jcp026

Guys, I think we're fooling ourselves if we think either one of the candidates is going to fix the economy. Let's talk about the economy...NOW:

So, there's no question that the major problem with the economy right now is a lack of demand. Demand is down because people aren't stupid enough to put everything on credit cards anymore, people can't borrow against their homes any more because they're either underwater or have lost the house entirely, and wages, though mostly stagnant, have actually gone down in the last thirty years. The minimum wage now, adjusted for inflation, is lower than it was at its inception. And, last I heard, there are still four job seekers for every one job opening. Demand is down. No doubt about it.

How do we get wages up?
-Well, the minimum wage could be tied to inflation, which would push it up a bit now and increase the buying power of the working poor and help increase demand.
-Employer based health care places a HUGE BURDEN on our businesses. When you factor in what businesses spend to help pay for our insurance, which the government is already subsidizing, compensation has gone up. While not as high as profits, still a considerable amount. We can't keep subsidizing this and, with the ever increasing cost of health care, business can't afford to keep it up. We could stop subsidizing this and, naturally, most business will stop paying for our health coverage. Now, I'm not going to pretend that the bulk of money that would be freed up wouldn't just increase the profit margins, but, over time, I think we'd see wages tick up and removing this burden would make the U.S. more attractive to foreign business. I know of at least one case where a Japanese car company built a factor in Canada instead of the U.S. because of the cost of health care (and no, Obama Care doesn't have anything to do with it).
-Another, and more awesome, way to increase demand while simultaneously stabilizing the financial system would be what is a good tax (known as a Pigouvian Tax) that Luigi Zingales mentions in A Capitalism For The People. He talks about "a tax on short-term debt (with maturity of less than a year, for example), [can] discourage both excessive leverage and short-term leverage, preventing a crisis. Also, a 1 percent tax on outstanding short-term debt would raise $21.5 billion dollars annually just among the top nine institutions." He goes on to say that that amount would equal the tax liabilities of the bottom 65 million households who make less than $35,000. He doesn't exactly advocate this, but I'd take it one step further and say that for 5 years (a reasonable time to "fix" the economy, if we do what I want) the taxes of those 65 million households SHOULD be exempted. Paid for by this type of Pigouvian Tax and we put $21.5 billion dollars in the hands of the people most likely to spend it and, voila, we increase demand. But I have to stress that we write into this tax bill that those cuts for the bottom 65 million CAN NOT BE EXTENDED! It can be a BS political weapon. We have to take the debt seriously and, outside of Bill Clinton and Dwight Eisenhower, we haven't been very good at doing that.

-But what about my health insurance, you douche?!
GREAT QUESTION! A Public Option, where people opt in and pay some rate (just like with private insurance) then the federal government can insure them. It could be set up in a way that IT WOULD ALWAYS BREAK EVEN. Not bilking the taxpayer or the people using the insurance, and not adding to the debt. We could also allow people to purchase insurance across state lines, which would probably lead to crappier private insurance, but it would be cheaper insurance.

What about the job creators?
-Traditional Supply Side (Trickle-Down) Economics DOES NOT WORK! But we can tweak it. Just giving rich people and corporations money doesn't create jobs. That should be obvious right now with near record high corporate profits and taxes at, at least, 30 year lows. So how do we "tweak" it? We could say to corporations that all of the loopholes are gone. The corporate tax rate is 28%, but if you create a certain number (or percentage) of jobs in the U.S. then you can push your rate down to 18%. You could also include a couple of tax breaks that we know work and, if they took advantage of them, they could get their rate down to 12% (or pretty much the lowest in the world). But 12% is the absolute rock bottom. You will pay taxes. You will contribute.

What about taxes in general, you douche?
-Now you're just being mean. I believe that the best way to "clean up" the tax code is to get rid of all tax breaks. Then we can leave all of the rates the same and increase revenue. I also support raising the top rate to 39.6% also known as the rate from about 12 years ago.
-But what about small businesses, you stupid ass? Ouch. The "Small Business" label includes Bechtel, which took in $31 BILLION a couple of years ago. Not what most of us think of when we think of a small business. I think we should change the definition of "small business" or, if it's possible, pull them out of the individual tax system that we're in and into a system just for small businesses. A progressive system, to be sure, but a system that wouldn't lead to big tax increases for Mom and Pop spots. I don't have any idea how this would be done and haven't heard anyone talk mention it, so I can't elaborate. I'd like to add, though, that under the current system, with loopholes included, raising the top rate back to 39.6% would only affect about 2% of "small businesses."

With our current political system, how does this get done?
-It doesn't. Without campaign finance reform, getting rid of gerrymandering, reforming Congress and the filibuster, and pulling more people into the voting booths (Australian-style), none of this is possible.

Someone, please, respond seriously to this. I don't have anyone to talk to about it.