Alternative Proposals on the Economy

[Bravus]

We're seeing lots of criticism of the Obama plan for the economy here, and I've asked for alternative proposals several times, to deafening silence.

What would Bush have done?

What would McCain/Palin have done?

What would you do?

It's very easy to throw stones, much harder to build a house. How about coming up with some solid, constructive, realistic ideas about how to rebuild the US economy...

[John317]

Cut wasteful spending, of which there is a great deal here:

Overview of some of the major items found in this bill in terms of spending. You can form your own judgments. You can find the full text of the bill, H.R. 1 at http://www.rules.house.gov/111/LegText/111_hr1_text.pdf

$44 million for construction, repair and improvements at US Department of Agriculture facilties

$209 million for work on deferred maintenance at Agricultural Research Service facilities

$245 million for maintaining and modernizing the IT system of the Farm Service Agency

$175 million to buy and restore floodplain easements for flood prevention

$50 million for “Watershed Rehabilitation”

$1.1 billion for rural community facilities direct loans

$2 billion for rural business and industry guaranteed loans

$2.7 billion for rural water and waste dispoal direct loans

$22.1 billion for rural housing insurance fund loans

$2.8 billion for loans to spur rural broadband

$150 million for emergency food assistance

$50 million for regional economic development commissions

$1 billion for “Periodic Censuses and Programs”

$350 million for State Broadband Data and Development Grants

$1.8 billion for Rural Broadband Deployment Grants

$1 billion for Rural Wireless Deployment Grants

$650 million for Digital-to-Analog Converter Box Program

$100 million for “Scientific and Technical Research and Services” at the National Institute of Standards And Technology

$30 million for necessary expenses of the “Hollings Manufacturing Extension Partnership”

$300 million for a competitive construction grant program for research science buildings

$400 million for “habitat restoration and mitigation activities” at the National Oceanic and Atmospheric Administration

$600 million for “accelerating satellite development and acquisition”

$140 million for “climate data modeling”

$3 billion for state and local law enforcement grants

$1 billion for “Community Oriented Policing Services”

$250 million for “accelerating the development of the tier 1 set of Earth science climate research missions recommended by the National Academies Decadal Survey.”

$50 million for repairs to NASA facilities from storm damage

$300 million for “Major Research Insrumentation program” (science)

$200 million for “academic research facilities modernization”

$100 million for “Education and Human Resources”

$400 million for “Major Research Equipment and Facilities Construction”

$4.5 billion to make military facilities more energy efficient

$1.5 billion for Army Operation and Maintenance fund

$624 million for Navy Operation and Maintenance

$128 million for Marine Corps Operation and Maintenance

$1.23 billion for Air Force Operation and Maintenance

$454 million to “Defense Health Program”

$110 million for Army Reserve Operation and Maintenance

$62 million for Navy Reserve Operation and Maintenance

$45 million for Marine Corps Reserve Operation and Maintenance

$14 million for Air Force Reserve Operation and Maintenance

$302 million for National Guard Operation and Maintenance

$29 million for Air National Guard Operation and Maintenance

$350 million for military energy research and development programs

$2 billion for Army Corps of Engineers “Construction”

$250 million for “Mississippi River and Tributaries”

$2.2 billion for Army Corps “Operation and Maintenance”

$25 million for an Army Corps “Regulatory Program”

$126 million for Interior Department “water reclamation and reuse projects”

$80 million for “rural water projects”

$18.5 billion for “Energy Efficiency and Renewable Energy” research in the Department of Energy. That money includes:

$2 billion for development of advanced batteries

$800 million of that is for biomass research and $400 million for geothermal technologies

$1 billion in grants to “institutional entities for energy sustainability and efficiency”

$6.2 billion for the Weatherization Assistance Program

$3.5 billion for Energy Efficiency and Conservation Block Grants

$3.4 billion for state energy programs

$200 million for expenses to implement energy independence programs

$300 million for expenses to implement Energy efficient appliance rebate programs including the Energy Star program

