Setting the Record Straight

December 22, 2008

Gift Card From Your Government

Trickle-Up Bailout Card—Part II

     Instead of bailing out the economy by spreading government money at the top of the income pyramid, we suggest the government concentrate instead on the bottom of the pyramid, spread the bailout money there and let it trickle-up through the economy.

     But our proposal also relies on some social engineering attached to the funds. Since the ails of the domestic auto industry are front and center now, we will begin with that.

     Call it a bailout by gift card, the giver being the store of last resort, the federal government. The givees would be American households, each with a choice of which gift card to receive.

     Under the plan, the household would receive a huge amount of the equivalent of cash (huge having much more meaning at the bottom of the scale than at the top) they could not spend frivolously (except in the many instances of buying an unnecessary car), and that in turn would stimulate the neediest segments of the economy as well as benefit the societal problems of the environment, alternative fuels, credit, savings and many others.

     As we saisr-giftwrappedcar2jpegd in Part I, there may be many problems with the proposal, but the thinking in Washington has been nowhere near considering a new way of dealing with the financial crisis while at the same time steering the American public in the direction they as well as the U.S. automakers should have been moving before the economic bubble burst.

     1. Gift card for a car, $20,000 for one of the “big three,” $5,000 all others. The card would be good only for cars that meet government-set criteria, the social engineering part of the proposal. They must meet some combination of a minimum mileage standard, carbon footprint standard, reliance on alternative fuels, safety and a few other concerns. Those cars currently produced have been rated on most of those standards by the Environmental Protection Agency.
      The U.S. automakers were selling about 3.6 million cars a year in 2000 when they were riding high. In November of this year, the month they went begging for a bailout, they were selling about 2.1 million. Thus, if the $20,000 stimulus led to 1.5 million sales, presumably the automakers would be out of financial trouble with time to retool and begin making only cars that meet those government criteria. There is $30 billion of the $700 billion bailout funds, leaving $670 billion.
     2. Gift card to pay off credit card debt, but coupled with new usury laws at the federal level more stringent than new ones scheduled to take effect, perhaps limiting the cards to pay off debt capped at a certain interest rate. The average American household has $8,000 in credit card debt and 48 million spend more than they earn. That amounts to $384 billion, trimming the bailout fund to $286 billion if all 48 million took that option.
     3. Gift card to pay off student loans, recover mortgage stability, cover the cost of alternative energysr-foreclosurejpeg sources or a variety of other “green issues.” Recent figures put 2 million homes facing foreclosure because of the credit crisis, and at an average of $35,500 to save each household, the cost would be $71 billion. About 6 million outstanding student loans amount to $85 billion, or an average of $14,600 each. A $10,000 card would cost $60 billion. Those two programs would cost $157 billion, leaving $129 billion worth of cards for those who select from other government priorities.
     4. Subject the gift cards to taxes, but couple that onerous requirement with a supplementary card in the form of a certificate of deposit, treasury bill or federal bond that would not be redeemable for at least another year, to cover those who do not plan well for the extra tax burden of having thousands added to their tax bill the filing period after they receive the gift card. The forced savings also would be beneficial in introducing some people to the idea of the value of having savings to help them weather crises such as this one.

(from http://www.straightrecord.com)

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1 Comment »

  1. This is an idea of stimulus even credit card or economic or anything. Thank you for your effort to sharing this idea with me.

    Comment by credit card stimulus — November 8, 2009 @ 12:33 am | Reply


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