My Ingenius Plan to Revive the Economy

Posted by on February 25, 2009

Okay, first let me preface the forthcoming genius with a disclaimer: I’m not some kind of economics expert, nor do I have any kind of background in banking, finance or government policy.

You know, I have nothing at all against President Obama or his ideas. I don’t think he’s trying to turn our country into a socialist nation (we kind of already ARE socialist—minus all the perks, of course, like decent healthcare, paid maternity leave and an assurance that we WILL be able to retire at some point without having to eat cat food and forgo medication) and I support his plans to shore up our infrastructure and create green jobs because those are things that need to happen anyway.

I do, however, have a big problem with “throwing good money after bad” where the big banks on Wall Street are concerned. If what I read every day in the news is any indication, they’re still partying like it’s 1999 and spending the bailout money (aka our tax dollars) like it’s 2004.

And exactly what part of those billions of dollars have freed up credit markets? Well, according to NPR yesterday, not much at all, if any.  So why keep giving them money when it’s clearly not working? DUH. My second grader could have figured that one out.

If your personal bank was failing due to bad practices and reckless judgment, would you continue to keep your money there? Only if you’re an idiot…

So have you ever gotten the email (probably in the last 3-4 months) that says if they distributed the bank bailout money to American citizens instead, it would be much more effective and yield far more positive results than giving it to banks?

My idea is similar… Give every American taxpayer, age 21 and up, a BIG chunk of  money on a debit card and then, instead of taxing it as income (which really just means you’re getting 30% less money), enact a national sales tax, which we currently don’t have, of say 3-5% so every time one of those dollars changes hands in the retail sector, it gets taxed.

The money would, in theory, continue to generate income for the government over and over and over. Don’t ask me to figure out the math ’cause I don’t have nearly enough fingers. Just know it would be a LOT of money.

Of course, this will also stimulate the retail and industrial sectors (OMG JOBS!!!) and would, hopefully, allow them to build up cash reserves so they’re not completely dependent on bank-issued credit which is non-existent right now anyway.

It’s a win-win. Businesses and banks get a much needed shot in the arm, the government gets their slice back in spades and the American people get to do what they do best…spend money like there’s no tomorrow!

Could it really be any worse a plan than giving money to a bunch of ginormous banks that have demonstrated repeatedly that they’re irresponsible and unethical?

If you had proven to be fiscally irresponsible, untrustworthy and unethical, do you think any of those banks would just hand you a bunch of money? NEVER! They wouldn’t even LOAN you the money. Hell, they’d probably throw you right out of their fancy building for even THINKING of asking.

So yeah…waste a bunch of money on people who really need it (because HELLO? Not EVERY American has a giant flat-screen yet, which is simply unconscionable) instead of sleazy corporations that suck. That’s the plan!

I told you it was genius :)


37 Comments

  • What you are saying sounds better than what is going on. Of course I also do not have a degree in economics or finance.:)
    IMO The banks do not deserve ANY more money. I cannot believe they are asking for this kind of money all the while living it up like they do. They have no idea what’s it like for the average person. We are the ones that deserve the freakin’ bailout.

  • Brooke says:

    I actually work for a bank and can’t believe what is going on. While our bank struggled, we course-corrected our lending practices a year or so before everything blew up… and then we were told everything was great, but our stock price kept falling because of consumer confidence…. and then we found out that we got bought. By a big bank. That was not struggling, even a little.

    That used TARP money to buy us.

    And… when the TARP plan passed we all thought we were saved.. because even though we were struggling a little bit because of our stock price, consumer confidence would rise once our stockholders knew that we had received TARP funds. Right? Right? Ah, no. We were denied the funds, even though we were struggling. While the big huge non-struggling perfectly-ok bank got money from TARP to *BUY US*.

    It makes no sense, not one bit of it.

    I see both sides. As a taxpayer, I know that it’s horrible to throw money at these corporations and I don’t want that to be the solution…. but as someone whose job would be affected if the financial sector failed… I know that I didn’t know that our lending practices were bad, and if I thought I worked for a unethical company, I probably would’ve left my job a long time ago. You know, when there were other jobs to be had.

    Sorry to rant in your comments – this one hits home for me, just like I know it does for many many others.

