The Taxpayer’s Bailout Plan

The Taxpayer’s Bailout Plan

 

My father taught me at a young age that people do not appreciate what they do not have to pay for.  I have had forty years of consistent confirmation of the truth of this principle.  Give someone free housing and it will be destroyed inside of two years.  Give a sixteen year old a new Corvette, requiring no personal investment of their own, and they’ll be driving it like a rental by the end of the first day.  Give a man a fish… you get the point.

Coupled with that principle, my high school government/economics teacher, Mr. Fortenberry, taught me that the Federal Government gets all of its resources from a singular income stream:  taxation.  And, unlike other income streams in a capitalistic system, taxes are not “earned” by market forces but are coerced by law which requires no measure of accountability to market performance.  Those who make the laws require the money to be given to their collective whims.  Those who pay can only respond by replacing their elected officials with others who will be equally unaccountable for the money they get to spend without the discipline of having earned it. 

At the end of the day we find ourselves in the same situation time and again:  the government has the same appreciation for our tax dollars that a child who does no chores has for an allowance.  Our money is meaningless to them.  It is spent as liberally as it is attained, with the presumption that the supply is limitless.

The current approach to “fixing” our nation’s recession is a great example of the flaw of this system.  The money of “other people” is now being prepared to be dumped upon those who have not earned the rights to it from the market.  Banks, automobile companies and others who have performed poorly will be getting free money from those of us who have performed well enough to pump taxes into the system.  Already congress is asking curious questions concerning the use of the last bailout given to the banks.  Already they are dumbfounded at how this welfare stimulus has been spent by its recipients.

There is only one scenario where money can be counted on to be spent wisely, and that is when the money is spent by those who have earned it and appreciate the discipline required to attain it.

To that end, here is my bailout proposal, which I will call the “Taxpayer’s Bailout Proposal.”

If congress and the president are determined to spend 900 BILLION dollars to jump-start the economy, then that 900 Billion should go to the people who earned it: the tax payers.  You may say, “this is only a tax cut.”  No, this is an immediate injection program. 

There are some 300 million people in America, and roughly 60% of them are actual taxpayers.  (The rest are the teenagers mentioned earlier with new Corvettes they cannot appreciate.)  Using simple math, logic and capitalistic principles then, let’s return that 900 Billion to the 180 million actual tax payers. 

900 Billion divided by 180 million tax payers comes out to $5,000 per tax-payer.  A tax-paying family of four would receive $20,000.  Since our goal is to stimulate the economy, then a foundational rule must be put into place to ensure the economy receives the intended boost.  That rule is that the money received must be spent within thirty days.

In this scenario, people who have demonstrated discipline in being the wage-earners of the country will be rewarded with the privilege of reinvesting this tax-generated cash infusion.  And, the recipients of the infusion will have the opportunity to earn their money from the market, by selling goods or services which are deemed necessary by the market.

If this plan were implemented, the supposed key beneficiaries of the bailout would be immediately given the breathing room they need.  Many families of four, having received $20,000 in cash, will choose to buy a new car.  Assembly lines will turn.  GM will rejoice.  Ford will endure.  Some will choose to pay off debts, thus injecting funds into the struggling banking system.  Who knows, at the end of the day, perhaps even Larry Flynt will sell some magazines and can stop his preposterous whining about a potential “failed” porn market.  We should be so lucky.

4 Responses to The Taxpayer’s Bailout Plan

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  • Interesting proposal. We’ve had economic stimulus packages such as the one last year, but increasing it to the amount of the total sum of the currently proposed stimulus would definitely turn the wheels of the economy.

  • This is the old Keynesian economics versus the supply side economics debate. The truth is that neither works, because neither addresses long term economic issues, which for America is A) increased expectations of standards of living which drives up wage demands, B) a declining manufacturing base and C) competition from rapidly industrializing Asia. The best part is that if you think that things are bad now, imagine if Africa and South America, which now mostly supply the west (and increasingly Asia) with raw materials and markets for finished goods, get into heavy manufacturing in a serious way. Sure, it is unthinkable today, but give them 20 years.

