The American Recovery and Reinvestment Act of 2009 economic stimulus was an unfocused series of compromises that had a modest stimulative effect on economic activity. Indeed, no matter how haphazardly you dump a trillion dollars on the US economy, it will goose employment, industrial production, retail sales and GDP. Its hard to spend that much money and not have an impact.

The limitation of most of these spending increases and tax cuts was that they had a temporary effect: As long as the money flowed, they were stimulative. Once the spending stopped, the stimulus stopped also.

Talk has begun on a new set of stimulus plans. To avoid the limited and temporary impact, perhaps policy-makers, tax-payers and voters should be asking these questions about any stimulus: “What are our policy goals? Are these he most effective and efficient spending & tax plans for achieving these goals? What are the costs? What is the likely result of the alternative — doing nothing?

So far, most proposals have been either too timid or misdirected (The infrastructure rebuild is a good idea but its only a quarter of what is necessary). The goal of counter-cyclical government tax cuts and spending should be more than a temporary salve — it should be to “prime the economic pump.” With consumers and businesses so cautious, the virtuous cycle of hiring, spending, saving, investing has not gotten any traction.

If you were going to give me a trillion dollars to stimulate the economy so that the next expansion could proceed, here’s what I would do:

1) One Year Payroll Tax Holiday: Want to increase job creation and reduce unemployment? Tax it less. A 12 month employer FICA holiday will encourage job creation.

How to pay for it: Raising both the retirement age and the cap on FICA contributions.

2) Capital Investment 1 year 100% Deduction: The administration has already proposed a variation on this. It was an effective tax credit when done in 2004-05, but the drawback was it encouraged CapEx over new hiring. The idea of the payroll tax holiday is that it prevents that drawback.

How to pay for it: Via gains from the  Corporate Tax-Free Repatriation (#3)

3) Corporate Tax-Free Repatriation: US corporations are sitting on trillions of dollars of cash in their overseas divisions. A one year tax holiday to bring that back to the US. It can be structured in tiers (0%, 5%, 10%). The goal should be to bring to the US a trillion plus in overseas profits.

How to pay for it: Its free; These are overseas revenues that are untaxed by the US.

4) Pure Science R&D Program for Alternative Energy: Gains in the basic science of solar energy conversion, battery storage, alternative biofuels, etc has been incremental. The private sector does not patience for multi-year or basic science R&D.

How to pay for it: Via a Pigouvian tax on gasoline, phased in over 5 or 10 years.

5) Mortgage Principal Write Down Plan: Buyers paid too much, banks lent too much against residences at the top of the RE cycle. To get the sector healthy again requires prices to normalize, which is now occurring thru Foreclosure. An alternative is a voluntary principal write-down, where both the borrower and lender split the losses. An underwater home is refinanced at its 2011 appraisal value, with the mortgage shortfall rolled into a 10 year interest free balloon payment. Banks cut the balloon loan in half in year 10, rolling it into the existing mortgage (assuming the owner stays current on mortgage).

How to pay for it: There is no costs, but Congress would need to make the 10 year zero interest free tax free, and permission the banks to defer reserving for eventual balloon defaults for the same 10 year period.

6) Electrical Grid Refurbishment: This is both an economic and national security issue: The electrical grid is an unreliable mishmash of public and private ownership, vulnerable to both blackouts and cyber-attacks. It needs to be upgraded yesterday.

How to pay for it: A one cent per kilowatt hour grid tax.

7) Airports, Ports, Roads, Bridges, Tunnels: The US was one of the first nations to build out a massive interstate highway system. We love big construction projects, but we seem to dislike the maintenance. Most of the transportation grid in the US is falling apart, in need of a massive repair. Many US airports look like they are from 3rd world countries.

How to pay for it: Usage tolls on roads, ports, bridges, landing slots.

Some folks believe the government should do nothing, spend no money, focus on balancing the budget. But is the ideal time to begin a new diet and exercise regime when you have pneumonia? The time to reduce the government’s economic deficit and footprint is during a robust expansion, not during (or just after) a contractions.

The alternative is to do little or nothing, and suffer through another lost decade, with an economy that is anemic at best. In a Democracy, the electorate has other options than misdirected austerity . . .