  • Diana says:

    They can call me what they will, but I agree with you. And no, I’m not an economics expert either, but I do like to think I have an ounce or two of common sense and common sense says to stop throwing money away to corporations who aren’t using it to fix the problems we face anyway.

    This ought to hit home for every single American citizen right now, not just those who might lose a job to a failing sector – whether banking or automotive – because this is our money being tossed around. This is the money our children and grandchildren are going to have to repay on our behalf because we’ll never have enough to pay it back before we die. This is a crock.

    Diana’s last blog post..The State of My 101. February, 2009.

  • Chris says:

    I’m afraid that nothing short of an armed insurrection will stop the looting of the US Treasury and the American taxpayer by the Government and their Silver Spoon buddies on Wall Street.

    Chris’s last blog post..Hello, Is It Me You’re Looking For?

  • Kelley says:

    At the risk of being lynched I have to disagree slightly with you.

    Firstly, I am no expert. Far from it. And yes, I don’t understand the whole throwing money at the banks thing. Here in Oz we are facing a similar (but not as dire) situation. I am in total support of our governments decision to throw millions of dollars into infrastructure and heath, creating a better Australia and more jobs.

    However, if the government gave every adult in the US 400k+ your economy would fall into the toilet even faster. Every household with more than one adult has the potential to become millionaires. They would go out and spend of course, houses, cars, luxuries etc. But here is the rub. Supply and demand. House prices would skyrocket (in the last 5 years house prices here have tripled) to reflect the disposable incomes. No one would want to do ‘menial’ jobs they would just quit because they don’t need the cash. Within a year you would be paying 45 dollars for a stick of gum.

    Right now I am whacked out of pain meds so I hope this comment makes some sense, like it does in my head and not actually say ‘I like chicken’. Cause I do. And we don’t have any, so that is top of memory right now. Mmmmm, chicken.

    Kelley’s last blog post..Acknowledging your own damn awesomeness is dangerous. OR Pain sucks yo. OR How to mop a floor properly biatches.

  • Apryl's Antics says:

    Well, perhaps you could modify the plan by requiring people with jobs to keep them. Limit what they could spend the money on such as mortgage payments, college tuition, and all other aforementioned items in this post. And let’s not forget that money would also go to those bank employees who might possibly be effected if the money didn’t go to financial institutions instead.

    Either way, I’m up for it. Sounds like a good one to me.

  • Apryl's Antics says:

    Well, perhaps you could modify the plan by requiring people with jobs to keep them. Limit what they could spend the money on such as mortgage payments, college tuition, and all other aforementioned items in this post. And let’s not forget that money would also go to those bank employees who might possibly be effected if the money didn’t go to financial institutions instead.

    Either way, I’m up for it. Sounds like a good one to me.

  • Apryl's Antics says:

    Well, perhaps you could modify the plan by requiring people with jobs to keep them. Limit what they could spend the money on such as mortgage payments, college tuition, and all other aforementioned items in this post. And let’s not forget that money would also go to those bank employees who might possibly be effected if the money didn’t go to financial institutions instead.

    Either way, I’m up for it. Sounds like a good one to me.

  • Apryl's Antics says:

    Well, perhaps you could modify the plan by requiring people with jobs to keep them. Limit what they could spend the money on such as mortgage payments, college tuition, and all other aforementioned items in this post. And let’s not forget that money would also go to those bank employees who might possibly be effected if the money didn’t go to financial institutions instead.

    Either way, I’m up for it. Sounds like a good one to me.

  • Cara says:

    Well, I do have a degree in Economics, so let me throw my two cents in to the mix. First off, if you gave $85 billion to all Americans over 18, lets assume that’s 200 million people, that works out to about $425 a person. That won’t even cover most people’s mortgage payment, let alone pay off their whole mortgage. No one is going to quit their job based on $400. Yes, that money would temporarily boost the economy, but as you might recall, Bush sent out stimulus checks last year, we got about $1200. That most certainly didn’t save the economy. So, that argument just doesn’t hold water. Sorry to bet the buzzkill.

    But on to the bigger point of your argument, throwing bad money after good. Or really, bad after bad, in my opinion. Obama, Congress, and anyone else that will listen: STOP. You’ve probably heard the saying a hundred times by now, but what’s the first thing you’re supposed to do when you realize you’re in a hole? Stop digging. Instead, the geniuses in Washington just keep digging. It is insane.

