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Fletcher: Upgrading military would help economy

September 6, 2011
The Alpena News

Since federal spending has gone from 18 percent of the gross domestic product under George W. Bush to 24 percent under the Obama administration. I think that government should spend less.

This significant increase in spending from one administration to the next has had a lot of income transfer associated with it that has not provided much stimulus for the economy.

Using the national debt cap to bludgeon the president into holding the country's bloated budget at its current level was nothing more than political maneuvering. Obviously, the transfer payments made by President Obama were not effective in creating jobs in these troubled times. Further transfer payments would do nothing more than continue to use failed Keynesian economic principles and not help us at all climb out of our long recession.

In a recent column I espoused the use of fiscal policy to lower taxes to create more private sector cash for investment. In the same column I mentioned that market tranquillity caused by much less government rule making would be beneficial for folks as it would allow us to plan projects for the future on a level playing field.

What usually accompanies a tax decrease to stimulate the economy is governmental spending on capital projects. Our problem today is that the Obama administration already has spent something like $4.5 trillion on transfer payments, which haven't given us an economic lift.

What I am going to propose is tried and true stuff that has worked in the past, so it is more likely to work in the future. This is in contrast to what the present administration is doing as it replays the mistakes of the 1930s, which was a decade long overall depression coupled with two recessions in the middle of a depression. It took World War II to have us recover.

Congress and President Obama are talking about cutting defense spending 14 percent over the next five years but the Chinese are increasing their defense spending by 142 percent in the same period.

My plan is different as it includes across the board tax cuts to build private capital and $1 trillion of additional capital spending for the military. We have been in the Middle East for a decade and now have the Obama war in Libya. Our military equipment is getting very beat up and quite dated compared to the new stuff now available. I'm suggesting putting America to work again by retooling our armed forces.

To me, the world seems to be getting more violent and uncertain rather than all of us singing Kumbaya around the campfire. If we were to get serious about ending the recession, we would have to boot up industrial production. If we are to be safe in uncertain times, I'd sure like our warriors to have the latest high technology spears and armor being made.

However, in order to jump-start the economy, the national debt would rise with the combination of a tax cut and more spending. At least this way we would be following a blueprint that has been successful economically in the past, while gaining the benefit of outfitting our soldiers with the best equipment and weapons in the world.

Stephen Fletcher was graduated decades ago from Cornell University with an A.B. in Economics and from Michigan State University with an M.B.A. He has lived and worked in the decades from graduation until now in the Alpena area. He thinks economics is fun and interesting.



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