Henry Paulson, Secretary of the Treasury, the man given unprecedented authority to spend taxpayer money, and who is now under fire for not telling where the money is being spent, has a letter in the office of his Assistant Secretary, Neel Kashkari, from a private citizen, Grover Norquist, asking for $700 billion.
I think Grover’s on to something.
Lots of people want to talk about what we could do with $700 billion – but those ideas are usually couched in terms of “what can we buy?”
Grover takes a different spin – how could we change the climate for growth and prosperity?
According to The Washington Times and the blog, Red State, we could actually turn the American economy around and back into the powerhouse it really is. Consider:
An excerpt from the letter reads:
*I write today to formally request $700 billion from the TARP Capital Purchase Program. Since unionized auto companies, state and local governments, and certain credit card companies are applying, I thought I should, as well. Attached you will find the two-page application which I downloaded from www.treas.gov.
I am fully aware that some $125 billion has already been allocated as of October 29, 2008. However, given that the federal government has the full weight of the army, the FBI, etc. behind it, I am confident that you can re-appropriate this money from the likes of Wells Fargo (or their successor companies, if the current over-regulatory and over-taxing economic climate has caused them to go under).
I have a plan for this $700 billion which should be just what’s needed to get the American economy going. Since the money came from the taxpayers in the first place, I propose giving it back to them. With $700 billion in TARP funding, ATR would facilitate the following tax cuts:
The tax cuts include:
Cut the corporate income tax rate from 35% to 15%, giving us one of the lowest corporate income tax rates in the developed world. We currently have the second-highest rate in the world (behind only Japan). This new 15% rate would give us the third-lowest rate in the world (ahead of only Ireland and Iceland). It would put us well below the Euro-zone average rate of 25%. Companies would be dying to set up shop in the United States. Estimated JCT cost: $170 billion.
Eliminate the capital gains and dividends tax. These rates are currently 15%, but actually represent a double-tax on corporate profits. When combined with the new, lower 15% rate on corporate income, capital costs would be at their lowest levels in nearly a century. Tax something less, and get more of it. This would also be an improvement over a suggested change we have made to the Treasury for years—allow taxpayers to index the cost basis of their capital assets to inflation (something which Treasury has the unilateral authority to do and which would be the equivalent of a 50% cut in the capital gains tax rate). Estimated JCT cost: $35 billion.
Cut the top personal income tax rate from 35% to a flat 15%. This would give the U.S. the lowest personal income tax rate in the developed world. Estimated JCT score: $235 billion.
Kill the death tax. Almost nothing is more capital-killing for small businesses and family farms than the estate, gift, and generation-skipping transfer taxes. Estimated JCT score: $24 billion.
Allow companies to fully-expense capital assets purchased the first year. Under current law, businesses and other taxpayers must usually “depreciate,” or slowly-deduct, capital asset purchases the first year. This capital-boosting proposal would allow taxpayers to deduct 100% of the purchase price from their taxes in year one. Estimated JCT score: $240 billion.
Wow! Now that would be “change” we could ALL vote for!
Paulson (left) and Bernanke (right) would be wise to heed the advice of Michael E. Levine in today’s Wall Street Journal:
[GM] is a once-great company caught in a web of relationships designed for another era. It should not be fed while still caught, because that will leave it trapped until we get tired of feeding it. Then it will die. The only possibility of saving it is to take the risk of cutting it free. In other words, GM should be allowed to go bankrupt.
Unfortunately, I don’t believe Congress, nor Paulson nor Bernanke have the intestinal fortitude to take either Norquist’s nor Levine’s approach. That’s not the Washington, D.C. modus operandi. Instead, we’ll follow the usual, tired approach – throw some money at it.
