Hedgehog Party

Rational Bailout

The flaws in the various bailout proposals are many.  This is a short list.

1.  They require a large bureaucracy and a lot of time to implement...time we don't have.

2.  They will foster massive fraud, waste, and corruption...particularly in big cities.

3.  Project selection will be political rather than economic.

4.  Political positioning and implementation of new initiatives will be more important than economic recovery.

5.  The expenditures will achieve a life of their own...and will never end.

Here is an alternative.

Cut all tax rates 50% for 6 months including both halves of Social Security and medical taxes.

The benefits eliminate the objections the massive spending.  It is worth restating the benefits.

What are the benefits?
1.  Using the crisis to socialize everything is stalled.   
2.  The graft of middlemen (including the federal govt) is thwarted.
3.  Money is in the hands of people that can increase spending and create jobs.
4.  Instead of waiting for months (or years) for an effect...it is instaneous.
5.  The average voter no longer trusts the government...this plan eliminates that issue.
6.  It really can be temporary...unlike the big spending apparatus that is about to be created.

Who do you trust to best use the money?  I believe it is the people that created it...the people most likely to create new wealth.  Average voters will understand the impact of this plan and support it.  NO ONE understands the impact of the massive spending proposals. 

Implementation will take a piece of paper and about 5 minutes. 

NY Times - Sunday Editorial on Taxes

Today's New York Times has an editorial (here) encouraging Obama not to forget about raising taxes on the rich. 

If Obama is to raise taxes, he needs to get beyond merely raising tax rates.  High rates are typically paid by "income rich" people, often our most productive and talented citizens who are at the early to middle stages of their careers.  Those who are "very income rich" or "asset rich" typically have the resources and expertise to avoid paying high tax rates.  They don't pay high rates today, and they still won't if Obama simply reverses the Bush tax cuts.  What's fair about that?

Real tax reform would ensure that the "very income rich" and the "asset rich," who are really the ones with financial resources beyond what they require, pay taxes like everyone else.  Why should we burden the mid-career doctor, engineer or small business owner whose spouse also works with higher taxes?  Shouldn't Obama go after the likes of Warren Buffett, Paris Hilton and the Rockefeller Foundation instead?  Wouldn't that be a better way both to raise revenue and restore fairness?

The Way it Works

This NYT piece on the troubles of Charles Rangel follows the trail of possible corruption of campaign and other donations in return for favors.  I don't think it covers the larger issue of the power and influence of important government officials.  Decisions that they make control the flow of 100s of billions of dollars and the regulations that directly affect the lives of all of us.  

Those individuals, corporations and institutions that can directly profit from those decisons unsurprisingly are the major contributors to these politicians.  Over time, this influence peddling cannot fail to work.  In fact, it is clearly impossible to hold office without satisfying some of these special interests.  Satisfying the needs of the general electorate can easily fall into second place.  There is evidence of this in almost every news summary.

The Hedge Tax is intended to limit the freedom of our representatives to tax and spend as they please.  Our current system offers a voter only a vague connection to their candidates actions and the overall effect on governance.   Only special interests matter.

Make a considered judgment of Congressman Rangel.  He is a typical product of the system.