A different stimulus idea that might work

Written by

Warning: this content is older than 365 days. It may be out of date and no longer relevant.

Jobs are what matter most. Here’s a stimulus idea to send to Washington.

Create a $100,000 loan grant run through the federal department of your choice, backed by the Treasury.$

Businesses of any size may apply for and receive a100,000, one year loan at the Federal Funds Rate. If a business then spends that loan funding solely on employment (verified by new payroll taxes and W-2 data from the IRS), at the end of one year, the loan is forgiven, essentially giving the business a free employee or three for a year.

Conditions: payroll taxes and W-2 data should verify that the business spent the equivalent of $100,000 solely on employing new hires. Using data the government collects anyway, controls should be able to easily verify that these are new hires and not existing employees. Don’t spend it correctly? IRS detects a little hanky panky? Interest capitalizes and the loan enters repayment immediately.

Why a stimulus idea like this? Rather than attempt to plow money into specific industries, this lets businesses hire or rehire based on what that specific business needs to grow. The Student Loan Network might need a junior web developer but the Advance Guard might need an admin. By giving businesses the discretion to hire who they need, the market can get the talent actually required, rather than decided by government fiat.

This kind of stimulus will, by design, disproportionately benefit small businesses. Because they’re more agile, this will help them grow faster. Because it’s small business, the ability to bring unemployed citizens in for retraining will work better – after all, you’ll learn the craft of baking bread faster at a small family bakery than you will at Omni Consumer Products Grain Division. (though certainly they can apply and get the same loan)

What’s the cost? The IRS estimates roughly 30 million small businesses exist in the US. Guess what? This is a three trillion dollar stimulus. Considering some of what’s being flung around Wall Street and DC, that’s in the ballpark of other proposals. What makes this one different? If 10% of businesses get the loan and start hiring, the 3 million job deficit goes away immediately, rather than waiting for government funding to flow through states, cities, and banks.

What’s your stimulus idea?

Did you enjoy this blog post? If so, please subscribe right now!

Get this and other great articles from the source at www.ChristopherSPenn.com

Comments

96 responses to “A different stimulus idea that might work”

February 11, 2009

Scott Sigler

Why should my tax dollars to go giving you free employees? Just because the government is throwing money at failing businesses doesn't make it a free buffet for additional businesses to line up and take their piece. You take a $100,000 loan that you don't have to pay back? That's not “stimulus,” that's “theft.” Theft from the taxpayer. Taxes should not go to propping up failing businesses.

Reply
February 11, 2009

Scott Sigler

Why should my tax dollars to go giving you free employees? Just because the government is throwing money at failing businesses doesn't make it a free buffet for additional businesses to line up and take their piece. You take a $100,000 loan that you don't have to pay back? That's not “stimulus,” that's “theft.” Theft from the taxpayer. Taxes should not go to propping up failing businesses.

Reply
February 11, 2009

Scott Sigler

Why should my tax dollars to go giving you free employees? Just because the government is throwing money at failing businesses doesn't make it a free buffet for additional businesses to line up and take their piece. You take a $100,000 loan that you don't have to pay back? That's not “stimulus,” that's “theft.” Theft from the taxpayer. Taxes should not go to propping up failing businesses.

Reply
February 11, 2009

Chris Hooley

That's actually a pretty damn decent idea dude.

Reply
February 11, 2009

Chris Hooley

That's actually a pretty damn decent idea dude.

Reply
February 11, 2009

Chris Hooley

That's actually a pretty damn decent idea dude.

Reply
February 11, 2009

Eric Garland

Pay everybody's student loans. Then, those kids will be free to innovate, start new businesses, and be the consumers of the future. Otherwise, they will be tied down by crippling debt, purchased at the top of the education bubble.

Reply
February 11, 2009

Eric Garland

Pay everybody's student loans. Then, those kids will be free to innovate, start new businesses, and be the consumers of the future. Otherwise, they will be tied down by crippling debt, purchased at the top of the education bubble.

Reply
February 11, 2009

Eric Garland

Pay everybody's student loans. Then, those kids will be free to innovate, start new businesses, and be the consumers of the future. Otherwise, they will be tied down by crippling debt, purchased at the top of the education bubble.

