FeedsHow about some trickle up economics?
As we head into 2009, all of us—no matter our professions, educational levels or places of residence—are concerned with the fiscal health of our country and the world.
Last week the U.S Treasury proposed giving banks and other financial institutions $800 billion, bringing the government obligations for Wall Street bailouts and loan guarantees to nearly $7 trillion or nearly half of the Gross Domestic Product (GDP).
The premise is with this money, companies like Citibank, Fannie and Freddie Mac and AIG, can sell their bad assets, stocks and properties that have been foreclosed or unpaid to the federal government in exchange for “live money” to be disbursed to Americans through normal enterprise activities. In English, the government will bail out the companies in order to allow people to get car loans, mortgages, credit cards and student loans again.
Sounds good. But there is one small hitch; it’s not working fast enough. The money is not reaching the market fast enough and by the time it does, it may be too late for some companies as Congress figures out who deserves money for what while those who received the bailout money are holding onto it and not extending credit to those who need it, like small businesses or those of us who want a credit card.
Notwistanding the $25 billion or so the Big 3 hopes to receive.
There are rumblings of a second stimulus package that would not only include money for taxpayers but funds to spark a 21st Century. But $300-$600 will do very little to help those in foreclosure or behind in student loan payments.
Here’s an idea. Instead of giving the corporations the money and then hoping it trickles down to the consumer. How about giving the money directly to the consumer and having it rise up to the corporations.
According to the US Census Bureau, the population of the USA in 2006 18 years of age and older is 225,746,457. If you take the 7 trillion and divide it among the number of Americans over the age 18, every adult would have around $31,000 to use to pay their bills, refinance their homes, start businesses, pay student loans and other obligations. In essence, it’s a win-win for the consumers, markets and country.
The $31,000 would be considered taxable income from state and municipal governments providing money to fix bridges and potholes as well as put cops on the street and build community recreational centers or any other infrastructure project. The federal government would, in return, collect taxes on the banks and mortgage companies, stock market purchases and income taxes from those businesses who hired additional employees due to spike-up in demand caused by the increased stimulus.
To ensure the 7 trillion is used to assist those in need to catch up on their financial obligations, all Americans who receive the cash would have their credit reports examined. Any outstanding creditor debt would be paid directly on your behalf to your creditors up to 25 percent of your government stimulus. (All creditors would receive an equal amount of money from the 25 percent pullout).
Of course this would not be a money grab. Provisions must be in place to assure the safe transfer of funds as well as making training on investments and business practices available for those who seek them. Like any medicine, the patient needs to know about the side effects and potential pitfalls.
I fully understand that some would consider this socialism or the death knell to the free market philosophies of American capitalism. My suggestion is a one-time deal. This has to be a one-time deal. The government cannot be the constant provider. And with the stimulus injection going directly through the American bloodstream by placing the cash into the hands of Americans, we wouldn’t have to administer this medicine again.