Category: Economy, Politics

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

128 Responses to “Economic Stimulus? Try These 7 Ideas”

  1. jad714 says:

    It’s great to see economists take initiative and come up with plans to fix the mess that we’re in. Phil from philstockworld.com is much like that. He’s told me of quite a few good plans to help bail America out of the hole we’re in. Unfortunately the bills that arrive in legislature get held up and we get nowhere. Regardless, it’s great to see people coming up with great, detailed ideas to help this country out.

  2. Greg0658 says:

    many are suggesting pull funds from the MIC .. seriously next to building buildings for the butter here in the USA – the MIC is the next biggest driver of the economy domestically .. and close foreign bases (your on your own) – sure lets see if WW3 can get started on cue for 12/21/2012 .. just go cold turkey on it all – can hardly wait – and watch shovel ready pull a rabbit outta the hat

    Rocky & Bullwinkle “Goof Gas Attack”
    http://www.youtube.com/watch?v=0okytU6LpEc

    and saw up there somewhere – a “brake” stops a vehicle – or bends steel
    the other “gimme a break, Dave” – “one break, coming up”
    Van Halen – “Unchained” (studio version)

  3. Neil C Denver says:

    During the 1930s, stimulus money was primarily spent on domestic products and services. In the present global economy, much of our taxpayer stimulus money is helping to build the economies of foreign nations. That does not mean that Keynesian economics is dead, but it surely effects its’ impact.

  4. obsvr-1 says:

    #Jim67545 Says: … The first obligation of the federal government is to protect the citizenry. Let’s put more people on the borders, chasing down drug dealers, scammers, fraudsters, tax cheats, medicare and disability cheats, etc. In the good old days (3 years ago?) we could afford to have 100,000s of leeches sucking off of the body politic. Now we cannot. Let’s stop the bleeding …

    Are we not under attack, economically?

    — Reply

    Good post, good ideas to add to many from above
    Yes, we are under attack, both from external sovereigns, internal oligarchs and MNCs with profit motives placed before country/societal value. The internal enemies are more insidious, we should target the perpetrators as economic terrorists and unleash the heavy handed powers of the Patriot Act and RICO laws on them. The best way to win the economic war is to remove the cash from the enemies of the economy — unfortunately the elites control the game, the gov’t and the troops (at least for the time being) so we can all suggest great ideas, but to see them come to fruition is lost in hope. Perhaps when enough “Of the People” band together real change can be effected, the tea party is a leading indicator of a sea change.

    @Greg0658 Says: yes indeed pull funds from the MIC, redirect the assets to other programs and projects suggested above to invest in US based activities. No one is suggesting eliminating DoD spend, but prioritizing on national security, border protection and anti-terror (directed at USA) objectives.

  5. wojmax says:

    This should have been tried in Jan 09.

    BUT THEY KNEW BETTER.

  6. [...] Well, it prodded companies to increase their Capex spending over hiring. That is why I suggested marrying this tax credit with a Payroll tax holiday so as to not nudge companies away from job [...]

  7. Greg0658 says:

    Someday Soon by Firefall
    Enterprise NX-01 commissioned in 2151 commanded by Captain Jonathan Archer
    Enterprise NCC-1701 commanded by Captain James T Kirk
    Enterprise NCC-1701-B (an Excelsior-class upgrade Starfleet vessel) commanded by Captain John Harriman

    I guess the MIC could do without its 110% funding for some time and pull thru a-ok … but on this thread of ideas to move forward .. I would like to see a new vision .. maybe the creators will come back and usher in a new reality once we show them this 8000 year affair with this cash for benefits system was a baby step http://www.metrolyrics.com/on-the-road-to-kingdom-come-lyrics-harry-chapin.html

    mornin dj @ WOLD
    http://www.youtube.com/watch?v=QVh6aOwY08g&p=09C14928C548188C&playnext=1&index=16

  8. GPLamb says:

    I thought I would pose the following for consideration:

    Would you or a business owners/managers that you know hire a new employee if it “cost them nothing”?

