I could not get very far into Lara D’Andrea Tyson’s cheerleading piece (Wall Street Journal, March 9, 2009, “In Defense of Obamanomics”) for President Obama’s economic policies and plans without disagreeing right off the top. The first two sentences are filled with misrepresentations concerning the definition of leadership (it’s not clear where she got the definition she summarized in the first sentence) and about President Obama’s “inheritance” of the current crisis. It is as if President Obama’s election, inauguration, and ramrod treatment of the Pelosi-Reid Stimulus Bill were no big deal and he is still getting a pass on whether his administration owns the crisis.   This is in spite of the incredible loss in equity value since the election and inauguration.   I’ve got news. He was elected. He’s on watch. It’s pretty much all his baby now.

I’ve got my own plan and it is better than his plan. I will acknowledge that President Obama did not start the mortgage and securities crisis.   He did not construct the entangled economic structure that seems to have unraveled due to somebody’s large adjustable rate mortgage going into default somewhere (Let’s call this the Typhoid Mary” of mortgages. It will be interesting someday to identify the specific mortgage default that started the ball rolling).   But, President Obama has announced policies and signed legislation that greatly accelerates the accumulation of debt while interjecting the federal government into areas of our lives that should remain unencumbered by federal government intrusion.

As an aside, My Plan could stop this crisis, and I promise that I will describe that to you a bit later.   For now let’s get back to Ms. Tyson’s WSJ OpEd where, in the third sentence, she really writes a doozy. The sentence actually contains words stating that the President’s economic plan will “bolster demand and create 3.5 million jobs.”   What demand will the President’s plan “bolster”? What jobs will be created? Will it stop at 3.5 million jobs? I ask this because I read today that this crisis has caused a loss of over 4 million jobs. Maybe we should borrow another trillion or so.

Apparently Ms. Tyson is one or two talking point faxes behind the times because her erstwhile colleagues are using the phrase “create or save 3.5 million jobs.”   Let’s review the bidding regarding the stimulus package.   According to some reporting the state, county, and city governments that receive Stimulus Plan dollars will have to report on jobs created with this money. (It doesn't matter whether this is the truth or not because nobody's read the bill even now).   Apparently this includes jobs that would have been cut had these governmental bodies not received stimulus money.   States, counties, and cities will have to indicate how many people they would have laid off if they didn’t get stimulus funds, and how many fewer they will lay off if they do get stimulus funds. I assume these folks who do not get laid off, but would have been laid off had the stimulus funds not been available, will be counted as “saves.”   

What we are talking about here is saving government jobs by the way. We are not talking about the types of jobs that would have been saved had the government simply stopped collecting taxes for a year or so and let people spend their money on things like construction, manufacturing, private sector lending, retail purchases, office space, etc.   We are talking about saving government jobs at all levels with borrowed taxpayer money (over $10,000 per taxpaying household and growing).

Let’s look at California.   California is projecting a budget deficit of over $40 billion.   (This is a $40 billion shortfall for a $140 billion budget that, five years ago, was a $90 billion budget).   The state will make a few small symbolic cuts, but, for the most part, Governor Schwarzenegger and the legislature want to raise taxes and get the rest from the federal government.   They think this is the only way to balance their bloated budget. But that probably won’t be enough.   After California does what whatever budget manipulations they can they will still need a federal stimulus payoff of over $20 billion. After all that California may still be short.   To summarize, about 15% of the state’s budget will have to come from money borrowed from federal taxpayers.

I have to ask at this point, would you lend money to a state like California that appears to be drowning?   On top of that, would you do it again next year?   

I think this is time to point out that we’re borrowing a ridiculous amount of money and spending it all without getting anything that helps with our most pressing problems in California. We will not get any new nuclear power plants to help with a power generation system that is stretched thin. We will apparently not be using this funding to build any desalination plants to help with California’s chronic fresh water shortage.   What we are getting is the opportunity to keep $20 billion worth of civil service labor on the payroll. Many of these people do good necessary work but they will not generate one kilowatt of electricity, refine one gallon of gasoline, or produce one gallon of fresh water.  

Some municipal government is getting some new police officers out of this stimulus funding apparently.   I understand President Obama had a press conference in the last couple of days in front of a couple of dozen young police cadet graduates. The young cadets who stood behind the president will be hired with stimulus funding.   We did this same thing when Bill Clinton was president, remember? The minute you hire folks using federal money you take on the responsibility for their continued employment as part of the federal workforce, at least from a cost perspective. If you decide two years from now that you’ve done your “stimulus” job and don’t continue to fund these folks then they are likely to be layoff victims.   Stimulus forever?   It doesn’t seem like it.

So I’m thinking it is time for a new plan. A different plan.  My Plan.

Here’s what we are doing now:

1. Continue to spend what we currently spend.
2. Borrow a record amount of additional money to spend and send it to state, county, and municipal governments to retain a large number of civil servants.

MY PLAN: Here’s what I think we should do:

1. Suspend the collection of taxes for one year.
2. Borrow a record amount of additional money to pay for our current spending.
3. Cut all civil service and military payroll by 25% in exchange for relieving all civil service and military personnel of the requirement to pay state or federal income tax.  (It's stupid to collect taxes from people who are paid using tax dollars).
4. Recalculate all federal, state, county, and city budgets to include workforces that cost 25% less.

The difference between my plan and President Obama’s plan is simple.   His plan preserves a large number of civil service and government jobs. My plan puts a large amount of money in the hands of millions of taxpayers who can best decide how to spend it.

President Obama’s plan may make it seem that the economic deterioration has slowed down to some degree.   A large number of state, county, and city governments across the country which receive stimulus funds will have more employees than they would have had without the money.

My plan would allow the state, county, and city governments to make the cuts they need to make in order to continue operations without any borrowed funding from the federal government to prop them up. Some governmental entities may go bankrupt which can be a good thing.   Bankruptcy will force reorganization and enable them to restructure labor costs and trim operations.

My plan would also follow up quickly with spending.   Big spending.   People will indeed have more money. The Democrats will argue that some people are taking trips and buying cars and buying new computers with their tax dollars.   The Dems have a funny way of making you think that if you’ve been given a tax break that it is not really your money. They’ve given it to you.  

While we’re on the subject I’ve got some news. If tax revenue is never collected in the first place it is not tax revenue.    It is spendable income.   Florida and Texas don’t act as if the state income tax that they don’t collect is their money that they have given to the state residents. They haven’t given the state residents any money. It is not the government’s money until they collect it.

More jobs will be created in one year under My Plan than ever will be created under the Obama plan.    These jobs will be created by millions of taxpayers who have been given a year off of paying their taxes.   These relieved taxpayers will be spending money on house painting, new carpet, insulation, new cars, bathroom remodeling, hot tubs, vacations, clothes, new backyard decks, new sod, solar power panels, new front doors, window replacements, new dishwashers, new refrigerators, new stoves…

Wait a minute. All that new, environmentally friendly stuff will be a massive environmental disaster that will reduce carbon emissions and accelerate Global Cooling.  

Never mind.