PhillyInc: What the economy needs

Posted: September 21, 2011

While we await Wednesday's 450-word statement from the Federal Reserve's monetary policy committee, I'd like to revisit some of my words from last Friday's column.

In it, I'd wondered aloud if the U.S. economy needed more government action to get it moving in the face of what appears to be paralysis by the private sector.

If it does, prepare to be disappointed because all signs point to a lot of tongue-wagging and thumb-twiddling through the 2012 elections.

The Federal Open Market Committee has been ruminating over the health of the U.S. economy and what, if anything, it should do to support growth. Will it buy more Treasury securities - a strategy known as "quantitative easing" - or try a new move called "Operation Twist" that involves swapping short-term bonds for bonds with longer maturities? Or neither move?

As for what passes for constructive debate in Washington over taxes and spending, well, it looks from Broad Street like the equivalent of World War I trench warfare, not class warfare.

Which brings me to reaction to Friday's column from two executives about whether more government action is needed. Neither wants to see another federal stimulus program, but each offers other suggestions that they believe would goose the private sector into growth mode.

Roger Colley, a former president of two local environmental com-

panies - Betz Laboratories and Envirogen - would try to reduce uncertainty for business by doing the following:

First, put all new regulations on hold and freeze federal spending, both for five years. Next, cut the corporate net income tax rate to 15 percent from a top rate of 35 percent and make the current rates for individuals permanent.

Finally, Washington needs to "start all over again" with its changes to the nation's health-care system, Colley said in an e-mail.

Tom Callahan, senior vice president of Bristol's Modern Group Ltd., which rents forklifts, cranes, and other heavy equipment, tallied up a similar set of actions, starting with a reform of the tax code "so it makes some sense."

He would also cut the corporate tax rate so that businesses are not "incented to do business overseas all the time." Instead of a freeze on government spending, Callahan suggested it be cut, saying, "The wars should be ended."

It all sounds as simple as that old Steve Martin joke about how to become a millionaire and never pay taxes. ("First, get a million dollars.")

But nothing has been simple about this weak economic recovery.


Contact columnist Mike Armstrong

at 215-854-2980 or marmstrong@phillynews.com, or @PhillyInc on Twitter. Read his blog, "PhillyInc," at www.phillyinc.biz.

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