|SUGGESTIONS, SOLUTIONS AND WILD IDEAS
I have several suggestions for fixing America's jobs machine. But the first order of business is to stem
the flood of jobs that are pouring out of this country. To my mind, that means getting out of the World
Trade Organization, preserving the trade relationships that are fair and entering into hard negotiations
with those countries those unfair trade practices are destroying the American economy. On the other
hand, it doesn't matter exactly how stemming the job flow out is done, as long as it gets done.
Obama has given us a primer on how not to generate American jobs. He picked industries that he felt
were politically correct, "green," and gave them government loan guarantees. Some of his results have
been horrid, for example Solyndra borrowed $528 million of government guaranteed money, then
declared bankruptcy. Another $529 government loan guarantee went to Henrik Fisker, who will build the
$100,000 Fisker Karma "green" sports car in Finland.
Obviously, this kind of development requires the oversight of someone who understands business,
particularly start-up companies. And the economy is tough for new businesses now. Most people are
only buying what they really need. These days, how many people will install solar panels on homes they
might lose, or buy $100,000 sports cars?
These two challenges: ending job outflow and promoting promising businesses, are some of the
reasons America should elect the "hidden" candidate, former Congressman and Governor, Buddy
Roemer. He has started many successful companies himself, including banks, and as a banker, he has
provided the financing for many other businesses. Buddy knows what works and I believe that electing
him would jump start development of businesses based on new technologies. (For more, see Nos. 131
and 133 on this website, "Why Hide Buddy? Billion$ Of Reason$" and "Ten Good Reasons To Elect
Another industry where jobs could be generated is Big Oil. It's dirty, seriously not-green, but America is
not even close to the end of its dependence on oil as a fuel. As a country, we need both jobs and
energy independence. I would suggest giving Big Oil a free hand to develop American oil fields,
perhaps five years with minimal regulations and red tape. That will produce both a lot of jobs and a lot of
Another area where America has lost a lot of jobs is the construction industry. The housing market is
critical to the American economy. Because most houses are built on site, housing provides local people
with good jobs. These days, there is a huge supply of existing unsold houses, millions of them
foreclosures. As a result, new housing starts went from a monthly high of 2,273,000 in January, 2006 to a
low of 479,000 in February, 2011. That drop in housing starts translates to the loss of millions of well paid
jobs in the construction industry.
These figures were taken from Forecastchart.com/chart-housing-starts.html. For most of the 50 years
illustrated on the chart, housing starts were over 1,000,000 a month. An eyeball average (quick look)
suggests that an actual average number of monthly housing starts from 1959 to 2007 was somewhere
between 1,400,000 and 1,500,000. In August 2011, actual housing starts were 571,000. That's about 40% of
the number of housing starts required for economic recovery of the construction industry.
Many of the foreclosed homes that are holding down the construction industry are more or less owned
by the American people, through Fannie Mae and Freddie Mac, which the government took over in
2008. "Fannie Mae and Freddie Mac’s combined inventory of foreclosed residential property has
quadrupled in just three years and now stands at a record $24 billion. The number of properties on their
rolls -- now at nearly 242,000 -- has increased fivefold." (Clea Benson, "Fannie, Freddie’s $24 Billion Glut
Imperils Recovery," Bloomberg, January 21, 2011).
Fannie and Freddie are very slowly selling these homes to live in buyers. But the slow rate of these
sales could depress the construction trades for decades.
My Suggestion: Move these homes with a national home lottery involving 5000 or 10000 homes each
month. Let's start the discussion with 5000 homes. That means there would be 5000 winners a month.
The top few winners would be allowed to pick any house in the portfolio of homes, secondary winners
would be restricted to picking a house with some specified maximum value. At 5000 a month, the homes
currently owned by Fannie and Freddie would be disposed of to happy homeowners within four years.
"The median foreclosure list price for properties owned by the two government-sponsored enterprises
is $99,000, according to RealtyStore, a Santa Barbara, California-based foreclosure data provider." (Ibid).
Based on the midpoint (median value of $99,000), the average value of the homes raffled off each month
would probably be not more than $150,000. So the total value of 5000 homes raffled off each month
would be less than $750,000,000. That seems like an awful lot of money to raise, but there would be 5000
guaranteed winners and a lottery of homes in America would probably attract international interest.
(International sales could be conducted over the Internet using credit cards. Any international winner
not deemed suitable for residence in the United States, because of criminal or terrorist ties uncovered
in compulsory background checks, could be given a cash payment instead of a house.)
A successful dream house program could tempt the banks to join in and raffle off their foreclosed
homes. With continuing slow individual house sales, raffling off 5000 homes a month would clear the
backlog of all foreclosed homes owned by Freddie, Fannie and the banks in about a decade, but the
publicity of lottery winners picking the best homes might speed undecided buyers into the market
before the best deals are lost. That would speed up the process of finding new owners for the
foreclosed homes. In addition to clearing the backlog of foreclosed homes, this plan would provide
needed capital to Fannie Mae, Freddie Mac and participating banks.
REDUCE ENTITLEMENT SPENDING
There are obvious solutions to some of the entitlement spending problems America faces, for example,
take the special interest payoffs out of Medicare and Medicaid and put in schedules of maximum
covered fees for procedures. Is it a wild idea to think this could happen? I don't know.
So I don't know if the suggestions I am about to offer could be solutions or will just be blown off as wild
ideas. The problems are real however, and solutions are necessary.
Social Security was created as a pension plan, but it was never even close to being adequately funded.
Initially, this was not a big problem as there were many more workers than retirees. (Note that not all
workers were covered.)
Year Beneficiaries – Dollars Total Workers
1950 – 3 million – $961,000,000 59 million
1960 – 15 million – $11,245,000,000 66 million
1970 – 26 million – $31,863,000,000 79 million
1980 – 36 million – $120,511,000,000 99 million
1990 – 40 million – $247,796,000,000 119 million
2000 – 45 million – $407,644,000,000 137 million
Source: Wikipedia Source: US Bureau of Labor Statistics
2011 – 55 million – $727 billion 139 million
Source: Social Security Official Website Source: US Bureau of Labor Statistics
My Suggestion: Gradually convert Social Security from a pension and disability plan to a disability and
poverty insurance plan. Convert the plan in 3 stages: Initially reduce benefits for current and future
beneficiaries by $1 for every $4 of other income. After 5 years, reduce benefits by $1 for every $3 of
other income. Finally, after another 5 years, reduce benefits by $1 for every $2 of other income. Reduce
the maximum benefits at each stage toward a minimum consistent with reasonable, if frugal, comfort.
Since the highest income workers would tend to receive the least benefits from this plan, reduce the
maximum salary on which taxes are deducted with each benefit reduction, perhaps ending with $25,000.
If at all possible, reduce payroll tax rates as well.
"Among elderly Social Security beneficiaries, 54% of married couples and 73% of unmarried persons
receive 50% or more of their income from Social Security. Among elderly Social Security beneficiaries,
22% of married couples and about 43% of unmarried persons rely on Social Security for 90% or more of
their income." Source: Social Security Official Website.
Using my approach, the poorest Social Security recipients would have very little reductions in their
benefits. This is not consistent with pension plans which tie benefits to contributions. But as America
has fewer and fewer workers to support each retiree, perhaps all the taxpayers can afford is not a
pension plan, but disability and poverty insurance.
Amo Paul Bishop Roden