During the next few months, the Bush administration and Congress will debate the merits of a new economic stimulus bill. Historically, these economic packages are a mix of political rewards and substantive economic growth policies. Now, more than ever, President Bush needs to rise above the politics and make it known that he is responsible for his administration’s economic policies, and that he will either benefit or suffer from the consequences of this bill. He has a choice, he can follow the path of reluctant compromise as his father did; or change ahead, as President Reagan did, with a confident and positive attitude that he is president and that he will live by his economic measures.
The measures being discussed include, in part, the elimination of the double taxation of dividends, accelerating business equipment depreciation, and across the board tax cuts including the acceleration of last year’s cuts. Although these tax cuts will provide a boost to the economy, I believe the answer lies elsewhere. We need to level the manufacturing playing field.
For nearly 175 years, the United States has been a nation of manufacturers―we make things and we make them as good or better than anyone else. A manufacturing has given way to services, the unemployment of people without college degrees has not only increased, but the remaining employed have witnessed a considerable erosion of their incomes. In the meantime, China and India are taking advantage of our free trade policy, as are the Japanese and Europeans. They all want to sell their goods to the American consumer with little regard to the American manufacturer who gets in their way.
The result of this practice, during the past 25 years, is that consumers benefited from this “open border” policy, while manufacturing in the U.S. continues to shrink. To be sure, there are plenty of examples of manufacturers who are investing in technology and innovating their manufacturing processes. However, many of these visionary businesses are having a difficult time competing on an uneven playing field.
It is imperative that the Bush administration considers the plight of all manufacturers when they develop their new economic stimulus bill. A significant portion of the middle class in America is dependent on the well being of manufacturing in this country. We have tremendous resources that many of our competing nations do not. Tax cuts that consider the effect on our manufacturing industry are essential, but so are policies that encourage and reward those who continue to invest in the manufacturing sector.
Without a manufacturing industry to provide a meaningful livelihood to middle class Americans, who will be left that can afford to buy the Ford’s and Chevy’s, or for that matter the Toyota’s or VW’s?