Posted by
Old Retired Fart on Monday, January 12, 2009 3:34:24 PM
It is funny to me that no one seems to be asking the simple and obvious questions about the "stimulus" package Congress is about to debate. We should be asking ourselves, how is this going to help the economic situation? (It won't ,Kensian pump-priming has never worked, and there is no reason to believe it will work this time) and How are we going to pay for this? The budget crisis is the real crisis we will be facing soon. Fortunately, there is a simple method for solving the crisis that answers both of these questions.
Step 1). Across the board PERMANENT tax cuts. This answers the first question, how is this going to help the economy. There is research out today that shows that the rate of people losing/leaving their jobs is actually lower than it was a year ago. The reason for the rise in unemployment is the lack of new jobs. Right now there is a terrible sense of uncertainty, particularly as regards tax rates. Permanently lowering the rates would reduce the uncertainty and at the same time create an incentive for people to create new jobs. New jobs would reduce the unemployment rate. Amazing how simple that is.
Step 2) How do we pay for that? There are two parts to this, first there is the increase tax revenue that seems to always follow a tax cut, but we will set that aside in favor of a much simpler tool...zero based budgeting.
Zero base budgeting is really simple. The government would start by budgeting all of it's non-discretionary requirements, medicare, social security, and national defense. After that, every other expenditure is listed in rank order...from most important to least. The government then simply counts down to where their expected revenue runs out and draws a line. Nothing below the line gets funded. The result, a balanced budget in year one.
This is how families traditionally budget. There is no reason the Federal Government can't do the same.
Write your senators/representatives, let them know you are watching.