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Streetcar Line
Animal Economics, Unleashed
One simple step to prosperity.
It’s so simple.
Fixing this economy, that is. Simple. One step. I’ve written about it before in this space. But let’s build some tiny suspense before I reveal it.
The key to the recovery is to unleash the spirits that motivate productive investment. Spirits, that is, and also cash. Right now there is a huge amount of the latter, an unprecedentedly huge amount, sitting around waiting to be tapped into. American businesses are sitting on a record $1.8 trillion is cash reserves, according to the latest statistics. Another $1 trillion in reserves rests in bank vaults.
Meanwhile, the personal savings rate of ordinary Americans has jumped all the way above 6 percent, more than three times as high as it was just three years ago. That means, if memory serves (I can’t find this statistic at this writing), that there is another $1.2 trillion in individual accounts that is available for productive use. (Again, that dollar figure may be off, but whatever it is, it’s very large if the savings rate is above 6 percent.) Actually, the economy is well off if people don’t rush out and spend this latter amount — it’s a constructive thing for people to be inured against debt, for a multitude of macro-economic reasons — but if just a little of it were unlocked for both spending and more aggressive personal investing, it would provide the economy an extra “oomph” as well.
The reason businesses and individuals alike are hoarding cash is that they don’t know what’s coming next — but they have reason to believe it won’t be good. Everywhere they turn, they see the Obamites and Pelosi-Reid brigades raising taxes, badmouthing businesses, bashing the profit motive, regulating the hell out of everything that moves, driving up energy prices, spending the federal government into oblivion, and taking over formerly private enterprises. They also see a Federal Reserve that seems to care not a whit about the strength of the dollar, and that seems so freaked out about possible deflation that they forget that lenders are unlikely to lend, and bond-buyers unlikely to buy bonds, if the yields are too low. There comes a point where interest rates can be so low for so long that they discourage lending while actually exacerbating deflationary expectations, becoming a self-fulfilling prophecy. (This is in the short term; in the long term, the weakened dollar, as is evident in the outrageously high cost of gold, could well lead to an inflationary explosion the likes of which this nation hasn’t seen since 1979-80, if ever.)
There are lots and lots of things that can be done to make this situation better. Freeze domestic discretionary spending for three years straight. Reform entitlements. Re-institute the parts of welfare reform that Barack Obama gutted in the first stimulus package. Reform the rest of the welfare-related infrastructure along the lines that Congress reformed Aid to Families with Dependent Children in 1996. Strengthen the dollar. Put a freeze on all new regulatory rule-making. Repeal Obamacare. Repeal most or all of the Consumer Product Safety Improvement Act. Phase Fannie and Freddie out of existence. Read the Heritage Foundation’s newly released “Solutions for America” and adopt it almost whole. Ditto for Rep. Paul Ryan’s Roadmap for America’s Future. Refuse to spend any still-unspent portions of any of the various stimulus porkages passed in the past three years. Work to elect conservative politicians at all levels of government.
But none of that is simple. Very little of that could be done without complicated legislating. And little of it could provide a virtually immediate jolt of the sort that would unleash the spirits — the entrepreneurship, the lenders’ and investors’ positive outlooks, consumer confidence, stock market demand, reduction of pensioner fears — that must be unleashed in order for businesses, banks and (to a lesser extent) individuals to stop hoarding their cash and instead spend or, far better yet, invest it productively again.
But one step could be taken in one fell swoop (with a few rather technical amendments added later). One step would be so dramatic, so easily understood by the public, so clean and simple, that it would shock the economy back to life like those devices that EMTs use on cardiac arrest victims to restart their hearts. (What are those things called — you know, those things that look like air-hockey paddles that EMTs put on each side of a patient’s chest?)
I’ve written about this idea before. It sounds radical, but it really isn’t. It’s just common sense — which, come to think of it, is a rather radical concept in Congress these days. It stops taxing an entity that is an artificial construct — and a construct, at that, which merely passes the taxes on to real human beings in the form of higher prices, fewer consumer choices, fewer jobs, and lower dividends and stock prices.
Eliminate corporate income taxes. That’s it. Kill them. Just do it.
