So … is there a stimulus plan that could work?  Is there an idea that could put an immediate cash infusion into the American economy?  Could we, with one or two quick decisions, take action to put our economy on the fast-track again, while costing no more than the estimated one to three-and-a-half trillion dollars that Obama and the Democrat-controlled Congress have allocated so far?

Yes.

Before I get into the solution, I’d like to tell a short story.  Not so long ago, I operated a small business in my hometown in North Carolina.  The business was located in a small, rustic little downtown Main Street area that needed some stimulus.  A bunch of the business-owners started a group to try to improve the area, and we began meeting regularly.  It didn’t take long for ideas to start flowing, and one of them was beautification.

It seems that the city had a beautification program that we could take advantage of.  If we would purchase the cement planters to place around our little downtown area, the city would fill them with flowers, and take care of the upkeep.  Not a bad deal, all in all.  We all thought it was a great idea, so the next question was, how to get the planters, and pay for them.  The head of the group, a Republican, was pushing for a special tax district for our area, with a small additional tax being paid by the building-owners that would go into the coffers of our group, the designated business association.  The tax money could then be used to purchase planters, as a first project.

The tax-district idea had been put forth in multiple meetings.  It wasn’t popular.  Honestly, I did my part to make sure I talked to everyone that hated the idea, and make sure it couldn’t be pushed through.  When it was brought up yet again, in reference to the planters, I stood up to say exactly how stupid I thought the idea was, and where I thought the district lines should be drawn so that I was excluded.

The leader of our group looked at me, and asked a simple question.  “Without the tax district, and the money we would get from it, how would we pay for the planters?”

I stood my ground, and presented my idea.  It was simple.  We call around, and find suppliers of the planters.  We find the best price, and any business owner that would like a planter can buy one, two, or however many they need.  We just collect the money, and go pick them up on a truck.

You would have thought I had slapped the guy’s sister.  While others in the room nodded at my suggestion, our leader blustered something about how not everyone would buy them, and we would have planters in front of some stores, but not others.

My response to his objection was, yet again, simple.  If everyone doesn’t buy planters, then not everyone gets planters.  Those who don’t get them will see them appear in front of the other stores, and they’ll want them too.  Before much time passes, a second order will need to be made for those that don’t buy-in the first time.

Well, my idea won, and his idea lost.  Money was collected, planters were purchased, and flowers were planted.  The tiny improvement made a huge difference, and lots of people talked about how nice the planters looked.  Those that didn’t buy on the first round saw the benefit, and a second round of planters had to be purchased.

The point of the story is that we could have gone the tax route.  Money could have been taken from profits to pay the tax.  The tax money could have gone to the city, until the time came to pay the business owner’s group the proceeds (100% of the tax would have gone to the group).  The group would have had to pay costs of accounting, and decide how to spend the money.  Some day, perhaps months down the road, we would have been able to purchase planters for everyone.  Instead, we simply allowed those who wanted the benefit of the planters to buy-in, and we got a good deal.  Peer-pressure worked on the stragglers, and they soon paid for planters as well.  No taxes, and great benefit in two weeks, rather than months.

How does this story apply to today’s economic issues?

Right now, our government is taking taxes at every level.  They take a personal income-tax, which you pay out of your paycheck.  They take a corporate income-tax, which you pay in the price of the goods and services you receive.  They take tax in tariffs, duties, and licensing fees, all of which increase the cost of goods and services you receive, and so you’re the one paying them in the end.

Looking at the bills Congress is passing, and Obama is signing, that tax money isn’t being spent well.  It’s paying for streetscaping, trollies, libraries, museums, sidewalks, “Totally Teen Zone,” fairgrounds, ferries, a swamp canal, a water-taxi service, a Historic Jazz Association, aircraft displays, lobster research, catfish research, and many, MANY, more non-stimulus items. For the record, there’s even at least one downtown revitalization project in there.

All this, and Obama is talking about tax increases “for the rich.”

What if we took a little different path.  What if we cut out the middleman.  It seems to be a good idea for business to cut out the middleman, and passing the savings on to the customer.  The customer pays the money, and the customer gets the benefit of the purchase.  YOU are the customer.  YOU pay the taxes, and YOU are supposed to be the beneficiary of all the good that government does. The government is the middleman.

Let’s do something simple.  Let’s go back and cancel the “Porkulus” bill, that is disguised as stimulus.  Let’s cancel the spending bill with 9000 earmarks.  Let’s replace them with a simple, effective stimulus plan that we can agree on.

Here’s the plan.  We cut the 2008 personal income tax to zero.

