A Progressive Stimulus Package for America’s Future Sustainability

A Progressive Stimulus Package for America's Future Sustainability

by Gary Null
February 9, 2009
http://garynull.com/gnStimulusPlan.html

There is no doubt that a stimulus package addressing the economic downturn predictably leading to a depression equal or worse than The Great Depression of 1929, which lasted twelve years, is urgently needed. However, the last thing we need is a stimulus package solely for Wall Street banks and executives, investment and insurance firms and heavily lobbied special interest groups providing government funded pork barreled projects that do not benefit the public at large.

An examination of the current stimulus proposal, being pushed through Congress, is doomed to fail even before the first dollar is committed. First, it does not target the immediate personal needs and fiscal recovery of the average American citizen. Second, it does not take into account the horrendous drain of American reserves and dollars being wasted in Iraq and Afghanistan. Third, many politicians are being given numerous pork-barrel benefits that have nothing to do with addressing the current economic crisis—like the $44 million for repairs at the Agricultural Department headquarters, the $200 million for rehabilitating the National Mall, the $400 million to the National Aeronautics and Space Administration (NASA) for research in climate change (any intelligent person should know this already), the $426 million for new construction of the Centers For Disease Control (CDC), etc. 

The current plan does not even consider what might be saved from the existing budget that could lower spending and taxes, improve social services, and actually make the nation run more efficiently.  Redundancy, waste, profiteering (charging far more for the project's actual cost) and fraud are rampant..  Include all of the outdated military industrial contracts given for projects that become obsolete by the time of completion, this represents over a trillion dollars a year. So, if we truly want to re-stimulate the economy, shouldn't we first try to manage the economy we have better? This can be achieved with greater accountability, transparency and ethics.  We can then introduce the necessary far-reaching reforms to strengthen America in the global economy.

For an example, look at the following chart for four major banks, assets versus liabilities. These figures are from the Comptroller of the Currency and clearly indicate the grave situation these banks are in because of credit default swaps, derivatives and other poor loans.  These four banks alone account for nearly $179 trillion of toxic debt and downside liabilities and yet their total asset value is only $4.5 trillion. Even now many of these assets are still over-valued. This means that each of these banking institutions are virtually bankrupt.  There is not enough money in the civilized world to pay off all of these debts. Giving taxpayer money to bail out bank debts is tantamount to fraud. Furthermore, under the oversight of the Fed's Ben Bernanke and the Treasury's Henry Paulson, not once were banks seeking a government bailout required to reveal actual and potential liability portfolios. If this had been done and the American voters were made fully aware of them across mainstream media, the original $700 billion package would have been rejected outright. Instead, the American public has been sucker-punched. The gang who orchestrated the current meltdown are again steering the sinking vessel to remedy the crisis.

Assets vs. Derivatives and Credit Default Swaps for Four Leading Banks
Chart is represented in Trillions

Bank	Assets	Derivatives	Credit Default Swaps	Total Liabilities
J.P. Morgan Chase	$1,768,657	$87,688,008	$9,177,731	$96,865,739
Citigroup	$1,207,007	$35,645,429	$2,939,783	$38,585,212
Bank Of America	$1,359,071	$38,673,967	$2,480,672	$41,154,639
HSBC	$181,587	$4,133,712	$1,152,948	$5,286,660

Americans voted for progressive change that would remove the United States from Iraq, roll back past administrations' favoritism towards the corporate and financial oligarchies, and to reinvigorate life on Main Street. The United Nations and other forces—with America's assistance—can deal with the Afghanistan crisis. Just by exiting these two war zones, American taxpayers would save between $5 and $10 billion per month.
In addition, the money in the current stimulus package ignores investment in preserving our natural resources. In my opinion, we cannot solve our problems in the same manner in which we caused them.  Instead the solution should not be only an economic one, but rather look towards a resource solution.  In part, we got into the present recession by shifting away from a manufacturing society to a consumer based society. We must reverse that and the American worker must be restored and supported in his/her own local economies in every large and small community across the US.. Otherwise, we are only expending massive amounts of money with no sustainable growth and measurable results to show for it. That is a prescription for further disaster.  Specifically, the ever-rising crisis in the quality and scarcity of America's water and the misuse of our other precious and finite resources will make human development unsustainable in the coming decades.  Clean water and safe food are not luxuries in life. They are necessities.

