Tuesday, April 15, 2008

The Radically Moderate Economic Plan

Since I'm busy whacking on McCain, I suppose I should put down what I'd do if a ran the circus. (The remarkable foon, that eats sizzling hot pebbles that fall off the moon, will not be included.) Here goes:
  • Make the tax cuts permanent, with the following exceptions:

    1. 33% bracket goes to 34%.

    2. 35% bracket goes to 37.5%.

    3. The 15% rate for dividends phases out for adjusted gross incomes greater than $500,000.

    4. I could live with a new 40% bracket on incomes greater than $2M, but now I'm just indulging my "soak somebody other than me" inclinations.

  • Implement legislation that limits the federal debt to 50% of GDP. When debt exceeds that limit, all discretionary accounts take an across-the-board 1% cut and all mandatory accounts are frozen (with the obvious exception of debt service). You'd need a phase-in period for this. Note that zero-based budgeting, a la Gramm-Rudman, probably won't solve the problem, as you need to explicitly target debt service as a priority.

  • The only new financial regulations I'd institute would be to increase capital requirements on all leveraged instruments. (I suspect that the devil in the details is to accurately define a "leveraged instrument.")

  • I genuinely don't know what to do about the housing mess, since the real goal is to prevent people from walking away from their houses for the duration of the crisis, while they pay as much of their mortgage as they possibly can. Coming up with the carrots and sticks that are necessary to make this work is dicey. I'll leave the goal there--everything else is negotiable, as long as it achieves the goal.

  • Free trade with anybody who will free-trade with us.

  • Crafting a real job retraining program would be nice, if you can keep people from freeloading. I suspect that the criteria have to be something that forces you to have worked for at least a year in an industry that's likely to shrink (the feds would have to designate these--there's a big mess for you), and that you're training for something in an industry that has a higher median wage that the one you're coming from. You'd also need to have some way--loans, probably, of subsidizing people who can actually benefit from more than 12 months of training.

  • Huge amounts of incentives for non-fossil energy production. Very generous tax credits for energy technology research.
I think that's about it. To sum up: Modest tax increases on the wealthy and very wealthy, mandatory prioritization of debt service (which in turn requires significant spending cuts across the board), a little bit of regulation on leverage capitalization, free trade with a bit of a cushion for those that get nailed by it, and getting serious on removing fossil energy from the national bag of tricks.

No comments: