The U.S. manufacturing sector is in critical decline due to inability to compete with foreign producers and U.S. production relocated abroad. The U.S. currently has a trade deficit totaling 6 percent of GDP, reflecting a deficit with virtually every trade competitor and in every class of goods. The U.S. now produces only $2 worth of every $3 of goods Americans consume.
The precipitous decline of manufacturing employment’s share of U.S. employment is a principal cause for declining middle and blue collar share of U.S. incomes. Just since 1998 manufacturing employment has declined 20 percent, the worst layoff since the Great Depression. Despite doubling manufacturing productivity since 1978, the real factory wage has declined 11 percent. A similar trend to manufacturing appears to be developing in the business services sector due to foreign outsourcing, although not yet as severe.
The U.S. manufacturing crisis began soon after foreign replacement of radically reduced tariffs with border adjusted value added taxes (VATs) on tradable goods not provided U.S. manufacturers by the federal tax code. Starting with France and the EU, all OECD competitors have adopted VATs averaging 18 percent abated on their exports to the U.S., and 18 percent levied upon imports from the U.S. not matched by abated U.S. taxes. The transition from U.S. trade surpluses in goods to huge deficits coincides with previous adoption of border adjusted VATs, by foreign competitors which in effect replaced tariffs.
The relentless growth of the U.S. trade deficit has not provided evidently beneficial investment of the resulting "foreign capital surplus". Virtually all foreign investment has been in existing rather than new productive assets; instead, the U.S. trade deficit has been reflected in excessive consumption at the expense of U.S. saving for investment.
The U.S. trade deficit will not be successfully resolved without border adjusted federal tax reform which equalizes competitive terms of foreign taxation. This 18 cents on the dollar advantage for foreign producers cannot be overcome by innovation and productivity given the rapid rate of diffusion abroad (and by U.S. firms which move abroad) or by devaluation. Nor will devaluation of the dollar provide more than temporary relief at an excessive price. What is required is border adjusted and consumption based federal tax reform if the U.S. is to restore competitiveness.
The Business Transfer Tax is the most efficient and competitive alternative for federal tax reform. As a tax on the entire Gross Domestic Product after expensing of Private Commercial Investment and on Imports, but not on Exports, it will restore competitive U.S. terms of trade for U.S. manufacturers as well as territorial taxation of corporations to restore the U.S. as the preferred location for headquarters. A 17.5 percent BTT will replace all federal income taxes, including personal, corporate, employer share of social insurance, and the "death" taxes; except for personal share of social insurance. Rebates will replace exemptions, deductions, and credits in order to prevent regressivity. Transition costs can be funded from making foreign trade subject to the BTT and from increased growth due to BTT tax reform.
The U.S. needs to confront the reality that since the industrial revolution all major powers have been leaders in manufacturing as the source of competitive advantage in growth of incomes, wealth, and military strength. Preservation and restoration of the manufacturing sector is vital to U.S. national interests, and adoption of border adjusted, consumption based BTT taxation is the vital condition for this remediation. The BTT is the optimal basis for fundamental federal tax reform enabling equitable and competitive taxation of consumption, growth of investment and income, and restoration of the U.S. economy as the leader of free enterprise and freedom.
Warren BuffettYesterday, I wrote a Viewpoints article highlighting the need to change our federal tax system in light of our huge trade deficits and loss of manufacturing jobs (click here to link to article). Today, legendary investor, Warren Buffett is quoted in an Associated Press story as saying the following about the dangers of our trade deficit: "The U.S. trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to ‘political turmoil’. Right now, the rest of the world owns $3 trillion more of us than we own of them."
Buffet’s made his remarks about the trade deficit at a speech he gave at the University of Nevada, Reno.
We had better get serious soon about revising our present tax system in order to address this serious (and growing) problem of our trade imbalance.
The Texas Supreme Court issued its written opinion reinstating Anette Carlisle to the ballot for state representative. (Carlisle is running against incumbent Rep. David Swinford, R-Dumas.) Click here to read the opinion. The court held that a member of the Amarillo school board is not a lucrative office that would preclude its member from running for the legislature. Amarillo school board members get reimbursed for expenses, but do not have to submit receipts for meals. The court held that was not sufficient for the office to become lucrative.
The Texas Supreme Court also denied a request by Court of Criminal Appeals Judge Charles Holcomb for a writ of mandamas. Holcomb was disqualified after the discovery of duplicate signatures on his nominating petition. Because of the duplicates, it was determined that Holcomb did not have enough valid signatures to qualify for the ballot.
Texas Attorney General Greg Abbott today reminded Texas consumers and businesses that all receipts for goods or services paid for with credit or debit cards must now conceal all but the final four digits of the card number.
