What Didn't He Say?

What Did He Not Say?


Often one can discern a great deal about an issue from what is NOT being said.

It seems that President Obama has bought into the idea of growing the economy out of the doldrums.  It may be a good decision, indeed it may be the only workable decision that will bring the budget deficit under control and eventually tame the national debt.  It is a message that has been part of every President’s program for as long as I can remember and that is pretty far. 

It is a different focus than what he had upon entering office but the wipeout on Wall Street demands that money come from somewhere and the largest portion of our income is generated by businesses that have a lot of money.

This from the New York Times

Corporate Profits Were the Highest on Record Last Quarter
By CATHERINE RAMPELL
Published: November 23, 2010

Many of the leading financial indicators show that the economy is in recovery.  Last year was a very profitable one for the major corporations and it is estimated that they are sitting on roughly two trillion dollars of excess cash.  It seems they are waiting for a more favorable political climate to arise before they spend it.  They are still unsure of how the health care legislation will shake out and many of the new regulations for Wall Street still have not been written.  Those businesses deserve to know how to allocate their money and our Congress and regulators should let them know with all alacrity.  My personal opinion is that the health care legislation has been passed and Congress should get on with implementing it.  Wall Street regulations only need to be written since the legislation has already been passed.  It appears that this is the direction that the administration is going to take judging from the President’s recent appointments.  A business friendly Chief of Staff with ties to Wall Street and appointment of Jeffery Immelt, the CEO of General Electric, to head up a commission on growing business indicates a new approach to the business community.

This is all well and good but what is the question NOT being addressed?  That question is what impact does this have on our middle class and how does it allow that middle class to share in the new wealth created from their labors?  How does this translate into jobs that will allow the middle class to pursue the American Dream?

General Electric derives some 60% of its income from overseas operations and closed nineteen plants in Ohio alone in the past ten years.  That has been great for General Electric but terrible for the middle class of Ohio.  The President has stated a goal of doubling American exports by 2015.  That indicates an awareness that the American consumer is tapped out and really can’t contribute much more to the financial recovery.  Of the financial indicators used to judge the health of the economy only the ones that are based on domestic consumption are down and that tells the tale.

The assertion is that if we export more then we will create jobs domestically.  That is certainly true but what is NOT being said is what those jobs will be like and whether or not they will pay a wage that will allow the middle class to participate in the increased wealth and buy products that will demand domestic production.  It cannot be denied that production of many domestically used products has moved overseas to take advantage of cheaper labor.  Labor that does not bear the burden of the expectations of the American Dream so the question remains, how will the American worker benefit from increased exports.  What WILL increase is the size of revenues to the federal treasury and that has to happen but it will have the effect of further emphasizing big money’s contributions and decrease the ability of the middle class to participate in contributions to the federal budget.  It can’t be good that a large portion of the populace is excluded from taxation because that creates a disconnect between taxation and expenditures.  It also increases the power of big business to influence legislation. The middle class has to receive a wage that will be enough to require a contribution.  The burden has to be as broad based as is possible to preserve the sense of participation in the affairs of the Republic.

So, what is the answer?  The inescapable conclusion is that Corporate America needs to allow the worker to share more of the profits.  If Corporate America is enjoying the best of times then the American Worker should be doing the same.  If that can’t be accomplished by a sense of corporate decency then the job must be done through a system of progressive taxation.  I would prefer the private route but it has to be recognized that the role of business is to make as much money as is possible even if that means not sharing it with the workers.

My take is that Corporate America needs to buy into the American Dream.