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April 9, 2009

20 Solutions for the American Economy in 2009

American Solutions, in partnership with the Nationwide Tea Party Coalition, is sponsoring nationwide Tax Day Tea Parties for April 15, 2009. The purpose is to “communicate our anger and opposition to the irresponsible policies of politicians in Washington who have failed to solve problems.” American Solutions continues: “More importantly however, this is our opportunity to clearly define a bold, new agenda and to tell our elected officials that they can either work with us, or find new jobs.”

I’m very concerned about our incredible national borrowing and spending. I’ve been concerned for decades about the size of the national debt; however, the almost exponential rate of increase seen over the past few weeks is staggering and unsustainable. We cannot spend our way out of debt but we can spend our way into slavery.  We’re rapidly approaching the point of national bankruptcy with debt accumulation patterns that resemble a third world dictatorship. This simply must stop.

I’m also very concerned about the erosion of our rights. Companies are being nationalized. Private corporate leaders replaced. Banks have been forced to take federal money and then not allowed to pay it back (which allows the federal government to exercise direct control).

As for my reaction, I’m slow to anger and don’t want to knee-jerk into protest mode. However, I’m not sure what else will get our leaders attention in Washington. I smell a rat when they pass legislation without allowing anyone to read it first. When they ignore minority party input and play hardball even with dissenting members of their own party, I know something is wrong. When our tax cheating Treasury Secretary and bowing to the king of Saudi Arabia President force businesses to remove their own leaders and nationalize banks, I know we’re losing our freedoms quickly.

The bottom line is something needs to be done while we still have the resources and freedom to do something. After studying the successes of the Civil Rights Movement, I feel that non-violent protests are in order. In any protest, though, I feel it is wise to offer a clear and reasonable alternative to the situation being protested.

So, with that in mind, I offer some solutions for the American Economy in 2009.  I first share the 12 American Solutions for Jobs & Prosperity offered by American Solutions as a start and then add 8 more of my own (which in a few cases somewhat overlap with the first 12).

1. Payroll Tax Stimulus. With a temporary new tax credit to offset 50% of the payroll tax, every small business would have more money, and all Americans would take home more of what they earn.

2. Real Middle-Income Tax Relief. Reduce the marginal tax rate of 25% down to 15%, in effect establishing a flat-rate tax of 15% for close to 9 out of 10 American workers.

3. Reduce the Business Tax Rate. Match Ireland’s rate of 12.5% to keep more jobs in America.

4. Homeowner’s Assistance. Provide tax credit incentives to responsible home buyers so they can keep their homes.

5. Control Spending So We Can Move to a Balanced Budget. This begins with eliminating Congressional earmarks and wasteful pork-barrel spending.

6. No State Aid Without Protection From Fraud. Require state governments to adopt anti-fraud and anti-theft policies before giving them more money.

7. More American Energy Now. Explore for more American oil and gas and invest in affordable energy for the future, including clean coal, ethanol, nuclear power and renewable fuels.

8. Abolish Taxes on Capital Gains. Match China, Singapore and many other competitors. More investment in America means more jobs in America.

9. Protect the Rights of American Workers. We must protect a worker’s right to decide by secret ballot whether to join a union, and the worker’s right to freely negotiate. Forced unionism will kill jobs in America at a time when we can’t afford to lose them.

10. Replace Sarbanes-Oxley. This failed law is crippling entrepreneurial startups. Replace it with affordable rules that help create jobs, not destroy them.

11. Abolish the Death Tax. Americans should work for their families, not for Washington.

12. Invest in Energy and Transportation Infrastructure. This includes a new, expanded electric power grid and a 21st century air traffic control system that will reduce delays in air travel and save passengers, employees and airlines billions of dollars per year.

In addition to the above 12 solutions, I offer the following:

13. Cut payroll taxes now. To provide immediate relief to working Americans, I propose immediate payroll tax cuts. On their very next paycheck Americans would receive tax relief. Additionally, tax relief should be available to all employers paying additional taxes on behalf of their employees (which, on top of withholding taxes, amounts to additional tax payments of more than 7% of most employee’s wages — if an employer pays an employee $2000, it really costs the employer more than $2140 for that employee). Cut both of their taxes and there’s more left for both to spend and stimulate the economy.

14. Require a two-thirds super-majority vote of Congress to borrow money (or deficit spend). To be safe, that would require a Constitutional amendment to institute since Congressional rules can be exempted and overturned easily. Such a requirement would go a long way towards the goal of a balanced budget while allowing emergency spending and borrowing for widely-accepted capital investments to proceed.

15. Strengthen our national currency. If we do not dilute our currency through inflationary expansion, then it will remain high and investments will flow into this country as other nations’ currencies weaken relative to ours.

16. Allow companies to fail and/or be reorganized through bankruptcy. Stop propping up failures and bad leadership. Instead of infusing failing companies with public money taken from taxpayers, let them suffer the consequences of their bad decisions and fail. Let the market innovate with new and better replacements. The assets don’t disappear with bankruptcy, the ownership of them changes. If there was demand for the product before bankruptcy, there will be demand after bankruptcy and somebody creative will meet that demand.

17. Overturn regulations and accounting rules that restrict innovative market solutions. I’m not an accountant but I know that most mortgages are sound. There is no reason for the massive declines in values that we’re seeing when only a single digit percentage of most assets are bad. There are billions of dollars to be made by creatively insuring “toxic assets.” The government needs to provide enough oversight to prevent fraud but not so much that creative solutions are stifled and rejected. Furthermore, the government should not nationalize companies, period.

18. Rebuild trust in the American people. Our leaders in Washington are largely responsible for this problem. For one, they set up the environmental parameters in which the problems occurred and they allowed it to happen under their watch. Most did nothing until it happened and their response has been to throw new money at the problem and into the hands of the same governmental and other entities that created the problem. That’s like paying the fox that ate the chickens to do a better job next time in guarding the hen house. Crazy!Obama Logic

19. Cut government spending. Everybody knows there’s so much waste. Yes, jobs are lost when government spending is cut but jobs are also lost when taxes are raised. Government does not have anything that it doesn’t take from somebody else first. If government takes money from employers, then they cannot hire as many workers or pay as high a wage. We’ve got to stop taking so much money out of the economy to “stimulate” the economy as the government sees fit. The best stimulus for the economy is the people. Let them keep their money and use it as they see fit.

20. Return power to the States. Many things are better done at the local level. Where the Federal government has encroached on the States’ Constitutional prerogatives, the Federal Government must be required to back down. The states provide 50 laboratories of innovation and competition. That’s good for our country and usually costs far less.

These 20 items would make a good start in addressing these trying economic times. There are many more items that could be added to this list and I invite your suggestions. In all, I argue that the principles of freedom, capitalism and individual responsibility should remain supreme and trump any attempt at collectivism, socialism and bailouts.

Note: Photo courtesy of http://patriotpost.us/images/broadcasts/humor/040609.htm

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