Ask Auntie Pinko
August 14, 2003

Dear Readers,

Auntie Pinko was simply amazed at the response to my request for "economic fix" ideas. Not only were there so many of them, but they showed a creativity, insight, imagination, and expertise that makes me so proud of you all. I certainly hope you're taking these wonderful ideas to your candidates and elected leaders. I certainly hope you're using them as you participate in your local, regional, or State Democratic Party, building up platforms and policies. I certainly hope you're sending them to your local newspapers, blogging them, posting them on websites, and sharing them as many ways as possible.

It was a challenge to pick a few to share with you - I'd love to share them all, but we must be considerate in our use of bandwidth, after all. I did notice some major themes that many readers addressed in a similar fashion:

Public Works and Infrastructure Investment

Alan, who tells me he is an engineer, suggests:

Repeal at least part of the last two rounds of tax cuts (on as fair a basis as politically possible) and hand ALL the money back to the States to invest in public infrastructure. There is a huge backlog of projects waiting in transportation, water supply, wastewater treatment, environmental cleanup etc. that need to be done. Many of them are already planned and designed and sitting "on the shelf" waiting for funding. This will lead to significant immediate increases in employment in engineering and construction, and the benefits will "trickle out" to everybody much quicker than the "trickle down" we keep waiting for.

Bruce is even more specific:

Repeal the recent $550 billion tax cut and create a major government public works plan, where 9 million people could get jobs averaging $50,000 (with $100 billion going to administration, purchase of materials, etc.) That would: 1) Cut the unemployment rate almost in half; 2) Get a whole lot of work done on our infrastructure; 3) Require a whole lot of materials, spurring on manufacturing; 4) Increase the tax revenue base due to the extra $450 billion in wages, and 5) Help reenergize the economy by putting spending money in the pockets of those 9 million people.

Ben is a little more focused, but on the same general lines:

How about employing the out-of-work with a government works program? This would help parks, roads, school maintenance, etc. while providing income directly to people who most desperately need it and of course are most likely to spend that income to stimulate consumer demand. Run properly, it could also teach job skills in areas that are immediately needed.

Ending "Job Flight" Overseas and Creating Jobs in the U.S.

Lots of readers said it, but Bob from Buffalo was perhaps the most succinct and straightforward about it:

The US should either heavily penalize US companies or tariff their products if they close business here and hire overseas. We'll get a short-term influx of cash and companies will stop (or never start) moving jobs to India. Employment will go up and so will spending.

Dave was a bit more creative about a similar goal:

My proposal - jack up the overall tax rate again, but give a break for investing in truly American companies - those who hire Americans and buy American products and raw materials. For a company like Wal-Mart for example, determine the percentage of sales from foreign-made products vs. American made products, and have Wal-Mart report their own effective capital tax rate to the IRS. It'll make you think twice about investing in a company which imports so much finished product.

Teresa likes the carrot approach, rather than the stick:

The one thing we should do to fix the economy is bring good jobs back to the US. We could do that by giving tax breaks to businesses that create American jobs which pay over a certain dollar figure (perhaps 18 bucks an hour and up). In addition they would have to prove that more than half their labor cost below the executive level was directed to the US citizenship.

Payroll Tax Holiday

A number of readers would implement another tax cut, but this time focused where it might have a big short-term impact. Megan simply suggests:

One measure would be a temporary payroll tax decrease or payroll tax holiday.

And a reader who forgot to sign their e-mail offered a suggestion on how to pay for it:

My immediate economic fix would be to simultaneously cut the $55 billion (out of $97 billion) in corporate welfare that is currently being doled out to Fortune 500 companies, then use that money to cut payroll taxes by the same amount - across the board. That evenly spreads the aid among employers and earmarks the savings for job creation and higher take-home pay for workers - especially among the working poor.

Tax Policy Reform

Auntie was really quite intimidated by how many of my readers are savvy about the complexities of tax policy and how it can be used to stimulate the economy (I'll have to be very careful about any casual suggestions in this area, I can tell.) Some were quite straightforward, like Thomas:

All you have to do is undo that worthless tax cut enacted in April (except for the checks which have already gone out) and send that $100 million to the states where is can help the economy and save thousands of jobs. It is simple Keynesianism. It works much better than reverse Keynesianism.

And Casey:

I would repeal the ridiculous exemption of certain dividends from taxation. This measure has no benefit to the economy. A much more effective way to eliminate the so-called "double taxation" of corporate profits/dividends is to allow corporations to deduct dividend payments from before-tax profits. Thus encouraging a company to either share more profit with shareholders or reinvest its profits into itself, rather than provide a tiny tax benefit for most Americans and a large benefit for the relative few who have large dividend incomes.