Paul Ryan’s Roadmap calls for this same step (which means I’m no longer alone in advocating it), although he “replaces” corporate income taxes with some sort of transaction tax. The latter isn’t necessary. Just stop taxing corporations completely. For now, forget all the arithmetic, even though it really does work out. (Do read the columns linked above for fuller explanations.) Forget the bean counting; and forget the likelihood that Barack Obama would likely demagogue the idea as being a sell-out to “evil corporations,” because if politicians can’t put both a positive and accurate spin on the idea to counter Obama’s demagoguery, they don’t deserve to be in office in the first place.
Instead, just imagine, upon elimination of all corporate income taxes, what would happen to the $1.8 trillion in business reserves, the $1 trillion in bank reserves, and part of the $1.2 trillion (or whatever the figure is that corresponds to a 6 percent savings rate) in individual’s hoarded cash. People controlling the cash would see the obvious likelihood of gushers of corporate profits free of taxes, and would want to get in on the action. Investors who love dividends would understand immediately that dividends would rocket higher, and they would invest accordingly. People looking for capital gains would see the start of a stock market boom and want to get in on the ground floor, or on the next floor, or on the next one, with each rise in stock value building more and more confidence for even greater improvement.
And all that unlocked cash would have a multiplier effect. In the summer issue of National Affairs, N. Gregory Mankiw reviews a plethora of recent scholarship and reports that the demand multiplier from tax cuts is $3 for every $1 cut, which is twice as high as the multiplier for even well-designed stimulus spending. (Amazingly, the most definitive study showing this comes from Christina Romer, the soon-to-depart chief of Obama’s Council of Economic Advisors.) Furthermore, reports Mankiw, “the stimulus packages that appeared to be successful had cut business and income taxes, while those that evidently did not succeed had increased government spending and transfer payments.”
In addition to re-animating all of these unused cash reserves — which in itself would dramatically and almost fully re-start the economy — eliminating the corporate income tax would serve as a super-powerful magnet for new businesses to start, for businesses that have outsourced operations to repatriate in the United States, and for foreign businesses to build more plants here as well.
Again, it’s all so simple. The only complication, which could be handled separately, would be to figure out what to do with arrangements such as Limited Liability Partnerships, Subchapter S Corporations, and the like. But those considerations could be worked out.
This idea is an utter, complete economic winner. Handled rightly, it could easily be a political winner too. (Again, see my earlier columns for explanations of the politics.) Eliminate the corporate income tax, and watch the United States become an economic powerhouse again, almost overnight.
About the Author
Quin Hillyer is a senior editor of The American Spectator and a senior fellow at the Center for Individual Freedom. Follow him on Twitter @QuinHillyer.
Letter to the Editor View all comments (68) | Leave a comment
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Ken (Old Texican)| 8.20.10 @ 7:19AM
Quin,
when you are on your game, you nail it!
The very best line:
""The reason businesses and individuals alike are hoarding cash is that they don't know what's coming next -- but they have reason to believe it won't be good.""
Heh. Masterful understatement.
The problem truly is though, that it is SO simple, that it leaves our rulers out of work.
Alan Brooks| 8.20.10 @ 12:11PM
This piece was so good, I thought for a second I was at the NR site in the late '90s.
vtwin| 8.20.10 @ 12:11PM
“Eliminate corporate income taxes” and who really benefits?
The Top 1% of income earners in Americans own over 50% of the U.S. Stocks and Bonds, and Mutual Funds while the bottom 90% of American earners owns less than 10%.
http://www.businessinsider.com.....ica-2010-4
The RICH of course!!!!!!!!!!!!!!!!!
JR| 8.20.10 @ 12:35PM
Of course it's the RICH! When is the last time you saw a poor person or small business going broke offer someone like you a job? The answer: NEVER! That's what makes this country go and its damn time folks like you realize that.
Capitalism, for all its faults, has lifted more people more quickly out of poverty than any government (socialistic) program ever in the history of the world. And it only happens when people are rewarded for their hard work, which sometimes will make people (or corporations)rich.
vtwin| 8.20.10 @ 12:48PM
From 1979 to 2003 the share of capital income earned by the top 1% of Americans income earners has risen over 20% but during this same period the capital earnings share for the bottom 80% has fallen over 10%.
http://www.businessinsider.com.....ica-2010-4
Reagan tear down this supply side myth!!!!!!!!!!