    Instead of beginning a bunch of programs that won’t help for months at least, but in many cases, years, the government needs to let the market correct itself. Which almost all experts say it will within the next year or so. Most of the programs in the stimulus plan will not yield results for a year or more, so how does that make sense? It doesn’t. While I think the politicians are well-intended, they are no more in touch with your average American than the billionaire bankers.

    Oof, sorry for the rant. Coming down off my soapbox now.

    Cara’s last blog post..Tiny Town

  • Mia says:

    I totally nominate you to fix our economy. When can I expect my check , or my debit card?

    Mia’s last blog post..Hide-And-Seek~Come Find Me

  • SciFi Dad says:

    We in Canada already have this. They implemented it back in 1991 on the cusp of the last big recession. We call it the GST: http://en.wikipedia.org/wiki/Goods_and_Services_Tax_(Canada)

    SciFi Dad’s last blog post..Assorted

  • Sarah says:

    I like your economic plan way better.

    I also like the blogher idea. I can relate to that topic oh so well. You have my vote.

    Sarah’s last blog post..The Ladyrather Diary

  • Dana says:

    I think this is a great idea.

    My father is a “learned” economist or so he calls himself…and his idea is that our country do away with income tax (since so many Americans find ways to evade taxes anyway) and instead go with a consumption tax on everything we purchase. He believes it would boost our economy and quickly shrink our deficit. Sounds like another good idea, I think.

    Dana’s last blog post..Refresh My Memory

  • patois says:

    If you could make the debit card work so it wasn’t to any particular company — like, say, a bank or Visa or MasterCard — so no one benefitted by being the holder of such a chunk of change, amen. AMEN!

    patois’s last blog post..Grace in Small Things #2

  • Chris says:

    I reread this and I really think you are on to something. The leading domino in the falling cascade of dominos is the American consumer. More specifically, the confidence of the American consumer because with confidence comes spending and with spending comes economic recovery. The national fixes have focused on businesses like banks, investment houses, insurance, and now automobiles. None of these entities can do anything to get American’s to spend and feel confident. The only thing that can do that is money in the bank.

    Chris’s last blog post..Pull My Foam Finger

  • Mirinda says:

    Cara, you are so right on.

    The income tax was a TEMPORARY tax started in 1913. It’s now 2009.

    My husband is an expert in finance and does very well at it for a living. So much so that I’m going right now to ask him to come respond to this post….which then gives me the idea to have him guest blog on my blog. :)

    Mirinda’s last blog post..mirinda’s monologue

  • Mirinda says:

    Yes, he does…and he likes long walks on the beach and is really cute :) hehe…

    I’m heading over to watch the link now….It honestly blows my mind the crap our government is getting away with right now. I feel like there HAS to be millions of us ready to pick up our pitchforks and take back OUR government. They are corrupt and do not even come close to representing what our founding father’s ideas were for our great county. We are definitely sliding down a slippery slope.

    Obama’s definition of “rich” is $200k per year. Sort of like Clinton’s was and then practically overnight it went down to $45,000 per year was “rich”. I’m telling you right now, we will ALL be paying greatly for these bailouts not just the “rich”. Since when did doing well for yourself become wrong? Corrupt CEO’s? Yes. They need to be dealt with, not given BILLIONS of dollars. But everyone else shouldn’t be punished for it, including hard working business owners struggling. I know, we are one of those and we are not rich by any stretch of the imagination.

    We live in a democratic nation. It’s not their responsibility to hand out money to anyone much less guarantee that we all have good healthcare or retirement. Talk in depth to someone who lives in the UK and Canada who has gone through a major illness and see how highly they think of their healthcare system.

    As for retirement, people had darn better be making plans (it’s the main thing my husband deals with in his business) for retirement OTHER than 401ks or qualifed plans. Or everyone WILL be eating cat food LOL Do you know there is a bill being heavily discussed in the house right now where the government will TAKE OVER everyone’s 401k plans and RATION them out among everyone. IF there is one person who can tell why this is reasonable and OK I’d love to meet them. It’s INSANE.

