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Building a better America today, not tomorrow.
Michael D. Ballantine
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Executive Summary This plan encompasses the desires and wishes of the American people to convert their 20th century economy based on fossil fuels to a 21st century economy based on clean renewable energy. To do this America will make the necessary investments in new technologies and restructure its economy to produce goods in a cleanenvironmentally friendly manner. Additionally, America will change its foreign policy from an offensive imperialistic stance to a purely defensive stance recognizing the rights of other nations as an equal. Further, America will redevelop its health care, education, and social programs to reflect its character as a free democracy promoting the rights of life, liberty, and the pursuit of happiness. The current economic climate presents a number of challenges that if not faced and overcome could leave to a deep depression erasing all the progress the middle class has made over the past 60 years. Specifically this nation faces the following dilemmas: • • • • • • • • • • • • • Unemployment approaching 20 million workers 49 million adults without health insurance $1 trillion in student loans $2 trillion in sub-prime debt currently mired in foreclosure proceedings A drop in housing prices equal on average to 32% leaving 25% of homeowners underwater The continuation of two major conflicts in Iraq and Afghanistan New conflicts or potential ones in Libya, Syria, Yemen, and Pakistan. An unresolved crisis between the Palestinians and the Israelis The potential failure of the European Economic Union and/or the Euro currency Banks unable or unwilling to lend to small businesses A trade currency conflict with China with global ramifications A tax policy that is considered unfair by most citizens A national deficit exceeding $14 trillion and an annual budget deficit of $1.5 trillion
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• • • • • • • •
A failure rate of inner-city schools approaching 40-50% for minorities 12 million undocumented workers A failed drug policy that has led to nearly 2 million citizens being imprisoned A societal clash between the right and left that at times appears ready to split the nation The wholesale violation of civil rights by the Patriot Act and the TSA A feeling that government has been subsumed by corporate interests A Congress detached from the electorate A general lack of leadership and vision
Through this document, we will identify the many problems faced by the nation as well as the desired solutions to remedy them. Once adopted, this document will become the blueprint for how we management our government and economy for the next 20 years. Mission Statement America’s mission is to lead the world to a greater understanding of the benefits of democracy and the advantages of adopting a clean-environmentally friendly lifestyle. To provide the necessary support to all members of its society from the young and elderly to the rich and poor. Historical Perspective In 2008, President Obama was elected to bring “change.” Despite the pundits claims and interpretations of what “change” meant, it is clear that the people knew exactly what they wanted, change. Instead, President Obama largely continued the failed policies of his predecessor, President Bush. President Obama failed to close Gitmo, end the Iraq war, provide transparency, or a host of other campaign promises. Congress, instead of demanding the President honor his promises supported him in his quest to cut taxes for the wealthiest 1% at the expense of the poorest members of our society. Whereas, President Obama honored his campaign pledge to not raise taxes in fact, he did not honor it in deed because a spending cut for the poor has the same impact as a tax increase. This use of language to defraud the public is unacceptable. The most recent manufactured debt crisis was done for the sole-purpose of forcing Senior Citizens to accept a cut in a benefit they have earned and is in no way in any immediate danger. In fact, the social security trust fund is sufficiently funded for the next 20 years. To make matters worse, in collusion, neither party is willing to offer a realistic economic plan to solve the many problems identified in our Executive Summary.
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America is loosely governed by two parties with each party alternating the Presidency to present a false impression that Americans have an electoral choice. In fact, Americans have no or limited influence over who will be the party candidate and most Americans feel they are asked to vote on which candidate is not as bad as the other instead of who is the best candidate for the job. To offset this lack of democracy, Americans Elect has chosen to offer an Internet primary where any potential office seeker may challenge any other. It is hoped that this model can spread to every election held in this great nation. In 2007, despite the assurances of Ben Bernanke, this nation entered into a period of recession that most believe has not ended and will continue into the forseeable future. This downturn was caused by an expansionary policy of the Federal Reserve that led to a housing bubble that has resulted in our economy being brought to its knees. Despite trillions in quantitative easing, the FED has been unable to reinflate the economy. To make any substantive progress it will take fiscal policy to get things moving once again. However, someone drug out an old discredited idea that you could cut your way to prosperity. The current wisdom among the pundits is that by cutting spending and cutting taxes, the US economy will begin to pickup. This notion is both fanciful and dangerous. The point of cutting taxes is to put cash in the hands of business to spend on new equipment or hire employees. In fact, there is $2 trillion in the banks, this means that businesses have plenty of cash. The second objective cutting spending will result in a contractionary response by consumers affected by the cuts. The two actions together will worsen the deficit, cut spending, and push into an official recession. It would be understandable if this was the first time but this is exactly the same policy pursued by the Hoover Administration precipitating the first great depression. Instead, the Congress should follow simple economics and create demand through targeted spending on infrastructure projects to create jobs and expand economic activity. The Congress has one opportunity to get it right before sending us into another death spiral similar to that faced in 1933. To make matters worse millions of homeowners are faced with foreclosure. Without jobs, students are overwhelmed with substantial debts from university. Finally, there are 49 million American workers without health insurance and no prospect of getting it. All of these elements are combining to provoke an economic tsunami potentially greater than that faced in 1933. The campaign to elect Mike Ballantine has developed an economic plan and societal plan to address all these concerns and more. We welcome your ideas, suggestions, and criticisms. This plan is to represent the hopes and desires of the American people bringing accountability to its leaders. It is a living document and must reflect the challenges that we face as a nation. The Economy
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The get the economy going, America needs to first remove the impediments to growth, stimulate growth and then support growth long-term. A number of factors enter in the equation, specifically, consumer debt, national debt, budget deficit, and a lack of credit despite substantial cash deposits. Consumer Debt At present consumer debt is one of the burdens holding back the economy. With house equities collapsing, consumers are unwilling to g further into debt. According to the Federal Reserve, there was $2.45 trillion in outstanding consumer debt. (http://www.federalreserve.gov/releases/g19/Current/). There is another $13.6 trillion of mortgage debt (http://www.federalreserve.gov/econresdata/releases/ mortoutstand/current.htm) and sub-prime mortgages make up about 13% of this share (http://www.rayroy.tv/subprime-mortgage-problem-its-causes-andconsequences-on-the-recent-mortgage-market). The final major component of consumer debt is student loans which total about $875 billion (http://www.kansan.com/news/2011/apr/26/total-student-loan-debt-track-surpass-1trillion/). To reduce consumer debt and reenergize our economy, I am proposing that we write down consumer debts to reflect the realities of the current market. Until this debt overhand is removed from the consumer, it will continue to plague the market place preventing consumers from purchasing. That is not to say that debt forgiveness is fair or equitable only necessary to get the economy moving. Currently the FED has certain assets it acquired during its Quantitative Easing programs as well as its asset purchases from banks, Fannie and Freddie, and student loans. I estimate this amount is somewhere between $5 and 6.5 trillion. I propose that we move these assets into a Resolution Trust Corporation much like we did in the 80s during the Savings and Loan crisis and identify those with marketability and those that need written down. I propose we provide debt relief to consumers during a 90 day period. Consumers will post on a special website at the IRS all their debts that they wish to have considered for a write-down. Priority will be given to student loans, sub-prime mortgages, home-owners followed by medical bills. There will be an allocation of $5 trillion for this program and will be divided as follows: Debt Home Mortgages Allocation % of total 61.5% 12.0% 15% 11.5%
$12.5 trillion $3,075 trillion $1.1 trillion $600 billion $2.5 trillion $750 billion $875 billion $575 billion
Subprime Mortgages Consumer Debt Student Loans
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There are many reasons to object to this but in reality without some sort of forgiveness program, our courts will continue to be clogged with bankruptcy filings and new foreclosures will drive housing prices lower. Jobs Having relieved consumers of an unsustainable debt burden, the next thing blocking recovery is jobs. Official unemployment has been hovering at 9.1%. When adding in discouraged workers, that number moves up to 14%. Even if we remove some of the debt from the unemployed, they cannot start buying again until they have a job. With a total work force of 151 million workers, we need to create 20 million jobs over 18 months to reduce unemployment to a more sustainable level of 3%. Keep in mind that approximately 150,000 workers enter the work force each month. Here is the breakdown on how we will create those jobs. Project Five cities - construction Transport systems/Hispeed Rail Service/support of construction Small Business Textile Factories Software and IT Restaurant and Food Service Electronics Factories New Nuclear Reactors Hospital and Health Care New Schools construction New Teachers DC Powerlines construction Moon Space Program Architectural and planning Electric Car Factory Solar Mirror Farms Renewables Pipeline construction Hydroponics Farms Community Police 2 - Oil refineries - Detroit Oil refinery – Gulf Coast Number of workers 4,000,000 2,000,000 2,000,000 1,800,000 1,500,000 1,015,000 800,000 750,000 600,000 600,000 500,000 500,000 400,000 350,000 300,000 300,000 300,000 300,000 300,000 250,000 250,000 200,000 100,000 Project Life 10 years 10 years 10 10 10 10 10 10 10 10 years years years years years years years years Permanent Workers 1,000,000 500,000 3,000,000 1,800,000 1,200,000 1,015,000 800,000 350,000 200,000 600,000 50,000 500,000 75,000 200,000 150,000 120,000 120,000 225,000 50,000 200,000 250,000 75,000 75,000
3 years 10 years 5 3 10 10 10 10 10 10 10 3 3 years years years years years years years years years years years
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2 - Steel Mills Mars Space Program Plastics and Petrochemicals Tree Planting Rare Earth Minerals Mines 1 - coal gasification Midwest 1 - coal gasification Kentucky 1 - Electric battery plant 1 - shale oil processing mine Totals
150,000 150,000 100,000 100,000 125,000 75,000 75,000 75,000 35,000 20,000,000
3 years 8 years 3 years 10 years 10 years 3 years 3 years 3 years 10 years
75,000 150,000 50,000 100,000 125,000 35,000 35,000 35,000 35,000 13,220,000
These numbers represent estimates and a more detailed analysis will be provided for each project in the appendix of the plan. Companies participating in the growth plan will be able to borrow at low interest rate or no interest rate for a period up to five years depending on the project life. Principal payments will be deferred up to five years as well. To participate in this program, all companies must be 50% owned by their employees and the Federal government will take a 30% stake to represent the taxpayer’s interest. The Federal government will then offer its stake first to the company and then to the market once the loans have started to be repaid if financially advantageous to do so. We believe that by requiring companies to have employee participation in ownership, they will take a stronger interest in the success of the organization, reduce conflicts between management and employees, and prevent the offshoring or outsourcing of this work to make sure American companies and workers benefit from this program. The Federal government will take an ownership interest much like a venture capitalist to enable it to step in if the company fails to meet the contracted requirements and enable the tax payer to recover additional earnings to offset expected losses. This justifies the taxpayer’s continued support for the program as well as the deferment on the principal payments. The expectation is that this program will require $2 trillion its first year, the second year, and another $1trillion in the third year. These funds will be raised in the market through various bond issues at a market coupon rate. It is anticipated that we will need to offer 5 to 6% on the coupon. This type of program is not inflationary because we are not issuing new currency. It could cause wage inflation by reducing the number of unemployed below the normal unemployment level. If that happens then construction on the 5 cities will be adjusted and construction in one or two cities will be slowed down. The goal of this program is to bring the American economy back to health, not create a roller coaster of booms and busts. An
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expected criticism is that this program will drive up the cost of money and crowd out funding for private enterprise. These are valid points and must be addressed separately. Interest Rates and Bank Lending As part of this program, the Federal Reserve’s mandate will change from maximizing employment and minimizing inflation, two goals that are sometimes in conflict, to the simple goal of maintaining inflation at zero. This is the only way to stop the FED from continuing to fund asset bubbles. Currently, the FED is engaged in a policy of quantitative easing which has nothing to do with its mandate. The FED is attempting to reinflate the housing market, prop up the stock market, and maintain interest rates at an artificially low level of zero. Almost no economist agrees with the FED’s current policies. One might say Ben Bernanke is grasping at straws to fix an economy, whereas to fix the economy, Congress must act. It is expected that the FED will resist our move against their traditional independence. However, the FED is not acting in the best interest of the economy so we propose that the FED be nationalized and reestablished as the “Central bank of the United States.” Once this is done, interest rates will be adjusted to target zero% inflation. It is expected that interest rates will increase presenting a fiscal crisis for the government as its interest obligations go up on new borrowings. We predict that interest rates may go as high as 10% for short periods until the excess money that the FED has created in the economy works its way through. Debt service will cost between $300 billion and $600 billion and this money will need to collected in higher taxes or spending cuts. This is the unfortunate reality of the FED’s quantitative easing program over the past 3 years. The sooner we begin to accept this reality, the lower the average interest rate will be. Continued delay will result in a repeat of the 70s when interest rates climbed above 15% Our target for interest rates is 2 to 3% providing savers with an incentive to save and invest in our infrastructure program. In addition to changes at the Federal Reserve, the reserve ratio at banks will be adjusted as well. The reserve ratio will be raised from the current low of about 3% to 50% to reduce speculative lending that does not create economic activity. The margin rate for stocks will also be adjusted to 50%. This will allow the Central Bank to regain control of the money supply. The infrastructure bank will provide the initial lending necessary to get the economy moving obviating the need for bank lending. At this point in time, banks are not lending to businesses only to market speculators. Over the course of three years, reserve ratios will be adjusted by the Central Bank to reflect the zero% inflation policy. It is anticipated that once housing prices stabilize, new construction takes place, and workers begin spending their money that economic circumstances will change sufficiently that banks will be more willing to take risk and begin lending again.
