Assignment:
Long-term Economic Policy Options
In this section you should suggest 2 options to enhance long-term economic growth. These policies do not have to be linked to your evaluation of the state of the economy. The only requirement you have is to make sure the policies relate to the factors that contribute to long-term economic growth we discussed in class.
Graphs and Tables will necessarily be Time Series in nature and be able to discuss trends over a minimum of 10 years.
Long-term Economic Policy Options
In order to enhance long-term economic growth, the United States should eliminate the personal income tax. The Internal Revenue Service is a tremendously large organization that wastes money and only collects taxes on roughly fifty-percent of the Americanpeople as many work under-the-table for cash and never pay an income tax.
According to Fairfax, a national organization endorsed by 79 Novel and Pulitzer Prize winning economists, "the FairTax plan is a comprehensive proposal that replaces all federal income and payroll based taxes with an integrated approach including a progressive national retail sales tax, a prebate to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue neutrality, and, through companion legislation, the repeal of the 16th Amendment."11 The following graph compares the fair tax to the personal income tax.
Mr. President, my second long term recommendation to enhance long-term economic growth is that the Federal Government reduce the growth rate of government spending.
First and foremost, the increases in costs of medical care, Social Security, Medicare and other entitlements must be kept in check. Ludicrous government spending on earmarks and other pet projects and frivolous spending bills could bankrupt the government.
Reduce the spending on these programs and instead pay down the astronomical debt. The debt could be the demise of the United States and running around spending money like it is going out of style is not a sound fiscal policy. Reduce the growth rate of government spending by minimizing spending. The importance of this policy move can be seen in the disturbing debt to GDP chart below.