    I think we need for the government to quit trying to “fix” things- which is funny because they are not fixing anything, only taking more and more control over OUR lives. And I for sure think everyone needs to quit EXPECTING them to fix everything. They need to step back and run our country the way it’s meant to be run. Quickly. I feel like the next election we will see some fresh, new faces in our congress and senate because we’re tired of the same old crap. Somewhere the voice of reason will cry loud and strong. I’m just wondering when.

    Mirinda’s last blog post..mirinda’s monologue

  • Mirinda says:

    I agree that it is out of control. It’s greed by the insurance companies but also stems from people who take advantage of the system as to why the cost is so high. Each month our insurance for my family is the same as my home payment…and I live in a $250k house in south Alabama. So I understand paying unreasonable amounts, believe me. What’s even more fun is when they deny coverage after paying unreasonable premiums.

    However, I don’t think it’s the governments place to PROVIDE the healthcare or the taxpayers place to help pay for it for those who cannot. I just don’t. It’s just my opinion.

    Do I have the perfect solution? No.

    Mirinda’s last blog post..mirinda’s monologue

  • PunditMom says:

    I am SO totally nominating The Caffeinatrix for President in 2012! Or at least to head OMB. The thing that worries me is that it seems like each potential solution has it downsides and there doesn’t seem to be anything that anyone can do to manage this crisis of confidence, which is what’s sending the market into a tailspin.

    Everyone keeps saying this is just like 1997, when the markets tanked then. I wasn’t so worried 12 years ago, feeling that I had plenty of time to have what little money I had to recover. Now, in 2009, I don’t feel that way and I’m scared. The thing that scares me about being scared is that we’re in a pretty good spot — Mr. PunditMom is about as secure in his job as anyone can be, makes a lovely salary and we have (had) savings. I still have a few freelance gigs that contribute a little bit to the bottom line, And WE feel frozen and worried. So where does that leave the people who lost their jobs or are next on the chopping block?

    The only thing that’s going to turn this mess around at the moment is if we all start feeling confident and not freaking out at the prospect of even spending a couple of dollars. I wish I knew what act it would take to find that confidence.

    One thing I am sure about — someone needs to convince the GOP that it is in no one’s interest to have them continually bashing Obama or to have the MSM continually covering their empty criticisms. The news coverage needs a different spin to help out with our collective perceptions.

    PunditMom’s last blog post..Every Mom Can be a Mom-in-Chief

  • Christina says:

    I’ve told my husband much the same idea. I’m all for giving the money to the consumer and letting them put it back into the economy.

    As for health insurance, I’ve always thought that health insurance should not be “for-profit”. Whether it’s private non-profit or government controlled, health care should be a right for all. And I’m not against paying for health insurance, either. What about a sliding-scale premium based on income with a capped top amount?

    It is a complete conflict of interest for a company to be in the business of providing health insurance when they’re trying to make a profit, too. They’re going to deny as much as possible for maximum profit.

  • terena says:

    My daughter has a disability, so I am smack in the middle of the economic disaster. She is dependent on services and Medicare for her health and well being and all of those necessary services are being cut so badly I fear for her future. I fight every day to make sure she gets what she needs. We live in POVERTY so she can qualify for health care because no insurance on the planet would cover those expenses. And yet I am treated like a “welfare mom” and looked down on like a loser. But CEO’s who have fucked over this country get hand outs? I am hard working and devoted to my family, but somehow me and my child are “parasites?” AHG! Don’t get me started. If I hear about one more bailout while my child loses another service I am going to scream!

  • Belindetta says:

    Have you seen the public housing in the UK? Would you really want to retire there? .

    You’ve got a very rosy view of things you don’t know much about.

  • Caffeinatrix says:

    @Belindetta

    Who said anything about public housing? Or retiring in the UK? Have you seen how retirees live in Denmark? Pretty damn good.

    In any case, it appears the TONGUE IN CHEEK tone of my post escaped you, which is no surprise given your nasty disposition.

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  • The Caffeinatrix says:

    When I call people unethical and cheaters and such, please know I am referring to those who knew very well what was going on and you know somebody, somewhere, did.

    I don’t want banks to fail, not at ALL. But I’m not sure that giving money to banks that are still refusing to make credit available to businesses is the way to save them, either.

    I really do think that if people actually had the money to spend, everybody would come out ahead because right now people not spending is a big part of this freefalling, deathspiral of an economy.