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National Debt The exact figure of our National Debt at the time of this plans implementation is unknown. In August of 2011, it was approximately $14.3 trillion and additional borrowings were authorized. For discussion purposes, we will assume that the debt will be $16 trillion at the beginning of 2012. To minimize the conflict between the right and the left, no increase in the debt ceiling will be proposed. Instead, excess assets held by the FED that were not used in the debt forgiveness program will be used to offset short-term financings. This could have been done by the Obama Administration and the entire circus surrounding the deficit battle avoided. At present, the FED has approximately $2.5 trillion in Treasury Notes on its books as well as its income stream from the interest on the notes. This money will be used to fund any immediate needs faced by the government until a budget package can be approved. With our promise to end troop deployments overseas, it is expected that substantial savings could be realized within the first 6 months offsetting the ongoing budget problem. Here is a chart showing the interest burden at different average rates of interest in billions on the National Debt: Total Debt 16,000 16,000 16,000 16,000 16,000 16,000 16,000 16,000 16,000 16,000 16,000 16,000 16,000 16,000 Interest Rate 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% Total Payment 160 320 480 640 800 960 1,120 1,280 1,440 1,600 1,760 1,920 2,080 2,240
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When one looks at this chart, one can begin to appreciate the true scale of our problem. Congress knows that zero% interest rates are impossible to sustain. If Interest rates were to rise to 10% it would absorb all the domestic spending and military spending leaving nothing for the American people. Congress does not want to cut social security to make it solvent, they need to cut social security to pay the interest on their profligate spending. This is the real problem faced by Americans, not the deficit or unemployment, if interest rates go up, it will be impossible to pay the bill without shutting down the government. We will explore solutions to this problem later in our analysis. The first thing we need to do is get control of our currency and stop the red ink from taking us further into this black hole. Health Care Currently, America provides its health care through a patchwork of programs including private insurance paid for by individuals or companies, government funded programs such as Medicare and Medicaid, or simply out of pocket by consumers unable to afford private health insurance but not eligible for government assistance. Most children and most of our elderly are covered by some form of insurance but there remains 49 million uninsured Americans. President Obama attempted to reform our health insurance through existing providers, unfortunately his program depends on requiring individuals to purchase health insurance through private providers. Many feel this goes beyond the powers expressed in the constitution and the Supreme Court will soon begin to investigate this issue and determine the government’s right to require the uninsured to purchase private insurance. It is our position that what is known as “Obamacare” does not address the fundamental flaws of our current health care system. Assuming that people are required to purchase insurance, what happens if they are unemployed, unable to work, or decide not to pay? Further, the main problem with health care today is that it is too expensive and Obamacare does not address the cost side of the problem, only the revenue side. That is why we propose “Medicare for all” (MFA) MFA would address the current access issue and provide the same standard of coverage for everyone. This is not meant to be an all encompassing program and individuals are free to purchase supplemental coverage through private providers. What it does is answer the question about what to do if people don’t pay and it will lower costs. MFA lowers costs by taking the profits out of health insurance and simplifies hospital and doctors paperwork by consolidating everything to one program, reducing costs across the system. Further, this can be a simple legislative exercise of simply extending care to everyone without having to negotiate the types of benefits, the expected standards, etc. That work has already been done. In fact, 11 |V e r s i o n 1 . 0 – O c t o b e r 1 0 , 2 0 1 1
