Stop the trickle down madness

All day long the former Wall Street bankers who now pose as government regulators on behalf of the Bush Administration have argued that we have to save Wall Street to save Main Street. That Americans will be much worse off if we don't protect the mansions of millionaires with a welfare check worth $700 billion. Larry Kudlow has gone so far as to say this is a Main Street bailout not a Wall Street bail out. Are you kidding me?

This is the same tired trickle down economic theory that has pervaded American economic thought for years. And it has been proven to be wrong, wrong, wrong. By cutting taxes of the rich the poor benefit. By deregulating our markets, the average Joe wins. By bailing out Wall Street the real beneficiaries are middle class Americans. The time is now to reject and bury this nonsensical theory. In the past eight years with staggering enrichment to Wall Street moguls, the average American is worse off financially. It is stunning to me that anyone takes this argument seriously.

As I have written before, millions of Americans are going to be unaffected no matter how many investment banks fail or how much credit gets squeezed. Additionally, there is no proof whatsoever that the failure of Wall Street as we knew it will have any significant or lasting detrimental effect on the middle class. And even scarier, no one can say with confidence that by saving Wall Street, the middle class will benefit. What is more likely to happen is what happened over the last eight years, the Wall Street profiteers will find a way to profit from their taxpayer investors while the working taxpayers face higher costs of living with flat wages.

Instead of a Wall Street bailout that will trickle down, why isn't Congress considering a direct Main Street bailout that might trickle up? This would have a much higher likelihood of stabilizing the economy and Wall Street. Here are some ideas for the $700 plus billion we are about to give to the millionaires who caused the problem:

Social Security Plus Accounts

For the next five years allow any American with an Adjusted Gross Income of $500,000 (married filing jointly, levels to be adjusted based on other filing status) or less to contribute up to 3% of their AGI into a Social Security Plus account. The government will match each contribution. All contributions and government matches will be invested in Treasury Notes. Each account can be accessed tax free at the age of 67 or after five years from the first contribution whichever occurs last.

For those at or below 150% of the poverty level, SSP accounts will be established and the government will contribute 3% of AGI or the average contribution the government made to all participants in the program each year. Contributions by those at or under 150% of the poverty level need not be made to obtain the government contribution.

A special FICA apportionment will be levied against those who exceed the maximum income to contribute to help fund this program.

This will increase the saving rate. This will provide a likely steady cash stream to buy treasuries which could keep interest rates down. This will also provide a cushion for seniors in their retirement years that will help control future government spending.

Infrastructure Investment

Bush's vanity war against terrorists in Iraq must be ended within three months. There is no incentive for terrorists to destroy the American way of life any more. Bush and these financial criminals have done that already. Even John McCain conceded today that the financial crises is the biggest crises we have faced since World War II. Securing our financial future should now trump fear of cave dwelling terrorists.

All money currently being spent on the Iraq war must be redirected beginning January 2009 to infrastructure projects in the United States. Projects will be selected based on need, both structurally and economically (except none in Alaska or Arizona where they do not need or accept pork projects).

The specter of job losses if we don't do something for Wall Street can be offset, if they occur, through this public works program. Additionally, Americans will actually receive something of value for the investment of money rather than an amorphous "confidence restored in the markets" (which is code for allowing brokers to keep their fancy cars). A steady flow of government job programs will assure that heavy industries will have a steady flow of orders for their goods. This will alleviate pressure on the credit market and open up the short term business loans that have been closing.

Reinstitute and Expand Government Guaranteed Loans

Instead of making loans to JP Morgan to buy Bear Stearns in the hope that credit will remain available to Americans for education or business expansion or other needs (not wants), the government should provide loans directly to Americans.

Nationalize student loans and make them readily available. Expand the small business loan programs. Allow homeowners the same terms as JP Morgan to borrow against their house. Have faith in middle class Americans that direct credit opportunities will have a quicker and longer lasting positive affect on the American economy then bailing out those who want to engage in predatory lending practices again.

Provide Tax Breaks for Socially Responsible Businesses

Eliminate all federal income taxes to any business who pays all its employees a minimum of 200% above the poverty level, provides full health insurance benefits to all employees, does not outsource work to contractors, and pays no individual more than 6 times the lowest paid employee.

Nationalize the American Oil Industry

Eliminating the profit made by big oil through reduced gas prices is putting money in American's pockets allowing them to spend on other items thus helping us get out of the recession we will be in with or without this Wall Street bail out.

Oil nationalization appears to work everywhere else in the world. And I think we'd be better off nationalizing oil rather than nationalizing AIG.

This is a start of a real bail out. A direct bail out that benefits the people who suffered the most through these eight years; working middle class Americans and those who are less fortunate. Some may say this smacks of wealth re-distribution. We have had wealth re-distribution for eight years, but it went from the low and middle class to the wealthy. And what did they do with all our money? Created the biggest financial crises in decades. It is time to distribute wealth the other way. The economy can not be wrecked any worse.

I am sure there are plenty of other ideas for securing our financial security other than the continued drivel of trickle down prosperity that is all the Paulson Plan's success rests on.