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Bush Economic Proposals—Too Little Too Late

Published 02/04/07 Richard C. Cook - Print Article
E-mail - editor@economyincisis.org

President Bush in his economic proposals is to be acknowledged for recognizing that the American economy is suffering from a lack of purchasing power among the people. And that this lack of purchasing power could be leading the economy into a recession.

However, we have been in “something like” a recession for over a year at the level of working families. This has been shown by the steady decline in M1, the money immediately available for everyday purchases.

In other words, working men and women in the U.S. are losing their income security due to a host of factors, but most particularly the tremendous growth of debt—mortgage debt, credit card debt, student debt, business debt, as well as the state, local, and federal debt for which they are ultimately responsible.

Looking deeper, the underlying cause of the onrushing catastrophe is that our monetary system is based entirely on bank lending. Combined with the decline under globalization of our agricultural and manufacturing base, as well as of our private and public infrastructures, the U.S. economy today is running on fumes.

What then is the remedy? In my opinion, our economy can only be restored by a program that recognizes credit as public utility, that restores our infrastructure, that eliminates debt, and that puts sufficient purchasing power directly into the hands of the people. Above all, our monetary supply should be created through the federal government spending money directly into existence, not through bank lending.

Among the measures I have been proposing in my articles on Global Research and elsewhere are, first, an income guarantee to all citizens similar to the annual payments to persons in Alaska through the Alaska Permanent Fund. These payments today amount to almost $1,700 per person per year or $6,800 for a family of four.

What I am calling a National Dividend would be a substantially larger amount and should be provided to everyone in society, whether they work or not. In other words, a subsistence level of income security should be a human right. Such an infusion of purchasing power would also encourage economic growth, particularly at the grassroots level, by allowing people to buy what they need without borrowing or else pay off what they currently owe.

The second measure is a new system of public finance, starting with a federal self-collateralized infrastructure bank similar to the Reconstruction Finance Corporation that rebuilt America during and after the Great Depression. Such a bank has been proposed by Senator Chris Dodd and others, but the bank I have in mind would channel money directly into the economy without going through the Federal Reserve or the private banking system.

A National Dividend combined with a self-collateralized federal infrastructure bank would also create a new American currency different from debt-based Federal Reserve Notes.

Finally, the abuse of credit by the banking system should be stopped by outlawing the practice of lending for speculation, including most leveraged buyouts, mergers, acquisitions, and hedge funds. In other words, no more bank-created bubbles. Of course this is the system that is now crashing anyway.

These programs would lead to real income security and revitalize the U.S. economy. It would do the same if applied in other nations. By contrast, a pittance of a tax rebate combined with slightly cheaper bank loans is a bad joke.

Richard C. Cook is a former U.S. federal government analyst, whose career included service with the U.S. Civil Service Commission, the Food and Drug Administration, the Carter White House, NASA, and the U.S. Treasury Department. His articles on economics, politics, and space policy have appeared on numerous websites. His book entitled We Hold These Truths is in preparation. He is also the author of Challenger Revealed: An Insider’s Account of How the Reagan Administration Caused the Greatest Tragedy of the Space Age. He can be contacted at his website http://www.richardccook.com/

Editor's Note: Click here to read EconomyInCrisis.org's list of solutions to save the American economy

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