Since our leaders can’t seem to make a plan…

Posted by admin on 6. August 2013 in Economics |

I think everyone can agree that the economy is still sluggish. Depending on where you sit at the economic table the economy is not great, but it’s not terrible either.

Lately the talking heads on Fox Business, CNBC and other news outlets have been dogging the President’s plan to help jump start the economy. The most recent oval office plan (I’m using the word plan loosely) deals with getting the middle class to move the economy forward.

Somehow not a single network can find a credible person to define how to work with or improve the President’s middle class plan. The networks, as usual, find the most extreme left and right analysts to “debate” the issue. The reporting from the business networks is so bad I couldn’t tell you what the President’s plan is. I have a sneaky suspicion it’s not a real plan, just a few more talking points, but that’s just me, maybe I missed it.

Bottom line someone needs to lead. Someone needs to make some decisions.

It’s been 5 years of economic mess; however the President is still the President. Like it or not, he’s the one in charge. By this point everyone agrees he has leadership issues, and his team doesn’t quite understand the economy. Combine a lack of leadership with a lack of ideas and well, the outcome is predictable, the economy has stalled.

Given that the President is the President I’m going to try and work with him (eventually someone has to work with somebody – might as well be me). The President is right on one point… there are 300 million middle class Americans, but he’s wrong on how to get them moving.

I’m going to make one simple proposal that will make both the extreme right happy (tax cut and tax cuts that are paid for) and make the extreme left happy (paid for by Fat Cat bankers – Wall St vs. Main St).

Here it is… the only new (old) proposal out there:

Bring back the interest deduction for unsecured loans (i.e. credit cards) for the next two years, retroactive to Jan 1, 2012. This interest deduction will be refunded as a cash grant not a tax credit. I’m proposing to pay for this program through a tax on profits (capped at no more than 0.05% of profits until the plan is completely paid off) on every organization the FDIC and other sister agencies oversee or should oversee.

This is only a middle class tax cut – the rich (pick a number, I really don’t care what you define rich as) don’t get the break. The poor – go find another plan this isn’t it, someone else can devise that plan.

Here’s the gist of the plan:

  1. The middle class relies on unsecured credit to make purchases, since as a group they have stop using credit in great degrees, the economy is sputtering. We need the middle class to feel secure enough to start going out on a limb and start using credit.
  2.  A tax grant will add real money back into the system where a tax credit will only help those that have enough mortgage interest deductions to itemize their taxes.
  3. A tax grant vs job training, sorry Mr President believe it or not I still vote Republican. Green job training is really trying to hire people to cut mustard seeds. Maybe in 10 years when green jobs are cranking but not now. Just drop it – you sound like a broken record every time you bring it up. There must be at least one other idea in your head.
  4. I’m excluding the rich, not because we don’t need them to spend and invest, but because the President wants to get the middle class moving. He is the President and no one else is doing anything substantial except trying to get on TV. Maybe after this plan is implemented the President can devise a new plan to help the rich invest.
  5. I’m not sure how long it will take the banks, investment houses, hedge funds, etc to pay off this tax cut. I don’t really care. However the plan needs to be paid for somehow, someway.
  6. The 0.05% was chosen to keep the Right from bitching about how horrible this tax hike for the banks and their investors is going to be. If this number will not work, pick a smaller number (don’t care about the number) – the bottom line is the middle class tax cut needs to be paid for.
  7. I’m picking on the banks because after 5 years into our financial malaise no one has gone to jail and I’m betting that 75% of all Banking related CEO’s and their Boards have not turned over from the mess they caused. Obviously Mr. Holder, the Bank Boards, and their investors think they have done nothing wrong. It’s time for Wall St to at least appear like it’s doing something to help us out of this mess.


  1. Inflation: Given the status of the QE policies this additional cash from this tax grant will have real cash chasing current inventory – this may not be a good thing – please have real economists look at this before attempting! Someone with a brain who is not trying to get on TV.
  2. Congress is too paralyzed to do anything. There is not a single leader or real idea among them. It would be more helpful for them to just stay on vacation until the 2014 elections. Certainly they are doing such a bad job that an unpaid furlough should be looked at as well to help pay for this middle class tax cut.

Is this the best plan – probably not, in fact it may be awful, but at least it appears to get the economy moving by placing cash into the economy from the only group that can make a difference today. 300 million Americans that are just muddling through this mess is a whole bunch of folks. The President is right, you get 300 million people spending at one time and it will be hard to slow the train down.

Isn’t that what we really need, something that gives the President and Congress a win, stimulates sales tax revenues for the states, creates manufacturing jobs here and abroad, creates jobs to fulfill the purchasing demand, doesn’t impact the deficit – well in short – it’s one small paid for plan to gain confidence in the economy. Confidence created by seeing it actually move forward.

PS: I feel like George Bush after 9/11 telling everyone to go out and spend!

PSS: I’m going to go out and try to buy a small business right now!

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