Reply
February 11, 2009

Christopher S. Penn

As opposed to the current plan of handing the same amount of taxayer money to banks and hoping they do something with it?

What's the better plan than this?

Reply
February 11, 2009

Christopher S. Penn

As opposed to the current plan of handing the same amount of taxayer money to banks and hoping they do something with it?

What's the better plan than this?

Reply
February 11, 2009

Christopher S. Penn

As opposed to the current plan of handing the same amount of taxayer money to banks and hoping they do something with it?

What's the better plan than this?

Reply
February 11, 2009

Jay M.

Seesmic video reply from Disqus.

Reply
February 11, 2009

Jay M.

Seesmic video reply from Disqus.

Reply
February 11, 2009

Jay M.

Seesmic video reply from Disqus.

Reply
February 11, 2009

jaymartinez

20,000 tax credit per employee to companies who hire and keep them for at least 12 months.

20,000 x 3.5 million jobs = roughly 60 billion

same for folks who purchase and close homes for the 2009 calendar year

first one will get people working and second will do the same. not my idea heard it on the dave ramsey show

Reply
February 11, 2009

jaymartinez

20,000 tax credit per employee to companies who hire and keep them for at least 12 months.

20,000 x 3.5 million jobs = roughly 60 billion

same for folks who purchase and close homes for the 2009 calendar year

first one will get people working and second will do the same. not my idea heard it on the dave ramsey show

Reply
February 11, 2009

Scott Sigler

I see, so in your eyes it's okay to take the taxpayers money, you just think it should be given away, for free, to someone besides the banks, yes?

Reply
February 11, 2009

Scott Sigler

I see, so in your eyes it's okay to take the taxpayers money, you just think it should be given away, for free, to someone besides the banks, yes?

Reply
February 11, 2009

Scott Sigler

I see, so in your eyes it's okay to take the taxpayers money, you just think it should be given away, for free, to someone besides the banks, yes?

Reply
February 11, 2009

Scott Sigler

Why should my tax dollars to go pay some deadbeat's student loans? If the kid can't work to pay back the money he/she borrowed in good faith, that doesn't say much about their business sense to begin with. They borrowed it, they can work to pay it back. That's how business is supposed to work.

Reply
February 11, 2009

Scott Sigler

Why should my tax dollars to go pay some deadbeat's student loans? If the kid can't work to pay back the money he/she borrowed in good faith, that doesn't say much about their business sense to begin with. They borrowed it, they can work to pay it back. That's how business is supposed to work.

Reply
February 11, 2009

Scott Sigler

Why should my tax dollars to go pay some deadbeat's student loans? If the kid can't work to pay back the money he/she borrowed in good faith, that doesn't say much about their business sense to begin with. They borrowed it, they can work to pay it back. That's how business is supposed to work.

Reply
February 11, 2009

Christopher S. Penn

Well, we're going to do it anyway regardless. Washington is hell bent on that course. The question is how the money will be spent.

Above all else, the 11.6 million people out of work need to be employed, or at least a good chunk of them. Employment is what will hold the line on foreclosures, on decreasing business output, on declining retail sales, etc. Without jobs, nothing else matters.

The basic formula for growth – GDP – is C+I+G+(X-M). Consumers can't buy without jobs. Investors won't invest in businesses with no productivity. Exports are in the toilet, as are imports. That leaves the big G – government – as the catalyst to reverse the vicious circle into a virtuous one.

If you oppose this or any other stimulus plan, that's fine – what's your proposed solution to 11.6 million people out of work?

Reply
February 11, 2009

Christopher S. Penn

Well, we're going to do it anyway regardless. Washington is hell bent on that course. The question is how the money will be spent.

Above all else, the 11.6 million people out of work need to be employed, or at least a good chunk of them. Employment is what will hold the line on foreclosures, on decreasing business output, on declining retail sales, etc. Without jobs, nothing else matters.

The basic formula for growth – GDP – is C+I+G+(X-M). Consumers can't buy without jobs. Investors won't invest in businesses with no productivity. Exports are in the toilet, as are imports. That leaves the big G – government – as the catalyst to reverse the vicious circle into a virtuous one.

If you oppose this or any other stimulus plan, that's fine – what's your proposed solution to 11.6 million people out of work?