the only real debate will be why some Republicans feel we need to continue to burden America with a grossly ineffective program that neither works nor provides equal access to health care. The problem is how to pay for it. National Sales Tax Currently, Medicare and Medicaid are paid for through a mix of state and federal taxes including employee payroll deductions. Then depending on where one works, employers may pay nothing or 100% of the cost of health care. Employers have used this carrot as a benefit to attract and keep employees. It has the perverse effect of forcing employees to work in jobs they don’t like just to get health care. Further, if the employer lays someone off, that worker is faced with huge COBRA payments just when finances have become more difficult to manage. This is stupid. If someone came to you and asked you to design a payment scheme would anyone actually dream of such an inefficient method or would one try to streamline it to reduce costs. One of the arguments by many tax payers is that they do not want to subsidize people who do not do their fair share of work. They feel that these people are getting a free ride and should accept the consequences of their decisions. There is some truth to that notion but the practical implications of abandoning people simply because they had a run of bad luck seems more 18th century than 21st century. We propose an alternative financing mechanism that is truly fair to all. Everybody pays and everybody benefits if we use a National Sales Tax. Everyone is a consumer and everyone eventually needs health care. We propose a tax of 15% on all purchases excluding fruit, vegetables, and dairy products. When purchasing large-ticket items, the tax could be spread out over a set period and collected as part of a loan agreement. Without working through the minutia of our economy, let’s take a look at the big picture. The American economy is roughly $15 trillion per year. Of that, $2.3 trillion is spent on health care. If our MFA program captured the entire health care program, Americans would see a cost reduction of about 5% or about $115 billion a year. Where most people come from, $115 billion is a lot of money. To fund MFA, the National Sales Tax would need to raise $2.2 trillion each year. 15% of $15 trillion is $2.25 trillion. No program is perfect and the final numbers will need to be adjusted to reflect reality but in general terms, this works. One of the arguments will be that it will cause massive inflation as people now have to dig deeper to cover the extra 15%. There is some truth to that. To counter the inflationary impact, we propose to increase social security payments by 10% as well as the earned income credit for the poor. As employers reduce prices or return some of the savings to their employees, prices will fall or incomes will go up. It is a one-time expense and once we move to the new spending level, it will be mostly forgotten. Consumers can adjust their spending habits and prioritize their spending
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on goods they need. This program could be implemented in 90 days with almost no major road-block except the negative impact on health insurance company stock prices. To help in the transition, the Federal government will absorb health insurance companies processing centers to transition health records and related employees to either positions in the Federal government or assist with retraining to other needed employment positions in the economy. This will avoid mass layoffs and cushion the impact of substantially reducing the health insurance industry. When the original Medicare program was adopted, there was a lot of hand wringing. Now we have a proven program with sufficient foundation that we can expand upon and benefit from. Whereas, some people may have less coverage than they have today, we will provide coverage for 49 million Americans. Those that want additional coverage remain free to purchase any number of supplementary Medicare products available to seniors now. Getting these programs past Congress Consumer debt forgiveness, creating 20 million jobs, and Medicare for all are part and parcel of total package to put America on the road to prosperity. We would present it as a package deal. Congress would be asked to authorize $5 trillion funding from the assets of the Federal Reserve to be transferred to a Resolution Trust Corp (RTC) that would be mandated to use these funds to reduce consumer debt under the following formulas; 60% for home mortgages underwater, 12% for resolving the sub-prime mess, 12% for student loans, and 16% for consumer credit/medical bills. The RTC would be directed to rewrite home mortgages involved in the program according to the payment policies of FHA, to write down the first $10,000 of every students’ student loan and up to 50% of the remaining balance, and to give preference to unpaid medical bills in writing down consumer loans. This program will last for a period of 6 months with participants having 90 days to submit claims and another 90 days to verify eligibility. Any remaining funds will be used to reduce the National Debt. It is hoped that all obligations could be restructured and resolved in one year. The jobs program will be administered through a new “American Infrastructure Bank” a branch of the Federal Reserve Bank. This bank/agency will be authorized to borrow $2 trillion each year for the two years and $1 trillion the third year to fund new infrastructure, new factories, and fund business start-ups according to the requirements that companies that are 50% or more owned by employees will receive preferential rates and repayment terms and that the government will take a 30% interest in any company receiving financial support from the bank. The interest rate subsidy will be offset by a new financial transaction tax of $.25 per transaction on Wall St.
