If I Were President (Guest Voice)
The first question: What will Barack Obama do as President? The second question: what would YOU do as President. In this Guest Voice post, conservative talk show host Michael Reagan, son of former President Ronald Reagan, gives you his answer. Guest Voice posts do not necessarily reflect the opinion of TMV or its writers.
If I Were President
by Michael Reagan
Who needs gigantic bailouts when there are far less costly and more effective ways to deal with the economic crisis, such as those I’d use if I were president of the United States.
To begin with I’d give the economy a powerful shot in the arm by eliminating a lot of federal taxes that are hobbling economic growth.
There is a better way to boost our economy than the socialistic programs now being both used and considered. It’s called free enterprise, and it works by loosening the death grip now strangling America’s small business community, which provides the majority of jobs in this country.
I’d start by reinstating the tax deductibility of the interest rates we now pay banks on vacation or second homes, cars, motor homes, RVs, boats and yachts.
Instead of following the lead of the Governor of New York by putting a luxury tax on these items — thereby killing the free market — I’d revive the market, and those houses in foreclosure and owned by banks would find eager buyers seeking to invest in real estate.
If buyers knew they could write off the interest that they would be paying a bank on the loan, you wouldn’t need a government bailout, because the people with money to invest — not government — would be the ones who would bail out the economy.
Giving them a tax break for getting involved in the economy by investing in income-producing real estate is the sensible way of bailing out the marketplace.
What are we thinking when we plan to give General Motors a bailout with money we don’t have? Why should we need to borrow from our grandchildren and great-grandchildren and their offspring?
Instead, why not allow us to deduct the interest on a second home we might buy? Do the same with boats, with RVs, with second homes, with automobiles.
We’d undo much of the damage the downturn in the economy has done to our retirement accounts, causing most of us to lose at least 25 to 30 percent or our retirement savings.
Moreover if we also cut taxes on capital gains to zero and slash corporate taxation by half, the economy would grow and the nation’s economic engine would be restarted and roar into life, and it would all happen with raising one cent of taxes.
We’d do it all without socialism and without bailouts.
Think about it. Giving the automakers huge barrels of money doesn’t do a single thing about motivating people to buy cars, and if people don’t have an incentive to buy cars most won’t, and you’re right back where you started, only a lot poorer.
People need an incentive to buy a car. What’s the incentive? If, however, you give them a tax break as a reward for buying a car they have an incentive.
With the economic downturn, the boat business is in the tank. Nobody is buying boats, yet the Governor of New York wants to kill the boat business by adding a five percent luxury tax to the cost of buying a boat? Why not just order boat sellers to go out of business and be done with it?
Years ago a tax on yachts was imposed and the results on the economy were staggering. I was in the business of selling boats at the time, and the taxes simply killed the business in the United States.
The tax did boost the economy, except it wasn’t the U.S. economy. People kept buying boats, but not here. They bought them in Venezuela and Mexico and a host of other foreign countries, had them registered in those countries, and then had somebody take them to the United States.
Why? To avoid the taxes.
Make the interest buyers pay on cars, boats, motor homes, second homes and investment real estate deductible, and you won’ t need bailouts. The American people will do the job themselves.
©2008 Mike Reagan. Mike’s column is distributed exclusively by: Cagle Cartoons, Inc.
9 Responses to “If I Were President (Guest Voice)”
This is without a doubt the most ridiculous thing I have heard. We are in this period of economic decline because of too much credit. The lesson we should be learning that an economy that depends on credit can't be sustained. If you want customers you have to pay them enough so they have some disposable income. The way to cure the ills of the economy is to drive a stake through the heart of Reaganomics once and for all. Supply side economics has failed and the so called 'free trade” is just a free ride for multinational corporations.
RS To be fair, the neo-liberals of the Clinton years were just as free market friendly as the Republicans. Now the end of supply side tax cuts and economics is a different story.