That’s it.

I can’t take credit for the idea.  Rush Limbaugh is the one I heard mention the idea, but as I keep thinking about it, it sounds better and better.  Here’s how it would work.

Starting as soon as possible, all federal income-tax withholding would be stopped from your paycheck.  This would result in an immediate boost in available cash to every working person in America.  How much of your paycheck each payment period goes to federal income taxes? Is it 25%?   Let’s just take that as an easy number to work with.

If 25% of your check goes to federal income taxes, and your tax rate is cut to zero, your $1000 in take-home pay will rise to approximately $1330.  That’s enough for a payment on an affordable car. $330 per week for a year is over $17,000.  That’s enough for a nice downpayment on a house, or a full purchase on a slightly-less-affordable car.

In April, anything you’ve paid into the federal income tax withholding before the wittholding was stopped would be refunded to you. If the plan went into action on April 1, then your refund would be almost $4000 based on the numbers above.

What’s the cost to the government?  It would cost one trillion dollars.  That, conveniently enough, would be offset by the cancellation of the last spending bill.  What’s more, unlike the spending bill, the tax cut would actually stimulate the economy.

What would YOU do with your federal income-tax money back?

First, we need to think about why the US auto industry is doing badly, while foreign automakers are performing better with US based plants.  A large reason for this is that the unions have, over time, gained far too much control over the automakers.

When most think about union involvement in the automotive industry, they think of the line-worker.  It isn’t unreasonable that automakers provide decent pay and benefits to those who make the cars. When someone talks about reducing the power of the unions, the automatic assumption is that this would mean lower pay and benefits for the line workers.  While that may be a side-effect of reducing union power, it’s not the area in which the unions need to be broken from the process.

The most cumbersome requirement of the unions is that the automakers rely on unionized vendors.  Let’s take brake pads, for instance.  If Ford has bids from three different manufacturers of brake pads, each capable of producing the same pads to the same standards of quality, they are able to make a decision on price.  Manufacturer #1 can create the brake pads for $20 per car in its North Carolina plant using non-union labor.  Manufacturer #2 can make the brake pads for $30 in Massachusets using some union labor.  Manufacturer #3 can sell their brake pads for $50 per car out of their Ohio plant using nothing but union labor. 

Given identical standards of quality and safety, the choice is easy.  The North Carolina manufacturer gets the contract.  In Detroit, this isn’t allowed.  Union contracts require that the parts that go into the cars be made by union labor.  This means that each part of the car costs more to produce than it should, thus driving up the price

It’s the extraneous requirements on the contracts that have to go.  The best way to do this is the bankrupcy process.  Bankrupcy proceedings could allow the big-three automakers to renegotiate these contracts.  The end result could, and should, be reduced manufacturing costs per car, and therefore a lower cost per car.

Lower prices per car would increase sales, allowing for profitability.

Lower prices aren’t the only answer, though.  In order to be able to sell the cars, the automakers also have to be able to make cars that people want to buy.  That’s easy enough, isn’t it?  A little market research, good design teams, and quality engineering should be able to produce the cars that America wants.

Wait a minute, though.  That isn’t how it works.  Thanks to the US Government, the automakers can’t just produce what America wants.  The greatest impediment to this is called CAFE standards.  CAFE stands for Corporate Average Fuel Economy.  In short, the CAFE standards say that each automaker must produce CARS with an average mileage defined by the government.

Notice the emphasis on cars in that last sentence.  That’s important, and I’ll get to why in a moment.

My parents love their Mercury Gran Marquis. It’s not a gas hog, but it isn’t going to get any awards for economy, either. The estimated miles per gallon on the highway is 25mpg. This is below the government’s CAFE standard rate of 27.5mpg.  In order to compensate, Ford must produce cars that exceed this standard.  The Ford Focus exceeds this standard.  Unfortunately, the Focus is a tiny car that, quite frankly, wouldn’t meet my parents needs in a car.  By averaging the fuel economy across the full production, the automakers try to keep the number below 27.5mpg.  If they exceed 27.5mpg, they pay civil fines.

Personally, I love my Mustang.  If I change the plugs and wires, and buy a new air filter, it should get more than 27.5mpg.  It is, after all, a six-cylinder model, and I drive conservatively.  I’d really rather have a V8, as I’m sure many other people would.  What happens, though, if  the automakers find that there’s more demand for the V8 model, and other less fuel-efficient automobiles?  They either follow the CAFE standards and make cars that are in less demand, or they pay fines on their cars and pass the costs on to the customers.