We should neither imagine nor fool ourselves that America is totally immune from what we are now witnessing in France, Greece, Spain and the UK. In these countries—several that have been the most heavily hit by the global economic meltdown—massive civil unrest is growing. Even larger demonstrations are emerging in developing countries where conditions are more dire. The riots and strikes currently taking place in these nations will, inevitably, spread to other European cities. It is only a matter of time when tremors of civil unrest befall the US, where economic inequality, poor healthcare and overtly bureaucratic social welfare is worse than in Europe.

Rather than providing a constructive, proactive stimulus that addresses the needs of average citizens, which can realistically dispel the likelihood of civil unrest in the US, the current administration, as with its predecessor, appears only concerned with assuring itself that there are enough troops on American soil to quell civil disobedience in order to pacify dissent and sustain the current status quo, even amidst peaceful protests.
The stimulus package I am proposing below will help address these and several other key issues. It is not intended to address a short-term quick fix.  Instead, it is far-reaching.  It will help rebuild and reform America so that she can sustain future generations.

It is surprising that our corporate media refuses to invite the leading economists, futurists, social planners, environmentalists, alternative agriculturalists and progressive visionaries to discuss alternative models, which are contrary to corporate America's vested interests. Instead, we repeatedly see the usual suspects from prior administrations—the Reagan, Clinton and Bush presidencies—that have a proven record of making disastrous choices. For example: Holbrooke's dealings with Indonesia and East Timor; Clinton's failed economic gurus, Rubin, Summers and Geithner, who have contributed to the current deregulation behind this recession; Madeleine  Albright, who contributed to adding fuel to Iraqi-American relations with unnecessary sanctions, and many others. All of these individuals have strong ties to Wall Street, venture capital and insurance industries, the military defense complex and the pharmaceutical oligarchy. One definition of insanity is using the same methods repeatedly but expecting a different outcome.

Before outlining a viable, sustainable, economic and job growth stimulus proposal, I want to state that although I support the authentic change Obama put forth during his campaign, the selection of his Cabinet members do not bode well for the changes we were promised and so desperately need.  One can only wonder why the truly innovative, visionary leaders of the twenty-first century are completely absent from the current policy-making forums planning for America's future well-being and prosperity. Repeatedly, Obama promised new leaders rather than the old tired faces on the Beltway in his administration. For example, former Senator Tom Daschle is a quintessential Washington bureaucrat with no fundamental medical knowledge or background who Obama selected to head the Department of Health and Human Services (HHS).  As a lobbying consultant, Daschle has received $500 million from the healthcare and pharmaceutical industry.  How naïve is it to think that he is capable of promoting the urgent fundamental and constructive changes to America's healthcare system. It wouldn't happen.  This is not a good way to start, but Obama does have a chance to reclaim the moral high ground.  There is not a single true progressive amongst those surrounding him.  Prestigious individuals, such as Lester Brown, Joseph Stiglitz, Nouriel Roubini, James Galbraith, Van Jones, Brent Blackwelder, James Speth, Paul Krugman, Sheldon Wolin and hundreds others, are non-existent in his strategic planning process now being undertaken in his administration.

I do not want Obama to fail. I want him to succeed. Therefore, I am hopeful someone near to Obama will actually read the following suggestions and decide that one or more are responsible and doable and should be seriously considered and vetted for implementation. Otherwise, as I correctly warned of the impending failure of the first stimulus package, the current stimulus package will fare no better.

1.  By executive order, the Obama administration should place a ban and nullify all derivatives and credit default swaps. As shown above, there is nearly a $179 trillion downside debt among the top four banks alone, and total debt reaches several hundred trillion more when all other banks and financial institutions are included. Pumping additional billions of dollars into failing banks will not work because their massive debts are now insolvent.

