New Deal

On Solving The Economic Crises - A Really New Deal

I am not a politician, thank goodness. I'm just your average, everyday citizen who's very concerned about his country and the economic situation we're in. This economic decline is unlike any I've seen in my lifetime --and I'm not a young man, I'm approaching middle-age. I've seen a lot. I've seen good economic times and bad economic times, but I've never seen times like these.

I've watched as friends who've worked for the same company for decades, lost their jobs ---and these friends didn't have golden parachutes. They're out there right now looking for work that pays better than minimum wage, but there's no work to be found. They might well have to become greeters at Walmart or flip burgers at McDonald's before too long. All that college for nothing.

I've got another friend who's a little bit older than I am and he's watching his retirement account shrink and if it persists, his retirement account, representing years of sacrifice and dedication will be worth next to nothing.

Everywhere I look there is something to remind me that something is not right. I no longer have to wait in line to eat at a favorite restaurant. A factory my town, that once employed over 1500, recently went bankrupt and shuttered its doors. However, the owners of the company still live nearby, cozy in their million-dollar homes, but those they left without jobs can't even afford to pay their mortgages on their $75,000 homes. They're out of work and apparently out of luck.

I'm not going to get into a partisan debate over whether the Republicans --whose ideas of economic recovery are to slash taxes, slash spending and increase freedom - or the Democrats -- who think we can spend our way to prosperity, are right.

However it seems to me that we just got through trying increased freedom (deregulation) and cutting taxes with the hope that all that money would trickle down from the rich to the poor. I think that's partly how we got into this mess in the first place. The money that was supposed to trickle down from the rich to the poor never trickled, instead it was spent on million-dollar offices, corporate jets and high-roller junkets, lavish vacations, $300 crystal glasses and who knows what else. Deregulation (i.e. "more freedom" didn't work because Wall Street, bankers and investment firms, unfettered by regulations, ran amok. Freedom only works if those who are free are also responsible. This reminds me of that old aphorism about free speech which says the right of free speech does not give you the right to yell "FIRE!" in a crowded theater.

The Democrats have another way of dealing with economic crises. They want to throw hundreds of billions of dollars at it and hope, somehow, that it all goes away. This has been tried too. FDR tried it in the 1930's and it worked for awhile but never did really pulled the U.S. completely out of the Great Depression. It took World War II to do that. Let's just hope our government doesn't resort to more wars to bail us out. It seems that we've got more wars going on than we know what to do with -- and war-mongering makes America look bad in the eyes of the rest of the world. World War II could hardly be avoided. Hitler was gobbling up Europe, killing millions of Jews, and Japan bombed Pearl Harbor. Six days after Pearl Harbor, Adolf Hitler declared war on the United States. So, it wasn't like we went looking for war, it was forced upon us. I'm sure we can't say the same for the war in Iraq, although I'm sure there are some that would argue that it too was somehow forced upon us.

I'm a little worried about the economy. I'm very worried about my job. I'm even more worried that no one in our government has a clue how to fix this economy. It seems to me we're trying more of the same old ideas that have been tried before -- cutting taxes, tax rebates, huge government spending, and so forth. We're using all the things we've used before and none of these things have ever been very successful. Government hasn't tried anything really daring in six decades -- not since Franklin Roosevelt's "New Deal". We can't even know how well the "New Deal" would have worked because four years after it was enacted, many parts of it were declared unconstitutional by a Conservative Supreme Court. Thus crippled, the "New Deal" mitigated, but never ended, the Great Depression of the 1930's.

Extraordinary problems call for bold, new, extraordinary solutions. Sadly, it appears, we are not going see anything new or extraordinary come out of Washington, no matter which party is in control. Everyone's too busy criticizing everyone else and promoting their own agendas to get anything done.

Big, bold, new ideas are what's needed. Stale Washington thinking seasoned with bickering and name-calling isn't the answer. I think an approach based in good common sense, one that diverges distinctly from the tired, old solutions of past, is what we need.

Here is my common sense economic stimulus plan:

1. Abolish the income tax and replace it with a 10% National Sales Tax (NST) on all retail sales except food and medicine. This would immediately start billions of dollars flowing into the economy because it would put billions of extra dollars into the hands of the people.

2. Abolish all federal withholding for Social Security and fund Social Security with part of the revenue from the NST plus revenues from a new "Stock Transaction Tax" (STT). The Stock Transaction Tax would levy a two or three cent tax on every stock transaction - buy and sell. There are billions of stock transactions each day. Stock traders now buy and sell without paying any tax. A few pennies per transaction wouldn't inhibit the trading of securities, but it would generate billions of dollars of additional governmental revenue. It would alternately free up billions of taxpayer dollars that would then flow directly into the American economy.

3. Immediately issue a $500 pre-paid government-issued debit card to each single taxpayer or a $1000 pre-paid government-issued debit card to each married taxpayer filing jointly. The debit card would be used like any bank-issued debit card. The greatest advantage to about this proposal is that the cards could only be used to buy things, not to pay down debt or put money in the bank. Another advantage to this plan is that the government would not have to pay out all of the money out at once. The money would be paid out only if the cards are used and only as the cards are used.

4. Start a weekly national lottery. The proceeds from this lottery would be used exclusively for education.

5. Add a 50 cent tax to each gallon of gasoline and use this revenue to fund the development of alternative fuels.

6. Form a commission to look into legalization of soft drugs (i.e. marijuana), prostitution, and gambling. The way I see it, people are going to engage in these activities anyway, so the government might as well earn tax dollars from them. It seems to me that hundreds of billions of dollars of potential revenue would be generated. Of course, church groups and morality groups would fight this idea big time, but the reality is people are people - always have been and always will be. There's always going to be vice and it's high time we come to grips with it. The huge amount of revenue generated from drugs, position and gambling would do a lot of good for society - and decrease the prison population which would also save money. Such a great idea, isn't it?

7. Make federal money available to states for infrastructure improvements, but make it available only after the states had first made the improvements. The federal government would guarantee the loans the states would need to improve existing infrastructure and replace decaying infrastructure. Once the infrastructure improvements and replacements are completed and reviewed by a special government agency, the government would make federal money available to partially reimburse the states for the infrastructure improvement. The advantages of doing it this way is that we're not throwing money at the states in the hopes that they use it to improve and replace infrastructure only to find it's been used to install new carpet in the governors' mansion or buy new jets and helicopters for the governor to fly around in -- or wasted in other equally creative ways.

I'm not a details kind of guy, but I think my ideas are good, common sense ideas that would stimulate the economy, create jobs, and get people working, borrowing, and buying things again. I'm not sure how many economists would agree with me but then look at the mess we're in - some economists somewhere must have help get us into this. Find ten different economists and you'll find ten different opinions on how to best deal with our economic mess. I would bet you'd not be able to find a single plan on which even 50% of all economists would agree, let alone all of them.

So, do we cut taxes and hope the money filters down from the rich to the poor? It didn't work before, why would it work now? Do we throw hundreds of billions at the problem and hope it goes away? We've tried that before and it didn't end The Great Depression, why would it work now?

The trouble is that government, whether it's Conservative-leaning or Liberal-leaning, will only dare to do things that have been done before. When it comes to Washington, there really is nothing new under the sun. We won't find the answer to our economic problems in that tired, old sack of Washington solutions. It's time to step away from how it's always been done and try something fresh and creative. It's time for big, bold ideas and for a brave new way of approaching our unprecedented economic problems.

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