There is a lot of talk about the decline of America. We are no longer a superpower. We no longer set the agenda for the world. We have lost our moral leadership and our mojo. We can no longer promise our children a better life than we have. We are falling behind in education, innovation and dedication. We have a clueless President and an ineffectual Congress. The nation is being torn apart by extreme partisanship.

Times are hard right now, but this isn't the first time we have found ourselves in this situation as a nation. A lot of the talk is about how we are now in a crisis eclipsing everything short of the Great Depression. That could be true or hyperbole. One can study the numbers, but statistics can be manipulated to say anything.

Perspective is what is needed, but that is in short supply.

There is an abundance of experienced perspective on a more recent financial meltdown - the one of the late 70s and early 80s. The entire decade of the 70s was a shock to the system of the United States. War, demonstrations, a poor economy limping along - it sounds like now. Add on the Watergate scandal bringing down President Nixon, two Arab oil embargoes, and a principled novice taking the White House at a time of national crisis.

That novice, President Jimmy Carter, pursued policies that devolved the situation further. Stagflation and a credit crunch dropped consumer demand. The drop in consumer demand caused producers to curt back on production causing massive unemployment. By massive, we mean in the 14 - 16 per cent range nationally. The unemployment became long term as businesses and consumers hunkered down. The dollar fell to record lows, and gold soared to record highs.

Gasoline doubled in price, and then went up again. Rationing was instituted. Heating oil (the predominant form of fuel form home heating in the northeast and Midwest states) followed suit. President Carter advised us to wear sweaters. Unemployment was extended. Participation in other government aid programs increased. Hopelessness increased. President Carter told us to get out of our bad mood (the "malaise" speech). The Age of American Exceptionalism hit the wall. A popular song by the Kinks had the lyrics:

"Calling on citizens from all over the world, this is Captain America calling. I helped you out when you were down on your knees. Can you catch me now I'm falling?"

President Reagan took office and things changed - they got worse before they got better. The Reagan economic team understood that the recession was structural, and that the programs enacted under Carter were making things worse by treating the symptoms but ignoring the actual cause. Reagan sought to retool the economy and loosen the government's grip on it. This had mixed success in it's initial months. Some jobs that went away would never return. Manufacturing was now in decline. Services and technology on the rise. Workers required retraining.

Technical programs sprouted up in community colleges and private educational institutions. They offered affordable, specialized training in computer programming, electronics and other technology based fields. This was the work force adapting to the new economy. It was aided by changes making the college loan / grant program more generous.

There is considerable debate over whether the Reagan tax cuts paid for themselves. As we have said, you can make numbers say anything. The practical application of those tax cuts was a spark to the economy. Employees saw more money in their paychecks - an instant raise that didn't cost the employer anything. People started to buy things again. Employers who were moving goods and services increased production. The tax cuts for employers provided them capital to not only rehire laid off workers, but to expand their operations. More people went to work creating more demand for product. This cycle fed on itself creating an economy well enough restored that in the 1984 election President Reagan was reelected in a landslide carrying all but one state. In the end, results matter.

Flash forward to today. After throwing from somewhere between 1 and 2 trillion dollars at the bad economy, not much is happening. So much is not happening that there is a new "jobs" package being bandied about for rebuilding roads and railways (which was how President Obama's original stimulus was pitched). This is to supplement the last "jobs" package which was essentially an unemployment extension, and not anything expanding employment opportunities.

While we believe that President Obama has genuine good intent in wanting to help those feeling the pain of the current economy, we feel that he is, as Carter was, treating the symptoms and not the cause of the problem. His initial stimulus was heavy on bailing out the banks, other financial institutions and the auto makers. This may or may not have been necessary. It contained a nominal tax cut, which would have been more productive in a better economy.

He invested heavily in so-called "green" jobs. It is important to invest in growing new technologies - that was proven under Reagan - but it does nothing to expand employment today. The design engineers are already employed. There is a drought of students in engineering programs in American schools. Many of these engineers will be imported. Manufacturing will not increase until demand increases, and the demand will not increase in a flat economy. This is a 10 year plan. There are future benefits here but no immediate benefits.

The rest of the money was essentially unemployment insurance in one way or another. Whether you have lost your job and are collecting benefits for 99 weeks, or if you are a teacher whose job was preserved this year, government funding is finite. When the money stops, everyone dependent on it is back where they started. This is just kicking the can down the road. The only true way to grow the economy is through the private sector.