2.  The 1933 Glass-Steagall Act needs to be modified to address the current global economic reality and reinstated in order to place controls over wild speculation, re-regulation of interest rates, and to set a clear division between speculative investment firms from conventional savings and loan banks.

3. Insolvent banks should be streamlined towards easy bankruptcy, nationalization and then enable them to start afresh as savings and loan banks within a reformed regulatory structure. Such regulations would require banks to limit their loan capacity against their deposits at eight to one.

4. There is the need for a Presidential executive order banning speculative trading in those commodities that are essential to the sustainability of human life, such as water, gas, oil and food. 

5.  Enact an executive order to halt all speculative investment in currencies. In addition, a 60-percent tax should be placed upon hedge funds and equity partnerships. All hedge funds and equity partnerships should be restricted to a 3 to 1 borrowing ratio.  This will substantially prevent the massive speculation that has occurred during the past 15 years. Furthermore, all short selling would be discontinued

6. Qualified borrowers, with proper due diligence and 20% down payment and proper collateral, should be able to receive loans without being rejected. No one should need to borrow from a bank or financial institution at more than a 3 to 1 ratio.

7.  Mandate landlords to reduce rent on all businesses earning less than $5 million per year in gross sales. For example, the average rent in New York City is 100 percent above its realistic rental value. A mandated reduction in business rentals would prevent many businesses from failing and would save jobs.

8.  Implement an executive moratorium on all home foreclosures and auto repossessions in order to allow the market to return to a realistic deflated market value. This would permit more people to remain in their homes while benefiting qualified home buyers to afford a new home. Lending institutions renegade with home owners for a payment schedule that the owners can meet.

9.  By executive decree, all reset mortgages, which lure people into ALT home loans, now estimated at $200 billion, would cease. The very banks that made all the wrong choices in high risk speculative investment are now receiving money at zero to one percent interest. This in turn further threatens millions of Americans with losing their homes. By the President freezing all of these lower interest rates for five years, people can continue to pay their mortgages and live in their homes without having them repossessed.

10.  Banks and credit card corporations should be provided with at least a 100 percent profit margin between what they borrow from the Federal Reserve and what these financial institutions charge consumers.  For example, right now, qualified banks borrow at 0.25 percent. A new cap would prevent them from charging more than 2.0 percent to borrowers. The same would hold true for credit lending firms.

11.  Across the board, the government should require all lending institutions to forgive credit card, mortgage and auto loan late interest payments.  This would include forgiving interest on student loans. At current estimates, the nation faces a default of $950 billion in personal consumer debt (estimated around $17,000 per citizen). Forgiveness in overarching, predatory late interest payments would relieve the financial burden in cost of living and increase their family savings.

12.  Increase unemployment insurance by one additional year. All financial indicators point to a further rise in bankruptcies, layoffs and growing joblessness during the next year and half and probably more. Regenerating substantial job growth to offset job loss is still a ways down the road and many citizens will remain unemployed for long periods of time before any true recovery can be announced. 

13.  Repeal Bush's 2005 bankruptcy bill that enslaved citizens and virtually overturned the rationale for bankruptcy to restore Americans to a life of normalcy. This bill was pushed through the Bush Administration and Congress by the aggressive lobbying efforts of the banking, credit and insurance companies.

14.  The Administration should make every effort to protect retirement investment, including social security, by guaranteeing citizens retirement savings in insured money markets.  No private investment firm should be allowed to make risky, speculative investments in people's retirement savings.

15.  Implement an aggressive measure to shorten the inequality earnings gap between the nation's superrich (now at 1 percent of population owning 20 percent of GDP) and the average citizen (one in three workers earned less than $15,000 in 2007) to approximately forty percent. This would include regulation on taxation of corporate stocks purchased by corporate executives and a regulation against short trading and sales in the stocks received from their corporations.