Reply
February 11, 2009

Christopher S. Penn

Well, we're going to do it anyway regardless. Washington is hell bent on that course. The question is how the money will be spent.

Above all else, the 11.6 million people out of work need to be employed, or at least a good chunk of them. Employment is what will hold the line on foreclosures, on decreasing business output, on declining retail sales, etc. Without jobs, nothing else matters.

The basic formula for growth – GDP – is C+I+G+(X-M). Consumers can't buy without jobs. Investors won't invest in businesses with no productivity. Exports are in the toilet, as are imports. That leaves the big G – government – as the catalyst to reverse the vicious circle into a virtuous one.

If you oppose this or any other stimulus plan, that's fine – what's your proposed solution to 11.6 million people out of work?

Reply
February 11, 2009

Scott Sigler

I object to “free money.” If business need the $100k loan, they should be able to get it, but they have to pay it back, with interest. Want money from the government? Fine, let the government turn a profit from that.

My tax dollars are not here to subsidize failure. Where in the hell did we as a culture decide that it was fine and dandy to just take taxpayer money, give it away, and expect nothing in return?

Your “solution” assumes that the basic principle — taking someone else's money and giving nothing in return — is acceptable. Your argument is simply for a better method to give away our money — you clearly have no problem with the underlying principle that it's fine to give it away.

The point is that free money is not free. Who holds the final bill? Every tax dollar you take is a dollar I can't spend to buy products and contribute to the GDP.

A stimulus plan shouldn't be a blank check. Money isn't free. I pay over 50% of my income to federal, state, local and sales taxes. That means I work — for FREE — until July of each year before I make a penny for my own family. The cavalier attitude that it's fine to give that money away and expect nothing in return shows a basic misunderstanding of how business works.

You want money? Let's make that happen. Let's get your business to be successful so you can pay it back. You want free money? Go be the panhandler that you really are.

Reply
February 11, 2009

Scott Sigler

I object to “free money.” If business need the $100k loan, they should be able to get it, but they have to pay it back, with interest. Want money from the government? Fine, let the government turn a profit from that.

My tax dollars are not here to subsidize failure. Where in the hell did we as a culture decide that it was fine and dandy to just take taxpayer money, give it away, and expect nothing in return?

Your “solution” assumes that the basic principle — taking someone else's money and giving nothing in return — is acceptable. Your argument is simply for a better method to give away our money — you clearly have no problem with the underlying principle that it's fine to give it away.

The point is that free money is not free. Who holds the final bill? Every tax dollar you take is a dollar I can't spend to buy products and contribute to the GDP.

A stimulus plan shouldn't be a blank check. Money isn't free. I pay over 50% of my income to federal, state, local and sales taxes. That means I work — for FREE — until July of each year before I make a penny for my own family. The cavalier attitude that it's fine to give that money away and expect nothing in return shows a basic misunderstanding of how business works.

You want money? Let's make that happen. Let's get your business to be successful so you can pay it back. You want free money? Go be the panhandler that you really are.

Reply
February 11, 2009

Scott Sigler

I object to “free money.” If business need the $100k loan, they should be able to get it, but they have to pay it back, with interest. Want money from the government? Fine, let the government turn a profit from that.

My tax dollars are not here to subsidize failure. Where in the hell did we as a culture decide that it was fine and dandy to just take taxpayer money, give it away, and expect nothing in return?

Your “solution” assumes that the basic principle — taking someone else's money and giving nothing in return — is acceptable. Your argument is simply for a better method to give away our money — you clearly have no problem with the underlying principle that it's fine to give it away.

The point is that free money is not free. Who holds the final bill? Every tax dollar you take is a dollar I can't spend to buy products and contribute to the GDP.

A stimulus plan shouldn't be a blank check. Money isn't free. I pay over 50% of my income to federal, state, local and sales taxes. That means I work — for FREE — until July of each year before I make a penny for my own family. The cavalier attitude that it's fine to give that money away and expect nothing in return shows a basic misunderstanding of how business works.

You want money? Let's make that happen. Let's get your business to be successful so you can pay it back. You want free money? Go be the panhandler that you really are.

Reply
February 11, 2009

Christopher S. Penn

I'll partly disagree. Yes, the taxpayer pays the money into the system, but the money itself is engineered. It's not tied to anything substantive. The difference between a trillion dollar economy and a ten trillion dollar economy is a single keystroke on the mainframe of the Treasury.