We are not saying that there is no role for government, but the role has to be smart. It does no good to throw money at a problem, not get satisfactory results, and just throw more money at it.

The time has come to step back, take a breath and do what works in a deliberate fashion. There is still about half of the original stimulus that has NOT been spent. Let's scrap the current plans. If we have to spend $400 billion, let's do it intelligently. Here's our gift to the Republican Party and any Democrats who want to hold their seat in November:

1) Keep the Bush tax cuts - for everyone. Make them permanent. The middle class needs the money more than DC. With the threat of taxes going up removed, people will be more at ease about spending some money. That would spark the economy. The rich will start to reinvest and expand, just as they did under Reagan.

2) Expand educational opportunities in the technical sector and engineering. Encourage partnerships between businesses and schools in creating programs that will provide business with qualified, trained and motivated applicants. Cisco Systems has a long standing program reaching into High Schools offering college level training to students interested in IT careers. This gives the students a jump-start on a high quality profession. DeVry and ITT Technical Institutes (two private college systems) design their offerings around business needs. It is a strategy for success.

3) Encourage training and apprenticeships in the trades. The United States will always need carpenters, electricians, mechanics and plumbers. Unions have lost their way in the cause of advocating for improving the livelihood of tradesmen. They are now just power brokers funneling campaign cash for special favors. They have abandoned their mission and need to get back to it.

4) A good use of federal funds would be to expand these opportunities into areas scarred by institutional and generational poverty - be that in inner cities or rural areas. We refer you to our  "Work 4 America" program as a model. It has been submitted to the Obama Administration for consideration. Link at:

http://blog.thomaspaineproject.org/2009/03/02/strategic-investment-in-the-economy-work4america.aspx

5) President Obama's economic team is top heavy with theoretical economists who do not understand how things work in the real world (see Rodney Dangerfield's exchange with his economics professor in "Back to School"). It would be helpful to put on some people with real world experience in running a successful business to craft policies affecting business. We're not sure if the Chairman of Southwest Airlines is available, but he would be a good pick. Or the gentleman who chose to fix Ford Motor Company himself rather than go for the bailout money.

There it is - 5 simple ideas that will do a lot of good, and probably still leave money left in the stimulus fund. Maybe some of that can be used to pay down the debt as it is all borrowed money anyway. If paying back the money we owe is too radical an idea for DC, maybe we can put it to rebuilding and improving infrastructure - rather than borrowing another $50 billion to fund President Obama's latest proposal.

Common Sense Dictates

Economic stability at the federal level is the same as economic stability at the household level. Earning your salary, spending it carefully, investing wisely, paying your bills and using credit as an emergency source of funding make for a smooth running household. The same can be said of the federal government. Our proposals are some specific policy ideas that will resonate with the electorate. They are by no means a final solution.

That final solution comes by getting the country's economic house in order. That will involve getting rid of the bloat, the waste and the pork which is sizable. If Congressman X wants funding for a local library that will wind up being named after him, let him fund it himself. If the people of his district want to honor him in that way, let them pay for it. It is not the place of the federal government to hand out largess for projects of strictly local interest. That is the role of local and state government.

Streamline operations by eliminating duplication of efforts by competing agencies. There are seven independently operated programs providing food aid for those in poverty listed on the USDA website. Whether you agree or not with the concept of government responsibility to do something in this area, one program would be more efficient and make more fiscal sense. The federal government is littered with such duplication of purpose.

The "entitlement" programs - Social Security and Medicare, are not going anywhere, but they are quickly moving to insolvency. President Bush brought this up in 2001, and got punk slapped for being the grown-up in the room. There is no trust fund, just a big IOU where current contributors are funding current beneficiaries. That's the definition of a Ponzi scheme. It also threatens federal solvency in the same way that many state government pension plans have individual states lurching towards default. That must be fixed.

Candidate Obama campaigned on a promise to make "not bigger government, but smarter government". The definition of smarter in most circles is the ability to do more with less, and to do it better. President Obama has made enormously bigger government, but not even slightly smarter government. That along with the proposals listed here, are the formula that will not only heal the economy, but will heal the country. A prosperous, secure country is not angry. Common sense dictates that we would all welcome that.

RLB