staggering level of our unfunded liabilities. First, the short-term strategy is to enact those remedies necessary to minimize and then reverse the damage caused by our unfunded programs by funding those obligations as quickly as practical. Second, the longer-term strategy is to pass a Constitutional amendment that forever forbids Congress from enacting new or modifying existing laws that would permit unfunded social safety net programs that would once again mortgage our nation’s future.

Van Hollen Super Committee Appointment

The Americans United Party responds to Maryland Congressman Chris Van Hollen's statement on his appointment to the Joint Select Committee (Super Committee).

Our comments are highlighted in Red

Van Hollen Statement on Joint Select Committee Appointment

FOR IMMEDIATE RELEASE
August 11, 2011

Washington, DC – Today Maryland Congressman Chris Van Hollen, Ranking Member on the House Budget Committee, issued the following statement on his appointment to the Joint Select Committee on Deficit Reduction:

“I am honored to have been asked by Democratic Leader Pelosi to serve on the Joint Committee. I look forward to working with my Democratic and Republican colleagues to address the huge challenge before us.

“Putting America back to work [in the private sector] is the best and most immediate way to reduce our deficit as we also develop and implement a balanced [budget amendment that matches tax revenues and expenditures to 18% of our Gross Domestic Product. These actions will allow us to] establish long-term fiscal discipline and sustained economic growth. Our plan should put [private sector] jobs first, sharpen America's competitive edge [by eliminating the Job Burden], ensure health and retirement security [by replacing the fiscally irresponsible pay-as-you-go funding of Social Security and Medicare with fiscally responsible pre-funding at birth] , and require shared responsibility [ by replacing our economy killing income tax system with a new consumption based tax system that allows our private sector to compete in a global economy.] Together, we can build a prosperous and secure future for all Americans.”

If the Congressman accepts these clarifying changes, then we welcome Congressman Von Hollen's endoresment of the AUP's Economic Roadmap and look forward to working with him to implement these initiatives.

Learn More: http://americansunitedparty.blogspot.com/2011/07/executive-summary.html

Penny Plan Analysis

August 6, 2011 – by James W. Schneider:

The Penny Plan, officially known as House bill H.R. 1848, has received a lot of attention lately. Proponents of the plan claim that it will balance the federal budget in six years by cutting federal spending by 1% per year.

Here is an excerpt from the bill:

H.R.1848 -- One Percent Spending Reduction Act of 2011 (Introduced in House - IH)

To prevent a fiscal crisis by enacting legislation to balance the Federal budget through reductions of discretionary and mandatory spending.

When I first heard about the Penny Plan, it sounded a little too good to be true. I wanted to understand how reducing current spending by 1% per year would allow us to whittle-away at a $1.65[1] trillion deficit projected for 2011 and balance the Federal budget in six years. After all, we spend $3.8[2] trillion per year. One percent of $3.8 trillion is a measly $38 billion and six years of that totals only $228 billion. How can a $228 billion reduction in spending eliminate a $1.65 trillion annual deficit and balance the budget in six years? I was unable to find a satisfactory explanation so I went to the actual bill[3] and conducted my own analysis.

Findings:

The Penny Plan is designed to reduce spending to 18% of GDP[4] in seven years. It accomplishes its goal in two phases. Phase 1 begins in fiscal year 2012, lasts for six years and cuts 1% off the previous years’ budget[5]. Phase 2 begins in the seventh year and forces federal spending to 18% of GDP[6] regardless of the amount that may need to be cut from the federal budget that year. Let’s explain what that may mean.

If the economy (GDP) grows by 2.7% per year over the six-years of phase 1, then spending, because of GDP growth, would have been reduced to 18% of GDP by the end of year six and further cuts to spending would not be required. In this case, Phase 2 cuts would be zero. The plan would have been a remarkable success that we should all celebrate. (See Table 1):

If, on the other hand, GDP grows at 3.45% per year, then it only takes 5 years to lower the federal spending to 18%. However, the plan would still require a 1% cut in spending in the sixth year. This cut may cause spending to fall below 18% of GDP. We should all still celebrate, but some may question whether the 1% reduction in year six is worth the fight. (See Table 2):

However, if GDP grows at only 1% per year during phase 1, all else being equal, the bill forces a spending cut during 2018 of $274 billion or 8.6% of the previous years’ spending. A $274 billion cut in federal spending in one year may be difficult to sell to a nation equally split between those who want to stimulate the economy with more government spending and those who want to do so with less. (See Table 3):

If GDP grows even slower than 1% or goes negative, the forced reduction in federal spending in 2018 would be even larger than $274 billion. It may be economically unwise and politically unlikely to cut federal spending by that much in one year if growth remains that anemic.

Conclusion:

Despite the Penny Plan’s stated objective, it does not specifically address revenues and does not therefore provide a mechanism to balance the budget. It does however address federal government spending which represents at least half of the balance budget equation.