Your money, such as it is, does not exist beyond the faith you place in it.

That said, I still want to hear what YOUR idea is to rein in rampant unemployment, declining wages, and all the other crap that's occurring now. With or without taxpayer money, what is your idea?

Reply
February 11, 2009

Christopher S. Penn

I'll partly disagree. Yes, the taxpayer pays the money into the system, but the money itself is engineered. It's not tied to anything substantive. The difference between a trillion dollar economy and a ten trillion dollar economy is a single keystroke on the mainframe of the Treasury.

Your money, such as it is, does not exist beyond the faith you place in it.

That said, I still want to hear what YOUR idea is to rein in rampant unemployment, declining wages, and all the other crap that's occurring now. With or without taxpayer money, what is your idea?

Reply
February 11, 2009

Christopher S. Penn

I'll partly disagree. Yes, the taxpayer pays the money into the system, but the money itself is engineered. It's not tied to anything substantive. The difference between a trillion dollar economy and a ten trillion dollar economy is a single keystroke on the mainframe of the Treasury.

Your money, such as it is, does not exist beyond the faith you place in it.

That said, I still want to hear what YOUR idea is to rein in rampant unemployment, declining wages, and all the other crap that's occurring now. With or without taxpayer money, what is your idea?

Reply
February 11, 2009

JD

I like the idea – I also consider jobs to be the top priority and fixing the jobs issue will have a knock-on effect on banking by propping up the assets that otherwise would become more toxic (i.e. more job losses lead to more foreclosures). I would tweak the idea somewhat (hopefully without overcomplicating – I love the simplicity of your idea) to incent a longer term effect. Maybe something like a hybrid load – they get cash immediately (because they need the cash to hire people), but it is pre-payment against tax credit that they get to claim over time. The timeframe and the amount of the credit depends on how many net new hires (i.e. if they are laying off people while hiring, they don't get the credit) and sustained employment (i.e. if they lay off all their new hires the following year, they don't get the full credit because the credit is claimed/paid over 3 years). JD46

Reply
February 11, 2009

JD

I like the idea – I also consider jobs to be the top priority and fixing the jobs issue will have a knock-on effect on banking by propping up the assets that otherwise would become more toxic (i.e. more job losses lead to more foreclosures). I would tweak the idea somewhat (hopefully without overcomplicating – I love the simplicity of your idea) to incent a longer term effect. Maybe something like a hybrid load – they get cash immediately (because they need the cash to hire people), but it is pre-payment against tax credit that they get to claim over time. The timeframe and the amount of the credit depends on how many net new hires (i.e. if they are laying off people while hiring, they don't get the credit) and sustained employment (i.e. if they lay off all their new hires the following year, they don't get the full credit because the credit is claimed/paid over 3 years). JD46

Reply
February 11, 2009

JD

I like the idea – I also consider jobs to be the top priority and fixing the jobs issue will have a knock-on effect on banking by propping up the assets that otherwise would become more toxic (i.e. more job losses lead to more foreclosures). I would tweak the idea somewhat (hopefully without overcomplicating – I love the simplicity of your idea) to incent a longer term effect. Maybe something like a hybrid load – they get cash immediately (because they need the cash to hire people), but it is pre-payment against tax credit that they get to claim over time. The timeframe and the amount of the credit depends on how many net new hires (i.e. if they are laying off people while hiring, they don't get the credit) and sustained employment (i.e. if they lay off all their new hires the following year, they don't get the full credit because the credit is claimed/paid over 3 years). JD46

Reply
February 11, 2009

Scott Sigler

Tax money isn't tied to anything substantiative, like schools, roads, police, fire department, public transportation, water and garbage retrieval?

If my money does not exist, then why are you taking it? That's a rhetorical argument that has nothing to do with a discussion on how to spend said money.,

How about we simply modify your idea to make it have some basic business sense. You need an employee? You need to pay that employee $100k? Then borrow the money to hire that employee from this bottomless pool drawn from people who work for a living. What's the free market interest rate? Cut that in half. Now you get the money to build your business if you meed the qualifications you listed, and you get it a below-market rate.

