You will be surprised to hear this from me, but there are things that the president/congress can do that would possibly save the economy. We are hanging by a string, volitility is through the roof, and we are in danger of losing the world reserve currency status (more likely this is immanent at this point).
So, what actions can congress do to “save” the economy?
- Flat Tax – President Obama needs to come out this week in support of a flat tax. This could be one, or two, tiered. The clincher is that we need to simplify. Go minimalist on tax regulations. The tax code is currently over 70,000 pages long, and this is bogging down companies who could be doing productive things, like making products. Mr. Obama needs to hold a press conference saying something like this, “I have decided to ask congress to come up with a flat tax, a 10% tax rate at the low end, a 25% for income over $250,000. No deductions, no loopholes, no favorites, no exceptions. I want a bill that is less than 10 pages long. This bill will repeal and replace the 70,000 plus pages of current IRS tax code. Congress has one month to pass this.”
- Energy – Obama needs to come out and say tomorrow, we will expedite oil drilling permits in the gulf and elsewhere. He can also use this opportunity to say he would open up the processes to build new nuclear power plants. Economies run on energy, and without it, our standards of living cannot improve.
- Bailouts – The president needs to come out with a very clear statement saying there will be no more stimulus and there will be no more bailouts. It is important that he is very firm about this. While this may have an initial negative effect on the markets, the firmness of the statement would provide certainty in a chaotic market.
- Military – A massive pull back and draw down needs to be a priority. The pullout should start a few days before his speech, so he can retroactively announce it, providing certainty that the wars are ending.
- Detox the presidential staff – Mr. Obama should announce that he will be replacing 75% of his staff. He will be including Republicans (like Clinton did with Dick Morris) and independents in order to get more than just “yes men.” The president can admit that he still supports his liberal base, but wishes to encourage an atmosphere of open debate in the White House to ensure the best possible outcomes on future policies.
There are obviously other things that need to be done, but realistically, our president is too hot-headed to even consider other ideas at this time. These are things that he could agree with that would not be politically detrimental, and would encourage a more stable outlook on US markets.