Economic Stimulus Package: Let Them Eat Cake

This economic stimulus package has degenerated into an utter fiasco of political wrangling, classism, and socio economic warfare that has broken down amidst typical Beltway gridlock. All constituents are descending upon Washington, hat-in-hand in search of bailout money.

Although the stimulus package has ballooned from the $300 billion post Obama election estimate to well over $900 billion as the legislation stalls in the Senate – few are happy with the measure. Republicans have united in formation to slam the bill as an irresponsible pork barrel spending bonanza; Democrats retaliate by ridiculing the G.O.P as misguided Bush disciples; and Main Street’s broken Joe Six Pack is left to decipher this charged environment pitting big wig versus big wig amidst a $1 Trillion money grab death match.

Let them eat cake.

The haughty sentiment pervading the corridors of Washington, mindsets of Wall Street denizens, and the brewing outrage of Middle America parallels that of Marie Antoinette suggesting that starving peasants “feast” upon pastries within the trash strewn, vermin infested Parisian streets.

Whereas various constituents are eager to play the unfortunate, dismissed beggar role - all opposition is ridiculed as a mere nuisance that is to be appeased and patronized with insignificant, trifling measures. This cake is delicious, but Americans will remain tormented by long lasting hunger pangs:

• Proposal: $500,000 cap on bailed out executive salary.
• Proposal: $18.5 billion homebuyer tax credit.
• Proposal: $275 billion in tax cuts.
• Amendment: $11 billion tax break for new car and truck buyers.
• Amendment: $6 billion increase for medical research at N.I.H.

This bailout has morphed into a paper monster of legislation and of course, U.S. Treasury printing press cash to appease various disparate groups. Conservative Republicans clanging the tax cut / supply side economics bell have railed against staunch liberals boisterously presenting their universal health care / alternative energy / spread the wealth calling card. Both parties are threatening to torpedo this package with such idealist rhetoric. Ironically, Abraham Lincoln, hero to Barack Obama has already declared:

You cannot please everybody all the time.

I fear that this perpetual Whack-a-Mole Game attempt to please all parties will exacerbate an already disastrous debt binge of taxpayer money. Certainly, numerous groups lobbying Pennsylvania Avenue with tremendously noble intent must concede short-term defeat for the betterment of this Nation. Although these machinations will arrive with sharp disappointment – I must advocate for the immediate injection of equity capital into the United States of America that is to be efficiently utilized at this very moment – rather than several years into the future.

Unbridled, free market capitalism teetered upon the brink of collapse a few short months ago paralleling the outright seizure of commercial credit. The banking system must be stabilized immediately and infrastructure spending that will put our citizenry to work tomorrow takes precedence over any idealist reform scheme. Sacrifice is in order until Washington may legislate out of strength, rather than reactionary weakness that panders to populism.

The Federal Government’s bailout rescue cape lay in tatters.

Let us all eat cake.

Stock position: None.

Comments

[ecliptix543:]

Here Here!! Let us all eat cake, except of course, those twits in Washington making us pay the baker's bill in which case, let them choke on it!!

Feb 05 09:55 AM

[jsc173:]

Only comment I will make on this one is the Democrats, assuming the bill is passed pretty much as-is, had better hope and pray that in about 18 months it will have done as intended and we are on the economic upswing.

If not, they are burnt toast in the midterm elections.

Feb 05 10:03 AM

[k9s-4-k8:]

Democrats have no fear of this bill not working. In fact, they don't expect it will. The plan is unchanged, its a win, win deal. If the economy should pull out, they claim credit. If it doesn't they blame the banks and regulation under the Bush watch for the recession. People aren't all that bright. The vast majority of the media will support this conclusion with all their bias intact and people will take it as truth. People will also be in an even more dire situation and more dependent of bailout than ever before. Then we will get TARP part 3 which will complete a total Socialist economic makeover with next to no chance of reversal.

Feb 05 06:40 PM

[mauijeff:]

We look to politicians that are firmly in the grip on the banksters to help us. The banksters rip off trillions and they give us tax breaks to buy homes that are still grossly over valued. The bankster controlled government encouraged illegal economic behavior and the whole mess crashed. The banksters print money so they don't care about paper losses. The suffering masses are now huddle under Obama's hope illusion while the banksters that created the mess pick winners and losers and increase their direct control over the corporations. Bankers get trillions and car makers beg for a few billion. Soon states will be begging for money and the banksters will chose winner and loser regions. As the self appointed emperors they will carve the world up to their liking.

Feb 06 05:19 AM

[henarl:]

In a clash between Republican fascists and Democratic socialists one can only hope that neither ever wins a complete victory. The best times have always been when one party is in the White House and the other in the Capitol.

Feb 06 02:29 PM

[Charlie Bou...:]

A very clear-eyed observation and prediction. My only hope rests in that fact that mid-terms tend to swing against the President's party (which ever is in power) and the fact that Obama's shine already seems to be dimming. Even the NYT had to chime in about the Dashle debacle. Adn the Messiah putting forth tax cheat after tax cheat, declaring his administration a lobbyist-free zone then granting himself upwards of a dozen (?) exceptions is starting to wrangle even the most partisan reporters..... We'll see.


