Now comes the Bush-Pelosi Washington solution.
Using the rebate process as a salve rather than true remedy also places the US government's fiscal house in even worse order. Believe me; in order to cover the outlays of such a regressive measure, the budget will go further into the red; requiring higher interest offsets within the prime rate and exacerbating the overall problem. This is a dangerous cycle that will be driven within the economy; one that will last three to five times the pain of just facing the problem to begin with.
Adding just one quarter percent to the cost of a mortgage will cost the average home owner, AND RENTER an additional $375 per year. But the deleterious affect of this policy will likely drive up true interest four to five times that - simply on its own. So what is the true cost of this $50 rebate check? I would say that by the time the rebates are privatized, and the cost of government is added, that a $50 stimulus rebate will actually cost each consumer in the neighborhood of $650-700.
Bush/Pelosi are thinking of $800 per individual taxpayer. Quick math says the up-front cost will be $120 billion and the real cost about 6.3 times that amount or almost a trillion dollars.
This is stupid economic policy.
Since we have now gone almost thirty years within the charade that our economy is a consumer spending economy - a picture that can not sustain itself - then how do you face the issue today?
- Face the root causes. The recently passed energy bill didn't face a single cause. On the one hand, we speak of being a consumer spending economy, but every stimulus given within that energy bill was given to corporate and business structures. Give tax advantages TO CONSUMERS for Energy savings from weatherizing, to developing solar systems; buying more efficient cars, etc. This allows consumers to drive the economic turnaround rather than business being paid to protect its own gluttonous behavior that got us into this mess in the first place.
Think of how on the one hand we call this a consumer spending economy, but inconsistently apply the band aid to the provider.
2. Reward efficiency at every turn through the individual tax system. When tax savings can drive decision making, banks will lend money to make this happen to 70+% of Americans with good credit scores. This also allows banks a stimulus to do the right thing, rather than chasing the wrong economic policy as they have done now for the last 23 years.
3. BALANCE THE BUDGET and pay as we go. We can't dig out of this mess without quitting digging. When you go deeper and deeper with your budget, you have to quit digging before a recovery can take place. We must now pay for the boondoggles of politics and follies of foreign policy that have gone unpaid. Yes, this means that economic decisions now must strongly influence and maybe even dictate a major portion of foreign policy. Imperialism is not an economically sustainable option. America has learned that four times in history and supposedly learned by watching the rise and fall of other supreme nations including Great Britian This means that War in perpetuity - the War on Terror or other Wars against factions rather than States - are simply not prosecutable until we have regained our economic balance. It also means that "bridges to no-Where, Alaska" should become not only impeachable offenses, but criminally prosecutable ones, as an example. Using the philosophy that this is a consumer-spending economy encourages waste and corruption. Neither is tolerable within the building blocks of a strong economy.
- Realign the tax system for fairness; not stimulus. Wealth realignment has been allowed to occur over the past thirty years under the guise of economic stimulus. Any time local communities want to justify a bond issue today, they call it economic and job development. This is literally false economic policy and politically boondoggling. So is the practice of realigning wealth and protecting the ‘haves’ under the umbrella that they are the job providers. Within any tax system that makes exceptions for one over another will become loopholes that encourage waste and corruption as well. For example, why are Wall Street investors given special tax consideration over those that, for example, invest in plant, equipment, real estate or jobs? Is this sound policy, or a reward to the ‘have’s’? If so, we now have not only the class warfare of the ‘have’s’ and ‘have nots’ but a new super ‘elite have’s’ from which to provide different economic policy.
If this is a consumer based economy, then consumer based fairness must apply. A Flat Tax proposal without upper limits - based not on deductions, but on pure raw income may have to be applied to remedy this gross mismanagement of public policy in America. I am not in favor of it, from a theoretical basis, but even the two richest Americans tout that we have gone way too far in protections for the “have's” and taken away the ability to survive and thrive from those working the hardest. I am far more supportive of the theoretical edge of a flat tax as compared to the smokescreen issue of a simple sales tax. With a sales tax, immediately, the issue of deductibles for business and job creation will influence policy, and the warping of that approach will end with a further distortion of fairness. Discipline is not a strong suit in Washington.
5. Finally, all sacrifices must be jointly shared. This seems simple, yet, the last three generations have worked the hardest to insure this as a slogan but not as true policy. This principle if applied across the board would mean that all citizens; regardless of race, color, creed, gender or age would share the burden of financing, equipping, defending and prospering in America. In times of War, all Americans would share the burden to pay the costs of both blood and treasure. Every American is a ‘common’ stockholder with one share of stock in this nation. There are no ‘preferred’ stockholders.
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