Will some of those loans go unpaid because that business fails? Of course. But some of the businesses will not fail, and will pay the money back. Net result, far less “imaginary money” taken away from the taxpayer.

So, same play you've created, with the exception that we change it from welfare to an actual business relationship.

Reply
February 11, 2009

Scott Sigler

Tax money isn't tied to anything substantiative, like schools, roads, police, fire department, public transportation, water and garbage retrieval?

If my money does not exist, then why are you taking it? That's a rhetorical argument that has nothing to do with a discussion on how to spend said money.,

How about we simply modify your idea to make it have some basic business sense. You need an employee? You need to pay that employee $100k? Then borrow the money to hire that employee from this bottomless pool drawn from people who work for a living. What's the free market interest rate? Cut that in half. Now you get the money to build your business if you meed the qualifications you listed, and you get it a below-market rate.

Will some of those loans go unpaid because that business fails? Of course. But some of the businesses will not fail, and will pay the money back. Net result, far less “imaginary money” taken away from the taxpayer.

So, same play you've created, with the exception that we change it from welfare to an actual business relationship.

Reply
February 11, 2009

Scott Sigler

Tax money isn't tied to anything substantiative, like schools, roads, police, fire department, public transportation, water and garbage retrieval?

If my money does not exist, then why are you taking it? That's a rhetorical argument that has nothing to do with a discussion on how to spend said money.,

How about we simply modify your idea to make it have some basic business sense. You need an employee? You need to pay that employee $100k? Then borrow the money to hire that employee from this bottomless pool drawn from people who work for a living. What's the free market interest rate? Cut that in half. Now you get the money to build your business if you meed the qualifications you listed, and you get it a below-market rate.

Will some of those loans go unpaid because that business fails? Of course. But some of the businesses will not fail, and will pay the money back. Net result, far less “imaginary money” taken away from the taxpayer.

So, same play you've created, with the exception that we change it from welfare to an actual business relationship.

Reply
February 11, 2009

Christopher S. Penn

So in other words, still free money, since the Federal Funds Rate is effectively zero. That works. Lend out money directly from Treasury at no interest, with a repayment term. I like it.

Reply
February 11, 2009

Christopher S. Penn

So in other words, still free money, since the Federal Funds Rate is effectively zero. That works. Lend out money directly from Treasury at no interest, with a repayment term. I like it.

Reply
February 11, 2009

Christopher S. Penn

So in other words, still free money, since the Federal Funds Rate is effectively zero. That works. Lend out money directly from Treasury at no interest, with a repayment term. I like it.

Reply
February 11, 2009

chelpixie

Scott, there are two problems here.

One, people can't find jobs to make your dollar worth it's value. They can't make money, they can't spend money, they can't drive the economy. What's your money going to be worth if the US financial system collapses? As trust dwindles down, nothing.

Two, those “deadbeat” students graduated with debt they can't pay because the current market is dumping jobs in the thousands daily.

I'd really rather not crash and burn. I'd really rather those people that NEED to feed their families be able to find a job to do so. Right now they can't. Something's gotta give.

Reply
February 11, 2009

chelpixie

Scott, there are two problems here.

One, people can't find jobs to make your dollar worth it's value. They can't make money, they can't spend money, they can't drive the economy. What's your money going to be worth if the US financial system collapses? As trust dwindles down, nothing.

Two, those “deadbeat” students graduated with debt they can't pay because the current market is dumping jobs in the thousands daily.

I'd really rather not crash and burn. I'd really rather those people that NEED to feed their families be able to find a job to do so. Right now they can't. Something's gotta give.

Reply
February 11, 2009

chelpixie

Scott, there are two problems here.

One, people can't find jobs to make your dollar worth it's value. They can't make money, they can't spend money, they can't drive the economy. What's your money going to be worth if the US financial system collapses? As trust dwindles down, nothing.

Two, those “deadbeat” students graduated with debt they can't pay because the current market is dumping jobs in the thousands daily.

I'd really rather not crash and burn. I'd really rather those people that NEED to feed their families be able to find a job to do so. Right now they can't. Something's gotta give.

Reply
February 11, 2009

Scott Sigler

Then we agree, although it looks like the rate is 0.25, not zero (but I might not understand that correctly). So, half would be 0.125, a pretty damn good interest rate if you want to borrow money to hire an employee.