16.  Put a halt on tax breaks given to utility corporations who charge taxes to their service customers.  For example, citizens are charged a variety of taxes on their monthly utility bills; however, rarely does the utility company pay these over to the government. Xcel Energy, which provides electricity to eight states, collected $723 million in taxes from customers but will likely turn none of that over to government due to corporate tax breaks.  This tax policy should be immediately halted and higher legal statutes placed on corporations to turn over customer utility taxes directly to the government.

17.  Reduction of all redundancies in inefficient bureaucracies at all levels of government needs to be enacted upon with due diligence. The current Department of Defense budget, costing tax payers over $1 trillion annually, needs to be slashed in half by removing obsolete pork. Many defense programs will be obsolete before their completion.  Currently, the DoD controls and funds 737 bases in 130 countries; these are manned by over 1.5 million military personnel, including those in the Middle East arena. Aside from the overseas bases, there are approximately 6,000 military bases on American soil and in the US territories. Together, the military owns and/or rents over $600 billion in real estate. Half of these bases can be terminated with substantial savings to taxpayers.  They are no longer needed and serve no legitimate humanitarian or democratic purpose other than giving a raison d'etre for furthering a corrupt, aggressive infrastructure that serves only private corporate entitlement programs. Closure of half the military bases would save a minimum of $100 billion per year, and an additional $200 billion would be saved by cutting off funding from ineffective bureaucracies and defense pork. 

18.  The government needs to immediately implement the groundwork for a universal health care plan.  In 2006, healthcare cost Americans $2.1 trillion ($7,000 per citizen). Yet the US now holds a place at the bottom of the developed nations for its quality of medical care, especially for children. The health insurance industry is utterly incorrigible and corrupt by charging insurers several billion dollars total with padded private profits for coverage fees and drug and medical service costs. The health insurance industry should be forced out of business for the benefit of our nation's physical and mental health. This would save between 20 and 30 percent of all our nation's healthcare costs and would easily pay for the demise of the private health insurance industry. It would also be a substantial savings for both employers and employees with disposal incomes.

19.  The entire federal health agency system requires dramatic restructuring and a return to real science instead of patronizing the manipulated science to reinforce pharmaceutical  interests.  Current statistics indicate there are over 790,000 annual deaths due to iatrogenic causes (e.g., adverse drug reactions, hospital and physician medical error, hospital infections and malnutrition, surgical procedures, etc). The cost of erroneous medical interventions is $282 billion.  Furthermore, pharmaceutical drug overpricing and health insurance fraud adds an additional $400 billion burden to Medicare and Medicaid costs.  These should be clear indications that the present healthcare model is increasingly draining our society and needs to be overhauled.

20.  Pass legislation that would immediately enforce the least expensive Medicare and Medicaid drugs to be made available with proper regulatory oversight. This would have a savings of $100 billion per year.

21.  A sustainable reform of healthcare policy requires an expansion of funding for prevention, rather than our current over-reliance upon the pharmacological medical model solely based on diagnosed illnesses. The nation's current healthcare is primarily therapeutic and pharmacologically burdened. It has been repeatedly shown to increase medical costs for treating severe drug induced adverse side effects. 

22.  The Surgeon General, the Department of Health and Human Services (HHS), and the Centers for Disease Control should launch a national prevention program that presents examples of the scientifically proven benefits of living a healthy lifestyle, which includes nutrition, dietary supplementation, exercise, health education and behavioral change. After a period of five years, such a program could save government health spending upwards to $1 trillion per year.

23.  Medicare and Medicaid programs need to be expanded to include more cost effective preventative and therapeutic treatments in over-the-counter natural products: vitamins, supplements, herbs, alternative therapeutic treatments, etc. Since the start of the current recession there has already been an eight percent increase in retail purchases of natural products. These dietary supplements represent a fraction of the cost of prescription drugs, many which have been shown to be effective for a large variety of health conditions and diseases. In addition, because natural products do not carry any proven high risk of adverse medical effects, aside from a few rare exceptions, they should be included in health insurance coverage.

