Joe's fairly simple plan

Sunday, November 30, 2008

From what little I know about economics, I can tell it involves math. I've never been ashamed to admit I am terrible at math. I only wish some of our know-it-all economists and financial wizards would be as forthcoming.

As far as I can tell, predictions made by economists are as reliable as a November forecast for winter weather or a gambler's pick of who will win any game being played today.

But economists soldier on, making multitrillion-dollar decisions, tinkering with the monetary policies of entire nations and advising presidents, prime ministers and oil-rich despots.

I don't know if the decisions economists make are ever subjected to peer review, but to the average Joe (that would be me) they appear to be pulling everything they can -- nearly $7.5 trillion so far -- out of their bag of tricks in the hopes something will work, at which time they will take credit for being so gosh-darn wise.

No one, particularly economists, knows what it will take to get us out of the current financial mess that started as a burp but turned into a major gastrointestinal mess.

Despite this enormous deficit in solutions, every American, it seems, has something to say about the most used -- and abused -- words of 2008: "bailout" and "incentive."

Those two words tend to get mixed together quite a bit, but they are two entirely different approaches to what ails the nation.

In the simplest terms I can think of, a bailout involves giving my money to someone else -- very likely someone who made some terrible financial decisions -- in the hopes those same mistakes won't be compounded or repeated.

An incentive involves giving me back my money not when I need it or want it, but on a schedule arranged by bureaucrats who can spend days -- or weeks -- deciding whether checks ought to be mailed based on Social Security numbers or ZIP codes.

Earlier this year, millions of Americans got checks from the IRS. The money was intended to stimulate the economy and prevent it from falling into a bottomless pit. Look what happened.

I suppose the decision to send all those checks was as much politically motivated as anything else, but surely there was an economist or two suggesting that giving me back my money was a sure-fire way to ignite a financial fire.

Now another round of incentive checks is being contemplated. We might get two or three times as much money this time around, we're told. And let's hurry up and do it, the political and economic experts are urging.

I have a suggestion. How about instead of giving me back my money I just don't give it to the government in the first place?

I am not advocating breaking any laws, so hear me out.

The same government that can OK sending out billions of dollars in checks from the U.S. Treasury can also decide not to take money out of my paycheck. Wouldn't that be more efficient? Easier? Simpler?

I forgot. We're talking about the government.

Seriously, though, do the math. [Please double-check Joe[']s math. The editor.] If the new crop of politicians thinks this year's incentive checks were small potatoes, then they must be thinking of a hefty increase, right?

Let's say that, instead of sending $600 back to each taxpayer, the government, in its financial wisdom, thinks we ought to get $2,500, which is a little more than quadruple the first batch of incentive checks.

But the cost of collecting that money from taxpayers -- processing it, auditing it, depositing it, sending out letters saying you forgot to pay taxes on the 78 cents of interest your Christmas Club account earned, filing all those forms, microfilming our returns for permanent records and future prosecutions, writing and mailing refund checks and annual bonuses to top IRS performers -- is enormous. If the government didn't take our money, it could save on all those extras. So instead of $2,500, the government could afford to give us all $5,000.

Are we talking incentive yet?

Under my plan, of course, the government wouldn't give us $5,000. It simply wouldn't take it from us.

It goes like this: Starting with paychecks issued after Jan. 1, 2009, federal taxes that would normally be withheld would be added to our net pay. Once those deductions reached a total of $5,000 -- for some, that might be the end of January; for others, not ever -- the federal withholding would again be duly remitted to the IRS.

Under my plan, every wage earner would immediately have more money to spend, save, gamble, invest, pay doctor bills, cover college tuition or donate to your favorite missionary.

Moreover, my plan has a huge job incentive. In order to participate in this plan, as I see it, you would have to have to be ... well ... employed.

That's my plan. I don't know if it will work.

After all, I'm no economist.

R. Joe Sullivan is the editorial page editor of the Southeast Missourian. E-mail:

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