Also, any one who wants to turn this into a bill for submission to Congress has my blessing. In case you were wondering...
Update 2: Why did Reuters think the stimulus package would only cost $2 billion when I checked? Now its up to $150 billion. Inflation already...
The proposed economic stimulus package is projected to cost $150 billion. That's a lot more money that the government doesn't actually have. There are three ways to finance government:
- Taxes
- Debt
- Inflation
Presidential candidates whose names are followed with a "D" are recommending option #1. Not that they aren't into #2 and #3 also, they just want to stick #1 to the "rich" so that they "pay their fair share." Or something, I digress...
The theory behind this "stimulus" bill is Keynesian economics. In Keynesian economics, economic growth is driven by consumer spending. Since everyone wants the economy to grow, the solution is to give people more money to spend. Insert money: grow.
There are two problems with this. First, there is no guarantee that the money people are given will be spent on new stuff. People could save or invest the money, they could spend it on new stuff, or they could pay down some of the substantial consumer debt we have.
Second, Keynesian economics is wrong. It confuses cause with effect. When an economy is growing, people spend.
An alternative way to encourage growth (that is more sound than this spending theory) is capital investment. If only the government were sitting on a large sum of capital. Oh wait! It is!
The so-called Social Security Trust fund had a surplus of $2 trillion at the end of 2006. That surplus was still growing through 2007 and is expected to continue growing for several more years. Here we have $2 trillion sitting on its butt and the President (R) and Congressional leaders (D) want to borrow or inflate to "stimulate" the economy?
I have a better idea: invest one third of the Social Security surplus. That's well over $600 billion, which is 4x greater than the "stimulus" bill. No additional borrowing will be necessary nor will "free" money need to be printed (that would be inflation). As a side benefit, there will be a sizable return on that $600 billion to be reinvested and shore up Social Security.
To expand on this idea, I'm going to present to the world (for the first time ever) the Mitch Oliver Plan to Save America's Economy. It is amazingly uncomplicated.
- Eliminate entitlement programs
- Anyone currently receiving benefits will continue to receive them. Any budgetary shortfall will be recovered from the General fund.
- Anyone not yet receiving benefits but aged 50 and over can opt out of Social Security and Medicare. They forfeit any prior withholdings but no further withholdings will be taken.
- No one under the age of 50 will be eligible for Social Security. All prior withholdings are forfeited.
- Raise the "retirement age" to 75. Anyone currently receiving benefits will not lose theirs.
- No additional Welfare or Medicaid applicants will be accepted. Current recipients will be phased off the program.
- Enact the Fair Tax
- This gives consumers direct control over how much tax they pay.
- This also gives consumers incentives to enhance their own wealth and to enhance the economy. Spending is taxed, while saving and investing is not.
- Cut non-defense spending
- We need neither a Department of Education nor a Department of Energy, not to mention Agriculture, Housing, and a myriad of other departments.
- Budget a surplus
- We have trillions of dollars in debts to pay off.
- Even after the national debt is paid in full it is always wise to have a rainy day fund, even for governments.
- Cut "foreign aid"
- Drastically reduce the amount of aid we give to foreign governments and causes.
The answer is simple: less government yields a better economy.
