"I told him then that the global economy is currently structured to overvalue the dollar"

Getting ready for QE VII, VIII, etc.

Our "representatives" who are mostly career politicians and will say and do what it takes to get reelected are deeply out of touch...with rare exception they have become indifferent to the lives and needs of the American people as they coddle the rich, enable corporations and waste countless billions on a globe-spanning, military-run empire. This defines the Republican Party but most Dems are not far behind.

"Apparently they can be or could be if the proper policy environment were created. "

The problem with this article is that it doesn't articulate any specific policy action. It just states the problems.

I just got done reading an article in the Miami Herald on the unaccounted cost of the war efforts in Afghanistan and Iraq, and it is truly mind-boggling how the media in general doesn’t address the issue. The politicians say they are worrying about Jobs and the Economy, and poll after poll says that the American people are as well, but the facts speak differently. The “official” cost of the wars has been $1.3 trillion budgeted through GWOT or OCO, whichever name tickles your fancy, but we know that basically, this is only the top third of the iceberg floating on the surface of the water threatening to sink our ship. During this time frame, the DoD has been budgeted over 5 trillion dollars, and I know that my service has had to shift funding EVERY year to help cover the cost of the war. Not only that, but all the personnel cost and the training cost are not part of the “extra” funds normally. The trade deficit is the least of our worries, from what I have seen, and more likely, it is the massive overreach of the strategic vision for what exactly we are seeking to do in these countries. My question is this, what does jobs and opportunities mean for Afghans, when Americans are unemployed and can’t afford the basics of our standards of living?

Prestowitz doesn't suggest a policy to address the trade problem because he doesn't want to have to acknowledge how we got there and what it will take to get out of this hole.

Basically, the $650B annual trade deficit represents the amount by which consumption in the US (private plus business plus government) exceeds production. To fix this problem, we need to move this number at least $700B in our favor. We overconsume because government policy encourages us to do so. Income is taxed, consumption isn't. If we really want to get the trade deficit under control, we'll need to make people aware of their consumption and its impact on jobs, etc.

One way to do this is through a direct consumption tax. The way I would structure it is to:

First, impose an "internalization" tax which will ensure that the final cost of any product covers all the currently externalized costs associated with its manufacture, transportation, consumption, and disposal. By itself, this should cut down on imports since their prices would include the full cost of transporting goods to the US, including any costs associated with mitigating global warming, etc.

Second, a flat consumption tax over and beyond the internalization tax. This tax would be set at a rate designed to fully cover entitlement spending over some identifiable period, enabling the rate to go up and down as needed to encouage saving and/or consumption. The consumption tax would also apply to housing providing the counterforce necessary to discourage people from buying more housing than they can really afford; it is doubtful we would had the housing bubble if this counterforce had been in play.

Linking a consumption tax to entitlements is one way to get around the opposition to new taxes as opposed to cutting entitlements (which have grown from about 15% of federal outlays to more than 60% in the last fifty years). People who consume more will pay more tax, those who wish to reduce the tax they pay, simply consume less. (Yes, I am aware people will try to cheat, but today that is harder to do in any extensive way than it once was.)

Third, to ensure progressivity, link the internalization and consumption taxes with an "Individual Entitlement Account" (IEA) bestowed on citizens at high school graduation, which will be their source of entitlement spending throughout their life. This is highly progressive because it provides an endowment-like source of spending to everyone, and reduces the advantages of those born into wealth. The balance in the IEA would receive an imputed interest payment designed to encourage thrift.

Fourth, an inheritance tax linked to the balance in the IEA. Those with more in the IEA at death will enjoy a higher threshhold for taxation of their estate because they didn't overuse it. The inheritance tax will be dedicated to paying down the federal debt.

Fifth, repeal the personal income tax. Most people wouldn't have to file paperwork with the government, thus forcing the smart guys who now figure out ways to make big bucks helping their clients avoid paying their fair share to find more productive work.

Sixth, business would not pay tax on income, but would be taxed for executive consumption, everything from the company car to the country club membership, etc. The tax on these perks might well be over 100%. The objective here is to impress on executives that their positions are not intended as opportunities to loot.

Putting the entitlement/consumption tax issue outside the usual budgetary process would enable Congress and the President to get back to what they are supposed to do: plan for the future of the country. Elections could then return to discussions of that future and the alternatives to getting there. We might even find that this plan returns civility to Washington and American politics.

It's not the trade deficit, stupid.

It's the Obama, stupid.

The study you refer to Clyde, was published by Booz & Company--the well-known consulting company that sold Booz Allen Hamilton to the Carlyle Group in 2008. Please correct the reference in the text! ,

think about it for just a moment. There will be no more significant fiscal stimulus for the economy. The emphasis is all on debt reduction, cutting expenditures, and retrenching. Not only will the federal government be cutting back, but the state and municipal governments are already slashing and burning. All of this will result in further job reduction, less consumer spending, and declining stimulus which in turn will lead to reluctance on the part of business to invest. is that true?
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There is a need for a healthy ecology of markets, meaning healthy global markets for global commodities/goods/services, healthy regional markets, healthy micro-regional markets chainsawsreviews, healthy community markets. Whereas in the past, the tendency of economies of scale (fixed cost/marginal profit business dynamic) have driven institutions to broader markets (local growing to regional growing to national growing to global - Walmart for example), there will be a slight reversion hopefully

The consumption tax would also apply to housing providing the counter-force necessary to discourage people from buying more housing than they can really afford; it is doubtful we would had the housing bubble homeprojects if this counter-force had been in play.