(MENAFN- Asia Times)
This article first appeared on The American Mind, a publication of the Claremount Institute think tank, and is republished with permission.
Dear President Trump:
Congratulations on your November election victory. President Joe Biden and Vice President Kamala Harris have left you with a strategic disaster and a fragile economy, but you have put forward a program to keep the peace and restore economic growth. Here are some ideas that may help in your efforts, followed by more specific proposals:
Inflation is closer to 8% than the official“3%” after figuring in higher interest costs to consumers. Biden started this inflation by running record budget deficits and the Federal Reserve made it worse by increasing the interest burden on consumers. You must educate the American public on this reality and get the right people in place to fix it.
The federal budget deficit is 6.4% of GDP,“larger than any deficit in records going back to 1930 except the years around World War II, the 2008 financial crisis, and the pandemic,” according to the Tax Foundation . Federal interest costs have doubled and now cost as much as defense. Get people on the Fed board who understand your economic agenda.
Our woke education system is a disaster and has betrayed working-class kids. We can't fill skilled jobs in manufacturing because high school graduates lack basic math skills. In the short term, state community college systems and work-study apprenticeship programs can help. Create a federal-state initiative for public-private partnerships in manufacturing skills, and ask Governor Ron DeSantis to head it.
Vice President-elect J D Vance offered a workable peace plan in September to end the Russo-Ukrainian war. Give him a big role in handling the Ukraine problem. Leftovers from the foreign policy establishment in your first administration did nothing but sandbag you. Don't listen to them and put a smart outsider in charge instead.
The US military-industrial complex is a hopeless morass of corruption and incompetence that can't make enough artillery shells to supply Ukraine, let alone enough submarines. Bypass the Pentagon brass and the defense contractors and choose a secretary of defense who understands new defense technologies.
Your proposal to put high tariffs on Chinese EV imports but allow Chinese companies to build plants in the US is brilliant-and very much like Ronald Reagan's response to Japanese auto imports in the 1980s.
An America First Economic Policy Biden and Harris left you with record debts and deficits, and a dangerous household debt burden. Their reckless spending on handouts to their favored constituencies caused this inflation,
not
monetary policy, as
David Malpass
observed.
The Federal Reserve kept interest rates too low for too long and then raised them too much. Former Treasury Secretary Lawrence Summers showed that the real inflation rate is double the official number after including higher interest rates. Ask him to help the Bureau of Labor Statistics publish the real inflation rate.
You need a stable monetary policy instead of the Fed's boom-and-bust whipsaw. Put people on the Federal Reserve Board who understand how monetary policy actually works instead of the ideologues who run the Fed today.
The biggest obstacle to industrial revival is the lack of skilled labor, thanks to the liberals who control US education. Summon the CEOs of our biggest manufacturing companies, and they'll tell you the same thing: less than a quarter of US high school students are proficient in math. That puts high-end jobs in computer-controlled manufacturing out of their reach.
We can fix the problem by enlisting
state community college systems
in partnership with corporations. Florida already has the ball rolling. Ask Governor Ron DeSantis to head an emergency effort to train skilled workers.
For the first time in American history, America imports more capital goods than we produce for domestic consumption. The downside of tariffs is that they will increase costs for manufacturers who rely on foreign inputs, and domestic substitutes will take time and money to provide. You might propose a tariff rebate for American manufacturers who buy Chinese capital goods to expand production in the US.
The tax system is rigged against capital-intensive investment, raising the after-tax cost of capital for manufacturing. America's stock of manufacturing equipment hasn't risen in 20 years according to the
Federal Reserve .
To return to a long-term growth trend, we need about $1 trillion in capital spending. GOP leaders in Congress should propose emergency legislation to allow immediate tax write-offs of capital equipment.
The 2017 corporate tax cut, which increased the number of years required to expense capital equipment, should be revised to allow immediate expensing of capital equipment. That may be a bigger stimulus for domestic manufacturing than tariffs.
Countering the National Security Establishment You outraged the foreign policy swamp when you denounced endless wars, and they spent four years trying to remove you from office. The swamp bet the farm on endless war in Ukraine, and your refusal to play along makes you their irreconcilable enemy.
Don't underestimate how determined they are to stop you. You hired establishment types in your first administration and had cause to regret it every time. Now, there's no room for compromise with the swamp.
The Deep State entrapped your first National Security Adviser, General Mike Flynn, and his successors H R McMaster and John Bolton repaid your trust by turning on you. You can't trust the failed, feckless foreign policy establishment.
It knows nothing but forever wars and meddling in other countries' affairs. The problem is that the establishment has controlled promotion in government service and academia for three generations, so any candidate with a big resume got it the wrong way.
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