    Here is a plan to create 2 million jobs over the next 3 months.
    It is a very simple, efficient and quick/timely solution: Give each employer a single $45,000 tax credit available to each firm (not per new employee) to offset wages of net new employees added to payroll (no hiring/firing gaming) and kept filled for 18 months (net additions to payroll).

    The $5,000 current Obama proposal if far too low to induce employers to take on the financial and time risk of hiring new employees (low wage or high wage) in these uncertain times (we are facing a confidence crisis). A significantly larger amount will surely make this decision easier and also promotes higher paying jobs as well. What is the impact of middle America going back to work, paying income taxes, paying into social security, making mortgage payments, buying consumer goods….?

    Too expensive? Assuming 2 million employers participate, The cost: $90 billion. Well, for 2 million jobs, that is a bargain ($45,000/employee). There’s a good chance that some employers might hire more than one employee-making it a better bargain. So let’s compare this to the 3 million (if to be believed) jobs “created or saved” claimed by the $500 billion spent by the American Recover & Reinvestment Act of 2009 (is that really $167,000/job?)-I won’t even digress as to the worthiness of some of the projects. Plus, how much does it save in unemployment programs. Further, I saw a statistic on US Businesses that in 2004 there were 5,885,784 employer; and 1,262,22 employer with 10 or more employees. Based on these statics, I am wondering if my estimated cost of $90 billion is high as this would assume nearly a third of all employer to participate?

    Why does this plan work?

    1. It removes the fear and uncertainty for employers – yes they will hire (get an employee or two for free, who wouldn’t?) to add to the production line, administrative staff, sales force, etc. (let employers allocate to most productive area to create strong business).

    2. It places the dollars and decision-making in the hands of most efficient allocators of capital – private business

    3. It helps the engine of our economy – small businesses

    4. Designed to create (not “create/save”) real new jobs – private sector jobs
    5. Newly employed (with some certainty of employment) become better consumers – propelling growth again

    6. It gives our export businesses (especially smaller ones) a competitive labor/pricing advantage

    7. Politically, it can get done. The Republicans could not stand in the way of promoting private business and it give the Democrats some recognition of be pro-business (but this should be done on it’s economic, not political merits).

    Maybe we could fund this plan with the unspent stimulus plan.
    Keys to success:

    1. Get dollars directly to private business (making it efficient)

    2. Make it sufficiently large enough to have substantial impact (geared to totally offsetting the cost of hiring one or more new employee-a no-brainer, making it effective)

    3. It is simple to implement and easy to track (making it believable)

    It seems others have proposed similar strategies (including John Bishop-Cornell, Alan Blinder-Princeton, Tim Bartik-Upjohn). I am trying to figure out why this is getting little to no traction.

  9. Mike Duffy says:

    I was hoping someone can answer this simple question.

    Why is it that the United States doesn’t go back to it’s trade policies of the 19th century and used tariffs to keep out manufactured products that can be produced in the U.S.?

    Restricting European finished products was how the United States initially built up it’s powerful economy.

    Is it because finance runs this country and such a policy is not profitable to wall street interests?

    I rarely see trade and immigration policy discussed when concern about American unemployment is the subject matter. It’s always tax cuts. One would think that the wealthy had suffered enough over the past 30 years and that it was time for relief on their whopping tax rates of 15% on their dividends and capital gains.

    Odd that during the go go 1950′s and 1960′s the tax rates were much higher and the American economy still survived.

    I think you write well Mr Ritholtz and are also quite interesting to listen to. Since you are quite intelligent, I would enjoy reading your opinion about why tariffs were good for the United States for 140 years (1790 – 1930) and bad after that.

  10. Payroll tax holiday: My book, FREE MONEY recommended this way back in 1996. If you’d like to see Ten Reasons to Eliminate FICA, click the link.

    After you read it, ask yourself not only why we don’t eliminate FICA, but why after eliminating it, we ever should bring it back.

    Rodger Malcolm Mitchell

  11. Also, you said, “The time to reduce the government’s economic deficit and footprint is during a robust expansion, not during (or just after) a contractions.” Please explain, using historical data, why it ever is “time to reduce the government’s economic deficit and footprint,” other than you simply don’t like the words “deficit” and “big government.”

