Thursday, December 14, 2017

My plan to save the taxpayer $700 Billion and the country, to boot!

Posted on December 1, 2008

Recently, I have been really troubled by all the “bail-out” talk and have been able to concentrate on little else. I have been trying to get my mind around the $7.5 trillion number and just haven’t been able to. I feel that there has got to be a better way to save the economy than throwing all this money at losing businesses.

There is talk now about another economic stimulus package. Congressional leaders and President-elect Obama have said they are committed to it, but a price tag hasn’t been worked out yet. I read a report today that 43 states are facing deficits that could exceed $140 billion over the next two years so they are sure to be on the list of recipients. So, if I do my math correctly and add the amount of the last economic stimulus package to the new “needs” the total exceeds $200 billion. Of that money, it is estimated that the states would use $136 billion for infrastructure projects.

On top of that, we have all the banks, automakers and businesses that need saving which has been estimated will cost you and I another measly $7 – $7.5 trillion dollars. In a previous post I tried to demonstrate just how much money $7.5 trillion dollars is. If you didn’t read it, please do so here.

Being a numbers kind of guy, I decided to develop my own “economic recovery plan” and seem to have come up with a simple and, most importantly, cheaper plan. My plan has the potential to save the taxpayer $700 billion dollars and all I am asking in return for my plan is a new position with the government. My new job could be the first to be created by the new Obama administration and would instantly give the new BMOC (Big Man on Campus) some street cred. My new title would be “Deputy Director of the Obvious” and all I would ask for in return would be a modest salary, an honorary commission as a Colonel in the Marine Corps, and one of those cool round logo thingies like the President has.

My plan is real simple and I feel confident that it will spark the greatest amount of economic growth ever seen in such a situation. Here it is in summary, first some facts and figures:

Again, I use my trusty calculator to figure that if the government were to pay off every single active mortgage, this would free up $92.8 billion dollars a month that would normally go towards those mortgage payments. That’s more than the last “economic stimulus” package that was doled out and this is on a per month basis. The total cost to do this is $6.875 trillion.

With the acceptance of a mortgage pay-off, people would be required to stay in their houses for 3-5 years, unless there are uncontrolled circumstances (i.e. job relocation/transfer), and can’t buy any secondary properties requiring a new mortgage. Also, this money can’t be used to pay off mortgages on second homes, second mortgages on a first home, or home equity lines of credit.

That’s it and It’s that simple. How can that be it, you ask? Well, what do you think the people, who once had a monthly mortgage payment but now have some extra cash on hand every month, are going to do with their extra $1687 (on average) per month? They are going to buy things they couldn’t afford before (i.e. new cars, new clothes, home remodeling, etc.) or pay down their credit card debt, or invest. This is part of the problem we have at the very moment, no one is spending money because of the economic uncertainty.

Not only will the average mortgage holder benefit, the banks will benefit by eliminating their debt service overhead giving them the opportunity to offer credit to new home buyers. New home buyers being able to borrow sparks new home sales which in turn sparks new home construction which in turn creates jobs for people in all sectors. This is the true definition of “trickle down economics.”

Now, going back to the economic rule of $1 added to the economy actually results in $1.50, my new package injects $139 billion a month into the economy…a $139 billion per month! Beat that Washington! In case you were wondering, actual dollars injected in to the economy on an annual basis would be $1.1 trillion or $1.67 trillion realized annually.

Problems solved and country saved! This would end our current foreclosure problem, end the job loss problem we are incurring, as well as put an end to the credit freeze. It would also create a spike in the revenue numbers for the automakers ending their need for government money and save us from investing in any company that could possibly fail anyway.

No need to thank me, just write your congressman/woman and ask them to support my new economic stimulus package. It’s simple, it works, and it’s obvious. Let’s all help to make this country a better place and get the government to put the money in the hands of the person for paying it back, not some high rolling CEO who hasn’t been able to run his business up to this point!

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