The first suggestion to Washington to begin the economic turnaround.

Nearly all political statements in recent days has been of the same old, same old. The Democrats and Obama blame Bush or now the Tea Party but havent suggested a single reform that gets at the root of the economic problems. The Republicans for their part have blindly adhered to "principles" such as the Bush tax cuts to the detriment of considering all the options on the table.

Tax increases are almost never a good idea in a struggling economy, and it is understandable that many in Washington, especially Tea Parties ran on a campaign of not increasing taxes and cutting spending and they are very reluctant to break their pledge. Some friends on the Democratic side may not like that but the fact is that those respresentatives have as much right to stand on their pledge as some Democratic representative has a right to stand on their pledge of health care reform or some other program.

This post is the first of a series of suggestions, some of which have been suggested elsewhere but in some cases the ideas are so far as the blog knows new ideas.

We are not aware of the idea suggested here being made in Washington.

We have no idea how much money the repeal of the Bush tax cuts for people making over $250,000 a year is expected to bring in. However, the blog suggests we estimate this figure and go ahead and take the Obama approach and repeal the tax cuts for those upper income earners.

However, in exchange for the repeal, we take the estimated increase in revenue and give it back dollar for dollar to the taxpayers in the form of tax breaks and incentives for businesses who will bring on new employees within the next twelve months.

The pencil pushers will have to figure the dollar amounts but the idea is that a business that will hire on a new employee will get a tax credit in an amount to be determined. There will be no net tax increase so the pledge of Tea Partiers and others stands good.There is no increase in revenue for the Government.

This program would be aimed at getting new employees into the workforce which will in turn bring in additional revenue provide jobs.

Equally important it will give the President the opportunity to speak to the American people and restore confidence that business in America on the way back, that jobs are on the way.

The current situation is not only a result of the horrible economic situation and the failure of American leaders to address entitlements and run away spending including defense spending in places like Afghanistan, but it is also a failure of leaders to restore confidence. This suggestion is the first step toward rebuilding that confidence.

Comments

[David R]

Hi Jim. Very simplistic notion here - one that, by itself, cannot tackle our root problem, which is: our gov't is far too big and intrusive to the point of stifling our ability to make recognisable progress. In other words, the gov't machine currently in motion is creating new federal rules and regulations at a rate far outpacing our country's ability to match them with any further success. Because of it's now overly-monstrous size and reach, the only real solution is for our federal gov't to go beyond ceasing this unsustainable pace - it needs to recognise this, acknowledge it, then get out of our way, out of the way of businesses, large and small. We are more inventive, creative and productive when we are not stifled or heavily-burdened. But within this solution lies one core problem: the gov't body cannot let go of it's accumulated political power. To make gov't smaller would mean a reduction in their individual powers over aspects of our lives they believe they are helping us with. But so much of what they have a hand in is having the reverse effect by quelling our collective spirit and our sense of personal achievement. They've lost touch with that more important aspect of it's people. In my opinion, smaller gov't would open doors again that will allow us to regain our confidence in both ourselves and, perhaps, even our gov't. This ain't gonna happen with this current administration. The Democratic party has succumbed. These folks are pulling the socialist levers. History has taught us that socialistic societies ultimately fail. America has experienced the longest and most sustained societal success in world history by establishing constitutional freedoms early on and sticking by them. For our country to allow any group to circumvent the instruments of this success will cause the beginning of it's failure.

[Nathan Zingg]

I think the strategy should not be to additionally tax income but to tax idle wealth. There are trillions of dollars on the sidelines. If idle capital were taxed correctly, capitalists would have to put the money to work.

The Fed keeps dumping money into the system, but none of it is being put to work.

Taxing idle capital, creating a use-it-or-loose-it paradigm for the resource of capital, will put people to work, growing the economy and tax base.

