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Paul Simon on Budget & Economy


Weak dollar means weak America

A weak currency is the sign of a weak economy, and a weak economy leads to a weak nation. Judged by military might, the US is by far the most powerful nation in the world. Judged by economic standards the US is powerful but slipping. A nation that is weakening on the economic front will play a diminished role in the community of nations.

King Solomon wrote in Proverbs: “The borrower is servant to the lender.” So it will be unless the US puts in economic house in order-and soon.

Source: The Dollar Crisis, p. 45 Jul 2, 1996

Lack of Balanced Budget Amendment caused dollar’s decline

In the 1980s, we ignored our fiscal problems by allowing ourselves to live with an unbalanced federal budget, building a staggering national debt in the process. During the same time period, we became the world’s largest debtor nation. In fact, we are value against other major world currencies. This decline was attributed to the failure in the Senate, by one vote, to pass the Balanced Budget Amendment.

Too much fluctuation in the value of the dollar-in either direction-is not good for the economy of the US or the world. While it is important to all nations that the US maintains a stable currency, it is particularly important to the citizens of this country.

Source: The Dollar Crisis, p. 29-33 Jul 2, 1996

Lack of Balanced Budget Amendment caused dollar’s decline

value against other major world currencies. This decline was attributed to the failure in the Senate, by one vote, to pass the Balanced Budget Amendment.

Too much fluctuation in the value of the dollar-in either direction-is not good for the economy of the US or the world. While it is important to all nations that the US maintains a stable currency, it is particularly important to the citizens of this country.

Source: The Dollar Crisis, p. 29-33 Jul 2, 1996

Idea for Balanced Budget Amendment began in 1787

The long-term solution to the chronic deficit situation remains the constitutional amendment. It is not a new solution to the chronic deficit situation. While Thomas Jefferson was in Paris negotiating for our new government in 1787, James Madison and others were writing the Constitution. After Jefferson returned, he said that if he could add one amendment to the Constitution, it would be to prohibit the federal government from borrowing money. He wrote, “We should consider ourselves unauthorized to saddle posterity with our debts, and morally bound to pay them ourselves.“

The constitutional amendment in 1995 did not absolutely prohibit the federal government from borrowing money, as Jefferson suggested. The authors of this book believe that there are rare occasions, such as a war or a recession, when the federal government may need to spend more than its revenue. But government spending should not exceed revenue for 27 consecutive years, as we have done.

Source: The Dollar Crisis, p. 77 Jul 2, 1996

Idea for Balanced Budget Amendment began in 1787

ourselves unauthorized to saddle posterity with our debts, and morally bound to pay them ourselves.“

The constitutional amendment in 1995 did not absolutely prohibit the federal government from borrowing money, as Jefferson suggested. The authors of this book believe that there are rare occasions, such as a war or a recession, when the federal government may need to spend more than its revenue. But government spending should not exceed revenue for 27 consecutive years, as we have done.

Source: The Dollar Crisis, p. 77 Jul 2, 1996

Balanced Budget in 1970s equals $15,500 more income now

The bipartisan watchdog organization, Concord Coalition, has analyzed the deficit to determine what it has cost us over the last two decades. The study concluded that income would be $15,500 per family higher each year if we had balanced our budget over the last two decades.

Speaking of balancing the budget, what if a constitutional amendment had been in place in 1980 when our national debt totaled less than $1 trillion? Instead of paying $344 billion in gross interest during fiscal year 1996, we would pay less than $70 billion. Actually the bill would be appreciably less than this amount because interest rates would be much lower. A constitutional restriction would have given us more than $300 billion extra today for education or health care or reducing taxes. Because lower interest rates would have encouraged more industrial investment and home building, our productivity and standard of living would be much higher than they are today.

Source: The Dollar Crisis, p. 88-91 Jul 2, 1996

Balanced Budget in 1970s equals $15,500 more income now

we would pay less than $70 billion. Actually the bill would be appreciably less than this amount because interest rates would be much lower. A constitutional restriction would have given us more than $300 billion extra today for education or health care or reducing taxes. Because lower interest rates would have encouraged more industrial investment and home building, our productivity and standard of living would be much higher than they are today.
Source: The Dollar Crisis, p. 88-91 Jul 2, 1996

Tax incentives to encourage corporate & personal savings

The federal government [should alter the tax code because today it] rewards businesses that create debt to finance growth rather than financing growth through savings or equity (stock) financing. A corporation that borrows money can write off the interes payments, [while] stock dividends are not deductible. Tax breaks that encourage savings by individuals can save the federal government more in interest than the cost of the incentive. [Another method] to encourage savings is to require higher down payments for major purchases. “No down payment” is almost uniquely an American phrase.

Unless we, as a nation, do a better job of saving, our currency is destined to continue its downhill slide, and will take our standard of living with it.

Source: The Dollar Crisis, p.119-121 Jul 2, 1996

Tax incentives to encourage corporate & personal savings

  • Plant modernization and expansion
  • Worker training.Tax breaks that encourage savings by individuals can save the federal government more in interest than the cost of the incentive. [Another method] to encourage savings is to require higher down payments for major purchases. “No down payment” is almost uniquely an American phrase.

    Unless we, as a nation, do a better job of saving, our currency is destined to continue its downhill slide, and will take our standard of living with it.

    Source: The Dollar Crisis, p.119-121 Jul 2, 1996

    Stabilize dollar with central bank intervention

    The US should join with Japan and Germany and a few other nations with sound currencies in a statement that the dollar will be permitted to go up or down within certain publicly specified limits. Whenever those limits are exceeded, the central banks will agree to enter the market to stabilize the currency. When an overvalued currency declines in value, it is likely to fall farther than it should, and in that type of situation intervention will be helpful.
    Source: The Dollar Crisis, p.127 Jul 2, 1996

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