    I have to be honest, if forced to choose between the two bad alternatives of supply side and Keynesian economics, I choose the latter. Supply side economics has been in practice under Reagan and Bush (the only two that have tried it) cutting taxes while greatly increasing spending, which drives the national debt through the roof. (To make it even better, supply siders only complain about increased spending when the Democrats do it. The same Republicans that nearly defeated Obama’s stimulus package passed the prescription drug bill and every other big ticket item under George W. Bush, and how many spending bills did Bush veto in eight years?) Also, Keynesian economics result in things that have lasting, durable value to the economy and society for decades: highway and mass transit projects, dams and bridges, convention centers and other buildings for public use, etc. Meanwhile, any benefit from getting people to buy cars that they don’t need will be gone in six months. It will actually cause more problems for the car industry in the long run, because people who would have delayed car purchases over the next 2 – 3 years will all go out and buy cars today, which will mean absolutely no one is buying cars 2-3 years from now. (That is, except maybe the 40% that pay no income taxes.)

    Seriously, conservatives, especially conservative Christians, need to come to grips with the fact that supply side economics does not work. It gives a temporary economic boost based on giving people a little bit more money to spend it on things that we don’t need. But it peters out, and the result is economic problems as big as they were before, plus huge deficits that add to the economic problems. The Reagan – George H.W. Bush years? Ended in record deficits and recession. The George W. Bush years? Ended in record deficits and recession. Even during the economic expansions of Reagan and Bush, we lost critical portions of our economic base. Under Reagan, we lost a ton of manufacturing and mining jobs overseas. Under Bush, not only did the manufacturing losses continue, but we lost a ton of white collar jobs, tech jobs and managerial jobs, overseas as well. Meanwhile, neither Reagan or Bush did a thing to help the long term economic picture. Under Reagan, the big thing was the Cold War defense buildup that provided a lot of defense contractor type jobs that dried up as soon as the Cold War was over, because it was based on building weapons that we didn’t even need during the Cold War, let alone after it was over. This is in contrast to how other presidents did things like build the interstate highway system, create the national laboratory system (which gave us the Internet and a lot of other things that corporate America turned into marketable products), and brought electricity and phone service to rural America and to the desert.

    Sorry, but 16 years of “returning taxpayer money to the taxpayers” under Reagan and GWB hasn’t worked, especially since the money will be spent on things made in foreign factories (think China) or even in American factories owned by foreign companies (think Toyota) or better still by American companies who have shipped their manufacturing jobs to Latin America (NAFTA!) and their white collar jobs to India.

    Obama’s solution is the wrong one, but political conservatives need to try something else. What? I don’t know, how about actually proposing a plan to pay down the national debt. The only thing that conservatives have produced in that area were two balanced budget bills (one by Phil Gramm, the other by Newt Gingrich) that set spending limits that Republican Congresses did not even bother to adhere to.

  • You must have a slow blogging night, Job! You commented more than I wrote!! lol

    This isn’t a serious proposal, of course, but a tongue-in-cheek look at what’s wrong with the current one. Thus, my disclaiming “if/then” statement, “If congress and the president are determined to spend 900 BILLION dollars….”

    To that end, I will hereby denounce my position and agree with you- that the best solution is to let it all go where it will, and reward no one artificially. I think the market is fully capable of leaning out the dead wood; and companies that fail do so for good reasons. I do believe capitalism works – but only if left alone (like that will ever happen.) MY CHOICE would be to do NOTHING in the way of financial “bail outs.” Yet, it’s too late for that. It has been all along. So, if they are determined to spend it, I’d rather see it go back to the people who will be paying it off for the next however many decades. In the end- yes, that’s a return to Reagan era supply side tax returns. It’s not the best choice, but it beats rewarding failed companies and non-taxpaying americans. The best choice doesn’t earn enough votes, sadly. And until it does, (never) it will not be employed.

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