Pretty familiar solution: Cut MY taxes. Don't care how you do it, what the costs are now or down stream…just borrow me a tax cut and let the future generations pay for it.
Deregulation, globalization and excess credit have dragged down our economy. Also, since the 80's we have almost ceased manufacturing anything here— I just read that Chrysler is shutting down for a month!
All of those Wall Street wizards , auto and banking CEO's who once complained that government was the problem have lined up at the Capitol door– hat in hand. The middle class is slipping into the lower class, the lower class is slipping down to the homeless and jobless.
The roots of the problem are the causes I mentioned- to rebuild the economy we must learn to live within our means, curtail the power of corporate lobbyists to write policy and reinstall reasonable regulation over financiers, reinvest in our infrastructure and manufacturing industry.
I don't mean to be rude, but are you kidding me? We've done nothing but cut taxes for people who want to invest (aka the wealthy) and get rid of regulations for the last eight years. And look what it has gotten us. Ivenstment bankers who have the economy in a tailspin, bridges falling down because we haven't been investing in infrastructure (after all, we'd likely have to raise taxes for that), and an environment that going down the drain.
The market isn't perfect. Largely because the assumptions of perfect information, perfect competition and no transaction barriers aren't met. That is part of the role of government.
Cutting cap gains taxes isn't the answer because it isn't going to help the people who drive this country – the middle class. These are the people who are struggling to make ends meet as their retirement accounts have crashed, their wages haven't kept up with inflation, and their jobs are far from secure. They don't have money to invest even if cap gains taxes are zero. They are too busy trying to pay the mortgage and keep food on the table while praying they can keep their jobs.
Supply side economics doesn't work. Personally, I think we need to focus on demand side economics. Have the government start demanding services that are needed – such as green technology, infrastructure, manufacturing, etc. Make sure that people can afford to buy goods without resorting to credit which means trying to exert positive pressure on wages and decreasing the tax burden on middle class and shifting it to people who can afford to pay it. Find ways to decrease income inequality. I don't mean everyone should be equal, but having the wealthiest 1% own the share of wealth that they do isn't efficient. Economic studies have shown high levels of income equality hurts economic growth, especially in developed countries. We need to have policies that address that rather than promote it.
Reagan is beating a dead horse with his ownership society delusions. The middle class needs to be able to buy yachts?
The small businesses he touts are being so important are suffering now because of large corporate shortsightedness and greed, slashing the availablilty of important credit lines to even low risk borrowers. No tax break for the wealthiest top tier is going to help them, cash infusions to the banks haven't resulted in loosening the credit freeze. Banks are just sitting on the money to keep their bottom line looking healthy till the end of the year so that managers can get their bonuses.
I'm not sure what high tower Reagan is peering out over America from, maybe he's on his yacht, but he certainly can't admit that his and his father's economic philosophy had failed the country.
Of what relevance is this post anyway, Joe, other than to incite the inmates of the Asylum of the Left?
Conservatives lost the election. Michael Reagan's opinions were voted out of favor.
Where the hell is the relevance of the day………..what Obama thinks is the only thing worth posting in a political forum for the next six months.
Only after Obama and the DemCong reinstitute the teachings of Das Kapital for awhile will conservatives regain any rightful voice in the mix.
Conservatives (and other non-liberals) need to first decide what they want, though, and offer more than tax credits, which are just hoops to jump through as if you were a circus animal, but supposedly are voluntary because they're carrots rather than sticks that are used.
I wish he had been more conventional and correct and state that the big picture remains overall that Detroit's and governments' budget problems are mainly due to excess spending and the solution is not to rush to raise taxes (or Detroit-built automobile prices), and that a bailout is wrong, that moral hazard is moral hazard. (The counter-argument is that the bailout would prevent worse problems, which is a logical argument, though what you see as with other government activity is unintended if not unpredicted consequences that are deleterious.)