    Rodger Malcolm Mitchell

  12. Bernie638 says:

    I think your trying to answer the wrong question. Stimulus spending doesn’t work, never has worked, and never will work. Try these ideas. Reduce regulator burdens. I was looking at a company today that makes a really cool electronic toy and at the top of the website there is

    ” we would like to assure you our Snap Circuits® products meet American Society for Testing and Materials toy requirements (ASTM963), Standard Consumer Safety Specification (16CFR), and International Standards for Toys & Children’s Products (EN71)”

    and a link to the certificates of compliance. How do you start a business and find out all the requirements you need to meet.

    I have a friend who wanted to start a small restaurant. He had no idea about anything other than food, his first employees would need to be a lawyer and an accountant, he stayed in the navy instead.

    If the engine of the economy ain’t runnin so good, try spraying a little gumout in the carb.

    Another game changer would be open borders. Pre 1950s style, Ellis island unlimited immigration. We have a demographic problem coming, too many retirees and not enough workers, and a lot of people who want an opportunity. I would say 120 months (10 years) of paying income taxes and you get citizenship. welcome anyone who wants the real American dream.

    The last idea is to reduce the deficit, people are worried about future taxes and inflation. It may be foolish but the perception is real. The government owns about a third of the acreage of the country. Sell it. Use the proceeds to pay down the debt.

    No costs, just pure opportunity for the people who want to be successful.

  13. tyrdofwaitiin says:

    All items except #3 seem reasonable. Giving tax breaks to the trillionares make little moral sense. How’s about giving BIG tax incentives to companies that keep jobs in the good ole USA?

  14. Bernie638 says:

    Berry, you must be thinking we have or can get a working congress. It doesn’t matter how good your ideas are they will get mangled into laws that will do more harm than good again. You could give these clowns a nice Kobe steak and tell them exactly how to cook it and you’d get back the worst looking chicken nugget you’ve ever seen.

    Your trying to figure out whats best for the country, the few good people in congress are will only vote for things that are good for the country AND good for their district, most are just trying do what will get themselves reelected and the worst, well, you know who they are.

    ~~~

    BR: See the Nascar idea

  15. Bernie638,

    You said, “Stimulus spending doesn’t work, never has worked, and never will work.”

    I’m not sure why you believe that, but it is absolutely incorrect. Every recession and every depression in U.S. history has been cured by federal deficit spending. Today’s recovery is slow, but we would be in a depression by now, were it not for stimulus spending.

    Way back on April 9, 2008, I wrote to the Chicago Tribune predicting the stimulus would be too little, too late. You can read the letter here . Tentative little steps have given us a tentative little recovery.

    Had the stimulus been immediate, and about 10 times greater, we quickly would have recovered from the recession or avoided it altogether. Just think of the costs of this ongoing recession compared with the cost of a properly sized stimulus. This is a classic example of the ounce of prevention being worth a pound of cure.

    Rodger Malcolm Mitchell

  16. Here is a popular myth simply begging to be addressed:

    Bernie638 said, “The last idea is to reduce the deficit, people are worried about future taxes and inflation. It may be foolish but the perception is real. The government owns about a third of the acreage of the country. Sell it. Use the proceeds to pay down the debt.

    The so-called “deficit” is the net amount of money the federal government has added to the economy this year. The so-called “debt” is the net amount added since the beginning of the nation. Bernie 638 apparently believes that by reducing the money supply, we somehow stimulate GDP growth. There is zero data to support that myth.

    Further, were the government sell federal lands, where would the money come from to pay for it? Sure, we could sell it to China, but that would that cause a major uproar. We could sell it to U.S. citizens, but where would the money come from to pay for it? From the U.S. economy. Buying land from the U.S. government would be identical to paying federal taxes. In both cases, money would come out of the economy and go to the government, where it disappears.

    I urge commenters to learn about monetary sovereignty.

    Rodger Malcolm Mitchell

  17. Bernie638 says:

    You are correct about deficit vs debt, I made a few stupid errors in that comment. I think I have a very basic understanding of monetary sovereignty, in addition to this blog I’ve been reading TPC, its been well covered there.