The important thing here, however, is that the money gets paid back. Everyone wins. Businesses can grow and hire employees courtesy of Joe Taxpayer, and the money gets paid back — it's not “free.”

Reply
February 11, 2009

Scott Sigler

Then we agree, although it looks like the rate is 0.25, not zero (but I might not understand that correctly). So, half would be 0.125, a pretty damn good interest rate if you want to borrow money to hire an employee.

The important thing here, however, is that the money gets paid back. Everyone wins. Businesses can grow and hire employees courtesy of Joe Taxpayer, and the money gets paid back — it's not “free.”

Reply
February 11, 2009

Scott Sigler

Then we agree, although it looks like the rate is 0.25, not zero (but I might not understand that correctly). So, half would be 0.125, a pretty damn good interest rate if you want to borrow money to hire an employee.

The important thing here, however, is that the money gets paid back. Everyone wins. Businesses can grow and hire employees courtesy of Joe Taxpayer, and the money gets paid back — it's not “free.”

Reply
February 11, 2009

Scott Sigler

What is everyone's fascination with totally forgiving someone's obligation to make good on their agreements? Chel, if the economy is such that the students can't pay the bill they agreed to pay, then we can delay the repayment — not forgive it entirely.

There are basic principles at stake here. What you're saying is that as soon as times are hard, the government should step in and pay your debts.

It's not a pay/don't pay situation. That's simplistic. Delay repayment if you don't want to “crash and burn,” but no, you don't get a free ride. These students made an agreement, to repay the money they borrowed. They need to live up to that agreement, if not now, then farther down the road.

Someone is paying for it. Shouldn't that someone be the person that borrowed it?

Reply
February 11, 2009

Scott Sigler

What is everyone's fascination with totally forgiving someone's obligation to make good on their agreements? Chel, if the economy is such that the students can't pay the bill they agreed to pay, then we can delay the repayment — not forgive it entirely.

There are basic principles at stake here. What you're saying is that as soon as times are hard, the government should step in and pay your debts.

It's not a pay/don't pay situation. That's simplistic. Delay repayment if you don't want to “crash and burn,” but no, you don't get a free ride. These students made an agreement, to repay the money they borrowed. They need to live up to that agreement, if not now, then farther down the road.

Someone is paying for it. Shouldn't that someone be the person that borrowed it?

Reply
February 11, 2009

Scott Sigler

What is everyone's fascination with totally forgiving someone's obligation to make good on their agreements? Chel, if the economy is such that the students can't pay the bill they agreed to pay, then we can delay the repayment — not forgive it entirely.

There are basic principles at stake here. What you're saying is that as soon as times are hard, the government should step in and pay your debts.

It's not a pay/don't pay situation. That's simplistic. Delay repayment if you don't want to “crash and burn,” but no, you don't get a free ride. These students made an agreement, to repay the money they borrowed. They need to live up to that agreement, if not now, then farther down the road.

Someone is paying for it. Shouldn't that someone be the person that borrowed it?

Reply
February 11, 2009

chelpixie

Scott, I'm not saying they shouldn't repay what they owe the government. In fact, I didn't say that.

I did ask HOW they are expected to when we're tanking jobs day after day in the thousands. If you want to delay, sure, that's reasonable. Let's talk about what's going to start happening soon.

What happens when a family runs out of unemployment benefits because the providers can't find jobs because there are no jobs? A few weeks ago a man killed himself and his family. Right or wrong, he did that because he looked a future and saw nothing hopeful about the situation he was in.

That is the reality that we're facing right now. There isn't enough to go around. Even if people aren't killing themselves left and right, they won't have food or heat or electricity if they can't find a job. Which is again, becoming even harder by the day.

You have to make the economy's wheels turn, they are stuck in mud right now. Your money? It's going to banks exec who want their comfy little vacations and bonuses. Does that really make you feel better? If so, more power to you for being angry at the people who need to feed themselves.

The fact still remains that unless something rational is done with the stimulus that the government is going to take out of our pockets like it or not, then we're going to continue down the path we're currently on.

It won't matter if your money is blown, it won't have any value anymore. Then you face the question of how can you repay something when you can't determine the value? So the point will be moot.

So please, tell me what it is that is a better idea. Because G*d knows we need them.

