Radical Surgery

One of the things I detest about Friends comes in their ability to ask sensible Questions (perhaps even worse than Students). An old Friend (yes, even the socially-destitute have a few) asked one of these typically insensitive Questions: How could fiscal policy be altered to boost the Economy under present conditions, in the face of a falling Dollar? I cannot guarantee that was the exact phrasing of the Question, but I mentally translated it as: How do you fix the Economy if it effectively blows because of a sliding Dollar?

Readers know any decent Economist would not touch either Firecracker with a long, long Pole. I, on the other hand, feel a Commitment to answer the essential Question (yah, Right!). Inquiring minds want to know, and all that. Reputations are never made, and easily lost, providing illustrative thought on such grand sweeps of Intellect. The irreverent thought suggests boldness, as something cannot be lost, if never gained.

The first element of fiscal policy change must be to get your own house in order. This means introduction of a fiscal program where Tax revenues exceed Federal Expenditures. It is so easy to say, isn't it? I would reduce the Tax rates to payment of Social Security taxes for Incomes less than $20,000/year, 10% for Income between $20,000-$30,000/year, 20% for Income between $30,000-50,000/year, and 30% for Income between $50,000-100,000/year, 35% for Income above $100,000/year.

The second element of fiscal policy change would nullify all Tax deductions, exemptions, credits, and removals of any type from the taxable base of Income: this means no Mortgage credits (slowly evaporating grandfathering here), personal deductions ($2000 Exemption for every Child under 18 resident in the Household, and every Adult over 70 resident in the Household--the only reductions of tax base allowed), elimination of all 401(k), IRAs, Keoughs, etc., and elimination of the special status of Capital Gains taxation (hereafter considered as simple Income). A universal Docking Fee or Tax will be assessed on all Imports at 3% of registered Value (used both for Docking Fee and normal Business Cost deductions) also to be introduced. This is it for tax policy.

The added Tax revenues, along with strong curtailment of Legislative and Presidential Spending, will bring fiscal Solvency. One might ask how one can curb Legislative and Presidential Spending, and I provide a Constitutional Amendment:

No member of Congress or Presidency can stand for ReElection to Office, if any Budget Year of their previous Term of Office was in Deficit except in a Budget Year of Declared War by the Senate.

The Problem resoves itself from this Point on. Business Profits would begin to drop, Consumer Spending would increase--creating Jobs, Business Investment would be based upon Business Comparative Advantage--instead of gaining Tax reduction, and the Federal Government would begin the slow process of fiscal responsibility. lgl