Tag Archives: economy


President Trump is urging Congress as part of his fiscal stimulus proposal to take immediate action to provide funding for businesses to enable them to survive the disruption of operations resulting from the Covid-19 virus. Time is of the essence. Such funding is being discussed, but Congressional quibbling will delay it and without adequate revenues the funding when given will be quickly dissipated to pay for rent, mortgage payments, real estate and payroll taxes, loan interest payments and utilities. Unless we find a way to improve their cash flow large numbers of businesses will close and not reopen or will quickly fail and millions of jobs will be lost.

Creating a new form of bankruptcy relief which eliminates selected business obligations offers a better way to resolve their short term cash flow problem.

Congress should amend the federal bankruptcy laws by adopting The Covid-19 Disaster Amendment To The Bankruptcy Act (the “Act”) to permit small businesses, regardless of whether they are operated as corporations, partnerships or as individual proprietorships to file a simple petition to a federal bankruptcy court to obtain forgiveness of the operating expenses described above for a 120 day period beginning retroactively to March 10, 2020. The relief should be immediately available to a business upon the filing of a petition with the clerk of the local federal bankruptcy court listing the name and address of the business and the name and address of the owner of the business seeking relief under the Act. The relief shall become available immediately upon the filing. The clerk shall issue a receipted copy of such filing and at a nominal cost additional copies which the business owner can use to prove its immediate entitlement to such relief.

The relief should apply to all obligations which accrued during the protected period whether or not paid. Unpaid obligations during the period shall be forgiven. Payments made on account of such protected period obligations should be recoverable by subtracting the amounts paid from payments due to the person who received such payments. in the period immediately following the end of the protected period.

Certain large employers or businesses which have remained profitable or have not been seriously disrupted by Covid-19 such as businesses which receive payments from insurance reimbursements or governments and restaurants which regularly derive 50% or more of their revenues from take out orders should not be eligible for the relief.

The recipients of the forgiven payments will in almost all cases be able to absorb the reduction in their revenues.. We can offer protection to landlords and banks if required.

Layoffs and reduced individual income are separate and equally important problems. We must find a way to adequately compensate individuals have lost their job or whose income has been reduced. Providing loans to businesses as they reopen when the virus is under control will not solve the problem. Modifying unemployment insurance to compensate everyone who is laid off or whose income has been reduced should be considered with the same urgency. It might be the best way to get cash to workers. We must not forget service income employees, particularly those who rely on tips.


Jump Start America Bonds Represent the Perfect Economic Stimulus

My book, “Perpetuating American Greatness After The Fiscal Cliff”, proposes changes in the federal corporate income tax laws that will encourage our international corporations to STEP UP and invest, risk free, a portion of the $2 trillion parked overseas, in state transportation infrastructure construction projects. They will do so by purchasing a new type of tax-exempt bonds offered by our states that will be called Jump Start America Bonds. The sale of such bonds to finance shovel ready state transportation infrastructure construction projects will generate the perfect economic stimulus. Hundreds of thousands of good tax-paying jobs will be created.

Corporations investing in Jump Start America Bonds 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 having been made and remaining offshore and only pay a repatriation tax on the interest received. Five years after issuance the transferable bonds may be repatriated at the discounted tax rates and used at face value plus accrued interest to pay any federal corporate income taxes.

Corporations will alternatively be able to STEP UP and promote the economic stimulus by floating their own bond issues domestically at the currently low rates and investing the proceeds 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.

Wealthy individuals will also be able to STEP UP and purchase Jump Start America Bonds without risk of loss because the bonds will be usable at face value plus accrued interest to pay federal estate taxes (like previously issued “Flower Bonds”).

 A corporation providing the major portion of the funding of a bridge or tunnel might acquire naming rights during the term of the Jump Start America Bonds that finance a project.

The federal government will see a surge 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.

The multiplier effect will create tens of thousands of additional jobs and generate billions of additional federal and state income tax revenues. The housing and auto industries will benefit from the creation of middle class jobs.

The US government’s accepting 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 as interest payments are made and when they mature.

The tax law changes recently proposed by President Obama as part of his “grand bargain” are merely a slightly different form of tax and spend legislation he has previously proposed. He would reduce corporate tax rates, but increase net tax revenues by eliminating deductions and adding a tax to confiscate a portion of the $2 trillion held overseas by US corporations to legally avoid the unfair tax upon repatriation. The “grand bargain” is dead on arrival.

By way of contrast, changing the US corporate tax laws to enable the sale of Jump Start America Bonds will encourage our rich corporations to finance transportation infrastructure construction of the type which President Obama has suggested. We would expect that our corporations would choose to invest in projects likely to generate the revenues to fund the carrying costs of the Jump Start America Bonds. On the other hand we would expect President Obama to spend, as he previously did with DOT funds, on projects in states where Democratic candidates would benefit in the upcoming 2014 elections.