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The final part of the package will be the Medicare for All program and the National Sales Tax. These programs are relatively simple and the details will be determined by the agencies and programs themselves reducing the ability of Congress to either weigh these bills down with lots of other programs or reject one without rejecting all three. This package will be presented on the second day of office of this Presidency after having gone 30 days online to allow “the people” to comment and vote on it. Not only will it have the weight of a mandate from winning the election, it will have the strength of the nation behind it. This package will be presented without going to committee directly to the floor of the House. Debate will be limited to insure a vote within two weeks. The bill will then move to the Senate and will follow the budgetary rule of 51% approval limiting the ability of a filibuster. If either party of Congress refuses to pass the bill after the American people have given their blessing, the President will call for a Nationwide strike, a boycott against corporation backing individual Congressmen voting against and a million people in every capital of the nation. There is nothing more important than getting our economy moving again. The refusal of Congress to take action is tantamount to Congress trying to reverse the results of the election. Whereas, this President is willing to compromise and explore alternatives, the President believes that America no longer has the time to wait on fundamental action in these three areas. Structural Budget Problems There are a number of structural problems in our current budget. Some of these are legacy problems whereas others result from the economic downturn. The current funding problem for Social Security relates directly to the reducing payroll taxes caused by too many unemployed and efforts to boost the economy through tax holidays. We believe this program’s funding issues will resolve themselves after we create 20 million new jobs providing us with time to address this problem in 2016. The Federal Budget is comprised of the following groups of expenditures: In Billions Budget Outlays Mandated Programs Social Security Medicare Medicaid TARP Other Mandatory Programs Subtotal Net Interest Obama's Budget 2012 762 504 274 10 532 2082 340 America Inc. Budget 2012 762 2200 0 10 532 3504 660
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Discretionary Programs Security/Defense Non-security Interest Subsidy for Jobs Bank Education NASA Renewables (Batteries, Trees, etc) Subtotal Total Outlays Receipts/Revenues National Sales Tax (15%) Individual Income Taxes - New jobs - Millionaire Tax - Reverse Bush Tax Cut Corporate Income Taxes Social Security Payroll Taxes Medicare Payroll Taxes Unemployment Insurance Other retirement - Financial Transaction tax Excise taxes - Tariffs (China, Oil Imports) Estate and gift taxes Customs Duties Federal Reserve Earnings Other earnings Subtotal Deficit/Surplus
850 490 0 0 0 1340 3762
300 440 125 100 100 75 1140 5304
333 720 208 66 9 83 21 33 67 18 2829 933
1700 1200 52 100 225 535 820 0 66 9 150 89 236 21 33 50 18 5304 0
The Obama budget shows a deficit of $933 billion for fiscal year 2012. We believe that is both unrealistic, impossible to finance, and will result in the further depreciation of our currency. Our path to fiscal probity requires spending cuts as well as tax increases. We believe that when people compare our proposed budget to the unsustainable budget of the Obama administration, they will support the changes we propose.