There is another answer.  You see, the standards for light trucks are necessarily lower than those for cars.  People in need of more space for their family, more cargo room, more pulling power, or safer cars (CAFE standards kill, but that’s another post and a radio interview I gave several years ago) have to buy a light truck, instead of a car.  The intersection of needs for more car and a family-friendly format created the surge in SUV sales.

The SUV turned out to be the best way you could get a “real car” in the current regulatory environment.  A new format, the crossover, still qualifies as a truck while providing better fuel economy to meet the light truck CAFE standards of 22.2mpg.  They’re lighter, and less safe than the SUV, but still provide more than that little Ford Focus in room and carrying ability.

So, the second thing that should be done is to abolish the CAFE standards, and allow the automakers to create cars based on customer demand, rather than government mandate.  Let’s face it, letting the government decide what you can and cannot buy has never been a good idea.  For the automakers, it’s been a disaster.

Thirdly, the government should reduce taxes on the auto manufacturers.  The fact of corporate taxes is that the companies have to pay the taxes out of money they get from the consumers.  If you buy a car, part of the cost of that car is taxes paid by the company.  Corporations DO NOT PAY TAXES.  Their customers pay them in the price of the products consumed.

The government should, therefore, start a 12 year tax reduction plan for the automakers.  For the first two years, corporate income taxes on the big three should be reduced to zero.  That’s right, they should pay no corporate income taxes.  The savings should be taken out of the price of the cars, thus allowing consumers to buy new cars at lower prices.  After the first two years, the taxes can be put back into place in 10% increments.  At the end of 12 years, the corporate tax burden would be back where it was in the beginning.

Of course, reducing or abolishing the corporate income tax isn’t just a good idea for the car companies.  It should be done across the board.  Corporate income taxes should be abolished entirely.  The best way to demonstrate this is to experiment with the auto industry in their time of need.  It would be a great benefit to the manufacturers, the employees, the consumers, and the economy as a whole.

Three simple steps.  Reduce costs by reducing union controls over every aspect of the big three automakers.  Remove the crippling restrictions that government has placed on the industry, and allow the companies to create cars that people want for a change.  Finally, cut the unnecessary cost of government out of the automakers’ bottom line by cutting their taxes to zero for at least a short time.

If, after all this has been done, a loan is needed to get the companies past the short run, then maybe that can be done.  Just don’t add on extra requirements that hurt their business like demanding they make certain types of cars, or disallow dividend payments for stockholders.  That’s just more stupid government micromanagement, and that’s been half the problem the automakers had in the first place.

When I look back through history at Democrat Presidents, the greatest personal successes came from those who promised a lot.  Promises are an important tool in the Democrat arsenal, and one that you haven’t used to great effect so far.

Through your campaign, you pushed hard on the themes of “Change” and “Hope” without spending a lot of time on the details.  Even when directly attacking an issue, you managed to hedge your bets to cover nearly every possible situation. 

Pull out of Iraq?  You definitely will, within 16 months, but maybe not.  The issue is still open.
Govt. wiretapping of suspected foreign terrorists on phone calls to or from the United States?  Against, but supporting.

You can’t do this once you’re in office, making the promises that matter.  No, I don’t mean promises like pulling out of Iraq, ending all the restrictions on abortion that you can, or giving tax refunds to people who don’t have any money paid in to refund.  I mean the little things.

One little promise every day can endear you to one little segment of society every day.  That’s the goal.  On Monday, promise working families additional tax credits to help pay for raising their children.  On Tuesday, go for the minority scholarships.  Wednesday is the day for promising money for targeted education improvements (not reform.  That’s considered racist on the left, because it might place standards too high for minorities.).  Thursday is health-care day, so promise to remove the impediments of [insert disease sufferers here] to receiving the medicines that they need. 

Friday’s promise is an important one.  This promise has to carry you through the weekend.  I highly suggest somethnig that will generate a lot of discussion, and maybe a little controversy.  It should involve spending government funds on something, but then again, most of your promises will if you choose them correctly.  Maybe a promise to spend $100 million on pregnancy counseling services for lower-income single women.  In the paper briefing to accompany your announcement, create the controversy by allocating 75% of the money to Planned Parenthood, 25% to another group that supports abortion, and none to fund counseling for alternatives to abortion.  That will get the pundits talking.  On Monday, you can clarify the issue by saying that the numbers were incorrect, and that the money is intended to offer all alternatives to pregnant, single, poor mothers.

Here’s the most important thing to remember.  You just have to MAKE the promises.  You don’t have to keep them.

