Category Archives: transportation infrastructure

It’s Graduation Time And The Economic Recovery Gets a Failing Grade

As we reach the middle of 2013 our colleges are conducting graduation ceremonies and our in debt seniors are looking for jobs. Too many of our graduates are having a difficult time. The US economy is growing slowly, but this recovery is different from previous recoveries. Top line unemployment has fallen because of the substantial growth in low-income and part-time jobs. However, such low paying jobs are not the type of entry-level positions our college graduates seek and are qualified for.

Many of the new jobs have compensation so low that the employees become entitled to negative income taxes. Twenty-four million people are either unemployed, have given up looking for work or have accepted part-time employment. These are the unemployment ranks which our graduates are joining. The number of people collecting welfare is growing.

There is a serious risk that American capitalism is being converted under President Obama into a new form of socialism which is eerily similar to European socialism. Because of the failure to stimulate the economy and create tax-paying jobs, the National Debt is growing at a faster rate than the GDP. Non-income-tax-paying jobs, that offer negative income taxes, grow the GDP, but they also grow the National Debt.

Our transportation infrastructure is decaying because a large number of our cities and states are insolvent and Congress is not supplying adequate assistance. The author of this article in his book, “Perpetuating American Greatness After The Fiscal Cliff”, has proposed federal tax law changes to permit the sale of Jump Start America Bonds to enable and encourage our international corporations and wealthy individuals to invest in infrastructure spending.

Few members of the decimated middle class are participating in the recovery. Many of them have lost their jobs and their homes. Obamacare is encouraging part-time employment and many employees have or are going to lose their health care coverage. The IRS, which will have major responsibilities under Obamacare, has become politicized and too few Americans are outraged. The acknowledged wrong-doing has been permitted by the Obama administration to continue for years. Housing prices have seen a small increase because of purchases by investors, while young families remain in large part as renters. 

Austerity being fostered by the Sequester is the wrong remedy and is harming the economy. The Obama administration has lost control over its ability to stimulate the economy because it refuses to deal with our out-of-control entitlements which are becoming worse under Obamacare and because it has failed to deal with the scandals which have caused a decline in President Obama’s approval ratings.

The Perfect Economic Stimulus; Jump Start America Bonds

My book Perpetuating Greatness After The Fiscal Cliff introduces Jump Start America Bonds. The proposed changes in the federal corporate income tax and estate tax laws which would make the sale of Jump Start America Bonds possible would create the perfect economic stimulus. Why do I reach that conclusion?

1. The sale of Jump Start America Bonds to finance shovel ready state transportation construction projects will create hundreds of thousands of tax-paying jobs and help the middle class.

2. By investing in Jump Start America Bonds corporations will be able to repatriate to the US billions of dollars of cash held offshore for tax reasons at highly discounted tax rates and without risk of loss. If they prefer they can treat the investment in Jump Start America Bonds as remaining offshore and only pay a repatriation tax on the interest received.

3. Corporations will also be able to STEP UP and promote the economic stimulus by floating their own bond issues at the currently low rates and use the proceeds to invest in Jump Start America Bonds. Corporations will profit from the interest rate spread and will be able to use the proceeds from the Jump Start America Bonds to repay their bonds when the principal becomes due.

5. Wealthy individuals will be able to STEP UP and purchase Jump Start America Bonds bearing tax exempt interest and without risk of loss from interest rate increases or investment loss (like previously issued “Flower Bonds”) by using the bonds to pay federal estate taxes.

6. A corporation providing the principle portion of the funding of a bridge or tunnel will acquire naming rights during the term of the Jump Start America Bonds which finance the project.

7. The Jump Start America Bonds will be transferrable.

8. Our debt laden states will be able to finance their needed transportation projects on favorable terms.

9. The federal government will see a serge in tax revenues from the taxes which will be paid (even at reduced rates) from the repatriation of offshore profits and from the income taxes payable by the contractors building the construction projects and their employees. Welfare and unemployment benefits will decline. The federal deficit and the rate of growth of the National Debt will be reduced.

10. The multiplier effect will create tens of thousands of additional jobs and generate billions of additional federal and state income tax revenues.

11. The housing market will benefit from the creation of middle class jobs and economic growth.

12. The federal government will generate the economic stimulus with no cash outlays.

13. Accepting the Jump Start America Bonds if they are tendered in payment of corporate or estate taxes will act much like QE. The Jump start America Bonds will ultimately be converted into cash when they mature.