It would have been better for him to emphasize that the nature and scope of any bailout should be limited and that the federal government and wacky environmentalists not be permitted to ruin the companies or otherwise not let the federal government play “corporatist state” Mussolini-style games with nationalized “American Leyland” or “Amcars.” [rolling eyes] And no “fee-bate” enviro-wacko schemes should be unleashed by the Obama team next year on auto buyers, or stupid horsepower or engine displacement or weight- or dimension-based taxes on vehicles, or “greenhouse gas” taxes on fuels. (Taxes on fuels should be aimed at actual pollution and mitigating externalities, not levied in support of the Convenient Religion of “global warming,” “climate change,” or whatever the next mantra of this fad and crusade happens to be against the demons of Carbon and Progress.)
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> Obama and the DemCong reinstitute the teachings of Das Kapital
First things first. Keynes (that is, when he was arguably relevent, during the Great Depression, not during the relentless continuation of interventionism for decades afterward) deserves a fair trial. I suspect that Obama has already learned the most harsh lessons of our 1960s and 1970s extreme idiocy. After all, New York bankrupted itself in ways similar to how Detroit has bankrupted itself, as nearly have many Blue states. It remains to be seen how a federal bailout of failed states (pun intended, for it's no joke) would (as it should) constitute a form of managed bankruptcy (and as I've said elsewhere, federal receivership, demotion to territorial status and neo-colonial administration, and all else that such failed states deserve in exchange for rescue when they have not reformed). So far it's conventional spending (now up to a total promised to be one trillion dollars, perhaps because such a term gives certain people the Hope they seek).
“Personally, I think we need to focus on demand side economics. “
I'll ignore your subsequent equivocation and just look at the common meaning of the word. At issue regarding our possible deflationary slump and spiral (as Japan experienced in the previous decade) is that question of demand. The bailed-out banks aren't relending to the poor risks, and that doesn't count. But it will be interesting how people react to events the rest of this month (and year) and next year. The fools who expect or _demand_ that people spend money or borrow more are just that, fools. They won't if they don't wish to, if they prefer to save, or if they feel insecure. Here in Detroit, people are still driving as much as they have for the past six months, and are still using credit cards for routine expenses (as I have observed in both cases every day and night). But there has to be a limit eventually, and I am curious if it will be triggered by the end of _personal_ debt, possibly if banks reduce credit line limits as part of overdue reforms (as well as in response to new laws that will take effect in 2010 — the banks may not wait to begin making changes until then).
Our past decades have featured inflation (actually killed in the last decade or two, but people still recall the run-up in the 1960s and the bad 1970s). There was a possible triggger to the current slump when oil prices went up — again, people didn't curtail much driving, but on everyone's mind was the ripple effect throughout the economy of petroleum price increases, eventually. But what we see now with the drop in oil prices appears to be early evidence of a kneecapping of demand. And don't expect any massive (and often too-expensive and bloated) infrastructure projects and other public works projects to solve this problem. It didn't solve it, was no guarantee of solution, in Japan.
As to borrowing, while so many on the Left have been on record as saying deficits don't matter (and they should be delighted to see vast public spending, as all of us have already anticipated), and have fought the balanced budget reforms one by one in the federal as well as in state governments (to this day Dems like Rangel dislike “pay-as-you-go” constraints on new and increased spending by Congress), at least some older liberals are as upset as non-liberals have been with the idea of borrowing to pay for spending, greatly increased spending, by the federal government (and in the states, too), and while we're nowhere near a “debt trap” here in the States yet, certainly there is concern and resentment among some liberals that any desire to do a textbook Keynesian attempt at stimulus by spending that is financed by borrowing, is subject to the accomplished fact that our debt level is already high as an absolute amount and a non-trivial fraction of the GDP, and this must inevitably be a constraint on the borrowing the Dems would like to do to finance so much of their chance to engage in truly massive spending. And the earlier debt really cannot be justified, no more now than it ever could have been.