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The Neoavatara National Stimulus Plan January 30, 2009

Posted by neoavatara in Economy, Politics, Science.
Tags: , , , , ,

With the House now passing the record $819 Billion Stimulus and Rescue plan (not sure who it is going to rescue, other than those with sexually transmitted diseases), there is much debate if the stimulus will actually do anything.  I have heard a bunch of liberal commentators attack Republicans for their opposition to the Obama Stimulus Package.  Some have argued that the Republicans have no ideas.  Some have argued that the Republicans are just playing politics.  And some, like NY Times editorialist Bob Herbert, says just ignore the Republicans all together.

To say the Republicans are not giving ideas for solutions is actually false; it is just that liberal commentators don’t like what they are suggesting.  Massive tax cuts always provide faster stimulus, because they instantly end up in consumers pockets, while government spending must by defnition go through the beaurocracy, no matter how ‘shovel ready’ the project is.  Several pundits, from Rush Limbaugh to George Will, have provide numerous suggestions for stimulus plans.

I actually give Mr. Obama a lot of credit.  He is trying to balance his (albeit liberal) views with more moderate ones.  But his biggest challenge isn’t the Republicans, despite what the media says; it is the left wing of his own party, who is filling the bill with every last ounce of pork that they can.  Being out of power for 8 years can make you really want to taste every little last bite of bacon.  But liberal commentators are now arguing that all government spending is stimulus; I heard that exact line from Rachel Maddow last night.  This shows the utmost ignorance of basic finacne for liberals.  Every dollar spent from the government is also a dollar that individuals don’t have to spend on themselves.  And most of the stimulus is deficit spending; so not only do citizens not have money to spend on themselves, they are also going in debt in order to do it.  Think of this:  This bill increases each man, woman, and child’s debt by approximately $2,500.00 for this year alone.  A tax cut, on the other hand, wouldn’t shift that money from debtors to lenders; it would shift money back to the taxpayer themselves.  But liberals seem to miss this salient point.

So, to answer some of these critics, I am presenting my own stimulus plan.  Why?  Because I have nothing better to do.  And because I am sick and tired of liberals saying that they are the group with new ideas, when largely they are rehashing ideas from the early 1930s, most of which failed in their goals.

So here is my plan.  My numbers are relatively accurate, and come from a number of sources listed at the bottom of the post.

1.  Strengthen the economic safety net.   This is one of the essential jobs of government; to be the party of last resort in times of extreme need.  Unemployment benefits, food stamps, emergency health care all need to increase in funding.  Clearly there will be dire need in all essentials over the next year or so, and survival is the key to this item.                                                  Estimated Cost:  $100 Billion

2.  Individual tax Cuts.  I would significantly broaden the tax cuts currently proposed.  Right now, the cuts are targeted at lower income persons.  Which is fine, except these people, God help them, are not going to stimulate the economy.  For a family of 4, we are talking up to $3000 for the year.  This will certainly be boon to this group of people, because $60 a week can come close to paying for food itself.  But they are going to by ESSENTIALS with this money.  That will not stimulate anything.  To get real stimulus, you need people to purchase consumer goods, which are largely purchased by middle and upper classes.  You need to give these groups more money to spend.  Thus, I would propose a complete reduction of the lowest tax brackets by 5% for all wage earners.  This will give similar amounts of expendable income to higher earners, who are more likely to spend the money quickly.                                                                                                    Estimated Cost:  $250 Billion

3.  Business Tax Cuts.  I would largely keep Mr. Obama’s current suggestions the same.  Increasing write off amounts for business will allow them to quickly reduce tax burdens.  I would also decrease the capital gains tax.  This would provide some stimulus to the markets, which need them badly, and could provide some future stability for growth                          Estimated Cost:  $100 Billion.

4.  Infrastructure spending.  This needs to happen because the infrastructure is falling apart, as well as a for job production.  I am not totally against government creating jobs, and this kills two birds with one stone.  But I would be strict in how it is spent.  The money needs to be spent by states and localities by the end of 2010, or it is lost.  It must be used specifically for transportation, energy, or information technology improvements.  And these must be projects that are not already funded.  That way, it will be limited to infrastructure that is necessary, and hopefully limit any boondoggle projects.  It won’t eliminate those; I am not that foolish.                            Estimated Cost:  $100 Billion.

5.  Green Technology. I take another view of these than President Obama.  He believes that this must be instigated on the federal level only.  I disagree.  I think that that fundamentally, the market must allow these technologies to be competative.  To that effect, I would impose a total tax free zone to all green technologies that use solar, wind, geothermal, and other nonpolluting sources of energy.  You will need some regulation of what is covered of course.  But making these tax free will do the same for green technology as banning sales taxes for the internet.  It will allow them to compete much more competatively against traditional energy producers.  To further the market principle, I would give huge tax incentives to individuals and business that are willing to upgrade to green energy sources.  I would reinstitute the car loan deduction for cars that are hybrids or electric.  I would also refigure the tax structure on automobiles.  Currently the taxes are based on total price; I would make taxes based on fuel consumption.  No sales taxes on cars whatsoever.  Instead, the more energy consuming your vehicle is, the more taxes you would pay upfront.  That would again give a market edge to vehicles that are more efficient.  Of course, some of this money will have to be shifted back to the states because they will be deprived of sales taxes, but so be it.  Again, this proposal would allow individuals to make decisions that will benefit them financially; this helps on a microeconomic scale, but will percolate into a macroeconomic effect.     And, I would argue that this will have much more stimulative effect on the economy, both with producers and consumers.       Estimated Cost:  $100 Billion.

So my plan costs around $650 billion, or a quarter of a trillion less than Obama’s. And I would argue that short and long term, my plan would create more jobs than planting grass in the Washington Mall or preventing sexually transmitted disease.

But of course, no one listens to me.






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