It's the Economy...

It’s the Economy…

Good morning my fellow Rotarians. The topic of the morning is economy related, so why not share an article I read awhile back entitled ‘5 Crazy Ideas to Save Our Economy’ written by economist Don Phelan.

Phelan begins by explaining how our free-market supply and demand economy works and the importance of having goods and services for Americans to buy. But, if they have no money, or are afraid of losing their jobs, or are hording their cash to weather this financial storm, they aren’t buying, right? So, how do you create incentive for people to BUY?

Crazy Idea #1: Instead of the government spending the $1 TRILLION stimulus, how about giving it directly to the people to spend? It breaks down to about $4,000 per person and yolu could send each a debit card with $4,000 on it. A household of four gets $16,000, of three, $12,000, etc. The spending would come with specific rules on how the money can be spent; down payment on a house, to buy cars, appliances, pay for daycare, tuition, etc. Only to BUY goods and services and if you don’t spend it within 18 months, the card expires and you lose the money. Imagine how consumers would line up for cars and different homes. The impact on the auto and housing industries alone could be big; more jobs, more spending and thus, more tax revenue.

Crazy Idea #2: Cut income taxes from 25% to 15% for middle-income Americans and you’d see another immediate impact on US households. For example: If you make $60,000, you get $6,000 more in your pocket to spend. Could you use an extra $500 a month in after-tax income? As disposable income increases you build real hope in people and they gain more confidence that they can better provide for their families, make their car payments and have money to buy that new refrigerator.

Crazy Idea #3: Eliminate the capital gains tax on investment properties and that would put a major dent toward eliminating the glut of foreclosure properties. No government bailout and no throwing money at the problem. People with poorly performing 401(K) or savings accounts, would RUSH to buy distressed real estate. Real estate investors would get involved big-time. It would be a boom. Many people would fix up these properties by hiring plumbers, electricians, HVAC people, carpet installers, etc. Then, those improved properties could be rented or sold.

Crazy Idea #4: Reinstate consumers’ ability to write off interest paid on credit cards, auto loans and second homes. This frees up more money for consumers and reduces their tax burden.

Crazy Idea #5: Regardless of what party you support, all of us should participate in a petition to eject our politicians from office if they don’t stop the partisanship and start working together to fix our economy. Our economic crisis is enormous. It will take ALL of us, rich and poor, conservative and liberal, black and white, men and women, to fix this. We must all start pulling on the same end of the rope. And that’s a summary of the article.

These five crazy ideas don’t honestly sound so crazy to me, but they most likely don’t stand a snowballs chance of ever happening. However, I believe that as a nation and government, we must start thinking differently. And here was Phelan’s final big question… ‘Could it be conceivable that ‘we the people’ might better spend the money generated from these ideas rather than our government?’

Remember that line from the Clinton campaign, “It’s the economy…” and that’s the Bottom of our News on this Friday, October 12, 2012. I’m David Drewelow and once again I approve this message.

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