    People need help so badly right now. I know banks and business and employers etc need help, too, but actual people, with homes and families and retirements and health problems and everything else…they need help first or America is going to end up as one big tent city.

  • Brooke says:

    Oh, of course! I wasn’t implying that you were blaming me. But you would probably be somewhat surprised to know how many people give me *looks* when they hear that I work for a bank now – it’s like the new thing, industry profiling or something. Because apparently mid-level analysts make important lending decisions. Right.

    I do agree with everything you just said, completely and totally. I don’t know if we’ll get the help we need as consumers, but I know that it is ridiculous how the money is being spent right now, even since the government decided to step in and ‘help’….

  • Caffeinatrix says:

    We don’t lynch around here. Flog, perhaps, but no lynching!

    Actually, I get where you’re coming from but we have such an insane housing surplus right now, with entire suburbs collapsing—those houses NEED to be filled and as long as people are spending, saving or paying off, it’s money going back into the economy.

    Perhaps the amount of money needs to be reduced or adjusted or perhaps it needs to be doled out in increments but people refusing to do menial jobs is a lesser concern than people not being able to GET work right now.

    Also, we have an incredible number of immigrants here (legal ones, even) who wouldn’t be eligible for any kind of stimulus money so they would probably take at least some those jobs, as would a lot of minors old enough to work.

    I know it has holes but I still think my idea, with some adjustments, would accomplish multiple goals all at once, rather than waiting years for the bailout plan to help anyone.

  • The Caffeinatrix says:

    Your dad is a smart man. The consumption tax is much more fair. I watched this documentary not too long ago where this guy tried to get the IRS and other govt agencies to show him where the law is written that you have to pay taxes and nobody would or could. It’s a great flick.

  • The Caffeinatrix says:

    While I still feel that massive bank bailouts are a bad idea, this post is very much tongue-in-cheek. Does your husband have a sense of humor?

    As for income tax, have you ever seen America: Freedom to Fascism? If there is a law anywhere that says Americans are required to pay taxes, nobody seems to be able to find it. You can watch the whole thing on Google or get it from your public library. http://tinyurl.com/22sfw3

  • The Caffeinatrix says:

    Actually, I have a friend who lives in California and has a potentially life-threatening illness. He recently got laid off and with no job, he can’t even afford the COBRA to keep his medical coverage. He has savings but he needs it to pay his mortgage so he still has a roof over his head and as he gets sicker w/ out medical care, he’s nearly unemployable (if he could even find a job).

    What do you to say to someone like that and all the hundreds of thousands of people in the same position?

    Too bad?

    It’s a CRISIS, not a case of people being lazy and wanting to leach off the government, WHICH we totally finance with our tax dollars anyway.

    But my point is that my friend is a British citizen. At this point his only option, to get the care he needs, is to leave the US, probably lose his house unless he can find renters, and go to the UK.

    I’ve asked him many times and his opinion of healthcare in the UK is very high, particularly compared to what he’s dealt with here, where he’d simply be allowed to die.

    So while I agree with much of what you say, in times when a family’s health insurance premium (if they’re lucky enough to even have insurance) is more than their mortgage payment (as mine is) you can’t pretend something isn’t terribly broken with the system and without some kind of intervention, it will never be unbroken.

  • The Caffeinatrix says:

    You don’t believe in our current income tax system, as you previously inferred, but you’re okay with the government using tax dollars on anything but helping the people who actually GIVE them the money in the first place?

    And let’s say it was my family who was in a situation like the one I referenced, a lost job, COBRA payments out of the stratosphere, the inability to find another job with benefits and let’s say the person who was sick and facing death was someone completely innocent like one of my children.

    Could you look me in the eye and tell me that my family doesn’t have a right to expect the tax dollars we’ve paid all our adult lives into the US system, however flawed, should not be used to help our child, particularly when the current recession is a situation caused by our government (starting with deregulation of investment banks)? Could you look me in the eye and say that it’s a shame but the government should NOT do something about healthcare in this country?

    What if it was your child?

    I know, I know…your husband is a finance expert and he has planned for every possibility and thus, this will never happen to your family, right?

    I’m pretty sure that the people who were ruined overnight in the great depression felt the same way…untouchable, bulletproof. Until it did happen to them…and they jumped off of buildings.

