An aquaintance of mine, Matt Russell, shared some thoughts with me about the stimulus bill. Although I don’t believe a word of it, those currently in power say the purpose of the stimulus package is primarily to create jobs.
I personally think it is more about pork, a way to retain/increase their power base and to advance a big government agenda.
If they want to create jobs and give an adrenalin shot directly into the heart of the economy, the following is a better way.
Historically 3 out of every 4 new jobs in America have been created by small business. They should loan (not give) the entire 1 trillion dollars to small business at very low interest rates (say 2%, which is above prime). The money has to be used to start or expand a business that currently does less than $3 million a year in gross sales. For every $1 million dollars loaned, half of it has to go to new hires. This would create 16 – $30,000 a year jobs or 10 – $50,000 a year jobs. Lets split the difference and say 13 – $40,000 a year jobs average – far above what most of the unemployed are accustomed to earning. The 1 trillion dollars they are talking about spending would create 13 million new jobs immediately.
As of December, 2008 there were 11.3 million unemployed people in the US. This plan would employ every one of them (assuming they wanted to work) plus nearly two million additional illegal aliens. It would put the entire trillion dollars into the economy within 12 months. Now these 13 million new hires would need to buy cars, TV’s, houses and the like which would create millions of additional jobs. Also all these new companies have to buy computers, chairs, buildings, marketing services etc creating even more jobs. Now many of these companies would fail, but others would succeed and expand offsetting lost jobs.
So how to administer such a plan without increasing the size of big government or people ripping it off? Just use the current Small Business Administration which already has all the guidelines and controls in place. The loans would range from $50,000 to $5 million max creating about 500,000 new companies or 10,000 per state. Hire 50 attorneys/accountants in each state to oversee 200 businesses each. Most anyone that applies for a loan can get one providing they submit a reasonable business plan and budget. However, they don’t get all the money at once, only two month’s worth at a time. If they don’t show purchase of assets and new hires per the budget, they don’t get any more money. No one person can make over $80,000 a year until the loan is repaid in full. Anyone who is caught cheating automatically gets 10 years in prison.
The current stimulus package addresses none of this. Most all of the projects in the current bill are for things like building water parks and bridges which are a one-time thing and most of the money will go to people who own engineering and concrete companies. The best part is that unlike the current bill, at some point, taxpayers would get most or all of the money back.