[Michael Woodall]

Jimmy, I know that in Paris, Ky. and a lot of places across the country 250,000 for a couple is a lot of money and would be considered rich. I lived in Princeton, New Jersey area for 4 years and I can tell you that 250,000 is not a lot of money there. We paid over 400,000 for a 1900 square foot home that in Paris would cost about 175,000. We paid 12,000 a year in property taxes, in Paris it would be about 2200. I worked in Brooklyn and spent 28 a day in tolls just to get to work (yes a toll is a tax). Where you pay 2.49 for a gallon of milk and 1.49 for a dozen eggs we were paying 3.99 for milk and 2.19 for eggs. In the winter it costs us about 350 a month to heat that 1900 square foot home in Paris it would have been around 225. I could go on and on. My wife and I made good money working and living there, but when we left and took about a 85,000 a year pay downgrade, we actually wound up with more money in our pocket. We are now in Northeast Ohio in a 2700 square foot home that cost under 200000 with taxes under 2500 a year. No toll roads, cheaper food, cheaper utilities. When people talk about 250,000 as rich they need to take all this into consideration. In New England and the west coast 250,000 a year is equivalent to about 140,000 in the rest of the country.

[Brent Deweese]

Jimmy, I applaud the discussion since Washington appears unable to have one. I also believe we should allow the Bush tax cuts to expire. To help the "job creators", we should pass a payroll tax holiday for EMPLOYERS for all new jobs or raises after x date. This could be computed by taking the previous year's payroll numbers for a company and comparing to the current year and rebating the payroll tax on the difference. All new start ups would be included at 100%. This tax holday should extend 3-5 years on these jobs and longer on industries we want to build such as green energy, etc. This brings more people to the table paying taxes and off the unemployment rolls. The additional money would spur demand for goods and services and fuel an expanding economy.

Although unpopular, entitlement programs need to be adjusted also. Perhaps beginning in 2013, extend the retirement age 2 months each year through 2025. This would move the retirement age 2 years over a 12 year period and extend the life of this program. I believe this is reasonable as our life expectancy has increased.

One final thought, I think the opposing party should pick members of the other party to staff the "super committe" authorized in our useless budget deal just passed. We might then be able to find some agreement rather than each side staking out the extremes.

[jimmy brannon]

Well addressing several of the posts: David, I agree completely that the real solutions are much deeper and involve getting into the whole climate of spending, the entitlements etc. My post is simply a short term idea to get the economy moving which i think has to involve getting jobs. The stimulus programs havent worked and it appears that even this President may be looking at a "supply side" approach.
Nathan, I think that is an interesting idea, I'm not sure how it gets accomplished....my idea would be tax credits of some kind...I'm not sure i like the idea of punishing one for accumulating wealth.
Mike, I dont like tax increases on any group at the moment. I think it was Reagan who said the problem is not that we dont tax enough, it is that we spend too much and i tend to agree with that. BUT, we have to get this thing off dead center, my idea is if it makes the Democrats to feel good to say they got rid of the Bush cuts or they socked it to the rich, let them have their day, but in the meantime return the tax dollars in the form of tax breaks somewhere else.
And Brent i agree with you. and i think your idea on the committee is interesting: One of the problems in that debate over the committee that I think has been lost is that it really isnt that difficult to appoint a committee that could reach an agreement.... just put the gang of six and some of their friends on it....The problem is the deal may not sell to the rest of Congress. So for example I dont like Clyburn and I am sure some Democrats dont like some of the Republican choices....BUT if the Clyburn extremists in congress or the tea party folks dont feel like the deal that is reached if there is one, didnt take into consideration their issues and constituencies....we are going to have problmes down the road.

[Brent Deweese]

Another point that goes to our rising health care costs...forbid advertising by drug companies directly to consumers. This is ridiculous. I can't go and directly buy prescription meds without a doctor prescribing them. Why spend BILLIONS advertising to someone who cannot buy? All this does is have people running to their physician, diagnosing themselves and asking for the "magic pill." I can legally buy liquor and cigarettes but their advertisement is not allowed on TV. It makes no sense to advertise prescription drugs directly to consumers.