$400 million for expenses to implement Alternative Fuel Vehicle and Infrastructure Grants to States and Local Governments

$1 billion for expenses necessary for advanced battery manufacturing

$4.5 billion to modernize the nation’s electricity grid

$1 billion for the Advanced Battery Loan Guarantee Program

$2.4 billion to demonstrate “carbon capture and sequestration technologies”

$400 million for the Advanced Research Projects Agency (Science)

$500 million for “Defense Environmental Cleanup”

$1 billion for construction and repair of border facilities and land ports of entry

$6 billion for energy efficiency projects on government buildings

$600 million to buy and lease government plug-in and alternative fuel vehicles

$426 million in small business loans

$100 million for “non-intrusive detection technology to be deployed at sea ports of entry

$150 million for repair and construction at land border ports of entry

$500 million for explosive detection systems for aviation security

$150 million for alteration or removal of obstructive bridges

$200 million for FEMA Emergency Food and Shelter program

$325 million for Interior Department road, bridge and trail repair projects

$300 million for road and bridge work in Wildlife Refuges and Fish Hatcheries

$1.7 billion for “critical deferred maintenance” in the National Park System

$200 million to revitalize the National Mall in Washington, D.C.

$100 million for National Park Service Centennial Challenge programs

$200 million for repair of U.S. Geological Survey facilities

$500 million for repair and replacement of schools, jails, roads, bridges, housing and more for Bureau of Indian Affairs

$800 million for Superfund programs

$200 million for leaking underground storage tank cleanup

$8.4 billion in “State and Tribal Assistance Grants”

$650 million in “Capital Improvement and Maintenance” at the Agriculture Dept.

$850 million for “Wildland Fire Management”

$550 million for Indian Health facilties

$150 million for deferred maintenance at the Smithsonian museums

$50 million in grants to fund “arts projects and activities which preserve jobs in the non-profit arts sector threatened by declines in philanthropic and other support during the current economic downturn” through the National Endowment for the Arts

$1.2 billion in grants to states for youth summer jobs programs and other activities

$1 billion for states in dislocated worker employment and training activities

$500 million for the dislocated workers assistance national reserve

$80 million for the enforcement of worker protection laws and regulations related to infrastructure and unemployment insurance investments

$300 million for “construction, rehabilitation and acquisition of Job Corps Centers”

$250 million for public health centers

$1 billion for renovation and repair of health centers

$600 million for nurse, physician and dentist training

$462 million for renovation work at the Centers for Disease Control

$1.5 billion for “National Center for Research Resources”

$500 million for “Buildlings and Facilties” at the National Institutes of Health in suburban Washington, D.C.

$700 million for “comparative effectiveness research” on prescription drugs

$1 billion for Low-Income Home Energy Assistance

$2 billion in Child Care and Development Block Grants for states

$1 billion for Head Start programs

$1.1 billion for Early Head Start programs

$100 million for Social Security research programs

$200 million for “Aging Services Programs”

$2 billion for “Office of the National Coordinator for Health Information Technology”

$430 million for public health/social services emergency funds

$2.3 billion for the Centers for Disease Control for a variety of programs

$5.5 billion in targeted education grants

$5.5 billion in “education finance incentive grants”

$2 billion in “school improvement grants”

$13.6 billion for Individuals with Disabilities Education Act

$250 million for statewide education data systems

$14 billion for school modernization, renovation and repair

$160 million for AmeriCorps grants

$400 million for the construction and costs to establish a new “National Computer Center” for the Social Security Administration

$500 million to improve processing of disability and retirement claims

$920 million for Army housing and child development centers

$350 million for Navy and Marine Corps housing and child development centers

$280 million in Air Force housing and child development centers

$3.75 billion in military hospital and surgery center construction

$140 million in Army National Guard construction projects

$70 million in Air National Guard construction projects

$100 million in Army Reserve construction projects

$30 million in Navy Reserve construction projects

$60 million in Air Force Reserve construction projects

$950 million for VA Medical Facilities

$50 million for repairs for military cemeteries

$120 million for a backup information management facility for the State Department

