1000-Monkeys

I know, I know it sounds presumptuous to throw out an idea on one’s blog and claim it’ll fix the US Economy that others are struggling to deal with as their profession. I don’t really care how it sounds because when the chips are down like this (or you can’t get the dealer to give you any damn chips) then ALL ideas should be heard.

I’m going to break it down as though I’m not addressing an audience of economists and financial experts, since I am neither. The economy isn’t working when the flow of money is still. Consumers who have work, are afraid of losing their jobs, costs of goods and services are continuing to rise, 11.6 million people are unemployed (not counting the millions of people who are already homeless and not currently counted in current census data). Consumers have less and less to save as more is required for the basics including energy costs and inflated values of homeowner mortgages. Bailing out Fanny and Freddy, as well as the Banks and Auto Industries has not resulted in stemming job losses, increased lending to small businesses and consumers or increased consumer confidence intended to get Americans spending again. The problem with giving fat cats money is they will hoard it, hide it or spend it outside this country to avoid taxes. THERE IS NO TRICKLE DOWN, unless you count getting pissed on by the people who are smart enough or lucky enough to rig the flawed system.

So what would get Americans comfortable with spending without being afraid that missing a paycheck or two would put them in debt. What is the biggest bill most adults have? Paying for their housing. This is either rent or a mortgage. Those who are savvy with their money recommend spending no more than 1/3 of their monthly income after taxes on their housing; most Americans spend closer to 1/2. There are, according to 2007 census, approximately 306 million people living in the US. Of that, there are roughly 220 million that currently fall into the 18 to 75 year old range and many will be that age by the end of President Obama’s first term in 2012. Why not give a stimulus check earmarked specifically for housing (rent/mortgage or both) expenses with the following conditions:

1. Would exclude those whose net worth exceeds 5 million or income over 2 million per year or have more than 2 houses.
2. Money must be spent within 2 years of being eligible, interest generated before withdrawal does not go to the recipient, recipient does not get the money directly.
3. Housing paid with these funds cannot be used to borrow money, conversely this money does not have to be repaid.
4. Property taxes are waived for up to 3 years on qualifying GREEN dwellings depending on how energy efficient and how sturdy the construction is. This can be applied to retrofitting existing homes.
5. Recipient looses the dwelling if not kept to existing local codes or is convicted of a felony.

To prevent sellers from obscenely raising home prices, not because of real value, but a opportunism, the value of the dwelling at the time this Bill is passed plus at most 20% rise will be permitted. Any seller attempting to price gouge and is proven will be fined half their profit margin, unless circumstances exist than increased the property’s value.

With hundreds to thousands of dollars freed up per adult individual, some may save and should a save some for a rainy day, but most people with a sudden padding of disposable income will SPEN SPEND SPEND! Businesses of all types will be rushing to compete for that money. With regular spending, every month, more goods and services will be purchased, jobs will need to be created to keep up with consumer demand. When businesses have a healthier market of consumers, they will spend more on employees and advertising.

Some of you might be thinking that this sounds a bit communist, but if this is taxpayer dollars going to taxpayers, where is the harm? Are you feeling bad for the wealthy who is paying a higher percentage? Do you feel bad when dining with a large group and the check gets split evenly and the tax split evenly? The questions you have to ask are; do the higher income brackets suffer as a result and would these wealthier people be in their position if not for the opportunities provided by our free market system?

So how much would this cost? If you reduce the layers of bureaucracy to a minimum to disperse the funds once each qualified citizen applied, between $500, 000 per qualified citizen. So initially it would be $110 billion assuming every adult American citizen qualified, which of course would not be the case. Yeah, $110 billion is a large amount of money, but I argue it would have more impact on consumer confidence and spending than money spent at the top to maintain business as usual. Plus, the Stimulus bill President Obama just signed is $100 billion less than was originally proposed before compromising with the GOP. Submit this plan as a separate specific stimulus to tackle the Housing Crisis and Banking from the bottom up. If Banks know consumers have more liquidity, they will be more likely to lend. If people’s mortgages and rent are paid, then this will dramatically reduce the number of new homeless population and reduce the money needed for social programs to address them. Even those with minimum wage employment when not required to pay for housing…they won’t need additional government programs to supplement their income and that the government assistance comes in one direct sum, reduces a lot of wasteful bureaucracy. Is it a flawless plan; I doubt it, but in it’s desired results, I am certain it would be much more effective than what’s come before. But hey, it’s just a thought. Would like to know what you think.