    However I said people are worried about it, it may be foolish but that perception is enough to push a lot of politicians out of office. It matters. People are saving their money in anticipation of future taxes and electing politicians that will cut who knows what in order to satisfy them. It matters.

    Stimulus will not work, businesses say the biggest problem is lack of customers. My brother in law works at a plant thats in a 9 week shutdown because they have no orders.

    Buying land is not identical to paying taxes, I get something for the money. Significantly raise immigration and sell land, that will put a lot of people to work building new housing and reduce the housing oversupply while reducing the government debt. I don’t care who buys it, open auctions are good.

    You want renewable energy and a better grid? Get rid of environmental impact studies and the other silly laws that prevent them. This is from NPR http://www.npr.org/templates/story/story.php?storyId=129128750

    “The other challenge, Bottorff says, is California’s complex permitting process. Since many solar and wind projects cover hundreds of acres in environmentally sensitive areas, developers must navigate local, state and federal agencies for permission to build.

    “I would probably describe it as painful, tortuous and highly complicated,” says Michael Picker, the governor’s senior adviser for renewable energy facilities. “The reality is that each one of the projects that we permit this year will immediately become the largest in the world.””

    Same thing for companies looking to build transmission lines, wind farms, nuclear plants, hydro. There is regulatory gridlock that will prevent any amount money from actually building anything. Like in the NPR story the plant is running out of time to get federal stimulus dollars. More money isn’t going to help.

    Who do you want to pay to do the basic research? Who decides what to research? How much more spending on Fusion or room temperature superconductors before its ok to say they will exist only in science fiction.

    Which airports, bridges, roads and tunnels get money? Who decides? Every tax increase is sold under the idea that we need to improve our infrastructure, but before you know it the money is spent on something else and the infrastructure gets worse. The states are broke and they are not sovereigns, where did the money go that was suppose to fix the roads? This has been a problem for 30 years, and you think this time will be different?

    If the last stimulus was poorly executed, what makes you believe the next would be any better? Which congress rules your country?

  18. cyaker says:

    Barry those are great ideas. All you naysayers care to explain how austerity is working for the Greeks and Irish.
    As to the Government we are the government which seemed to work fine in the beginning of the last century we had a prosperous Middle Class and successfully fought two World Wars. Now we mired in the Middle East and still haven’t restored New Orleans. Welcome to Reagan’s Third World creation.

    Furthermore don’t be concerned about paying for these things according to Mosler and others

    “Federal taxes function to regulate demand, and not to fund expenditures,”

    Read Molser’s book “The 7 Deadly Innocent Frauds of Economic Policy” it’s free at his web site and recommended by William Black, Marshall Auerback and James Galbraith who wrote the forward

    About Warren Mosler

    Warren Mosler is running as an Independent. His populist economic message features: 1) a full payroll tax (FICA) holiday so that people working for a living can afford to buy the goods and services they produce. 2) $500 per capita Federal revenue distribution for the states 3) An $8/hr federally funded job to anyone willing and able to work to facilitate the transition from unemployment to private sector employment. He has also pledged never to vote for cuts in Social Security payments or benefits. Warren is a native of Manchester, Conn., where his father worked in a small insurance office and his mother was a night-shift nurse. After graduating from the University of Connecticut (BA Economics, 1971), and working on financial trading desks in NYC and Chicago, Warren started his current investment firm in 1982. For the last twenty years, Warren has also been involved in the academic community, publishing numerous journal articles, and giving conference presentations around the globe. Mosler’s new book “The 7 Deadly Innocent Frauds of Economic Policy” is a non-technical guide to the actual workings of the monetary system and exposes the most commonly held misconceptions. He also founded Mosler Automotive, which builds the Mosler MT900, the world’s top performance car that also gets 30 mpg at 55 mph.

    Learn more at http://www.moslerforsenate.com

  19. Joe Friday says:

    GPLamb,

    “So let’s compare this to the 3 million (if to be believed) jobs ‘created or saved’ claimed by the $500 billion spent by the American Recover & Reinvestment Act of 2009 (is that really $167,000/job?)”

