This article is part of a group writing project at The Finance Blog Network.
Obama has created a new website to encourage people to discuss and propose new ideas at Change.org. I think this is a great opportunity to give him some financial advice from the personal finance blogosphere to add to this list of 'experts' that are consulting him on the economy.
Obama should realize that only 23% of paper currencies have survived histories path to destruction through the use of government economic intervention through the increase in supply of currency to make debt payments. The government is already way over reacting. Like with the $700 billion bailout of the banking industry. During the Savings and Loan crisis the government let thousands of banks go out of business and that experience has had a profound impact of the bailout decision. This time, the government is determined to not let any banks go out of business. The number of banks that we had during the housing boom where needed to support the economy boom, but now that the boom is over we don’t need all these banks. Obama should let at least a few hundred banks go under.
The bailout is also going to create several moral hazards, as the government is forced into a position of deciding who will get the money and who will not, they are only furthering an atmosphere of greed and lying as people try to get a piece of the pie. Industry after industry is going to come knocking on the Fed’s door asking for bailout money. Just yesterday, America Express converted itself into a bank for the soul purpose of qualifying for bailout money. It is virtually impossible for the government to be ‘fair’ about who get money and who does not.
These decisions should not be made by any government, because they destroy the very fabric of capitalism, which rewards hard work and business leadership.
Obama should take advantage of the low oil prices and high value of the dollar to fill the Federal oil reserves. Realize that oil prices will soon rebound and therefore decisions should be based on high oil prices. Like finding new oil in the US and supporting off-short drilling. Obama should create several new nuclear power plants like McCain wanted to do.
Obama needs to realize that the public educational system is bloated and broken and perhaps the best way to fix it is to support alternatives, like private school vouchers, homeschooling and charter schools. Instead of putting more money into the current educational system or adding more government oversight or mandating more federal curriculum which take away from teaching reading and writing, more money should be put into these alternatives while starving the system that doesn’t work.
Obama should recognize that just become millions of Americans don’t have health insurance does not mean they are not getting high quality health care. The health insurance industry is what needs to be revised, not the health care industry. The health insurance industry has become bloated and broken, primarily because of government regulations that force health providers into offering unprofitable services. There is more money in the health insurance industry then in the health care industry. The other major problem with health care is the legal liability of doctors that has pushed the cost of malpractice insurance to record highs.
The wrong approach is to target the incentives, profits and capital investments that are vitally needed to keep the health care professionals motivated to continue caring for people and new technolgies from being developed. The economy cannot be taxed and regulated without potentially severe consequences. Universal health care will be a disaster to the health care industry, driving many to seek private health care services outside of the government health care system what will surely cost much more while providing lower quality care. The free market of doctor compensation, pharmaceutically research costs and capital investments in technology have been falsely accused of the increasing cost of health care. The real problem is the government oversight and regulation in support of the bloated insurance providers.
Obama's health plan is projected to cost $75 billion and approximately $130 billion per year. Facing a deep recession is no time to impliment this plan.
Small business creates as much as 80% of the new jobs in America and employs up to 40% of the population. Now more than anything we need to make it as easy as possible to start a business. That means decreasing the business tax, decreasing the self-employment tax, removing the health care tax advantages of large organizations and opening new international business relationships to increase our nation’s exports.
Obama should realize that the service sector of the economy is going to severely shrink over the next few years as consumers can no longer support it. The most critical industry in the next decade is going to be our manufacturing sector as our 72% consumer based economy is forced into a 70% producer based economy. That being said, the government could give extra attention to increasing manufacturing jobs and encourage new manufacturing businesses. Manufacturing jobs are perhaps the most important jobs because each manufacturing job provided many other jobs throughout the economy, while increasing exports and reducing our trade deficit.
Retirement/ Social Security
Obama should tell the people the truth and return to sound money monetary policies. By that I mean, Obama should tell the people that congress has borrowed and spent the money collected by Social Security and that is it highly unlikely that everyone will be able to collect from the failed program. Every household should live on a budget and try their best to save 10%-20% of the income for retirement and unexpected expenses. Then, Obama should tell congress to slash the federal budget to under the current GDP, drastically reducing the number of government employees.
In Summary, we need a much smaller government, which is entirely possible because most Presidents end up doing the exact opposite of what they said they were going to do.