Alan Brooks| 8.22.10 @ 5:49PM
"Reagan tear down this supply side myth!!!!!!!!!!"
But Reagan bankrupted the Soviet Empire. The Soviets became the premier imperialist threat with their invasion of Afghanistan, and Reagan had to build defense up as far as he could to bring the Soviet Union down-- it was his goal, not an accident.
vtwin| 8.20.10 @ 12:54PM
“Eliminate corporate income taxes” = Tax cuts for the RICH.
Since 1980 the national debt has risen from less than $1 trillion to over $13 trillion.
Reagan tear down this supply side myth!!!!!!!!!!
vtwin| 8.20.10 @ 1:06PM
“Eliminate corporate income taxes” = More Debt = More borrowing from the Kingdoms of the Middle East, the Socialists of Europe, and the Communist of Asian.
InLineFour| 8.20.10 @ 4:54PM
Troll vtwin consistantly shows himself to be an idiot, but I have to admit I'm with him on one point.
Mr. Hillyer, how will the federal tax revenue lost by eliminating corporate taxes be replaced?
We know the Reagan tax rate cuts and the George W tax rate cuts spurred unprecedented economic growth. And the resulting greater profits and personal incomes generated higher federal tax revenues at the lower tax rates than at the higher rates. Unfortunately, Congress usually increased it's spending at an even faster rate, adding to the deficit and debt, except when Repubs took control of Congress in '05 and restrained federal spending long enough to actually produce a brief surplus.
However, this is a bit different from Reagan and Bush tax rate cuts. The usual suspects like Schmucky Shumer will always whine about tax cuts stealing from the poor and giving to the rich, as if the economy was a zero sum game. But if the corporate tax is eliminated entirely, doesn't it become zero sum? Where will the federal revenue come from to replace it? Will it come from the taxes on the anticipated expanding payrolls and higher personal incomes that result from the economic growth? If not, then where?
I expect you should know from your research for this column. Please show us.
Quin| 8.20.10 @ 5:45PM
That's why I provided internal links to my previous columns, which answer your questions.
vtwin| 8.20.10 @ 8:44PM
Wow, a TAS columnist answering questions directly from the “little people.”
Mr. Hillyer maybe can answer another question.
Conservatives like to argue that supply-side economics, i.e. tax cuts for wealthy, are beneficial to all Americans, tax revenue increase, economic activity increases, employment increase …But my observation over the years tell otherwise.
President Reagan cuts taxes and the economy improved but national debt tripled and continued to increase all through the first Bush administration and of course economy eventual soured. Then President Clinton abandons supply-side economics and raises taxes and the annual deficits declined annually to the point where the country was running surpluses again. And, as for the economy well 23 million jobs versus Reagan plus Bush 19 million. Then catastrophe, Bush cuts taxes and employment growth is anemic, the middle class is downsized and outsourced, homes are lost, financial meltdown, unemployment climbs, national debt doubles, reaching $10 trillion… You get the picture.
So my question, do you think Americans are dumb enough to buy supply-side economics again?
Mel Torme| 8.21.10 @ 3:33PM
VTwin, Quin will occasionally answer questions from the "little people" (especially when they call him a pussy, eh Quin? ;-), but I've never seen him answer questions from the "stupid people". Hence, no reply.
Most economists, in fact, are members of this class of stupid people. The exceptions are people like Thomas Sowell, Lew Rockwell and the Austrians (hey, great name for a band, BTW!), and Milton Freedman. Most of these folks will not be posting comments here, as they don't have time to deal with economic illiterates like yourself. I'm sure Quin feels the same way.
One thing you may want to think about, VTwin, to get your mind in gear, is "who pays the corporate income taxes?". Do you not realize it is the customer? (This is after the corporation has paid mandatory matching FICA and other payroll taxes, sales taxes to their state (most states), and all of the employees have paid taxes on the income from that company). It's not a wonder to me why builders just hire Mexicans for cash, and bigger companies do all the manufacturing in China.
