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How to Reduce the National Debt Without Raising Taxes or Cutting Spending


Increasing business revenues is the most effective but frequently ignored way to reduce budget gap and bring down national debt.

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									                        Reducing the US Deficit and Federal Debt
  Increasing business revenues most effective but frequently ignored way to reduce budget
                             gap and bring down national debt

                                        Michael C. Sekora

Discussions about deficits and debt reduction inevitably centers on whether and how to reduce
government spending or to increase tax rates. Proponents of increasing taxes argue over what level
tax rates should be increased to and for which segments of the population. Proponents of decreased
spending, debate over which federal programs should be trimmed or eliminated altogether. The
problem is that the choice poses a classic false dichotomy and a rising tide lifts all boats. It is
possible to grow the pie larger, and the economy should never be viewed as simply a zero-sum

Of course today with the national debt and budget deficits reaching new highs and the nation’s
economic health anemic at best, the old dichotomy is less tenable than ever. Increasing tax rates or
cutting federal spending cannot be done effectively without disturbing a majority of Americans.
Obama’s deficit commission stated that making reductions for sustainable levels of debt and deficits
would necessitate large tax increases or major spending cuts, and quite probably necessitate some of
each. Even if these were done, given the structural dislocations in the current economy, it isn’t
likely the measures would do enough in time to turn the economy around at least to the long-term
satisfaction of the American people. The fact is both options share or possibly redistribute scarcity.

Sure spending should not be profligate, and taxes should be fairly levied. The far more effective
answer to reducing debt and alleviating a budget deficit, however, is to grow the economy and
increase business revenue. Significant and sustainable increases in the revenues of business,
however, are unlikely using the standard economic shell games of the day, such as off-shoring jobs,
lay-offs, and selling subsidiaries. To achieve significant sustainable increases, businesses must
increase and maintain their competitive advantages in domestic and foreign markets. Moreover, a
true competitive advantage is a matter of producing goods and providing services that customers
want to purchase because the products and services satisfy customer needs better than the
competition. If a business is not excelling at satisfying customer needs, then any other perceived
“competitive advantage” equates to nothing more than rearranging the deckchairs on the Titanic.

Under President Reagan I directed a program called the Socrates Project within the US intelligence
community. Socrates enabled us years ago to foresee America's present economic crisis, but it also
identified the means to rebuild this country’s competitiveness and to turn things around. George
Herbert Walker Bush scrapped the program, but it is time now to complete Ronald Reagan’s great
legacy and to return America to economic preeminence.

The Socrates Project utilized all source intelligence and determined by examining competition
worldwide, that the US and its organizations had begun losing competitive advantage in the
marketplace after World War II as a result of switching from technology-based planning to
economic-based planning as the foundation of most decision-making. Socrates also foresaw that if
the US continued to rely upon economic-based planning with its inherent degradation of
competitive advantage, the economic health of the US would go into catastrophic freefall and no
amount of economic maneuvering would be able to stop it.

From the vantage point of Socrates, we also saw that China via an aggressive use of technology-
based planning was, in effect, rapidly building itself into the next world superpower atop the
wreckage of US manufacturing industries and a systemic failure to apply technology strategically to
marketplace coordination and the output of real goods and services. China was out-maneuvering
the US and its organizations in the acquisition and utilization of worldwide technology purposefully
to decimate America's ability to generate competitive advantage long-term, as well as to ensure its
own maximum competitive advantage across the full range of markets and industries into the future.

To rebuild America's competitiveness, the Socrates Project developed a highly advanced form of
technology-based planning called automated innovation. In automated innovation, the process for
acquiring and utilizing technology for a competitive advantage, including research and
development, is automated so that it can be executed with unprecedented speed, efficiency and
agility. Automated innovation would enable the US and its major public and private organizations
to consistently outmaneuver China in the exploitation of technology, in order to acquire and
maintain maximum competitive advantage and thereby greatly increasing corporate revenues.

After the first President Bush abolished the Socrates Project for political reasons, the basis of the
initiative was moved to the private sector where it has been considerably refined since that time.
Debates today on how to best reduce the US national debt and federal budget deficit must include a
third leg and not only the tired rhetorical tug-of-war between the need and desire to increase taxes
or cut spending. What needs to happen is that businesses must increase their revenue from their
private businesses and do so in a significant and sustained way, in order to grow the economic pie
and thus exponentially bring in more tax revenues towards retiring the debt and living in our means
year to year. The political debate must include more than the usual suspects in terms of argument.
Corporations and businesses have to refrain from mere economic shell games claiming profit while
they hollow out their insides and lay off American workers.

Businesses will naturally do this if and when tax and trade policies are less regressive, and when
public-private partnerships produce the tools they need to have a real technology-based competitive
edge. The US Government and various State Governments should look into tech-based planning
models, in order to fully appreciate and address their sagging economies and debt burdens, which
are unique to this timeframe and not cyclic but systemic in their nature. To fully address the
economic health of the US, the US Government should move resolutely towards a reexamination of
President Reagan’s Socrates Project and so usher in the automated innovation revolution in this
country and a return to sustained economic prosperity and revitalized American Dream.


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