If there’s one thing Bill Clinton taught us, it’s that there are two types of people in this world.  There are people who don’t pay enough attention to what happens to know that a Democrat President hasn’t kept his promises, and there are Republicans.  If you demonize the Republicans hard enough, nobody on your side will care what they say.

So, it really doesn’t matter what the numbers on the “pregnancy counseling” promise are.  In the end, it’s not even something you need to bother yourself with.  Those who are interested in the issue will love you for the promise, thinking that the promise is actual legislative action.  The rest won’t remember it.  In fact, the only one on the left that is likely to remember is Christopher Hitchens.  He may even write a book.  Nobody on the left will read it, though, because you can just tar him as Judas to your messianic rise.

It’s the promises that are important, not whether you keep them.  Your supporters didn’t pay enough attention to the truth and facts to care that you weren’t experienced enough for the job.  It was your wife that said you weren’t ready to run because you hadn’t done anything yet, not your supporters.  Your supporters are useful, but not always informed.  Don’t count on them figuring out the truth behind your promises.

So, to summarize:  If you want to solidify and expand your base, with little political or fiscal cost, just make a promise every day.  Not even your own party expects you to keep it.

Today’s advice is this.  Take credit for anything good that happens during your presidency.  Add to that the following corollary.  Give blame for anything bad to George Bush and the Republicans.

On its face, this advice seems pretty simple.  After all, if the jobless rate falls, You can take credit for it during your term.  If the economy improves, you can take credit for it.  This, though, isn’t quite to the level that I mean.

When I say “take credit for everything,”  I mean EVERYTHING.  As the new messiah, it is important that everything good that happens in the world be credited to you, Mr. President-Elect. This means, if a research laboratory attached to NC State University discovers a way to convery spent uranium into non-radioactive, non-toxic, and rather tasty chocolate treats, you have to announce it from the White House.

If medical science somehow proves, once and for all, that a child in the womb is merely a mass of cells up until the moment it is delivered into the air and becomes a human life, you have to announce it from the White House.

When the truth starts to become clear about how the Earth has been cooling since 1998, thus placing us in a period of “global cooling,” you have to annouce it in the White House.  I suggest using words like, “Due to my policies of carbon-dioxide reduction, a move to more fuel-efficient transportation, and increased regulation of industrial pollutants, we have turned the tide against the global warming threat.”  Don’t harp too much on how the cooling started two presidencies ago, or how the actual climate scientists would never actually conclude that carbon dioxide caused global warming.  Don’t say anything about how global average  measured temperatures rose at a rate that could  be explained by the closure of measuring stations in colder regions such as Siberia.  Just leave the truth out of it.  If the people wanted truth they’d have elected… well, I’m not sure who they’d have elected this time, but it wouldn’t have been a Democrat.

At any rate, you have to take credit for any good news (meaning cooling in this case, which may not be better than warming overall) that happens.  It’s your job as the new messiah.  You just can’t go letting people believe that the old messiah’s Dad had anything to do with it.

The people are looking to you, Mr. President-Elect, to BE that new messiah.  YOU  have to be the source of all that is good in this world.  YOU have to make the rose garden speech announcing new technological innovations from IBM.  YOU have to speak from the oval office if science ever finds a single, solitary use for embryonic stem cells after all these years of trying. YOU announce the results of scientific studies that have gone on for years, if they publish during your presidency.  YOU announce that GSK or Merck have discovered a new treatment for cancer, after decades of research.  Heck, if you can announce that Baby Jessica has been rescued from the well, do it.

Don’t let the fact that the work on these things has gone on for years, or even been completed for a decade or more.  Annouce them as if YOU were the visionary who made it happen.

You’re going to need a short press conference (no questions from the gallery) every weekday for four years to say something positive.  How you handle these daily briefings will determine if you get another four years.

Oh, and the bad news?  Either ignore it, release it on a Friday afternoon (after 3:30 means missing Limbaugh and the deadline for the 6pm evening newscasts) or blame the Republicans.

I know you can do this.  It’s so important that you do this. You have an image to maintain.  That’s more important than the economy, or the country, or those little people clinging to guns and faith.  It’s more important than the police officers you had removed from your sight while they protected you during the campaign.  It’s important, because without the image you are nothing.  Without the image, you have no power.  Your image got you elected, and it’s your image that can get you re-elected.  Protect and enhance that image, and you get to grow, and keep your power.

Hey, if you can handle this advice properly, yesterday’s advice on the middle-class tax cut should be easy enough to handle.

Daniel 11:36-37