Wednesday, January 28, 2009

My Stimulus Plan

The house has passed a $825,000,000,000 "stimulus" package. The word stimulus has to be in quotation marks, because the predominance of the package is about funding pork, not creating jobs or truly helping the economy. I believe we would have been better off with nothing, than this package of future debt for our children. An example of what constitutes economic "stimulus" to the president and the democrats in the house is 335 million dollars for STD education and prevention programs (

The only good news is that for once, none of the Republicans in the house were party to this orgy of spending.

I believe if you are going to disagree with something, you should always offer an alternative . I do have an alternative proposal for a real stimulus plan. One that would require no new bureaucracy, and should not create any new government jobs. At its simplest, it only requires two words to describe: CUT TAXES. Let the people of this country utilize capitalism, and the free market to create jobs, and get the economy growing again. So what taxes should we cut? I am glad you asked.

The first part of my proposal would be to cut the corporate tax rate across the board by 50% for 2009, immediately. In 2010, the corporate tax rate would be raised to 70% of its 2007 rate, and in 2011 it would be brought to 80% of its 2007 rate. In 2012, it would be back to its initial levels. (Personally I prefer a permanent reduction, but I am trying to show a willingness to compromise and be bipartisan J ). I estimate this would be an approximately a 412 billion dollar reduction in revenue, or cost if you like. That is based on FY 2007 corporate tax revenues of around 400 billion, and an anticipation of flat tax growth if everything were left the way it is today. (It does not account for the potential of rising tax receipts due to it actually working, which would reduce the overall "cost")

The second part of my proposal is an immediate 20% reduction in personal income tax across the board, with an immediate reduction in withholding. In 2010 there would be a 10% reduction when compared to 2007. My expected cost for this is around 400 billion. Again this is based on FY 2007 income tax revenue which was around 1.4 trillion, and an assumption of flat tax revenues.

So why do I think this is a good idea? First, it requires no new government organizations(aka bureaucracy) to implement. Second, it does not look to the government to pick winners and losers. It puts money back in the hands of companies, and consumers. It lets them decide how best to spend and invest the money. It is after all, our money to begin with. A cut in corporate taxes, is like an instant increase in profitability for companies, and might mean the difference between staying afloat, and failing). Phasing the cuts out allows companies to take advantage of the benefits over time, and the end of the cuts are not an abrupt return to higher taxes that might prevent them from using the extra money they have. Companies should have to look less at cost cutting, and strong companies could look to grow. This might also encourage companies to invest some of their foreign earned income back in the United States ( ) Consumers having more of their income would help spur demand.

This is in no way a hand out. It is the government letting people keep more or of what they earn The total cost is basically the same as what the house voted to approve 810 billion. The difference is this plan would pump around 475 billion into the economy in the first year. Does not fund any "pet" projects, and follows basic economic sense. However, it would mean that 335 million would not get spent on STDs.

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