On Feb 05 06:40 PM k9s-4-k8 wrote:

> Democrats have no fear of this bill not working. In fact, they don't
> expect it will. The plan is unchanged, its a win, win deal. If the
> economy should pull out, they claim credit. If it doesn't they blame
> the banks and regulation under the Bush watch for the recession.
> People aren't all that bright. The vast majority of the media will
> support this conclusion with all their bias intact and people will
> take it as truth. People will also be in an even more dire situation
> and more dependent of bailout than ever before. Then we will get
> TARP part 3 which will complete a total Socialist economic makeover
> with next to no chance of reversal.

Feb 08 12:15 AM

[Steve Selengut:]

The President's $10,000,000,000,000 Economic Stimulus Package

For homeowners: Cut the interest rate on all mortgage loans by 50 basis points and extend the payment schedule by three to five years. Convert all variable rate loans to fixed, at prevailing rates, and extend the payment schedule by six to ten years. No fees, points or charges tolerated.

More for homeowners: Provide a pre-paid $5,000 debit card to all free and clear homeowners. The cards are worth double for Ford or GM car purchases, and expire valueless if not used for retail purchases within 60 days of issue.

For retirees: Eliminate all income taxation, at all levels, on any formalized retirement income program. Eliminate all income taxation on one half of all non-retirement plan investment income received by retirees. Provide totally free health care coverage.

For Social Security tax payers below age 35: Reduce mandated contributions to 3% of salary, but allow for additional voluntary contributions. Redirect all contributions to personally owned but "untouchable until age 60" SSRIA contracts with private insurance and annuity companies. Participants would be permanently assigned to qualified providors.

These fixed-income-investmen... contracts would be non-commisionable, management fee only, and benefit identical at all providors. Trustees responsible for directing the investments of SSRIA funds would have strict QDI (Quality, Diversification, & Income) guidelines, with a focus on all kinds of government securities--- federal, state, and local.

For Social Security tax payers from ages 35 to 55: Reduce mandated contributions as above and redirect to SSRIAs. Deposit one half of each person's total existing Social Security deposit account to the SSRIAs.

For Social Security recipients and taxpayers above age 55: Annuitize the income benefit over the next ten years using SSRIAs, starting with the youngest recipients.

For income tax payers: Over a five-year period, replace the Internal Revenue Code with a 10% tax on all income above $40,000 per year. During the same time frame, bring all state and local income taxes to a total of no more than 5%.

There are no tax deductions, but those earning less than $40,000 per year would be exempt from sales taxes.

For governments: Over the same five-year period, institute a 12% Federal Sales Tax on all goods and services consumed or used by individuals. Do the same at the state and local level with a combined cap of 6%. Decrease (thru attrition) the number of federal, state, and local government employees by 30%.

As surpluses develop, sales taxes on food, shelter, clothing, healthcare, and education would be cut or eliminated.

For the financial sector: Abandon mark-to-market accounting rules with regard to mortgage-backed securities until such time as all multi-level mortgage products can be unwound and restructured. Consider a permanent ban of all market value assessment of income purpose, and other illiquid, securities.

More for the financial sector: Unravel all multi-level derivatives, control blatant and damaging speculation, and protect shareholders from abuse by corporate executives. Adopt a global SIBORAP code, one that is created by securities investors.

For health care and insurance cost control: Reform the tort law system with an eye to restricting awards at reasonable numbers and to subject all law suits to non-peer, economic-impact, review before allowing them to move forward. All costs of extortionary and frivolous lawsuits must be borne by plaintiff attorneys.

For corporations: Eliminate all income taxes, fees, and nuisance charges at all levels in exchange for an audited requirement of: more jobs, higher non-management compensation, reduced product prices, or increased health care benefits.

Also for corporations: Eliminate matching contributions for Social Security over the next five years, starting with the age 35 participants and working higher. Note that all such contributions would have been reduced to 3% already.

For the self employed: Eliminate matching contributions for Social Security immediately, and refund all such contributions made over the past ten years to any business still in operation.

For heirs: Repeal the confiscatory death and gift taxes at all government levels and return all the stolen monies to the estates involved for immediate distribution--- also retroactive 10 years.

For investors: All investment income would be treated equally (at flat tax rates), except municipal bond interest would continue to be tax free--- but at all jurisdictional levels. All public corporations reporting profits would be required to disburse at least 25% of their profits to shareholders.

For education: The federal government would support and subsidize (even construct if necessary) fifty, non-sectarian, non-political, four-year, non-research, colleges or universities.

A total enrollment of between 100,000 and 150,000 students, with 75% tuition coverage, and some form of qualified pool lottery selection system. Management, administration, student selection, and professional staffing would be provided by the private sector.

For everyone: bring back usury laws with respect to credit card debt.

Chances are good that this revised package will reduce taxes, increase disposable incomes, grow the economy, eliminate the Social Security mess, increase tax revenues, reduce all budget deficits, provide better health care, reduce insurance costs, encourage home ownership, and reduce the size of government.

Hmmmm. Maybe the next President.


Steve Selengut
www.sancoservices.com/
www.kiawahgolfinvestme...
Professional Investment Management from 1979
Author of: "The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"

Feb 24 12:18 PM