Bill Hussein O'Stalin| 8.20.10 @ 7:25AM
The elimination of corporate taxes is an idea whose time has come but the ruling elite can't afford make such a move at this time.
What is needed is education. The public doesn't realize that all corporate taxes are paid by them. Many in the public actually like to see someone stick it to the man in the form of taxes.
If the public knew that they in reality paid for all taxation in the form of higher costs of goods and services, the public would get behind the elimination of corporate taxes.
As far as the cost of gold being outrageously expensive I disagree. It's the only free market left and unlike the bubble market of the early 80's is more realistic and more measured then cost of treasury notes and bonds.
George True| 8.20.10 @ 10:12AM
I agree. Gold is no more expensive than it was 100 years ago. Unfortunately, our dollars have been devalued by 95% in the same time period, so today it takes 20 times more of our nearly worthless currency to buy the same amount of gold.
Ken (Old Texican)| 8.20.10 @ 8:02AM
Bill,
I heard something the other day about some really rich guys setting up a "shorting" on gold group.
Do you know anything about that?
Bill Hussein O'Stalin| 8.20.10 @ 10:56AM
I haven't heard anything about that but in my opinion it will have limited success. Gold simply inflated to reflect real value after many years of dollar deflation. If it occurs again the gold holders will be wealthy while dollar holders will feel their their Geithners puckering.
Nunya| 8.20.10 @ 11:54AM
There is actually an ongoing investigation right now on the manipulation of the silver market at the London exchange, there is evidence that some very large organizations have been massively shorting silver in an effort to manipulate the price.
Please see: http://news.silverseek.com/Sil.....257866.php
Bill Hussein O'Stalin| 8.20.10 @ 2:31PM
I read the article. It's pure speculation. The price of silver hasn't jumped around that much to lead to allegations of market manipulation. In fact, I wonder if even a cartel could do it.
Mimi| 8.20.10 @ 8:13AM
Quinn...BOLD IDEA! Don't tax wealthy Corporations and increase some "Dough " for everyone. That's the opposite of the "DEMS " promises: "Tax and money-grab those big bad corporations cause we need to spread the wealth around....we gotta take from the rich and give to the poor! " Dumb DEMS...illogical DEMS...cowardly DEMS... No vision DEMS....Stupid DEMS! Do the opposite??? Folks, they don't get PARADOXICAL! since they put the wall street TOP DOGS on T.V. and made them famous their campaign funds are drying up.....Dumb DEMS! Oh how we long for November!!!
Mimi| 8.21.10 @ 10:47AM
WEll, well, well....This morning I heard the "O" complaining, on his radio address about campaign contributions....Blaming SCOTUS! Give me a break! The Corpos arn't coughing it up. Tough-Apples DUMB DEMS!!!
Mike| 8.20.10 @ 8:53AM
Mr. Hillyer,
Those things that EMT's use are called defibrillators.
I'm an EMT and I'm here to help :)
R Martin| 8.20.10 @ 8:55AM
I agree that the solution is simple, but it should include a second step. When all that money on the sidelines gets put to productive use it should generate a real return to the investors. The dollars they earn have to be worth something. For that we need a strong dollar, and for a strong dollar we need a tight monetary policy.
Dave Hansen| 8.20.10 @ 9:04AM
Eliminate all income taxes, the government should have no business looking into my productivity. I will gladly pay a 20% sales tax on everything I buy. That way I am at least seeing the real price of a product, not the cost and all the embedded taxes buried in the price.
ds80| 8.20.10 @ 9:16AM
Obama/Biden/Geithner/Bernanke/Summers/ Keynesian-stone Kops Skool of Economics:
Vice President Biden predicted Friday at a Pennsylvania fundraiser that the U.S. economy would be adding up to 500,000 jobs each month "some time in the next couple of months." Washington Post, April 23, 2010.
http://voices.washingtonpost.c.....ll-cr.html
The number of unemployment claims unexpectedly shot up by 12,000 to 500,000 in the week ended Aug. 14, Labor Department figures showed today in Washington. Bloomberg, Aug 19, 2010.
http://www.bloomberg.com/news/.....ember.html
Ken (Old Texican)| 8.20.10 @ 9:27AM
Oh Quin...