$98 million for National Cybersecurity Initiative

$3 billion for “Grants-in-Aid for Airports”

$300 million for Indian Reservation roads

$300 million for Amtrak capital needs

$800 million for national railroad assets or infrastructure repairs, upgrades

$5.4 billion in federal transit grants

$2 billion in infrastructure development for subways and commuter railways

$5 billion for public housing capital

$1 billion in competitive housing grants

$2.5 billion for energy efficiency upgrades in public housing

$500 million in Native American Housing Block Grants

$4.1 billion to help communities deal with foreclosed homes

$1.5 billion in homeless prevention activities

$79 billion in education funds for states

[Bravus]

That's still a criticism of the existing proposal. I'm looking for actual positive proposals.

[olger]

Cut wasteful spending (see above). Instate the flat tax immediately, and fire 50% (yes 50%) of the IRS). Reduce the EPA by a kindred 60%. Reduce taxes on small business by 30%. Small business has always been the engine that drives the economy. The flat tax would harvest income from the freeloaders who currently don't pay any tax. And most importantly, don't bail anyone out. If we prevent people from failing, we prevent them from succeeding.

sincere olger

[olger]

And, get rid of that insipid homeland security department.

olger out

[Dr. Shane]

There are a lot of programs that should not be in this stimulus. Although they may be good programs they should be in a separate bill. Like the following:

• $2.3 billion for the Centers for Disease Control for a variety of programs
• $2 billion for “Office of the National Coordinator for Health Information Technology”
• $1.5 billion for “National Center for Research Resources”
• $1.5 billion in homeless prevention activities
• $1 billion for the Advanced Battery Loan Guarantee Program
• $2.4 billion to demonstrate “carbon capture and sequestration technologies”
• $1 billion for expenses necessary for advanced battery manufacturing

The bill should be focused on construction projects and educational grants for students to go back to school. Grants provide immediate help. Unemployed people can go back to school. I would have made the size of grants available for people who lost their job since last September larger than what is normally available to regular students. I would make the grant increase in size depending upon the unemployed person's family size.

For all the talk about rebuilding America's infrastructure, there is not nearly as much money in this stimulus bill for infrastructure improvements as there should be. Democrats have used this bill to fund a lot of alternative energy research. They are hoping to develop a new industry that will decrease our dependence on fossil fuels. While that is a noble goal, it is not a good use of "stimulus" dollars. Instead of trying to develop a new industry, stimulus money needs to be poured into existing industry which will create immediate jobs. The bill should be funding the construction of at least a dozen nuclear power plants, more high-speed rail projects, offer more tax credits for purchasing hybrid or alternate fuel cars.

So how would my bill be different? It would look like this:

1. Extend unemployment benefits (Obama has done this)

2. Reduce payroll taxes (Obama has done this)

3. More money for educational grants (this bill doesn't have nearly enough)

4. More money on construction projects: nuclear power plants, roads, bridges, ports, airports, schools, water treatment plants, energy efficiency grants for homeowners, railroad and high-speed rail.

To keep things in perspective, the programs that are less than 1 billion dollars are a drop in the bucket. There stimulus impact will be minimal. In order to really give the economy the shot it needs, the money needs to be in the billions.

I spoke to a local school board member recently and he told me that Texas is not receiving any money for new construction of schools. We are only receiving money for renovation projects. Renovation is the most inefficient use of funds. In most cases, it is cheaper to tear down an old school and build a new one on the same property than it is to renovate the old one. One big reason is that the old one has to be brought up to code which can be very expensive. For example: old school stages were not built with handicap ramps and don't have room to add them, so a wheelchair lift needs to be added to make it comply with code. That wheelchair lift will cost 20 to 30 times as much as building a ramp in a new school. Other issues include fire code issues, moving walls to widen hallways, widening door openings, adding plumbing, repairing foundations, etc. New construction is cheaper which means we create more jobs for the investment.

