soccer_perversion_6

This is normally a column about technology and technology business but I can’t help noticing that the global economy is in the toilet and not much rational thought is going into fixing the problem.  I don’t mean to insult the bozos currently pretending to run our economy or the new group of bozos about to take their places when the Obama Administration starts up this month, but my Mom could do a heck of a lot better job than either group and she’s 84 years old. 

COME ON!  At least do a better job than Mom!

So let’s solve the problem right here and now, get it fixed and out of the way so we can get back to pondering DRM and Windows 7 and whatever else is more interesting than saving the world economy.  I’ll just present my plan.  If you like it then start calling it your plan and send it to everyone you know.  I don’t need any credit for this, especially if I turn out to be a bozo, too.  But I don’t think that’s likely.

So here’s the problem.  Coming out of a credit bubble we have no credit.  People and businesses that HAVE money won’t lend any of it to people and business who DON’T HAVE money so the economy suffers, enters a period of deflation, everything goes to hell and we lose our houses.  After that we’re set up for an eventual period of inflation that none of us will be prepared to handle, etc., etc.  Against this the government’s idea is to spend a lot of money to stimulate the economy, putting even more financial stress on our kids and their kids through $1 trillion deficits into the sunset.  And all of this is justified because of two ideas: 1) we don’t know anything else to do, and; 2) this way the same people who made the bubble are benefitting from its aftermath. 

Hank Paulson is not Lucifer in this story, but he IS Belial.  Bone-up on your Milton and figure that one out. 

The solutions being offered aren’t good.  It’s not that I am saying all these companies that have been judged as too big to fail should have been allowed to fail any more than I am saying those companies judged just right to fail ought to have been saved.  I think there’s a little too much God-playing going on around here and what we really need is a simple solution that pays for itself along the way.

I want a revenue-neutral route out of the current recession. 

And I want that route to involve a lot less government intervention and potential manipulation.  Government hasn’t shown itself to be very good at fixing things so far and the plans being presented going forward don’t look much better so let’s just do it my way, okay?

What we need is a lateral solution because the current bag of tricks is empty and wasn’t that good to begin with.  All this spending of money IN THE HOPE that it will inspire certain actions by banks and consumers just doesn’t make any sense to me.  I’m all for rebuilding our crumbling infrastructure, but I don’t think we can do so fast enough to make much of a difference.  We need to pack $2-3 TRILLION in spending into the next 12 months, ideally with as little of that amount as possible being paid for with government money.

Think about it.  The point of economic stimulus is to stimulate the damned economy, NOT to spend government dollars.  It’s much more efficient to get other people to spend that money and to spend it on most anything, it really doesn’t matter.  Just spend it.  Now how to make that happen… 

A federal study of the 2001 tax year concluded that Americans were underpaying their federal taxes by $290 billion per year and had been for many years.  Given that the Bush administration entered in 2001 and cleverly cut the budget for IRS enforcement I can guess with some certainty that tax cheating has become worse, not better.  So let’s pin it at $300 billion per year or $3 trillion for the last decade.

My proposal to end the recession will cost $20 billion, not $775 billion.  I would allocate $20 billion in extra funding for federal tax compliance in the coming year.  I’d also open-up such compliance enforcement to private firms.  That’s the stick.

The carrot comes in the form of a quite specific form of one-time tax amnesty.  Taxpayers who have shorted Uncle Sam will be asked to come forward and report their crimes, which will result in no additional tax payments or penalties – none.  If you are a tax cheat and don’t come forward, that $20 billion will go toward hunting you down.  If you are a tax cheat and do come forward but lie about the extent of your cheating, that $20 billion will be used against you, too, so there is a huge incentive to be honest and a large penalty for not being so.  This is not a free lunch: you have to report IT ALL.  That should be about $3 trillion for the last decade, remember.

Taxpayers who choose to participate in the amnesty program will be still subject to random audits but in general their accounts will be wiped clean IF they within the next six months take 50 percent of the tax money they admit to having owed but not paid and use it to buy goods and services in the United States.  These purchases would have to be documented. No investments or savings would qualify – just buying stuff.  Sure you can then turn around and sell the same stuff, I don’t care.

eBay will LOVE this idea.

It would be a $1.5 trillion stimulus plan that doesn’t fix any roads but sure buys a lot of Jonas Brothers tickets or anything else that people really want.  It would be distributed geographically much like the U.S. population.  It would generate secondary taxes (taxes on income earned by the people selling all that stuff — many of them the original scofflaws if you think about it) that could still be used to fix roads and bridges. And it would put no additional liens on our kids.

That’s my idea, what’s yours?