How in the world did you guys miss this?
http://townhall.com/columnists.....ocean_grab
UpChuck.Liberals| 8.20.10 @ 11:18PM
So the only ones getting Crab Louis will be Obismal & the Ruling Elite. That sucks a brick. We need to refudiate it.
owyheewine| 8.20.10 @ 9:37AM
As much as corporate taxes need to be revised, government overregulation needs to be addressed. All independant agencies and their rules need to be sunset every 10 years, subject to congressional reauthorization (I suggest that each reauthorization be made only with discreet legislation, meaning no omnibus bills). These rules are made by unelected, unaccountable bureaucrats and the public is virtually powerless to do anything about them. Time to put a stop to them.
Clinton nee Publius| 8.20.10 @ 10:12AM
In economics, if a principle is workable, then it is workable on whatever scale you wish to test upon it, otherwise; the principle is not sustainable policy and will create more problems than it solves.
If killing taxes for corporations is a good idea (and it is), then killing taxes altogether has to be an ideal solution.
You got yourself halfway there, Mr. Hiller. The reality is that we are seeing - right before our horrified eyes - the obsolescence of the taxation method of fiscal appropriations. It cannot be made to work and the realization of this issue is also the means by which recessions may be permanently eliminated and our national debt may be paid off. Okay effort; incomplete research and thinking.
Griff| 8.20.10 @ 10:28AM
What the Left refuses to understand is this: Corporations don't pay taxes. Corporations treat taxes as a business expense, and pass that expense to the eventual consumer, or mitigate it through reductions in other expenses (i.e., labor via layoffs), or both.
George True| 8.20.10 @ 10:30AM
In my wildest dreams I can only imagine the entrepreneurial renaissance that would blossom almost overnight if we could get free of the yoke of tax bondage. And CNP, I am thinking the same thing. Eliminating the corporate tax would be a huge step in the right direction. Imagine seeing the costs of goods and services go down by 20-40%. What a shot in the arm that would be for every consumer and every small business.
And then just imagine the explosion of investments in new ventures, and the number of new startup businesses that would take place if there were little to no capital gains tax, and no tax on unearned income. We would see a vibrant economy and a dramatic increase in personal prosperity across the board the likes of which we have not seen since the end of WWII.
But that is the last thing our current ruling class wants. They have their foot on the hose of prosperity. Some of them are either too stupid to see it, and others know it but they like it that way. We must throw out the statists, even the ones with an R after their name.
Nunya| 8.20.10 @ 12:07PM
George, I agree except for one thing: I don't believe they are too stupid to see it, I believe it is being done with purpose. The end is to make the US like a European Socialist state--that way, the ruling class stays in power and controls the rest of us. They siphon our money into their, and their friend's pockets.
WhiteBikerTrash| 8.20.10 @ 11:09AM
If you tax something, you get less of it?
And if you subsidize something, you get more of it?
So if they were to start taxing poverty, illegitimacy, and criminal actions, these would all go away?
And if you were to subsidize (Not just lower taxes) job creation, investment, and business creation we would get more of it, putting the poor, the illegitimate, and the criminal to work so they can pay their taxes. And to work out of their high tax bracket?
TennesseeVolunteer| 8.20.10 @ 11:11AM
Clinton nee Publius,
If your premise that businesses can charge whatever necessary to the customer in order to maintain their profits, why are my margins almost half of what they were three years ago? And, my sales are 40% of what they were three years ago.
Pete| 8.20.10 @ 11:17AM
If this idea's natural extension is to starve and thus shrink the federal government drastically, I agree wholeheartedly. I submit, however, that the second effect is the more important one. In the impossible event that our central planners allowed the tax elimination in a moment of clarity, they would certainly rush to seize and control the wealth created, no?
George S| 8.20.10 @ 11:26AM
Here are two scenarios:
Obama announces he's raising taxes on corporations and will resign the presidency if Democrats lose control of House in November, or
Obama announces he is cutting corporate taxes to zero and, by executive order, granting amnesty to 20 million illegally registered Democrats who may tilt the balance towards his reelection.
