My survey produced an interesting anomaly— several respondents felt that excessive consumer spending was the primary cause of the economic problems we face today, and that spending is not to be encouraged.

But the root problem they were correctly speaking to is the source of the spending money, not the spending itself. Spending is essential for demand creation, and increasing demand is what produces jobs.

So why we ask, does government remove the dollars from the economy before they accomplish the demand stimulus “thingie” (highly technical economics jargon)? Nearly half the survey responses observed that consumption taxes (The Fair Tax) are far more productive/creative than income taxes.

The other half wants to replace the IRC (Internal Revenue Code) with a Flat Tax on all forms of income. Both suggestions are simple, and quantum leaps better than anything being seriously considered by congress— “seriously” being the operative word.

A combination of the two— priceless, but later!
The single, easiest, fastest, biggest, consumer-spending instant winner bonanza is not even a twinkle in an old politician’s eye— there are far too few new politicians. Replace the Social Security Retirement Program with a plain vanilla pension plan, pre-funded by smaller, mandated employee contributions.

The current methodology is simple: it takes money out of our pockets (and our employers) puts it though governmental blenders, and spits out IOUs for a meager benefit at retirement. Why not let the private sector provide pension benefits to all employees under the direction of a trimmed down Social Security bureaucracy?

How? By purchasing Social Security Retirement Income Annuities (SSRIAs). Google “A Capitalist’s Social Security Reform” for the nitty-gritty details, but here’s what we accomplish:

We stimulate spending immediately by only withdrawing 3% of income from 300 million pockets and pocketbooks, and nothing from employer treasuries. We provide demand-push spending money and reduce demand for consumer credit.

And, looking forward an article or two, we collect a tax on every dollar spent in the economy— except those for food, healthcare, and higher education; even from our friends and neighbors in the Underground and Internet economies.

Some SSRIA details include: (1) No sales commission, no more than 10% in an approved list of equities, no multilevel derivatives or open end Mutual Funds, and no speculations; (2) Limited voluntary contributions and unemployed dependent eligibility; (3) Phased in transfer of existing Social Security and government employee pensions (including congress).

Using life annuities + a 50% of cash value, pre-retirement, term-life insurance benefit could prepay retiree Medicare benefits as well!

There are several other ideas on the more-spending-money-in-consumer-pockets agenda, and some thoughts about consumer confidence. It’s tough to be confident, for example, when you click the links between congress and business lobbyists.

It’s tough to be confident when we see Wall Street control its regulators, constantly produce the same speculative garbage, and reward its senior employees and sales persons from the carcasses of mutilated shareholder-owners and “hostaged” taxpayers.

These confidence destroyers can be dealt with, but first the rest of the story, on increasing consumer spending without credit abuse:

One: Reduce the interest rate on all mortgages at least twenty-five basis points, and adjust monthly payments accordingly. The banks owe us, and will make-up the difference from increased business activity.

Two: Bring the credit card mafia to its knees by enforcing reasonable usury laws (a 15% APR cap, for example) and include all fees, late charges and other debris in the calculation. Make minimum payments include a percentage of principal, and treat credit abuse like drug abuse.

Three: Eliminate all nuisance fees, taxes, surcharges, etc, forced on businesses and passed through to consumer statements. A $65 motel room should be a $65 motel room.

Four: Reduce state and local property taxes 10% per year for all persons over age 65, and devise a way to prorate this into rents paid by seniors— i.e., require landlords to pass through their savings.

Five: Eliminate all toll collections on highways, bridges, tunnels, subways etc.— everyone benefits from our transportation resources, the green impact is obvious, and demand for gasoline would be reduced significantly.

Six: Establish a combined federal/state/local $1,000 per month tax-free program for all workers. (The first $12,000 of each person’s income is untaxed). Workers earning less than $12K annually receive the difference in bank account debit cards. Usage could be restricted to essentials (no alcohol, gambling, tobacco, guns, jet skis, etc.)

Seven: Establish a $750 per month workfare program for the unemployed actually seeking work, but requiring no less than twenty hours of community service per week. Offset would be reduced numbers of government workers, shorter unemployment lines, and lower employer overhead expenses.

Thank you again for participating. I hope you all appreciate how important it is for you to help get simple ideas like these into the legislative arena. Find the time to address some of them aggressively in blogs, networks, and communications with elected officials.

Wall Street’s “Emperors New Clothes” game plan has infiltrated the federal government. The financial community has no interest in protecting investors from speculation and our elected representatives seem interested only in expanding their power by catering to the most generous special interests.

Do I hear congressional term limits as a “write-in” candidate for number eight?

Steve Selengut
sanserve (at) aol (dot) com
Author of: “The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read”, and “A Millionaire’s Secret Investment Strategy”