I don't think there was ever an acid test for the programs this package is funding. By that I mean, no one looked at each program and asked the question "How many jobs are we generating per million dollars be spent?" That is what I would have done and I would have maximized the jobs-per-$million.

[carolaa]

The flat tax would harvest income from the freeloaders who currently don't pay any tax.

I've never heard that one before. How would it do that?

[Bravus]

A flat tax gets rid of 'progressive' (not in the political sense of the term, although that too!) rates of taxation, where for example those earning under say $10,000 pay no tax, those earning between $10,000 and 20,000 pay 10%, those earning over 20,000 pay 20% and so on... (these are made up numbers because the rates and cutoffs vary from place to place, but you understand the scheme.)

It replaces that with a single tax rate for everyone. We often hear 10% talked about, but that would be way too little revenue to run a country. (Yes, right-wingers, you could slash all social programs, education, make the user pay for eveything... but 10% on everyone wouldn't even cover your beloved military spending.)

Basically, it's a way of having the wealthy pay less tax than they currently do, and the poor pay more. Because you know those 'freeloaders' earning and trying to live on under 10 grand a year are just high on the hog's back, living it up.

[olger]

The Advantages of a Flat Tax

There are two principal arguments for a flat tax—growth and fairness. Many economists are attracted to the idea because the current tax system, with its high rates and discriminatory taxation of saving and investment, reduces growth, destroys jobs, and lowers incomes. A flat tax would not eliminate the damaging impact of taxes altogether, but by dramatically lowering rates and ending the tax code’s bias against saving and investment, it would boost the economy’s performance when compared with the present tax code.

However, the most persuasive feature of a flat tax for many Americans is its fairness. The complicated documents, instruction manuals, and numerous forms that taxpayers struggle to decipher every April would be replaced by a brief set of instruc­tions and two simple postcards. This radical reform appeals to citizens who not only resent the time and expense consumed by filing their own tax forms, but also suspect that the existing maze of credits, deductions, and exemptions gives a special advantage to those who wield political power and can afford expert tax advisers.

PS. I was wrong.

It is the National sales tax that harvests from every person. Both reforms are improvements over the current complicated system that Americans endure.

[Gerr]

That's still a criticism of the existing proposal. I'm looking for actual positive proposals.

Just as no family can keep on living on debt, I don't believe any nation can keep on operating in debt forever. That's what the USA has been doing for decades. It seems to me, the Obama plan is merely perpetuating and aggravating what brought on this calamity in the first place - living beyong one's means. I would prefer not to use the adjective I have in mind for the Democrats who keep pushing for more and more spending without the money, and for the Republicans who keep pushing for more and more tax cuts while the debt grows and grows.

The solution?

1. People and gov't to start living within their means. Debt should not be a way of life.

2. It's high time for the rich to start paying more taxes. I favor the flat tax idea. This will probably close

the loopholes that the rich use to evade taxes they should be paying, unless the morons put in loopholes all over again. It will simplify the tax code and save me at least $600+ spent on accountants.

3. Stop using quick fixes and start thinking of longterm effects, not just what looks good for the present administration.

4 Bribe will blind even the righteous. Place the politicians beyond the reach of special interest groups.

[Gerr]

The progressive tax would be a good idea where those best able to shoulder the taxes would in fact pay the taxes due. But the problem are all the loopholes that are built into the tax code that nullify the very thing they are trying to accomplish.

Remember that millionaire woman in New York who claimed only the poor paid taxes?

[Bravus]

The flat tax is only fair in a very, very myopic view of the term.

If someone earns $200 a week, the vast majority of their income is spent just keeping body and soul together, covering food, housing and transport. Maybe some new cheap clothes once in a great while if they're lucky. A 10% tax on this person takes away $20 a week, which means forget about those clothes, move to a cheaper room (but that increases transport costs and time), eat even less.

