By Newt Gingrich
Washington is focused on the wrong issues.
The number one problem in America is the lack of economic growth required to create jobs. Americans are in pain from unemployment, the collapse of housing values, and the rising cost of gasoline and other commodities.
It is impossible to balance the budget at 8 or 9 % unemployment. If we add those who are underemployed or who have dropped out of the job market, this more inclusive unemployment rate is nearly 16%. Job creation is the most important step to balancing the budget, so we can move the millions of people consuming tax revenue off unemployment and welfare into jobs where they are being productive and paying taxes.
The March report that 42.1% of African American teenagers were unemployed is a warning about a social crisis of enormous pain and destruction. When nearly half of a group of people cannot find work, there will be tremendous social and personal costs. Some of our greatest cities are becoming ghost towns as economic decay and joblessness destroy the very fabric of the community.
The pain of unemployment is being compounded by inflation. Even those with jobs increasingly can't afford to fill up the tank of their car or truck. So people are in pain as earners and as customers.
The leading cause of the rising cost of gasoline is a destructive Federal Reserve System. The Bernanke policy of printing money is setting the stage for massive inflation. Cheap dollars become expensive oil, gold, silver and other commodities. Expensive oil translates into expensive food since energy is vital to food production, processing and distribution.
We have been here before. In the late 1970's, President Jimmy Carter's destructive policies led to stagflation.
Stagflation was the combination of economic decline with inflation.
Traditional economists did not know what to do.
Every time they stimulated the economy by increasing the money supply it led to rising interest rates and inflation. The rising interest rates then cut off economic growth and pushed Americans back into unemployment.
Congressman Jack Kemp, economist Art Laffer and Wall Street Journal writer Jude Wanniski developed a model of "supply side" economics which mopped up the inflation with a combination of tax cuts, deregulation, constant reinforcement of entrepreneurs and investors and a bold change in Federal Reserve policy to promote a stable dollar.
Washington today must undertake five parallel policies designed to create jobs, put Americans back to work, rebuild the housing market and cut off inflation before it grows out of control:
1. Pass a powerful tax cut and regulatory reform package designed to launch a decade of job creation and economic growth;
2. Pass an American energy program that creates jobs here at home. An American energy program would not just create jobs in the energy sector. Lowering the cost of gasoline, heating oil, and electricity would stimulate job creation throughout the economy;
3. Repeal Obamacare before it does permanent damage to our health system and economy;
4. Bring the Federal Reserve under control by insisting on a sound dollar policy and by exposing and investigating the billions in secret deals the Fed used to shift money to giant foreign and American banks;
5. Cut spending decisively to create the fiscal space for a pro-growth economic policy.
As the Congress approaches the debt ceiling debate and other future confrontations with the Obama Administration, it must make sure job creation is the number one focus.
America only works when Americans are working. That is the heart of our current crisis.