From Sundays St. Petersburg Times, a plan to fix the economy that might make sense.
There are about 40 million people over 50 in the work force … pay them million apiece severance with stipulations. They leave their jobs. Forty million job openings — unemployment fixed. They buy new American cars. Forty million cars ordered — auto industry fixed. They either buy a house or pay off their mortgage — housing crisis fixed.
Fixes for the economic fix we’re in Thanks to my father for the link.
It sounds good, but doesn’t a million times 40 million mean 40 trillion? Certainly, pumping 40 trillion into the economy would make it healthy, but where are we going to get 40 trillion bucks. If we just print it, we get instant hyper-inflation. If we tax people for it, that is a hundred thousand per man, woman and child in the US, including those 40 million, and the vast, vast majority do not have a hundred thousand apiece, or we wouldn’t be in this mess.
The problem with simplistic answers is that they are simplistic answers. This is actually a complex problem, much as poeople don’t want to admit it. We had many years of faux prosperity, paid on credit and the mirage of ever-escalating housing values, and now we have to pay the piper. It is going to hurt, and hurt badly (already is for many), but what exactly do we expect when we promote bubble/bust cycles? We enjoy the bubbles and hate the busts, but we can’t really minimize the latter without minimizing the former.
I agree it is a complex problem but on quick glance says it seems like we are spending 40 trillion to bailout fatcats that screwed up royally.
I still don’t understand how a bonus can be written into a contract. If it’s guaranteed then it’s not a bonus, it’s salary.
Not a bad solution. But $1 million is too little for someone that young to retire on.
@Jim – First, we are not spending anything close to 40 trillion. We are spending a couple of trillion, probably, and nobody really knows how we will pay even that back. Taking on 40 trillion isn’t close to reasonable or feasible. Just because two numbers are large doesn’t make them equivalent.
As for bonuses, there are different kinds of bonuses that make some sense. Performance based bonuses can be contractually agreed upon but only triggered by performance. Ironically, those are some of the bonuses that got paid out, since some divisions were doing well, and those employees are mighty annoyed to be lumped in with the people who caused all the problems. Retention bonuses are less justified, to me, especially since it appears people could take them and still leave. They should probably be treated as salary.
@Ben I didn’t mean to imply that we were really spending 40 trillion for the bailout. It just seems that way. Along the lines of how some days it seems like my commute is much longer than it really is.
Although I would also feel annoyed to be performing well and get lumped into the same category as under performers, in the cases we are seeing today I think it is reasonably assumable that if company is being rescued then no one in the company should feel persecuted when they are taken to task for taking a bonus. If the company wasn’t bailed out where would those people be now?
Our actual present debt, with Social Security and Medicade (off the books) is 56 Trillion. You can see the “on the books” debt here: { Link }
The contracted “bonuses” were actually compensation, not salary. The Salary for many of these folks, like the now famous Jack DeSantis, was $1. It’s like getting a signing bonus – it’s contractual, not salary. You can read Jacks resignation letter here: { Link }
Finally, the solution proposed above sounds simple but wouldn’t take care of the actual debt and would be an even more imbalanced redistribution of wealth than what is currently being proposed by Obama, which is saying something. It’s right up there with the idea of giving every American over 18 $250,000 or every American $112,000.
It all sounds great but would create quite a bit of upheaval. Plus, with our current debt, each US household owes about $480,000 right now.
Our portion of the deficits projected for the next several years, if we didn’t want to pay them down, is about $80,000 per year to cover the CBO’s estimate of $9 Trillion deficit year over year for the next decade.
If, like Obama says, we are going to reduce the debt by half in 4 years, it will cost about (based on about 117 million households) $47,000 in additional taxes over those 4 years – assuming no new debt is added, which congress appears ready to add 3.2 trillion to.
Either way, tax revenues now won’t support the proposed spending. We can expect some of the highest tax rates in the world in the coming years to meet our financial obligations if we don’t want to destroy the dollar and the world economy in the process.