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Changes in the tax code The movement from Medicare paid by employee taxes to one paid through a national sales tax moves has the biggest impact on the budget by decreasing revenues from employee and employer contributions. The second major tax change is a movement to a more progressive tax rate based on no tax due on the first $50,000 of personal earnings. In the process, we would eliminate all itemized deductions and personal exemptions. For every additional $1,000 earned, a wage earner would pay an additional tax of .1% increasing progressively every $1,000. The adoption of this tax policy automatically will cancel the Bush tax cuts. Here is a sample chart to show the tax effect on wage earners. Total Wage 50,000 51,000 52,000 53,000 54,000 55,000 56,000 57,000 58,000 59,000 60,000 70,000 80,000 90,000 1 00,000 1 50,000 2 10.00% 000.00 15.00% 5.00% ,000.00 15, 30, 10.0% 15.0% Tax Rate 0.00% 0.10% 51.00 0.20% 104.00 0.30% 159.00 0.40% 216.00 0.50% 275.00 0.60% 336.00 0.70% 399.00 0.80% 464.00 0.90% 531.00 1.00% 600.00 1 2.00% ,400.00 2 3.00% ,400.00 3 4.00% ,600.00 5 5.0% 4.0% 3.0% 2.0% Income Tax Effective Income Tax 0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 0.7% 0.8% 0.9% 1.0%
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00,000 2 50,000 3 00,000 3 50,000 4 00,000 4 50,000 5 00,000 1,00 0,000 1,00 0,001
000.00 50, 20.00% 000.00 75, 25.00% 000.00 105, 30.00% 000.00 140, 35.00% 000.00 180, 40.00% 000.00 225, 45.00% 000.00 500, 50.00% 000.00 500, 95.00% 000.95 50.0% 50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0%
Do develop a more accurate representation, an analysis must be performed at different income levels. The objective of this tax policy is to encourage investment and discourage taking income. Those earning income above $1,000,000 will be taxed at 95%. This figure could be adjusted to achieve the budgetary goal of increasing tax receipts by $100 billion per year from this group. The primary tax policy will be adjusted to yield $1.2 trillion in receipts to meet our targeted budget number and minimize the average impact on most Americans. The biggest change is the removal of mortgage interest deduction. This will be offset by the consumer debt relief program. The end of the state and local tax deduction is offset by removing the requirement for states to contribute to Medicare and Medicaid. Without health insurance, there is no longer a need to itemize medical expenses. To support investment, short-term capital gains will be taxed as ordinary income. Long term capital gains will be taxed according to a sliding scale based on the length of the holding and the personal tax rate of the tax filer. Here is a sample of the tax chart:
Year 1 2 3 4
Tax Rate 30.00% 25.00% 20.00% 15.00%
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5 6 7 8 9 10
10.00% 8.00% 6.00% 4.00% 2.00% 0.00%
For savings and time deposits, there would be no income tax. The objectives of our tax policy is to promote investment in the US economy, not reward investors for investing overseas. Further, we want to end ridiculous CEO pay that does not reflect their true contribution to the business of the corporation. Another major change is corporate tax policy. Corporations earning less than $300,000 will be taxed according to the personal income tax code or at the discretion of the owners according to the current S-Corp rules. Corporations earning more than $300,000 will be taxed at two rates on all earnings. Corporations that are at least 50% owned by employees will pay a flat tax on all earnings of 25%. Corporations that are not at least 50% owned will pay a flat tax of 50% on all earnings. This will avoid the potential for a corporation to pay less tax than the employees that work there. Special tax credits and accelerated depreciation schedules that distort economic activity will be eliminated. Interest expense deductions will be limited to 50% of EBIT to encourage companies to build more equity in the business and rely less on debt to conduct their business. Startup companies will receive a five-year waiver on interest expense rules. The objective of this policy is to increase corporate taxes by $200 billion each year and will be adjusted based on GAO projections. Projected Savings We believe that America must have a strong defense. The change between President Obama’s defense budget and our defense budget is the ending of overseas deployments. We will recall 90% of our men in uniform and close 90% of our overseas facilities in 90 days. The remaining troops will be responsible for returning equipment and property owned by the US taxpayer. We will identify 50 bases that will remain open to support humanitarian relief and peace keeping activities. These bases will be staffed by no more than 10,000 troops worldwide. It is our belief that US presence overseas creates more conflicts than it solves. Further, with $16 trillion in debt that must be paid, we can no longer afford a
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military strategy that calls for fighting two regional conflicts at a time. We will adopt a strategy that calls for no fighting overseas unless one of our allies comes under direct military assault. We will not anticipate hostilities thereby causing them to occur. Our defense budget and homeland security budget will be pegged at 2% of GDP inline with other major nations. Currently, China spends an estimated $120 billion each year and Russia spends an estimated $70 billion a year. Our spending will still be 150% higher than our two closest rivals. Military spending over the past decade is directly responsible for the high National Debt that we currently face. In fact, had we followed a more realistic policy during the past decade, our National Debt would be half of what it is today and we would not be faced with National Bankruptcy. The cold war ended 30 years ago and now it is time to acknowledge that fact. Bases of operations to be closed within 90 days include all bases in Iraq, Afghanistan, the Persian Gulf, South Korea, Japan, Colombia, former Soviet states, Germany, Italy, the UK, and Guantanamo Bay. Other bases will be prioritized based on time, personnel and material availability. Without a true threat facing this nation, maintaining an overseas base network is superfluous, expensive, and a waste of national treasure.