    Eh, no.

    That includes all the infrastructure built, such as roads, bridges, sewer systems, etc., as well as all the materials, supplies, and subcontracting purchased.

  20. Joe Friday says:

    Bernie638,

    “Stimulus spending doesn’t work, never has worked, and never will work.”

    Wrong, wrong, wrong.

    * FDR’s New Deal worked like a charm.

    The national economy had recovered by 1936, with GDP having risen to +13% and the Unemployment Rate having fallen to 9%, from -13% GDP and a 25% Unemployment Rate in 1932.

    * Before the stimulus bill was enacted last year, the GDP in the 4TH QTR of ’08 was -6.8%. After the stimulus bill was enacted, 1ST QTR ’09: -4.9% > 2ND QTR ’09: -0.7% > 3RD QTR ’09: +1.6% > 4TH QTR ’09: +5.0%.

    The almost 750,000 a month job losses during the previous administration prior to the stimulus was initially replaced by an average of almost 200,000 a month job gains.

    That’s a reversal approaching a million jobs a month.

    The stimulus worked like a charm. It was just too small.

  21. Bernie638 says:

    Some of the smartest people in the country, who are experts at economics and the economics of a recession in particular, were advising the president. They put together a chart for him to show on national television of what the stimulus would accomplish. It showed what unemployment would be if we did nothing and what it will be with the stimulus. Unemployment went significantly higher than the do nothing graph!

    Now you want to tell me that the stimulus didn’t make things worse?

    Oh, thats right, these brilliant people know how the awesome stimulus works, they just didn’t know how bad things were? They can accurately predict all the different future effects of a stimulus, but can’t accurately describe the present!

    Lets use Occam’s razor.

  22. killben says:

    The ideas are all great .. but do these people (regulators and politicians) have any interest in doing the right thing.

    The only thing that appears paramount in their minds is that banks should be made whole at any cost and house prices have to be propped up. Generally keep people deluded and hope it all turns around at the end. Else would they advocate curing debt with more debt?

    That said, a few questions here ..

    Regarding Mortgage Principal Write Down Plan, while that is the only route for the housing market to recover without acknowledging the losses (better still would be to allow actual market to play out and get the house prices to a level where buyers with ability to pay and borrow come in), how does this help if it was a NINJA loan or if the housing market takes a dip and you are still underwater or you are unable to keep up with the mortgage in future.

    Regarding Capital Investment 1 year 100% Deduction, would it do something like cash for clunkers where again you defer the problem by 1 year and bring in people who would have invested anyway and draw demand forward.

    Regarding Corporate Tax-Free Repatriation, in addition to this would it not be better to tax jobs that are moved abroad and use the cash to train americans for new jobs since the skill set that is moving out will no longer be required all that much!

  23. Joe Friday says:

    Bernie638.

    “Now you want to tell me that the stimulus didn’t make things worse?”

    Only if you think an almost one million jobs a month reversal and a reversal of GDP from negative to positive is “worse”.

    ~

    “Oh, thats right, these brilliant people know how the awesome stimulus works, they just didn’t know how bad things were?”

    Indeed.

    You are aware that even the experts, as those at the private-sector NBER (which is the official arbiter of when recessions begin and end), do not know until well afterward when these events occur ?

  24. Bernie638 says:

    GDP = private consumption + gross investment + government spending + (exports − imports)

    If government spending goes up faster than the other terms go down then GDP still goes up. That doesn’t mean anyone is better off. Fidel Castro can nationalize a country, double government spending (GDP goes up) and make the population worse off all at the same time.

    The number of unemployed went significantly higher than the do nothing option, and you call that a success?

    The road just outside my house go some stimulus. It was a decent road, the kind you never notice. It wasn’t new, the lines were a little faded, but there were no cracks or potholes. It was an unremarkable road. 50 million stimulus dollars later its resurfaced, has nice bright new lines and a fancy stimulus sign. There are a lot of other roads that are still in bad shape, but congress has no clue which roads need work, they just spent the money and got little value from it. Now you would give them more money to “fix the infrastructure”? Useless!