    As for the government providing healthcare, all I can say is that it’s a better situation than an employer providing it. I find it absolutely absurd that our ability to receive medical care is almost always tied to a job. Lose your job? Lose your medical coverage.

    I’m not opposed to PAYING for healthcare, I just think paying it directly to a company that is only in it to make a profit is a conflict of interest because the only way a health insurance company makes money is to DENY care or coverage or only insure HEALTHY people. Why on earth would any sane person want someone who wants to deny them care to ultimately be in charge of their medical care and health?

    We already subsidize medical care for the very poorest Americans through Medicaid and for the elderly via Medicare. It’s funny that nobody seems opposed to giving healthcare to the two groups that, when they become eligible for services, are not paying into system.

    Meanwhile, middle class people like my family pay into the system year after year after year and never ask for anything in return but when the country begins to implode and these same middle class people are losing their jobs by the thousands, we don’t have a right to expect same those tax dollars to help us? We’re supposed to happily give our money to the government to waste as they see fit but never expect anything in return? That’s insane.

    People are worried about this country becoming socialist? They should really be concerned with it becoming MORE of a corporate oligarchy than it already is…

  • Mirinda says:

    @The Caffeinatrix,

    I have the flu (which means I’m a wee bit ill) so this will be brief.

    First, I don’t have the time or inclination to argue this point on a blog of all places. I’m not hard to find, get my phone number and I’ll tell you what all I think.

    Second, your sarcasm was not lost on me but as of now it’s rolling right off my shoulder. My husband is great at what he does but I didn’t say we were bulletproof. However, we will not be jumping off any buildings (much to your dismay I’m sure) in the near future because we will NOT be looking towards our corrupt government to help us. Because they are not on our side.

    Third, I don’t think we should be paying the massive amounts of taxes IN so that we should then expect something BACK. If it was my child seriously ill, in all honesty, the last place I would expect to look for help was our government. And I pay massive taxes. Social security? Will be gone by the time I retire. Medicaid and Medicare? Ain’t gonna be around much longer. This country is reaching a place of no return.

    Mirinda’s last blog post..mirinda’s monologue

  • Mirinda says:

    @Mirinda,

    I knew had these bookmarked, had to wade to find them. I tend to agree with Glenn Beck on everything political…which I’m sure makes you want to push me off a building lol

    An excerpt from one of his programs…on why you’ll probably be getting what you want and why it’s not so great:

    http://archive.glennbeck.com/news/07252007.shtml

    One other:

    http://www.glennbeck.com/content/articles/article/198/14447/

    Mirinda’s last blog post..mirinda’s monologue

  • The Caffeinatrix says:

    I’m sorry. it was not my intention to be sarcastic. Blunt, perhaps, but not sarcastic. And of course I don’t want you to jump off a building. That’s not at all what I meant…which is that having any confidence at all that because of proper planning, one would avoid the horrible situations I’d proposed, is probably not wise. Man plans. God laughs…

    We’ve planned for our retirement and beyond but having lost about half of our actual MONEY, not profits on paper, who knows where we will be in 10-15 years? We did what good, smart Americans are supposed to do, what our government suggested we do, but with the way things are going, all bets are off.

    The point being that when you’ve done everything right and you held up your end by working hard and it’s because of circumstances well beyond your control (like a government-induced recession) that you find yourself in a deep, deep hole, your government SHOULD help you. You pay for it every minute of your working life. Well, WE do anyway…

    Of course, I’m opposed to the income tax 100% but since this isn’t an income tax abolishment discussion, I’m focusing on the fact that for better or worse, this is what we’re stuck with…

    And people are already jumping off of buildings. Just read a story a couple weeks ago— a German billionaire who lost everything…

  • The Caffeinatrix says:

    I ranted about this once before and you’re right. The greedy middleman known as managed care is the reason healthcare in America is so fucked. Remove the need for profits and see your premiums go way down!

  • The Caffeinatrix says:

    Amen! Empty criticisms and broken record speeches on the joys of trickle down economics… Make the über-wealthy MORE wealthy and if you’re lucky, a wee bit will trickle down to the masses. Oh and all the deregulation Reagan loved so much, THAT worked out really well, didn’t it?

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