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OCT. 20, 2010 -- Plagiarizing yesterday's The Wall Street Journal (10/19/10), "What's the matter with America?" and listening to Wolf Blitzer's lamenting the fact that the federal government and state governments were headed in two different directions on marijuana, immigration, and health care, Wolf Blitzer avoids the answer - jobs!

State governors jump through hoops trying to attract jobs. South Carolina just packaged $900 million of tax deferrals to get Boeing to produce the Dreamliner in Charleston, and the President and Congress do everything possible to get rid of jobs. The Congress could easily lower taxes and eliminate the incentive to off-shore jobs by substituting a 5% VAT for the corporate income tax. The corporate income tax burden averages 27% on the cost of production, which is immediately lowered to 5%, and since the VAT is rebated on exports, gives President Obama's export initiative a real boost. And since the corporate income tax is estimated for 2010 at $156.7 billion, and the 5% VAT brings in $600 million in revenues, that's $443.3 billion left over to pay down the debt.

The President could cut out his whining about the terrible economy he inherited, which was made terrible by the eight-year refusal of President Bush to enforce trade laws, and enforce the trade laws. We've lost one-third of our manufacture and jobs in the last ten years. President Obama has the country looking like a helpless giant in globalization as China calls the shots. And the free press and TV pundits follow suit. In Sunday's New York Times Magazine(10/17/10) there appears a sixteen page article entitled "What does he do now?" by Peter Baker that suggests everything except the United States competing in globalization; the United States engaging in the trade war; the United States attempting to stop the off-shoring of research, technology, development, production and jobs; of President Obama enforcing the nation's trade laws; of the government in Washington making it profitable for Corporate America to produce domestically.

You can't blame Corporate America. I know. I worked with Corporate America for thirty-eight years, passing legislation through both Houses of Congress requiring Republican and Democratic presidents both to enforce our trade laws, only to have the measures vetoed in a zeal to spread capitalism over communism in the Cold War. Then when President Clinton sold out American production to Mexico and China, Corporate America was forced to off-shore. Produce anything in the United States and in two years a competitor from China will bring it back in for a cheaper price.

Suffering $6 trillion in trade deficits in the last ten years, President Obama could move with a 10% surcharge on imports as President Nixon did in 1971when we had a fraction of the trade deficit that exists today. Both President Bush, and now President Obama, could move to save an endangered production as vital as automobiles under Section 201 of the Trade Act and not wait for GM to go bankrupt. Automobile production in the U. S. has faced a trillion dollars in subsidized auto imports in the last ten years. We're now begging Russia for helicopters for the war in Afghanistan. No embarrassment. We shot down Russian helicopters with stinger missiles to win Charlie Wilson's war. The War Production Act of 1950 requires the President to move to ensure the nation's production and supply of necessary equipment and materiel for our security. President Kennedy used it to save the textile industry. President Obama should have immediately upon taking office used it to ensure the nation's supply of helicopters rather than calling on Russia. In fact, we've off-shored our security. Defending the United States now depends upon the favor of foreign nations. Millions of jobs could be created if the 1950 Act was enforced.

What's the matter with America? The most competitive nation in the world is not competing. The most productive nation in the world is not producing. Tell Summers to take Axelrod with him so that the President can come in off the campaign trail and govern.

Senator Hollings of South Carolina served 38 years in the United States Senate, and for many years was Chairman of the Commerce, Space, Science & Transportation Committee. He is the author of the recently published book, Making Government Work (University of South Carolina Press, 2008).

© 2010, Ernest F. Hollings. All rights reserved. Contact us for republication permission.

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