Hollings, Sen. Fritz, “Critical Needs Ignored,” HuffingtonPost.com, 11/07/12

“The presidential campaign ignored the real needs of the country. Four problems — four solutions.…

Second, we must pay for government — not plan to pay. In 2001 we gave President Bush a balanced budget but he and President Obama have refused to pay, adding $10 trillion to the debt in twelve years. Now everyone is running around with plans for later Congresses to pay. Congress can pay for government now by replacing the 35 percent corporate income tax with a 7 percent value added tax (VAT). One-hundred-fifty countries compete in globalization with a VAT that’s rebated on exports. The corporate tax is not rebated. A U.S. manufacturer exporting to China pays the 35 percent Corporate Tax and is levied a 17 percent VAT when exports reach Shanghai. But a China manufacturer exports to the U.S. tax free. This 52 percent difference is killing manufacture in the United States. The Corporate VAT is not regressive, needs no exemptions and eliminates all loopholes — instant tax reform. Last year’s corporate tax produced $181.1 billion in revenues. A 7 percent VAT for 2011 would have produced $872 billion. This tax cut, with spending cuts, will balance the budget in two years. Eliminating the Corporate Tax releases $1 trillion in offshore profits for Corporate America to create jobs in the United States…

Third, we make wars in Iraq, Afghanistan, Pakistan, Somalia and Yemen; threaten wars in Syria and Iran, but refuse to fight in the trade war in which the world is engaged. Globalization is nothing more than a trade war with production looking for a country cheaper to produce. Tax cuts and federal aid for policemen, firemen and teachers don’t build a strong economy. It takes private investment. The president and congress must make it profitable to invest in the United States and protect the investment. The VAT tax cut is a good start.

The United States was founded in a trade war — the Boston Tea Party. Instead of calling for “free trade,” the Founding Fathers rejected David Ricardo’s comparative advantage in agriculture and opted for manufacture by enacting the Tariff Act of 1787 — two years before the Constitution. This protectionism worked so well that Edmund Morris in Theodore Rex wrote that, after a hundred years, the Colony was “$25 billion richer” than the Mother Country. But Wall Street, the big banks, and the U.S. Chamber of Commerce want to keep the China profits flowing. So they shout “Free trade! Protectionism!” and contribute to the president and congress doing nothing.

In 2006, the Princeton economist Alan Blinder estimated that in ten years the U.S. would offshore 30-40 million jobs, or an average of 3-4 million jobs a year. David Wessel reports in the Wall Street Journal “between 2007 and 2010 (U.S. Firms) added 200,000 U.S. jobs and 600,000 outside the U.S…” BusinessWeek headlined (10/14/12) “Despite profits near record highs many executives are planning to trim their payrolls.” We lose 4 million jobs a year due to our deficit in the balance of trade. Great Recession? The recession has been over for three years. We are having a weak recovery because we are offshoring more jobs than we are creating.”

http://www.huffingtonpost.com/sen-ernest-frederick-hollings/critical-needs-ignored_b_2088479.html