Dec. 31, 2005, was the deadline for all Texas retailers to comply with a law, enacted in 2003, that sought to reduce the chances of identity theft by requiring retailers to print no more than the last four numbers of the card or the card’s expiration date on the receipt. Retailers with cash registers or other types of receipt-printing machines that were installed before Aug. 31, 2003, were required to comply by Aug. 31, 2004. The Attorney General and local prosecutors are responsible for enforcing the law.
Consumers who notice that a receipt generated after Dec. 31, 2005, contains more than the last four digits of their credit or debit card number should file a complaint with the Attorney General. Complaints can be filed on the Attorney General’s Web site at www.oag.state.tx.us or by calling (800) 252-8011.
Violators are liable for a civil penalty of up to $500 for each calendar month during which a violation occurs.
House Speaker Tom Craddick announced the appointment of Rep. Dan Flynn (R-Van) to the Sunset Advisory Commission. Flynn replaces Rep. Glenn Hegar (R-Katy), who is running for the Texas Senate. Flynn joins Reps. Vicki Truitt (R-Keller), Byron Cook (R-Corsicana), Carl Isett (R-Lubbock), and Ruth Jones McClendon (D-San Antonio) as the House members of the panel. The Speaker's public member has not yet been appointed
On the Senate side, Sen. Kim Brimer (R-Arlington) will chair the Sunset Advisory Commission. (Truitt is the vice chair). The chair rotates between the House and Senate. In addition to Brimer, Sens. Bob Deuell (R-Greenville), Craig Estes (R-Wichita Falls), Eliot Shapleigh (D-El Paso), and John Whitmire (D-Houston) will represent the Texas Senate. Howard Wolf returns as the Senate's public member.
The Sunset Advisory Commission advises the legislature on whether to continue a state agency and how to best structure its functions.CHANGE
This little weekend gem didn't escape our notice, and we'll see what we can find out further, but what is it lately with local police throwing a beat down on jaywalkers?
Besides the lady skater in Deep Ellum over the weekend, there's the pedestrian that DART cops whooped up on then pepper sprayed, in addition to other DART cop excesses Jim Schutze over at the Dallas Observer has been tracking.
It's a shame when some people go unbeaten - people with those wearable cell phones, for instance - but jaywalkers? Doesn't natural selection take care of that problem in the long run?
Dallasblog.com has asked me to contribute some coverage of events and issues happening in Dallas, especially on the local political scene. I’m an experienced journalist and I’ve lived in the Metroplex since the mid-1990s, but city politics is a new animal to me. So I bring to the table a complete lack of bias, borne of my ample ignorance. (See that? That’s me being completely upfront. Expect a lot of that. With hopefully less ignorance as we go along.)
What we’re going to try to provide is coverage you don’t get from the established media, or else coverage of issues from a different or more complete angle. We’ll have stories, postings and viewpoints on issues that affect you, and hopefully well ahead of the curve. We’ll do our best to get it right and, unlike a lot of the old-line media, we’ll let you sound off when you think we get it wrong. We’re interactive. We break down that fourth wall.
Oh, and in addition to the feedback you can post right here on Dallasblog, I welcome all comments, questions and new tips (especially news tips – gimme gimme gimme) to my personal e-mail,
Now, for the action in today’s committee briefings.
There really wasn’t any.
Discussion of the progress of the Dallas NAFTA Trade Corridor dominated the Economic Development and Housing Committee. They’re essentially on the way to building an inland port in south Dallas that could become the focal point for hundreds of millions of dollars in trade and development, and anyone in real estate development, logistics or shipping who isn’t in on this should find out more.
Dallas Police First Assistant Chief David Brown detailed the effectiveness of a pretty interesting test program debuted in July 2005 called Operation Disruption that, if his numbers were right, was a significant part of last year’s dramatic drop in violent crime in Dallas.
The idea of Operation Disruption is to rapidly deploy a force of about 60 officers to crime hot spots to “disrupt the comfort level” of criminals. This involves both patrol officers as well as headquarters units such as SWAT, tactical, K-9, and narcotics officers, and there are two levels of crime hot spots – those where there is a lot of violent crime, and those with a lot of property crime.
Despite DPD being chronically short on officers, this program of taking officers from other operations and precincts to periodically focus on hot spots doesn’t cause upsurges in crime in the areas the officers are pulled from. Just the opposite, in fact – when crime goes down in the hot spots, it likewise declines in areas surrounding the hot spot.
Brown said the program is going ahead with a new target zones in 2006. Details on the program can be found here.
If you want to know what is coming down the road in the consumer electronics field then the Consumer Electronics Show is the show for you. Thomas Palamides of the Canadian Consulate provides an excellent summary report and collection of industry stats from the 2006 Consumer Electronic Show. Thank you Tom!