Posted by
Rich from Paso on Saturday, November 22, 2008 2:09:41 PM
As Congress and the Big Three automaker bandy about on what solution to impose to "solve" the crisis the automakers find themselves in, we need some original thinking here.
Let's break down the environment for a second. The Big 3 automakers pay billions every quarter in corporate taxes. Then the Big 3 fly up to Washington D.C. to ask for $25 billion in loans to keep from going “out of business”, or so they say. Plus, factor in all the other businesses that are looking to get their hands in the “bailout”. Companies like American Express are looking to Washington for a hand-out. What we have here is a huge shell game where businesses like GM and Ford are essentially asking Congress to give them back the money they pay in corporate taxes.
Another way to look at this is: say you give me $50 a day because you have to. Days go on and you keep giving me the $50 but now you can’t afford the food you need to keep doing your thing. So what do you do? You ask me for $50 to buy the food you need, but you do so after you pay me the $50 for that day. What sense does it make for me to just give you your $50 back? What I should say is “No, you keep it.” That’s what Congress should do to stimulate the economy: tell American business, “No, you keep it.”
Why not doing something original here? Why not give the American business sector a real bailout? I propose that Congress give all businesses in America a two quarter tax amnesty. For six months, American corporations from the smallest start up entrepreneur to the biggest of the big, to include the evil Exxon-Mobile, would be given tax amnesty. This amnesty would be an across the board pump to the economy by allowing businesses to keep all their profits while not needing to crank up the printing presses of the federal government to give them their money back. This has the added benefit of taking Congress out of the process of deciding who gets “bailed out” or not. After the initial six months, Congress would then relook the economy and make a determination on whether or not conditions are right to reimpose the corporate tax rate or to what percentage the rate needs to be set at.
I see this solution as a much simpler method of trying to figure out who gets bailed out or not. Let them keep their own money for a little while and bail themselves out and see what kind of rocket this economy becomes as it takes off. I think everyone will be shocked to see the massive rebound that occurs in the business sector. We might actually be able to make the $700 billion “bailout package” go away because it is no longer needed.
Let’s try this and see what happens. It can’t be any worse than what Secretary Paulsen and the “wizards of smart” in Congress have tried already.