24.  Support for biofuel technologies, including the use of land for cultivating fuel crops, should be substantially diminished. First, biofuels hold very little value in moving towards a viable green energy policy; biofuels are still polluting and require large amounts of fossil fuel and essential water resources in their production. Second, biofuels are not economically viable energy alternatives. They result in a massive disruption of food production at a time when Americans are already feeling the effects of food shortages and high consumer costs. 

25.  The Department of Agriculture needs to move quickly forward with the development and implementation of a new food management system that is sustainable. Such a system should focus on sustainable management of our current misuse of soil and water resources. Such a system would include a gradual shift to an organic farming model in order to increase grains and legume cultivation for American consumption and for export to other nations.

26.  There should be a national moratorium to boycott genetically modified crops and livestock, which is known to destroy top soil and rain forests, seriously threatens the planet's biodiversity,  and have yet to be proven medically safe for human consumption.

27.  Institute a Marshall program for a high tech transportation system connecting major cities with a rail system similar to the high speed energy-efficient trains mastered by the Japanese. Our Amtrak system is ineffective and no longer meets our transportation needs.  Such a rail system would reduce air travel and the high costs associated with air travel and the maintenance of airport infrastructures.  Such a Marshall plan would also mandate incentives for more people to use public transportation.

 

The above economic stimulus proposals focus on ways to reduce the debt and increase savings.  Next, an aggressive stimulus policy needs to be implemented to bring people back into the workforce. 

1.  It is estimated that 80,000 businesses will go bankrupt during the forthcoming 6 to 12 months.  A stimulus package should be launched that would provide two percent interest loans to small businesses if qualifying businesses agree to hire five new employees.

2. Institute a low income micro-credit loan program in our inner city neighborhoods. Such loans, however, would be co-sponsored by corporations that would receive a 2 to 1 tax write off for each business they sponsor.  A similar tax incentive would apply to corporations sponsoring basic skills and technological training to impoverished inner city neighborhoods.

3,  States and individual cities should donate free abandoned buildings for rehabilitation under the auspices of a new inner city conservation corps, with the proviso that the individuals employed are required to live in that city for three years.  Such a program, at a national level, could generate upwards to 3 million new jobs. The greater metropolitan New York City area, for example, has approximately 60,000 abandoned buildings. These can also be corporate sponsored for the sole purpose of being developed into schools, residences, community centers, etc. They would be registered as Trusts in order to prevent sole personal ownership.  In the case of buildings converted into low income housing, residents would be charged no more than 15 percent of their disposal income thereby providing low income families with good housing.

4. A corporate sponsorship project to employ men and women to transform inner city areas into parks for sustainable habitat would not only add jobs but also improve the quality of life for many city residents. These neighborhoods would be regulated to prevent outside gentrification, which has historically been shown to contribute to the decay of neighborhoods.

5.  A coalition of the states governors estimates that between $1.6 and $2.3 trillion over five years will be necessary to rebuild physical infrastructures throughout the nation: bridge and highway improvement, upgraded water and gas lines, etc. Such a project would be a long term investment to improve Americans' health and safety, in addition to saving energy. 

6.  Employ an environmental clean up work force to tackle the ecological and health problems of designated superfund sites and other high risk toxic areas. For example, such an environmental work force could clean up the coal mine scalping pollution now devastating many parts of West Virginia and Kentucky. 

7.  Launch an aggressive reforestation system with the goal to plant 1 billion trees over a 5 year period. In addition, funds should be put into land and water conservation in order to reclaim the land from further development.

8.  Generate incentives for the growth of small communities around farming regions for people who wish to live away from the cities.  Adopting a model similar to Israel's kibbutzim would increase land sustainability and help move farms towards sustainable organic models.

9.  All future faith-based initiatives need to be judged and only funded based upon a proven record of interfaith commitment. An interfaith missionary program dedicated to peace, which would serve the best interests of America's foreign image, can offer a model of compassion and understanding to other countries in the world. Only such an interfaith program—absent of sectarian exclusivity—can carry a mandate of honesty in sincerely working to eradicate diseases, increase agricultural sustainability and reforestation projects, to developing nations.