Later today, in all likelihood, the monstrous spendulus program will probably pass the Senate courtesy of three foolish Senators who call themselves Republicans. This bill will do little or nothing to stimulate the economy (as reported by the Congressional Budget Office and many others). In fact it will make things worse by simply extending and exacerbating the credit crisis and deepening the current recession.

There is a relatively simple solution to the economic problem we face. The good news is most of Washington knows what the solution is, the bad news is that they won’t implement it because it takes away too much of their power over us.

The solution is called the FairTax. I won’t go into all the arguments for it here, I hope you will read Neal Boortz’s and John Linder’s books on the subject. They are most persuasive. But I do want to point out a couple of key components of the FairTax that would virtually guarantee a quick end to this recession:

First, paying taxes would become truly voluntary. It would be your decision when or if to purchase something and thus incur the tax. You would be able to keep 100% of your income (from any source) because there would be no income tax, no Social Security tax, and no Medicare tax.  Also that income would likely go up across the board because there would be no corporate taxes, dividends can rise, because there would be no company contribution to Social Security, some of that money could pass to employees. Further, competition would force prices down now that the tax component of the cost of goods is removed.

Secondly, the elimination of the current 35% corporate income tax would make the United States the most attractive place in the world to run a business. Studies have shown that TRILLIONS of dollars of new investment would pour into the United States as businesses chose to move here rather than offshore.

So why won’t Congress do this if it is such a great plan? Simple: manipulating the current tax code is the way Congress-critters hand out favors and manipulate the voters. Plus, if the economy is booming and people are in control of their own lives, they won’t want or need big government.

It is an unfortunate truth that Congress has become an oligarchy. Protected by gerrymandering and special interests, Congress has broken faith with the Declaration of Independence and the Constitution and has set its own interests above those of the American people.

To find out more about the FairTax, please click on the logo below.

God Bless America

I think it is now safe to say that the country is in a recession and it threatens to be a bad one. Certainly the economy is in the worst shape since the Carter presidency although we are still MUCH better off than we were in 1979. (Remember 13% inflation, 21% mortgages, and 11% unemployment?) All the talk in Washington these days is about bailouts; $700 Billion already for the finance industry, and now the debate is over $25 Billion more for the auto industry.

The finance bailout is already done, so I won’t go into that one now, but why are we looking to bailout the “Big Three” automakers? I can see an argument for assisting GM and Ford since to some considerable extent the government caused their problem (more in a moment) and there are millions of US stockholders who stand to lose if they file bankruptcy. But Chrysler is privately held and recently purchased by investors who theoretically knew what they were buying; I don’t see any legitimate reason to assist them.

Why are GM, Ford and Chrysler in so much trouble today while Honda, BMW, Mercedes, Toyota, Mazda and others seem to be able build cars in the US profitably? I see two reasons: 1) the government has forced GM, Ford and Chrysler to build cars that are not in their “sweet” spot and target markets. They have done this through CAFE (Corporate Average Fuel Economy) regulations that led to the creation of such exciting vehicles as the Ford Aspire and the Chevy Metro. The American consumer looks to the big three for large, safe, comfortable, reliable cars and trucks. When they want high economy, they look to the Japanese manufacturers, when we want high performance, great handling cars we look to the European manufacturers. Cadillac is still the luxury leader, Ford is still the family car and the work truck, Jeep is still the offroad adventure. That is what the market wants. Who wants to be caught dead in a Ford Aspire (the odds being pretty good if you actually drive one)?

The 2^nd reason is self-inflicted. The management of these companies did not have the courage to stand up and tell the UAW where to get off during contract negotiations and they have been pushed into unsustainable and ridiculous union contracts to the point where the highest single cost of any vehicle is not the engine or computers or any physical part but is the cost of union benefits (the second largest cost is taxes, more on that in a minute).

Bankruptcy would allow the companies to renegotiate these absurd contracts, end the “job banks” where employees sit around and get paid while waiting for something to do, and would allow the kind of restructuring that is necessary. GM would be better off without Pontiac, Ford could lose the Mercury brand. Would anyone but my Dad miss Buick?