I say the first scenario will jump start the economy and the second will have no impact on the economy or make it worse. Point being, tax policy only has an effect when it is applied within a framework of Constitutional order. If you cut my taxes but give the local OSHA or EPA commissar unchecked subpoena power, then the uncertainty doesn't change.
Oldefarte| 8.20.10 @ 11:30AM
Quin, I AGREE WITH YOU 150% in your analysis and thesis, BUT [as I've previously said], IMO the very first thing that should be done [and which is crutial not only for economic/financial needs but the socio [of socio-economic] needs as well is to END GOVERNMENTAL WELFARE AS WE KNOW IT. Welfare is a governmental expense drag on our economy of immense proportions and is additionally a psychological impediment upon society to reap the joys of WORKING FOR A [FINANCIAL] LIVING. Today, if an individual on welfare is offered a job paying $100/week [but is currently drawing tax free $200/week in welfare payments, affordable housing, food allowances,etc], there is no personal incentive to obtain the pride of sweating/toiling at a job in order to EARN THEIR MONEY [as opposed to MAKING THEIR MONEY]. Welfare dehumanizes its recipients and makes them lazy and stupid in the long run. We simply must begin seriously reducing and eliminated governmental financial assistance [except in the cases of true need, such as the elderly, health impaired,etc]. Today children are born into welfare and because same is forced upon them by government, they go to their graves leading unproductive lives. If the federal government would perform their fiduciary duty regarding the federal immigration laws, many illegals would voluntarily go back to Mexico, and their abondoned work employments within field farms, tourist establishments, retiar stores could therafter be filled by citizens now on welfare [if same was eliminated]. As to the economic benefits, the elimination of welfare [or conversion to workfare], along with useless foreign aid, farm aid, the space program, needless military hardware,etc would seriously reduce our government's budgetary deficit/debt [and corrsspondingly spur the economy toward growth] the same way that your elimination of the corporate tax would [and would additionally perform a societal need as well]. I am not, not have ever been against tax cuts, but they avoid the issue of needed welfare reduction and are proposed by politicians, etc as an acceptable exuse to avoid discussing welfare governmental payments. If and when serious governmental expense reduction could be performed/accompolished, then I will then join the bandwagon for tax reduction!!!!!
jjl207| 8.20.10 @ 12:40PM
I actually think we should scrap income taxes all together and replace them with a variable VAT. The tax would vary based on the point of origin of the item. If it's made in the USA: 15%, made in China: 120%. China is making economic war on us, it's time we started making war back.
dcd| 8.20.10 @ 1:16PM
The idea should be to make things simpler not more complicated
jjl207| 8.20.10 @ 8:36PM
What's complicated? There are already federal standards in place for what constitutes "Made in XXXX" for labeling purposes. Just have companies make out checks.
TEXAS MOM| 8.20.10 @ 4:53PM
Not a VAT! Too easy to conceal the total cost to the tax-payer. Make it a National Sales Tax that you can see on every receipt!!! Make the rate visible to every taxpayer. Plus this will make every American have skin in the game, no longer will half the country not pay federal income taxes. This way everyone will care about the spending of Billions of our tax dollars and future taxes...
Nicolas Ziener (France)| 8.22.10 @ 10:50AM
Bright idea !!! Congratulations for re inventing the wheel! In case you don't know (living in a cave as of recently ?) this has already been done before, it's called "Protectionism".
Walter F. Gray| 8.20.10 @ 12:54PM
Good idea. An alternative is a fixed rate tax on corporate gross revenues - maybe one tenth of one percent. Something extremely low, predictable and requiring minimal accounting resources. As outlined in the GrayPlan for Tax Equity and Responsibility.
rgr.cole | 8.20.10 @ 1:04PM
I maintain there are three actions we need to take to restore our country to the founder’s ideals.
Three constitutional amendments:
1. There shall be no form of progressive income tax nor there an exception from paying any tax based upon income or socioeconomic status. (The Bible says that the love of money is the root of all evil. Our current system allows the elites to choose winners and losers and enhances their entrenchment in power.)