Ben R. remembers his history, and suggests reviving an old policy:

The outrageous tax cuts MUST be repealed, followed by excess profits tax on war related business. During World War II, the excess profits tax was as high as 90%. That made sense then and it does now. Patriotism should be its own reward; it should not be made profitable for a few at the expense of all the rest.

Business Sector Reform

Plenty of readers looked at the powerful impact of the business sector, and suggested ways to help them be more effective in reviving the economy. Matt says:

Wall Street companies should be charged with actively voting on every slate of boards of directors of every company they own in every portfolio both debt and equity, and that vote must be in the interest of their shareholders, not their own interests. Investment banks who handle personal and pension investment accounts should not be allowed to consult, provide tax services or any other financial service beyond auditing to companies they invest in. The auditing they would provide would then have to be top rate. And we should require auditors to report malicious, fraudulent or deceptive practices in the same way those who care for children must report any evidence of child abuse.

And Bill suggests:

Require all corporations with 100 or more employees include on their Board of Directors a representative of the employees chosen by the union, or if no union, by a vote of the employees.

Spending Cuts

Never let it be said that liberals don't understand the value of the spending cut when it comes to addressing economic problems. Here are just a couple of the suggestions from Auntie Pinko's readers like Larry:

I propose we cut the military budget by 50%, refrain from taxing Americans for 1/3 of this cut (so each individual gets a modest benefit), and then spend the other 2/3 of this reduction of the very infrastructure projects your article mentions. We can focus said defense cuts on non-personnel cutbacks. We might consider beginning by eliminating the Black Budget altogether, scrapping major tactical nuclear weapons R&D and production (hey, we can already destroy the planet 10 times over, how much more do we need?)

And a slightly different focus from Teena:

Sign an Executive Order suspending all private contracts for Iraq reconstruction until an investigation into the vetting of contracts by board members of those companies serving on the Defense Policy Board (which marketed the war) was complete. In the meantime reconstruct Iraq with the Army Corp of Engineers, the Peace Corps, AmeriCorps and allow laid off Americans in the tech sector to apply for jobs with these organizations to rebuild and update infrastructure. Finally, suspend all missile defense programs until they are scientifically proven more likely than not to succeed.

Other Neat Ideas

Lots of people pointed out the value of implementing a single-payer health plan, and several also mentioned investing in the development of power sources to make us independent of fossil fuels. Others ranged even wider for their creative suggestions:

According to Roxanne, we should:

Set up a resource of "Inventions Connections." A place for all these laid off geniuses who have come up with the next, great wave of things we didn't realize we can't live without. A place where sponsors agree the inventor gets to retain control of their invention to take it to market. A place where funding meets the invention, without stealing it out of the hands of the inventor. The US economy will never recover without something new and exciting to start a wave of investing, spending and consuming. Make that easy.

Kathleen looks at an intriguing systemic approach:

The first thing I would do is implement "systems thinking" in every department of government, state and local. Systems thinking involves building a mathematically based computer model with all variables (well, all those that can reasonably be predicted). Then you run the model and see if outcomes meet predictions or (as often happens) if there will be unexpected outcomes. Variables can be adjusted to affect outcomes, more variables can be added, and of course, no computer model can be completely accurate in the real world. However, it can reveal possible negative outcomes to any new policy or change to current policy more accurately than the standard linear thinking with two opposing opinions currently in use. Also, systems is versatile; the process has been used for everything from predicting population and housing changes, to the physics of a cooling cup of coffee, to determining how chivalrous Sir Gawain is in mediaeval poetry.

And finally, an idea I really liked from a reader using their DU handle of radfringe:

Create a national goal. This is good on two fronts - it gives America something to be proud of and it will also create JOBS and technologies that will branch out and benefit all of us. Just look at all the technologies and jobs that grew out of and were benefited by Kennedy's challenge to land a man on the moon by the end of a decade. It will mean the government will have to provide some seed money, grants, loans or other sorts of monetary support/incentives. So what kind of national goal? How about kicking the oil habit? Alternative energy sources nationwide in 10-20 years?

Goodness! This has been a long column. But believe me, dear Readers, it could easily have been five times as long with all the wonderful ideas from you. Now that you've had these wonderful ideas, don't just share them with Auntie - share them everywhere there's an opportunity.

It's pretty clear that we can't rely on Mr. Bush and his Administration to rescue our economy. But Americans have always been do-it-yourselfers. Let's concentrate on getting these ideas circulated, and on electing some Democrats who will help us implement them. Thanks again, this time for telling Auntie Pinko!

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