To soften the blow to the defense industry, it is our intention to increase funding to support an aggressive space industry. Money previously allocated for purchase of arms and munitions will be redeployed to our Moon and Mars programs. We
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anticipate redirecting $100 billion in this fashion. We will reduce the number of uniformed troops by mothballing at least 6 carrier groups, reducing the Army to its special operations units and one combined arms division. We will cut the Air-Force by 30% but there will be no cuts for the Marines. Our special forces units and Marines are necessary to fight an enemy employing unconventional warfare. Our budget will concentrate on this type of military environment as opposed to the previous large land scale wars of Iraq or expected wars against the former Soviet Union. America will maintain a policy of non-intervention in the internal affairs of other countries. We will only engage in deployments for humanitarian or peace-keeping operations. There will be no wars to prevent wars or non-kinetic military adventures under this administration. We need to rebuild our relationship in the international arena and this is the first step. To further build relations overseas, America will unilaterally reduce its nuclear warhead inventory to 500 warheads and transfer the plutonium to the space program. We will negotiate with Russia and other countries on further reductions with a goal to reduce the potential that these weapons could ever be used. We will suspend all arms exports and ask our partners to do the same to reduce the potential for conflict worldwide. Unless America leads, no one will follow. By putting our money where our mouth is, we believe the rest of the world will follow us and usher in a new age of peace. Education • • • • • • Space • • • • Moon program Mars program Solar panels in space Moon mining for Helium-3 Neighborhood schools National Standards Minority Teachers Funding for inner-city schools Block grants College financial aid
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Renewables • • • • • • • • Construction of Solar Mirror Farms Geothermal Projects Electric Cars Lithium Batteries Wind/wave projects Solar panels Biodiesel from algae Biodiesel from biomass
Energy • • • • • • • • • Construction of DC power grid Construction of 20 nuclear reactors Development of Thorium as a nuclear fuel source Coal-gasification Investment in technologies to make tar sand exploitation cleaner Investment in technologies to make shale-oil exploitation cleaner Ending fracking Investing in technologies to remove CO2 from exhaust Fuel-cells
Agriculture/Environment • • • • End subsidies for Corn Ethanol production Allow the import of sugar based ethanol as a substitute Plant 250 million trees a year Develop hydroponic gardens and vertical gardens in all major cities adjacent to power plants
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• • •
Promote organic farming and end the attempt by regulators to put small farmers out of business Create new water treatment processes Require farmers to use more drip-irrigation in their fields to reduce water demands on western aquifers.
Homeland Security • • Broken up and divided into different departments End the TSA and require airports to provide own security
Department Consolidation • • Re-empower the Commerce department to manage 20 year planning Bring Departments of labor, transport, energy, agriculture, and EP under it
Department of Justice • • • • • Create a panel to investigate war crimes by former leaders Create a panel to challenge laws that discriminate Decriminalize drugs Reclassify Marijuana as equivalent to tobacco Issue pardons to all imprisoned non-violent drug offenders o • Promote treatment and counseling
Create a new national civil union law
Department of State • Change work permit laws for Mexico and Canada o • • • Any Mexican or Canadian that has an employer sponsor will be issued a one-year work permit, renewable annually, $250.
Allow all Mexican and Canadian passport holders an automatic 6 month visa Increase the number of H1B visas to 500,000, give priority to students graduating from US colleges/universities. Foreign Policy
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o o o o o o o o o o o o
Israel/Palestine Arab Spring nations African wars Relations with Russia – joint Moon/Mars program China – tariffs, human rights India – reducing nuclear weapons Pakistan – policy reset Brazil – increase trade Cuba – normalize relations Venezuela – normalize relations Japan – sell a carrier group or two? ASEAN – promote clean energy development
Constitutional Convention • • • • • • • Vice-President to promote a convention to amend the constitution and make it a 21st century document Term-limits Line-Item Veto Publicly financed elections Increase the number of Representatives Define a person Repeal the 17th amendment
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