Pulling out of a nose dive (2-21-09)

....And the right way "Economic stimulus- PART II (conclusion)

Now that the Obama socialist spending plan has been passed, and this poorly thought through plan to stimulate the economy is beginning to be implemented. I thought a outline of what we should have done, should go on record. This, of no surprise to you I'm sure, includes approximately twice as much in tax cuts than in spending. While Obamas plan is large. I believe it is not large enough given the size of our economy and the shortfall it is expected to have. Not only that, the socialist democrats have no to plan pay for it. . My plan implements substantial tax relief over a four year period that people can count on and plan for. It will be paid for through spending cuts and, if necessary, reinstating the old tax structure after the four year period. In may last blog I showed my plan for stepped tax brackets you pay your way through. Now, I'm not going to go through all that because it's already on record, but it would be large, extremely stimulative, and just what this economy needs to get moving. There is no better way of stimulating the economy than not taking money out of it. . I bet your asking just how returning to the same old tax structure after four years would pay for the revenue lost over that period. Easy answer, growth! That's right, the amount of tax collected four years from now will be larger because our economy will have grown far larger than it is right now. And, as explained in my last blog, revenues grow faster than the economy. The amount of increased tax revenue, minus inflationary adjustments, will go straight to the plans debt repayment until such time as it is paid for. Not until it is paid for, adjusted to inflation, will any further tax burden adjustments be made. (assuming the economy is out of recession) . On top of that, I would remove all current business and corporate taxes and replace them with a business consumption tax of 10% to all products and services under $10,000, and a 5% + $1000 consumption tax on all prices above $10,000. While this may or may not pay for itself, it will be a four year experiment to provide a baseline for future adjustments after the four year period. I truly believe the savings will not only strengthen the business community to allow for job creation. It will eliminate "business taxes" from being hidden in the sales price "we pay". It will also, through the decreased cost of operations in this increasingly competitive world marketplace, allow for American made products to have an edge over their foreign rivals. The decreased cost of operations and increased competitiveness add up to an overall price reduction of goods and services even after the sales tax is added on. This will amount to a lower cost of living on top of the dramatic tax cuts you receive. The greater benefit is, the government will receive revenue from business operations regardless of whether or not they are profitable.
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The only thing I would ask of the business community, is to collect these taxes. Well that's not exactly true, there would be other changes they will need to brace for. The health insurance tax credit will be eliminated along with the entire employer provided health insurance idea. The employee will now be empowered to shop around, nation wide, and make the choice for themselves as to what type of coverage actually fits their individual needs. (Like buying auto insurance) Instead of a tax credit going to the businesses, it will now go to the consumer. Businesses will still need to pay 10% of payroll to Social Security. They would also have to pay a 5% payroll tax into the Medicaid/Medicare system. And yet another 5% into my American health care assistance fund. (All limited to the first $500,000 of income per employee) . O.K., that covers income and business taxes. Also essential to economic stimulus is investment and savings. Taxes on interest, capitol gains, dividends and inheritance will be eliminated completely. These are not temporary tax cuts, they are forever. . Spending? Yes, there is additional need during harsh economic times. I have no problem with increased spending for unemployment, health care subsidies and even safety net welfare programs. We should retain the original welfare reform structure passed in the Clinton years, only allowed to my 0% tax bracket citizens, with any increased payouts to the states being directly tied to the number of 0% citizens they have. Unfortunately, other than my American health care assistance fund, I have no plan to recoup these costs. This is money pissed away. As all welfare spending generally is. .
That's right health care assistance. A program that allows your cost of health care to be reduced through tax credits. Individuals earning below 20k, families below 40k are in my 0% tax bracket and are eligible for medicaid free and clear. Those earning 20k-40k, families earning 40k-80k are eligible for a 66-99% tax credit toward the cost of a health insurance policy of their choice. (Limited to total policy cost of $3000 for the individual and $9,000 for a family) Those earning 40K-60k, families earning 80k-120k are eligible for a 33-66% tax credit. And those earning 60k-80k, families earning 120k-160k are eligible for a 0-33% tax credit.
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I would have state and federal government departments look at spending projects they have planned over the next three years and implement some of them now, all at once where possible. On items we are going to be paying for anyway, that provide jobs or promote efficiency and productivity gains for our economy, we might as well move them up. They would be paid for by not having resources allocated to them in the three years ahead. By simply moving up the schedule, you pay 50% more now and 50% less later. Its not an expense, it's a trade. . Nothing we do in government that does not efficiently and effectively manage each and every dollar of revenue should be tolerated. There needs to be responsible project managers working with efficiency experts at every turn. There is at least $250 billion and maybe as much as $500 billion or more in spending each year that can be saved through; privatization of the federal government owned enterprises, ending all wasteful,duplicative or contradictory programs, corporate welfare and subsidy elimination, or just simply returning certain functions of government back to the states that are better suited to address them. There are studies and reports put out periodically by the congressional budget office (CBO), the general accounting office (GAO) and several reputable think tanks that contain specific reforms that can be implemented. If these measures were implemented, the cost of my stimulus bill could be paid for before it ran it's full four years. And would set us on a course for further tax and debt reductions. I, of course would be in favor of making my tax cuts permanent. . My plan is responsible, bold, innovative and expensive. His plan is Keynesian, moronic, wasteful and expensive. My plan can not fail. His has little chance of success. . "Even if we get everything right, there's still a 30% chance it will fail" . -Vice President, Joe Biden