Do you want to be president?

There are many problems and conflicts the new president is going to face. I feel sorry for him. He will face the greatest challenges of any president in history.

One of the major problems: Will the new president insist on a pay-as-you-go rule for the budget? Will he, or can he, increase income and decrease expenditures enough to balance the budget? This is scary with a $10 trillion national debt and a $450 billion trade deficit and following eight years of deficit spending. A balanced budget seems impossible, but the alternatives are borrowing more, increase the national debt (thus increasing the possibility of a foreign takeover) or printing more money (increasing the devaluation of the dollar, which is only worth about 56 cents). The latter is the one that bothers me the most, because it is something most people do not realize is happening.

The best example of printing money is Mexico. As far back as I can remember, the peso was reduced to 20 cents. The government continued to print money until it was unacceptable in trade. In 1994 the Mexican government revalued the currency and printed the new peso worth 1,000 old pesos. Unfortunately, it continued excessive printing, and in September 2008 the peso was worth only 17 cents. It can and is happening here. The $700 billion bailout will make it worse. The new president must refrain from borrowing, printing and spending.

There are many ramifications to increasing income and reducing spending. I will start with income.

You can't pay for a house or pay income tax unless you already have a lot of money or have a job. In the U.S. there are currently 9.5 million unemployed and 37.8 million living below the poverty level.

Needless to say, this is primarily due to the mass movement of manufacturing plants out of the country. Our trade policies are complex, but it makes no sense to me for our manufacturers to move out of the U.S., produce cheaper products, ship them back duty-free, put U.S. competitors out of business and pay little or no income tax.

I have heard there are actually subsidies or tax breaks to encourage corporations to move plants out and produce goods outside the U.S. If this is true, the first priority for President Obama should be to reverse that situation. In fact, he will have to review all our trade policies with all countries and consider imposing duties or tariffs on all products that could be economically produced in the U.S.

Country such as Canada, Mexico and others that supply our oil and other vital products should receive special consideration. Many products will cost more, but this is the price we have to pay to increase our gross domestic product, bring jobs back into this country and eventually increase income taxes.

Our greatest source of income is, of course, taxes. President-elect Obama has all kinds of plans on this, but one of the serious tax evasions is through the capital-gains tax. The presidents, CEOs and directors of virtually every big corporation in the U.S. own most of the stock, vote themselves a huge salary and then issues themselves stock valued at about 10 times their salaries. They hold this stock for a year or two, sell it and pay 15 percent capital-gains tax instead of their regular 35 percent.

This could easily be corrected by allowing only 4 percent of the gain per year at the capital gains rate. If they held the stock 10 years, they could get the capital gains rate on 40 percent of the gain and pay their regular rate on the balance.

The corporations also make less profit and pay less dividends due to their high salaries and stock options and consequently pay little corporate tax.

Other stockholders receive little dividend income and pay little tax as a result.

U.S. Sen. Jim Webb in his book "A Time to Fight" said in 1968 a CEO made 30 times the average employee wage. Now CEOs make 300 times the average employee wage.

The second phase of becoming a pay-as-you-go president will be his ability to make massive reductions in spending. The new president should look at subsidies, not tax breaks, paid to producers and corporations that are excessive, no longer needed or nonproductive. One of Obama's favorites is the reported billions paid to ExxonMobil. My favorite is the millions in subsidies paid to producers and investors of ethanol and biofuels, which have been proven to be uneconomical and inefficient and which transform food into fuel, causing food shortages and price increases.

One of our most excessive and controversial expenses is the military. Needless to say, everyone wants us to have a strong defense that is able to defend us against any enemy. But have we gone too far? One economist recently commented, "We are trying to control the world and its resources." I have always maintained that we should not try to be the world's police force. It is something the president-elect should look into with respect to the cost and what we can afford. We have the largest standing army in the world plus a huge air force, navy, marines, coast guard and homeland security.

In addition to Afghanistan and Iraq, we have large bases in Germany, South Korea, Japan, United Kingdom and Italy. Altogether we have 725 military installations outside the U.S. Our total annual military spending is $965 billion, or 54 percent of our budget. Our military spending is 47 percent of the world total, but our gross domestic product is only 21 percent. This creates deficit spending. We outspend Iran and North Korea 72-1. Our military spending, including nuclear weapons, is equal to the total of the next 15 countries: China, Russia, Japan, United Kingdom, Saudi Arabia, France, Germany, South Korea, India and five others.

It is obvious our military spending, not just for the Iraq war, has gotten completely out of control and must be a top priority if president-elect Obama wants a balanced budget.

One renowned economist put it this way: If we continue this drain on our finances, resources and reduced productivity, countries like Russia and China will be more prone to take us over than with a healthy economy and slightly reduced military. In other words, we would not be able to finance of buy enough fuel to fight another war.

The last depression took more than 10 years to completely recover from, and this one has a larger national debt, a larger trade deficit and an internationally devalued dollar. Do not expect the new president to perform miracles.

Jack H. Knowlan Sr. is a Jackson resident.