From a federal government spending and private sector economic planning perspective, the amount of cuts during phase 1 of the Penny Plan are predictable and as such should help stimulate economic growth by eliminating some degree of business uncertainty so prevalent in our present economy. The size of the spending cuts needed in phase 2 is contingent upon economic growth during phase 1 and as such are inherently unpredictable. The attempt by this Congress to tie the hands of a future Congress with such a large unknown may meet with considerable resistance and raise private sector uncertainty predicated by the mandates in phase 2.

The Penny Plan is an excellent concept that may benefit from one minor adjustment. Instead of two phases, it may be wiser, safer and an easier sell simply allowing Phase 1 to continue its 1% reduction per year until spending reaches 18% of GDP.

Table 1: Penny Plan with 2.7% GDP Growth Rate.

Fiscal Year	GDP (Billions)	18% of GDP	Penny Plan Outlay Cap	Penny Plan Cap as % of GDP	GDP Growth Rate
2011	$15,080	$2,714	$3,382	22.43%	2.7%
2012	$15,487	$2,788	$3,348	21.62%
2013	$15,905	$2,863	$3,315	20.84%
2014	$16,334	$2,940	$3,282	20.09%
2015	$16,775	$3,020	$3,249	19.37%
2016	$17,228	$3,101	$3,216	18.67%
2017	$17,693	$3,185	$3,184	18.00%
2018	$18,171	$3,271	$3,152	17.35%
2019	$18,662	$3,359	$3,121	16.72%
2020	$19,166	$3,450	$3,090	16.12%
2021	$19,683	$3,543	$3,059	15.54%
2022	$20,215	$3,639	$3,028	14.98%

In 2011 Spending Excess = $3,382 - $2.714=$668

From 2011 – 2017 GDP increases $2,613 X 18%=$470

From 2011 – 2017 Spending drops $3,382-$3,184=$198

GDP increases + Spending Cuts = $470+$198 = $668

Table 2: Penny Plan with 3.45% GDP Growth Rate.

Fiscal Year	GDP (Billions)	18% of GDP	Penny Plan Outlay Cap	Penny Plan Cap as % of GDP	GDP Growth Rate
2011	$15,080	$2,714	$3,382	22.43%	3.45%
2012	$15,600	$2,808	$3,348	21.46%
2013	$16,138	$2,905	$3,315	20.54%
2014	$16,695	$3,005	$3,282	19.66%
2015	$17,271	$3,109	$3,249	18.81%
2016	$17,867	$3,216	$3,216	18.00%
2017	$18,483	$3,327	$3,184	17.23%
2018	$19,121	$3,442	$3,152	16.49%
2019	$19,780	$3,560	$3,121	15.78%
2020	$20,463	$3,683	$3,090	15.10%
2021	$21,169	$3,810	$3,059	14.45%
2022	$21,899	$3,942	$3,028	13.83%

Table 3: Penny Plan with 1% GDP Growth Rate.

Fiscal Year	GDP (Billions)	18% of GDP	Penny Plan Outlay Cap	Penny Plan Cap as % of GDP	GDP Growth Rate
2011	$15,080	$2,714	$3,382	22.43%	1%
2012	$15,230	$2,741	$3,348	21.98%
2013	$15,383	$2,769	$3,315	21.55%
2014	$15,537	$2,797	$3,282	21.12%
2015	$15,692	$2,825	$3,249	20.70%
2016	$15,849	$2,853	$3,216	20.29%
2017	$16,007	$2,881	$3,184	19.89%
2018	$16,167	$2,910	$3,152	19.50%
2019	$16,329	$2,939	$3,121	19.11%
2020	$16,492	$2,969	$3,090	18.73%
2021	$16,657	$2,998	$3,059	18.36%
2022	$16,824	$3,028	$3,028	18.00%

Column Definitions:

GDP:

The estimated GDP for the fiscal year 2011 is provided by BEA.gov. The remaining years are increased by the percentage found in the GDP Growth Rate column.

18% of GDP:

The GDP column is multiplied by 18%.

Penny Plan Outlay Cap:

The amount for year 2011-2012 is given in the bill H.R. 1848 http://thomas.loc./cgi-bin/query/z?c112:H.R.1848: ((1) FISCAL YEAR 2012- For fiscal year 2012, the aggregate projected outlays (less net interest payments) for fiscal year 2012 shall be $3,382,000,000,000, less one percent.) [Which computes to $3,348,000,000,000 in 2012]

The remaining years apply the Penny Plan formula as provided in H.R. 1848 Sec 253A

Penny Plan Cap as a % of GDP:

Penny Plan Outlay Cap divided by GDP as a percentage. The percent is less than actual total spending because as mentioned above, the Outlay Cap does not include interest payments made to U.S. Treasury bond holders.

GDP Growth Rate Column:

The assumed annual growth in the GDP.

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[1] http://en.wikipedia.org/wiki/2011_United_States_federal_budget

[2] http://en.wikipedia.org/wiki/2011_United_States_federal_budget

[3] http://thomas.loc./cgi-bin/query/z?c112:H.R.1848:

[4] Excluding interest on the debt.

[5] Excluding interest on the debt.

[6] Excluding interest on the debt.