Your Lying Eyes

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25 September 2008

Getting Serious

Ok, so we're bailing ourselves out of this financial mess by borrowing $700 billion from various foreign governments (with our budget and trade deficits, that's who's basically going to fund it). One of these days, these foreign governments are going to say "Thanks, but no thanks" to our generous offers of debt. We need to start getting serious about this.

Here's a few quick and effective ways we can show the world we are determined to mend our profligate ways and continue to provide a safe haven for foreign investment.

  • Announce a withdrawal of troops from Iraq within 12 months and from Afghanistan in 24 months. Eventual savings: about $150b per year.
  • Apply a 75 cent tax on gasoline nationwide. We already collect federal taxes on gasoline sales - all we need to do is up it by a mere 6 bits. Estimated annual revenues: $100b.
  • Enact a 1% income tax surcharge on all incomes above $200k up to a maximum of 10%. Additional revenues: $170b.

Just these simple measures would reduce our budget deficit by $420b per year. In addition, we need to announce a transition to a Value Added Tax and away from income taxes on middle incomes and on capital gains and interest up to $20k per year. This would increase savings and reduce profligate consumption. It would also make our exports more competitive with other VAT nations without initiating a trade war. But, to hedge our bets, we should institute a trade fuse-box that would kick in across the board tariffs in response to trade deficits exceeding a specified threshold.

These measures would not just pay the bills. We would be telling the world we are serious about not wanting to expand our military adventurism, reducing our dependence on foreign energy, as well as willing to take the hard steps necessary to pay our debts and become fiscally responsible.


Blogger Black Sea said...

Three yearas ago, Charles Krauthammer proposed putting a $3.00 per gallon floor on gasoline prices, with the difference between the floor and the market rate going to the government. Yes, that figure does seem positively quaint in 2008, but I thought it was an interesting idea. As much as we have good reason to resent the hand of government in our pockets, our proclivity for debt financing for everything seems increasingly to be the problem, rather than the solution to the problem. And such a floor would encourage innovation and increased efficiency.

Just for purposes of comparison, where I live (Turkey) gasoline sells for $16 per gallon. You'd be surprised how many people of ordinary means nevertheless own cars and buzz around here and there. People don't like it (the cost of gas), but they live with it.

Krauthammer's piece from 2005 is here:

September 26, 2008 1:18 AM  
Anonymous Anonymous said...

I'd gladly accept this program if we can make some other changes as well regarding immigration and PC, but that's a pipe dream. I don't trust this money being used for the stated purposes either. It will be spent on "diversity."

September 26, 2008 2:39 PM  
Blogger ziel said...

A lot of people have long commutes to work (driven in large part from the need to escape the barbarians inside the gates), but I don't think a 75 cent tax will break anybody's back, but it will raise a lot of money.

September 26, 2008 2:55 PM  

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