No national security crisis is too big for our Congress! When the gavel comes down in the Capitol for the 111th time on Tuesday, elected officials will take a swing at some of the biggest and most complicated problems ever to face our nation.
Today’s problems to tackle: recession, outsourcing and Social Security. Here are some simple answers to make the American Way better and to make it last.
Abolish corporate income taxes. According to usgovernmentrevenue.com, in 2009 we only will take in $339.2 billion in 2009 here. Why waste the effort? Big corporations already ditch the tab by hiring accountants, hitting the K Street pavement, or relocating to Bermuda. Let’s simplify the tax code, attract business and manufacturing back home, and paint some big smiles in boardrooms across America.
Phase out the universal pension program, “Social Security.” This is social insurance, right? Okay, don’t rob workers of money they’ve kicked into the system through 2009, but rededicate the program to its original purpose. Eliminate payroll taxes in 2010. Allow only the disabled and the poor to claim new benefits. Workers under age 40 aren’t expecting benefits anyhow – give the money to those who need it,
Let everyone into tax-advantaged retirement plans. Double contribution limits. Eliminate upper income limits to participate. For that matter, require all employers to offer all wage employees a 401(k) with a minimum match contribution. Automatically enroll all employees and make them sign a form if they want to opt out (instead of in, as tax law is now).
Wow, what happened to the blue-blooded Democrat I thought I always was? Read on.
Raise taxes on capital gains and dividends. This won’t make up the shortfall on other tax cuts, trust me. But it’s a start, and it’s also an incentive for business to better capitalize itself and invest more heavily in R&D. And it’s incentive for more Americans to shelter their equities in tax-advantaged accounts.
Raise income taxes on the wealthiest Americans. Okay, you guys have heard this line too often to howl in protest – you’re only rolling your eyes. But the rest of this package will make businesses healthier and equities more attractive. And somebody’s got keep the OASDI trust funds solvent. You’ll be paying more taxes, but your net worth will skyrocket.
Tax pollutants and emissions. It might be easier for the IRS or EPA or whoever to tax states and not corporations. That way, EPA can tax carbon emissions like the threat they are without letting politics get in the way. If Delaware and Nebraska disagree on the toxicity of livestock, that’s okay – so long as the money makes it to the Treasury.
Eliminate income taxes on all Americans living below double poverty level. We’ve already eliminated the regressive payroll taxes. The sooner that the lower and middle classes participate in the economy, the better off we’ll all be. Let the Wal-Mart crowd keep their cash, and strange things might start happening – as more workers can afford health care, some procedures might actually grow cheaper. Why let boardroom porkers jack up the price of open-heart surgery when a hospital can do twice the operations for less cost?
Most of these items are political non-starters by themselves. But given the times, and given the public’s desire to see bipartisan effort, this is a politically possible package. And there’s no better time to tackle unpopular legislation than two years before the next election.
Until we pass monumental legislation such as this, I am avoiding equities and keeping my savings as unpegged from the dollar as possible.
Even if you don’t agree with me that hyperinflation is inevitable within four years, you cannot discount the threat. In a hyperinflationary scenario, Social Security outflows would exceed receipts far earlier than the now-projected 2017. And the trust funds would dry up decades earlier. Keep in mind 1980, when COLA rose 14% while wages rose only 9%.
If we fully funded Social Security while reducing the scope of benefits, confidence in our national solvency would increase. What better time to float, say, $8 trillion of long-term debt than when interest rates are near zero? As business and manufacturing relocates back within our borders, trade surpluses should slowly deleverage foreign ownership of U.S. assets and sovereign debt.
As for the near-term consequences of a stronger dollar – what, a stronger dollar? How is that possible? We’ve just pledged nearly one year’s GDP as collateral against the credit crisis. For most taxpayers, we just cut long-term capital gains taxes to zero. The Fed is printing money faster than the Treasury is floating debt.
I’m no economist. (To quote The Blues Brothers: No ma’am, I’m a musician.) My ideas might be way-off or impossible. The pollutants and emissions taxes might be especially tough to administer. But we require bold action by Congress now.
That’s why I’m calling on all of you for your comments and discussion.
Disclosure: no positions