If someone earns $2000 a week, they can afford far more in the way of housing, food, clothes and luxuries, can spend on a variety of entertainment and other things and so on. A 10% tax takes $200 from them, but leaves them with $1800, which is a lot easier to live on than $180.

And if someone earns $20,000 a week, or $200,000 a week, or more...

Not to mention that, as I said above, a 10% rate is completely impossible. As Gerry says, debt is already a huge problem, and 10% would fall far, far short of funding the US budget. It would mean debt increasing at a much faster rate than it currently is.

My best guess is that 25-30% would be more like the required rate for the flat tax. At that, our person on $200 a week, even on the lower of those assumptions, is now on $150 a week.

Not very fair when you look beyond the very simplest logic.

[carolaa]

I agree with you Bravus. I've never before heard the flat tax called "fair." It is not fair. It enables the rich to pay less or no taxes, and it takes food off the tables of poor people.

[olger]

There is also the viable option of the Fair Tax.

As to the flat tax, I heard Steve Forbes explain it in person, in Dayton. Makes a LOT of sense and is much simpler. Go gettum.. Clark Howard is also a supporter of the Flat tax, and he knows finances better than we on this board do.

`oG

[Bravus]

Doesn't need experts, though, just common sense. It's not even a compassion-based argument but just a practical one. A flat tax *seems* fair - but only until you start thinking about what people actually use their money to do.

[Bravus]

Incidentally I do earn about $2000 a week (Australian), and probably end up paying something like 30-35% of my total income in tax. I sure don't want to take $50 a week from every poor person in Australia to drop that to 25%...

[Bravus]

Incidentally, that includes all my kids' school fees, a fair chunk of their university tuition, most of our basic healthcare... so if anyone wants to do a comparison they should include those costs.

[carolaa]

There is also the viable option of the Fair Tax.

As to the flat tax, I heard Steve Forbes explain it in person, in Dayton. Makes a LOT of sense and is much simpler. Go gettum.. Clark Howard is also a supporter of the Flat tax, and he knows finances better than we on this board do.

`oG

I'm curious how he figures to collect taxes from the rich.

[Dr. Shane]

I agree with Bravus on the accelerated tax rate. To he who much is given, much is required. I think it only fair to require a high percentage of taxes from high income brackets. I take no issue with that. I do take issue with how some corporations are taxed and how many investments are taxed.

I think the biggest errors in this stimulus packages is that the Democrats loaded it up with a bunch of their pet projects that do not produce the number of jobs that the same money could produce if put into other projects.

[Bravus]

Yeah, I agree with you on that - surprisingly, even on the research into alternative energy sources. That is undeniably a Good Thing, but it's not what a stimulus package is for.

[olger]

David, why is it that anything that leans towards socialism, you are in favor of and I am opposed to?

[olger]

A fundamental tenent of communism is a heavy, graduating income tax on the people.

[Gerr]

As I have explained, Bravus, if not for all the loopholes in the US tax code, I would actually go for the progressive tax, where those more able to shoulder the burden would be paying more. There way too many millionaires who pay none or less because of all the loopholes. The flat tax without loopholes would catch them all. The flat tax proposals I have seen exempts from taxes the poorest that you are talking about.

[Gerr]

PS

Flat tax must be the most fair because God instituted the same method in the support of His work.

[Dr. Shane]

Loopholes encourage behavior that we want people to do. Donating money to charity, buying a house (thus writing off the interest), buying a hybrid car, etc. I am sure there are many loopholes that should be deducted but to say we should eliminate all loopholes is to throw the baby out with the bath water.

The graduated tax is fair. For example, everyone's first $10k is tax free. Everyone's second $1k is tax at 5%. Everyone's third $10k is taxed at 7%. Fourth 10k at 9%. Fifth $10k at 12%. Sixth $10k at 15%... 20th $10k at 38%, etc. The same tax deductions, credits and shelters are available to everyone.