Position Statement: Economic Stimulus

The poor economy and questions of tax and spending have been in the news quite a bit lately.  Here's some of Robert's current positions on these issues.  He reserves the right to change his mind.

Comments are welcome.

1.  The US government should use its powers, including its power to adjust interest rates, adjust tax rates, and spend tax money in order to stimulate the currently poor  economy.

2.  At this time, lowering taxes is not sufficient to stimulate the economy into recovery.  Demand creation should be the focus. Spending government money directly to create jobs is the best way to stimulate demand, and thus the economy, at this time.

3.  As a principle, any system of collection of tax revenue should be mildly progressive. Meaning, under a system in which income (and not, for example, consumption) is taxed, people with higher incomes should pay a greater percentage of their income into the public coffers.

4.  The total amount that the federal government should collect in income taxes should be somewhere between 17% and 20% of GDP.

5.  It is reasonable that a person earning more than $2 million dollars a year should pay the federal government 40-45% of each dollar after the 2 millionth into the federal coffers.  A little less between $1M and $2M.  A little less between $500,000 and $1M.

6.  At some point, a tax rate becomes so high that it starts to detrimentally affect the incentive to work. But this does not happen until the rate is more than 45%.

7.  The rate of tax on capital gains income should be the same as the rate applied to an individual's wage income.

8. The current home mortgage interest deduction should be phased out.

9.  The current estate tax system (i.e., the death tax) is a laudable system of wealth re-distribution.

10.  A VAT should be introduced.

11.  These must be times of austerity.  The federal government should significantly cut total spending.  Simultaneously, it should increase spending on certain programs in a hope to create certain types of jobs.

12.  The kinds of jobs that the US government should spend to create ought to be in the so-called "tradeable" sector of the US economy.  In other words, jobs within industries that develop products and services bought globally.  This will result in relatively higher quality jobs and have a greater positive effect on the economy for a longer period.

13.  Robert's understanding of the Obama stimulus plan is that it does not focus well enough on spending in the tradeable sectors. Perhaps more importantly, his plan, and his promotion of that plan, does not go far enough to excite citizens. The administration should have chosen to spend on projects that resonate more emotionally with people. Their base instincts.  Kennedy told us that we would land an American on the moon, but what he was really saying is that America would destroy the Soviet Union. He drew upon fear and bloodthirst. Obama's plan talks about spending to fix bridges and fix school gymnasiums. Boring.  Instead, he should be talking about putting high-speed internet in every home and on every cell phone. This is, of course, a proxy for a promise of more trashy television, shopping, and social network gossip.  Which is what Americans really want.