    Cut federal taxes, let the states raise taxes. The states cannot print their own money and they are bankrupt! Sell the federal land and let the states collect the property taxes on it. The states know better what the infrastructure needs are, DC has no clue. I don’t expect them to.

    I vote for federal politicians based on their positions on war, and foreign policy. I vote in county elections based on the policy for roads, and services.

  25. Joe Friday says:

    Bernie638,

    “The number of unemployed went significantly higher than the do nothing option…”

    The independent non-partisan Congressional Budget Office disagrees with you. They state that Unemployment was reduced by 2%.

    ~

    “and you call that a success?”

    Yep.

    ~

    “Cut federal taxes”

    Cutting federal income tax rates has never stimulated the national economy, never created a net increase in the American workforce, and never increased federal income tax revenues.

  26. subscriptionblocker says:

    Don’t care much for 1 & 2…am skeptical it would change anything.

    Don’t know enough about 3 to understand the implications of your changes, and am uncomfortable with all corporate tax evasion (legal or otherwise).

    #4 basic research funding is probably always a government function. Less clear is how to keep results as a comparative advantage for trade purposes.

    #5 – would like to see a quicker resolution – but realize this may be as good as it gets.

    #6 – Alternate solution. Define reliability standards and fine/jail power utility ceos who fail to meet them? Find some way to allow them to increase their prices to fund improvements and without giving that bunch a big raise for doing nothing. Folks, there are no real standards for power reliability. You’ll always miss the target if there never was one. And if you only knew how close some of these power company CEOs are to the Wall Street Boys (gambling) – you’d be very afraid. Jail em. That would work.

    7. We’re in triage now. There’s no money left, and even if we had it – we may not have the wisdom to spend it wisely..particularly if oil depletion demands we shed unsustainable routes. We need to think carefully before spending any money on this sector.

    Alternate suggestions:

    1. Government freezes expenditures, starts a 5 yr process to phase out all ineffective activities.

    2. Government immediately raises income tax rates to fully fund current expenditures, and to at least make modest progress on public debt.

    3. Pass new bankruptcy laws to allow those mired in debt a new start. From that moment on – these individuals/states/ cities/counties are barred from credit and must attend “credit AA”. All defaulted pensions worked out through benefit caps or worse. But no more kick the can.

    4. Allow housing to drop, phase out the GSE’s, pass a national homestead act, pass a national property exclusion law. No mortgage interest deduction.

    5. Close most foreign military bases, shrink the military budget, wind down wars. Make sure next war comes instantly with a draft and a war tax.

    6. We are currently losing a generation of college students due to this economy and excessive university costs. How about setting aside some funds for competitive grants to completely cover the expenses of our best students? Then put salary caps on university staff (especially administrators) , and drag college costs down to equivalent 1950 levels.

    7. Muzzle Wall Street and the banks so they can’t trigger something like this again.

    8. Find a way to fix the rail system – our insurance policy. Hire as many unemployed as you can to get this done quickly.

    9. Develop real emergency plans for the country. Figure out what must happen – then set about to make it happen. Things like – how do you evacuate NY in 24 hrs? Use the army of unemployed to speed things.

    10. Unemployment insurance gets extended indefinitely and for everyone without a job, but all benefit recipients are subject to callup for labor or specific training. Employers contact the government outlining their needs, and the government works to match the unemployed with those needs winking, cajoling, training as required to get the unemployed back into the workplace. Doing the hard dirty work to place people. After x number of weeks where the unemployed have tried to place themselves – the government then takes over.

    Recognize losses, clean it up – move on.

    http://www.theatlantic.com/magazine/archive/2010/10/the-least-we-can-do/8228/

  27. Greg0658 says:

    Bernie638 posts this formula:
    GDP = private consumption + gross investment + government spending + (exports − imports)

    Winston posts here what I was thinking when I read this but didn’t want to bother with @ the time:
    http://www.ritholtz.com/blog/2010/09/who-gets-what-tax-cuts/#comment-403867

    ie gov spending can be negative if borrowed and not from a checkbook with a + value

  28. Greg0658 says:

    subscriptionblocker @ 12:54am this morn .. just read it .. humm .. the hairs are tingling