How would you have designed the stimulus?

tom1944 · 02-14-2009, 02:33 PM

Even though I am an Obama supporter I have concerns about the plan that was passed. ( I also wish he stopped talking so negatively about the economy- by now anyone who cares knows how bad it is) So thinking about what I would have liked I wish the plan was as follows

Individual and business tax cut- zero social security payments for both the employee and employer on the first $50,000 of income for 2 years

A federal loan of up to 20% of the current state budget to assist in resolving current state fiscal problems. The loan would be at zero percent and would have a 10 year payment schedule beginning in 2011

Also the Federal government would have increased medicare funding

Spending to rebuild the electric grid, infrastructure in the cities water and sewer system as well as bridges and other roadways

a severe slashing of corporate tax rates - but somehow tied to job creation

A restriction on foreign workers tied to the unemployment rate

What would you have liked the package to look like?

While I like college credits and incentives for green energy I would have done those outside this package

Columbia_Student · 02-14-2009, 02:52 PM

Increase capital gain loss deduction to be more than $3000. Maybe $15000 would definitely boost the economy.

Deduction for health club fees that would get people to get excercise more and reduce obesity.

sueinphilly · 02-14-2009, 04:00 PM

I wouldn't have given myself a $400 tax cut. That is just plain dumb for someone at my salary level (70K)

tom1944 · 02-14-2009, 04:03 PM

My tax cut to you would have been about $4k and the same to your employer.

mini · 02-14-2009, 04:15 PM

I would have started by extending Medicare to the unemployed and to all those without health care on a sliding scale basis, and eliminated COBRA, instead allowing folks to join the new "Medicare for all" system, until I fully had a non-employer-based, universal, single-payor system established.

I would have ended the Bush tax giveaway, jettisoned the silly $1,000 tax cut and the AMT change, and come up with a system of using the tax giveaway funds to keep homeowners in place. Then I would have conditioned all bailouts to the automakers on phased-in, substantially higher CAFE standards.

Then I would have tripled the amounts Obama provided for mass transit, along with huge tax breaks to build out systems. I would have tied top executive pay at ANY corporation receiving tax dollars to a multiple of its lowest-paid worker.

I'd nationalize at least 6 of the 10 largest banks, which are already insolvent, along Swedish lines.

rds248 · 02-14-2009, 04:58 PM

re the Swedish model... even Obama thought it was a bad idea. Here's something I agree with him about!

Quote:

Sweden, on the other hand, had a problem like this. They took over the banks, nationalized them, got rid of the bad assets, resold the banks and, a couple years later, they were going again. So you'd think looking at it, Sweden looks like a good model. Here's the problem; Sweden had like five banks. [LAUGHS] We've got thousands of banks. You know, the scale of the U.S. economy and the capital markets are so vast and the problems in terms of managing and overseeing anything of that scale, I think, would -- our assessment was that it wouldn't make sense. And we also have different traditions in this country.

And even just one of the banks you are talking about dwarfs their whole system.

Imagine our Government under the guidance of Congress running 6 of the largest banks in the world. I shudder at the thought. The Government hasn't balanced a budget in over 10 years, and somehow when they take over these banks they are going to bring them back to health? Well that's certainly optimistic.

dstark · 02-14-2009, 05:09 PM

The government is going to take over $1 -2 trillion assets from the banks.

One thing that can be done with the banks instead of nationalizing them.

Restructure the banks.

Shreholders are wiped out.
Preferred stockholders are wiped out.
Bondholders, depending on how senior the debt, give up some of their bonds for equity.

This lowers the banks expenses.
Improves their capital structure.
The banks are back in business.

Bondholders have a chance to make some of their money back.

Equity holders are wiped out but some of these banks are trading near zero already.

Enmployees can be given new restricted stock in the reorganization. Those that had an ownership stake already. But it would be severely restricted.

Or bondholders and preferred stockholders swap their assets for debt.
Shareholders are diluted but still in the game.
Again it improves the banks capital structure and lowers the costs of the banks.

Looks like GM is going to restructure. Might file chapter 11.

tom1944 · 02-14-2009, 05:19 PM

mini- I like your first idea since I am all for a single pay system- I wonder if the recession puts enough white collar workers out of work if we will see a push for government single pay health care.

sueinphilly · 02-14-2009, 05:53 PM

my employer is the federal government, you want to give them more money :-)

Listen, my tax liability for 2008 was 4591 with an AGI just under 50K

If I don't use the tuition and fees deduction for 2009 because I am now eligible for the new $2500 tax credit and I put in a new heat and AC (already callled the guy about this) and let's say I take another $1500 tax credit (gonna cost over 4500 for equipment for sure), then I could be looking at a VERY low tax liability for 2009. Ridiculously low in fact!

