Sunday, August 7, 2011


The thought occurs to me that the solution to our economic woes involves a form of reverse financial engineering. Suppose we dramatically DECREASE downstream entitlements and use the savings to invest in jobs today ? Wouldn't that simple notion make S and P happy , the Dems happy and the GOP happy ? We look at the projected 30 year national Pro Forma and cut it 20 %. Let's say that's $ 100 TRILLION. So we cut that by $ 20 TRILLION. Then , we take $ 10 TRILLION and invest it today in job creation programs like infrastructure. We still get a reduction of $ 10 TRILLION and a lot of new jobs, bridges, etc. Plus, part of the $ 20 TRILLION would be in reduced capital gains tax for businesses, new tax code with lower rates, repatriation tax holidays, etc. We reverse the budget game by standing the Time Value of Money on its ear. The 30 year savings can be easily found by extending SS age to 70, trimming war related defense costs, changing the retirement Index for SS, means tests, etc.
Seems to me, this is the kind of renaissance middle ground that could accelerate this countries economy and make S & P delirious


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BOSMAN said...

Until we change the entitlement mentality that has developed in America over the past 20 years, we're doomed.

To many folks don't want to work and would rather exist on the public dole at the expense of those who do.

Turn off the free money spigot!

hamaca said...

I have to wonder the extent to which S&P blew the MBS ratings is influencing their overly cautious stance on this.

I mean really--they were giving out AAA ratings right and left on most every mortgage-backed security that came their way, despite underlying mortgages of questionable or dubious risk.

Now, they can't bear to keep the USA at AAA? Who's rating the rating agencies?