2. The laws of the country shall be passed exclusively by the Legislative Branch of government and these branches of government may not grant these powers to any subset of governmental authority. No regulatory body can be established that has authority to write rules, regulations or impose fines, judgments or other sanctions that give this regulatory body the powers that rightfully belong within the executive, legislative or judicial branches of government.
3. No official for federal office can serve more than twelve years in an elected capacity.
cnc| 8.20.10 @ 1:22PM
Corporations should pay for the benfits they get and want. Corporations benifit from military protection, especially the protection of the seas. Corporations benifit from police protection. And corporations benifit from limited liability, at significant cost to others.
Cutting the corporate tax to cover these basics would still be a huge savings.
Alan Brooks| 8.20.10 @ 4:50PM
"From 1979 to 2003 the share of capital income earned by the top 1% of Americans income earners has risen over 20% but during this same period the capital earnings share for the bottom 80% has fallen over 10%."
Vtwin,
the wealthy OWN this country-- and always will; albeit it will less controlled by whites in the future: more nonwhites will move up to the upper crust.
WTF Guy| 8.20.10 @ 6:57PM
Why isn't anyone discussing the elephant in the room?.....millions and millions of underwater mortgages.
Owners of these mortgages are obviously not spending money.
I fear the government will enact some massive loan modification program - perhaps in the trillions - to free up household spending.
If this happens, then what?
Also, there are now millions of new people on the waiting list for section 8 vouchers program. I'm no Milton Friedman but I see a huge demand for next-to-free housing (section 8 applicants) and a huge supply of cheap housing (empty foreclosed homes). I see the government eager to satisfy the demand and facilitate this transaction in the form of yet another MASSIVE entitlement program.
O'RFiley| 8.20.10 @ 7:22PM
There goes the unspent TARP!
Osamas Pajamas| 8.21.10 @ 2:13AM
I agree --- ditch the corporate income tax --- for starters. There's also a lot of so-called "federal land" which should be transferred "back to" the states to sell-off and dispose of. And finally, and so the steeeenking Democrats won't feel like they've hit the jackpot when the money starts rolling in again, we need to nail Uncle Sam's scrotum to the floor with rusty one-pound railroad spikes. By "Uncle Sam" I mean "every level of American government" --- and I seek the permanent termination of "millions" of government employees --- and some constitutional amendments to prevent the Demos and RINOs from overthrowing our rights ever again.
Jack| 8.21.10 @ 4:44AM
I would like to see the Federal lands given back to the States in a progressive fashion over a period of 10 years. The states are quite capable of maintaining these assets and they should have been doing it all along. This one step would downsize the Feds by half. I agree with you wholeheartedly. I am amazed that other people haven't given that some serious thought. The States should be managing their own lands instead of Washington DC or people in San Francisco telling people in Wyoming how to manage land in their state.
whyyeseyec| 8.21.10 @ 1:25PM
Excellent article. However, none of this will happen? Why? The EPA. The Environmental groups. The enviros will never let any of this occur because increased business means more people employed and that leads more driving, more electricity, more pollution and more everything that made this nation great. That`s a no-no in their world and they have the lawyers, democraps and the marxist media on their side.
Good luck with that but it ain`t going to happen...
liberty4usa| 8.21.10 @ 4:16PM
The uncertainty factor is huge. People cannot trust that our leaders are working to improve economic conditions when all they see is evidence of is leaders trying to improve their political power longevity.
Freedom from taxes and regulations would be a shot in the arm we need were our leaders to take that course, but they seem to want to take a different course that stifles and controls every aspect of both private lives and private enterprise.
Just give them a few more decades to prove their Keynesian theories are going to improve things very soon!
Even a 50% across the board cut in corporate taxes would work to kick this machine back into gear.
The left can't have that though, creating jobs and new spending and increased government revenue via economic growth rather than increased government spending.
Uncle Sum| 8.21.10 @ 7:39PM
put functioning of government under private hands; congress, supreme court, executive branch, military, etc. govt. can be ran like corporations who are efficient in maximizing surplus value .