Columbia_Student · 02-14-2009, 06:09 PM

Bankers and banks don't like nationalization and Obama has lots of bankers friend and so is Geithner.

http://www.nytimes.com/2009/02/14/bu...cera.html?8dpc

Quote:

Second of all, the reality is that nobody can say with any certainty what will work and what won’t. Nobody inside or outside the administration knows — not Tim Geithner, not Lawrence Summers, not Paul Volcker. It is difficult even to evaluate what has already taken place. Was the original $350 billion in bailout money wasted because bad assets were left on the books, where they continued to deteriorate, causing yet more losses? Or did the recapitalization stave off disaster, keeping the system from collapsing and buying time? I’ve heard both arguments.

.......

“When I talk to experts, after about two minutes they say, ‘we should just nationalize,’ ” said Simon Johnson, a banking expert (and blogger) at the Sloan School of Business at M.I.T. “That tells me that the consensus is moving in this direction, and we are all just afraid to say it.”

........

More important, Mr. Geithner simply doesn’t seem able to get his head around the idea of nationalizing a big bank. As he told the New York Times columnist David Brooks recently, “It’s very important that we don’t look like there’s any intent of taking over or managing banks. Governments are terrible managers of bad assets. There’s no good history of governments doing that well.”

But that’s a canard. The government did a terrific job managing banks during the savings and loan crisis of the 1980s. It took over banks — “we called them bridge banks,” recalled William Seidman, the former chairman of the Federal Deposit Insurance Corporation, with a chuckle — replaced their top managers and directors, stripped out bad assets that the government then managed brilliantly, and sold the newly healthy banks to private buyers. It turned out not to be all that hard to find actual bankers who could run these S.& L.’s for the federal government.

Just recently, the F.D.I.C. took over IndyMac in California, which it ran for six months and sold to an investment group. Although the F.D.I.C. had to absorb nearly $9 billion in losses, that was hardly because the government had managed the bank poorly. It was because the previous executives — the professional bankers! — had managed it so poorly.

The F.D.I.C. lacks the statutory authority to put a giant bank holding company into receivership, as it did with IndyMac — indeed, as it does with hobbled banks all the time. And without question, it would be a much more complicated and difficult proposition. But that doesn’t mean it can’t, or shouldn’t, be done.

Simon Johnson, the M.I.T. professor in my kitchen cabinet, used to work at the International Monetary Fund. Because of that experience, he is especially passionate about the importance of having the government take over insolvent banks, no matter what their size. “This is exactly what the I.M.F. tells an emerging market country to do when it is facing a crisis — like Thailand in 1997, or Russia in 1998,” he said. “We used to tell governments to close down some of the banks, and take over others, and inject them with government capital. It is not only simple and straightforward. It is also best practices.”

Whatever solution winds up working, it is going to cost the taxpayers billions. That’s a given. The S.& L. crisis — which was a piffle compared to what we face now — cost well over $100 billion by the time it was over. In return, shouldn’t the taxpayer be the one to hold the majority ownership stake in the banks? And shouldn’t the government have the right to decide that perhaps Ken Lewis should no longer be running Bank of America? And isn’t the best way to protect taxpayers — the mantra we heard all week long — to take control of what they are financing? It can be done right. It has been before.

dstark · 02-14-2009, 06:17 PM

Nationalizing the banks.

Yep. The economy is loookiiing preeetty goood.

Nice link.

vicariousparent · 02-14-2009, 07:49 PM

Doesn't matter too much how the money gets spent, as long as it is enough money and it gets spent fast.

I would send every citizen who voted in the last election a $200 debit visa or mastercard that has an expiration date six months from the date of issue. I would send another $200 six months after that. If you didn't vote, you get nothing.

I would greatly expand the existing immigration program for people who bring in money into the US. Buy at least 1 million dollars worth of residential real estate in the US (using funds from outside the US) and you get a green card.

mafool · 02-14-2009, 08:09 PM

I would have limited tax cuts to those with adjusted incomes below 50,000. That wouldn't have helped me, but I think that money would have been quickly spent. Increase unemployment benefits and payments. That money will be spent immediately.

The only tax cuts to corporations would be directly linked to new jobs. Not job creation; actual new jobs.

Infrastructure, infrastructure, infrastructure. Roads, bridges, wind farms, train lines, etc.

Whoops---have to go! Can't finish my recipe!

littlegreenmom · 02-14-2009, 09:21 PM

I probably wouldn't have given 200 million to Filipino WWII veterans.

It is a good question. I think infrastructure is always a good use of money, especially in the types of projects that need to get completed - as long as they are necessary.

I am not sure a high speed train from LA to Vegas would have been my choice in the money spent, either. It only takes about an hour to fly there, and about 4 to drive there from Los Angeles.

Border Fence. I would have put a large chunk in a fence to protect the border in the Southwest states from "unauthorized immigration". After the fence is built, I would designate the money to train people to work it.

BunsenBurner · 02-14-2009, 10:34 PM

No tax cuts. Instead, boost capital loss deduction and get rid of AMT for anyone under some income level, like $200K AGI (you don't know how screwed up the current AMT system is).

Medical insurance like mini proposed.

More money on medical research and new technologies and public transit.

Get the heck out of Iraq and secure the borders.