John B| 8.21.10 @ 8:12PM
Take the rich man's wealth and redistribute it, you feed the poor for a day. Allow the rich to invest and expand their wealth, you feed the poor for a lifetime. And ... you turn the poor into a middle class with wealth of its own.
RCV| 8.22.10 @ 2:12PM
right....................
Margie| 8.22.10 @ 2:38PM
RCV,
You see? This is exactly why yours & Obama's way of thinking is all wrong. It's all in the thinking.
The weird thing is that he is applying his thinking into actual actions and it is ruining our economy, yet you & he still stick with it. How many more unemployed will it take till you see it?
~Or is that exactly what you are waiting for to happen, along with him, because that is exactly what's going to happen. This country is being turned into a third world country right before our eyes.
This is precisely what dictators do. It gives them more power over the destitute. It is horrendous.
RCV.| 8.22.10 @ 11:38PM
Margie: Let me cease being flippant for once and give you a serious response. In the late summer - fall of 2007, toward the end of the Bush presidency, our financial system suffered the worst collapse since the great depression. Our economy and then the world's, faced an unprecedented banking and credit crisis. It was absolutely essential for the government to increase the money supply to avoid what happened in 1929-30, when all financial liquidity ceased. The steps President Bush and then President Obama took were not popular but were essential to ultimate recovery. It will take a very long time to get outbox that trough.
One of the biggest policy mistakes Bush made was the unnecessary and harmful tax cuts for the very wealthy. They did not stimulate the economy in a healthy way, but fueled the kind of speculation that led to the collapse. If we allow those tax cuts to expire, our tax rates will be at the very same level they were when Reagan was President.
Blaming Obama for the economic crisis we're in is like blaming Roosevelt for the depression. I realize that many revisionist rightists try to do that very thing, but it's a pretty lame effort.
Stop demonizing the President. He 's inherited a big mess, and in my view, he's doing the very things he needs to do to get bus back to where we need to be. And if this is a third-world country, it's one billions of people around the world would like to be in.
Ken (Old Texican)| 8.23.10 @ 8:20AM
RCV
I do have to agree with you on the liquidity crisis in 2008.
Nevertheless, I truly do believe you are confusing "cause" and "effect".
I think most people agree that the collapse of the housing bubble, and all the derivatives leveraging it was the main "triggering event".
Taxing the VERY rich is a zero-sum game. They have the ability to shift assets and investments over-seas, and they can afford an army of CPAs and Lawyers to shield them here.
No, when socialists...(and self-guilty liberals), talk about the "rich" they are talking about the upward mobile middle class. We are pretty much defenseless through normal channels.
As a lawyer, perhaps you know all the tricks to semi-legally avoid taxes, and willingly employ them.
Most of us cannot...or perhaps more acurately, we choose not. We are totally transparent to the government, but they are NOT transparent to us, except in one regard.
I'll give you a hint...16,000 additional IRS guys on their payroll, along with every new regulator they can imagine.
RCV| 8.23.10 @ 11:27AM
I'm afraid, Ken, that I'm the most unimaginative tax avoider in the world.
TaterSalad| 8.22.10 @ 1:08PM
Time for "Real Change" and in November is will happen:
http://www.youtube.com/watch?v.....r_embedded
Joe Wong| 8.22.10 @ 10:38PM
Here's a tax regime that works well in another part of the world:
Hong Kong salary tax rate: flat 16.5%
HK corporate profits tax rate: flat 16.5%
So, a small businessperson can take his/her income as salary or profits, tax is the same, so monkey business is minimized.
Dividends tax: 0%
Capital gains tax: 0%
Estate tax: 0%
Mortgage interest deduction: 0%
First US$12,000 in income is exempted.
US$6,000 income exempted per child.
Charitable deductions allowed.
A modified version for the US would work wonders. Of course, it'll never happen.
Bennet Cecil| 8.22.10 @ 11:30PM
The zero corporate tax rate should be for domestic manufacturing. Build it here and keep the profit.
Joanna | 6.6.11 @ 4:39AM
What an interesting article- I hope to read more like this, thanks!UTI Treatment