Reply
February 11, 2009

chelpixie

Scott, I'm not saying they shouldn't repay what they owe the government. In fact, I didn't say that.

I did ask HOW they are expected to when we're tanking jobs day after day in the thousands. If you want to delay, sure, that's reasonable. Let's talk about what's going to start happening soon.

What happens when a family runs out of unemployment benefits because the providers can't find jobs because there are no jobs? A few weeks ago a man killed himself and his family. Right or wrong, he did that because he looked a future and saw nothing hopeful about the situation he was in.

That is the reality that we're facing right now. There isn't enough to go around. Even if people aren't killing themselves left and right, they won't have food or heat or electricity if they can't find a job. Which is again, becoming even harder by the day.

You have to make the economy's wheels turn, they are stuck in mud right now. Your money? It's going to banks exec who want their comfy little vacations and bonuses. Does that really make you feel better? If so, more power to you for being angry at the people who need to feed themselves.

The fact still remains that unless something rational is done with the stimulus that the government is going to take out of our pockets like it or not, then we're going to continue down the path we're currently on.

It won't matter if your money is blown, it won't have any value anymore. Then you face the question of how can you repay something when you can't determine the value? So the point will be moot.

So please, tell me what it is that is a better idea. Because G*d knows we need them.

Reply
February 11, 2009

chelpixie

Scott, I'm not saying they shouldn't repay what they owe the government. In fact, I didn't say that.

I did ask HOW they are expected to when we're tanking jobs day after day in the thousands. If you want to delay, sure, that's reasonable. Let's talk about what's going to start happening soon.

What happens when a family runs out of unemployment benefits because the providers can't find jobs because there are no jobs? A few weeks ago a man killed himself and his family. Right or wrong, he did that because he looked a future and saw nothing hopeful about the situation he was in.

That is the reality that we're facing right now. There isn't enough to go around. Even if people aren't killing themselves left and right, they won't have food or heat or electricity if they can't find a job. Which is again, becoming even harder by the day.

You have to make the economy's wheels turn, they are stuck in mud right now. Your money? It's going to banks exec who want their comfy little vacations and bonuses. Does that really make you feel better? If so, more power to you for being angry at the people who need to feed themselves.

The fact still remains that unless something rational is done with the stimulus that the government is going to take out of our pockets like it or not, then we're going to continue down the path we're currently on.

It won't matter if your money is blown, it won't have any value anymore. Then you face the question of how can you repay something when you can't determine the value? So the point will be moot.

So please, tell me what it is that is a better idea. Because G*d knows we need them.

Reply
February 11, 2009

Scott Sigler

You're being very evasive. I responded to this comment: <<Pay everybody's student loans. Then, those kids will be free to innovate, start new businesses, and be the consumers of the future.>>

That's the topic sentence of this comment thread. I attacked that statement, you defended it. But now you're saying that you do not agree with the topic sentence that you defended? You agree with me, that we not forgive the debt, but instead delay repayment? Please clarify, because you're covering both sides of the discussion. Do you agree with me or not?

If you agree, then “how” they repay isn't the question. The question is “when” will they repay.

The rest of your comment has nothing do to with the discussion, and is a fallacy of logic known as “an appeal to emotion.” Was the man that killed his family trying to repay a student loan? If not, then you are using the appeal to emotion to confuse cause and effect.

Reply
February 11, 2009

Scott Sigler

You're being very evasive. I responded to this comment: <<Pay everybody's student loans. Then, those kids will be free to innovate, start new businesses, and be the consumers of the future.>>

That's the topic sentence of this comment thread. I attacked that statement, you defended it. But now you're saying that you do not agree with the topic sentence that you defended? You agree with me, that we not forgive the debt, but instead delay repayment? Please clarify, because you're covering both sides of the discussion. Do you agree with me or not?

If you agree, then “how” they repay isn't the question. The question is “when” will they repay.

The rest of your comment has nothing do to with the discussion, and is a fallacy of logic known as “an appeal to emotion.” Was the man that killed his family trying to repay a student loan? If not, then you are using the appeal to emotion to confuse cause and effect.

Reply
February 11, 2009

Scott Sigler

You're being very evasive. I responded to this comment: <<Pay everybody's student loans. Then, those kids will be free to innovate, start new businesses, and be the consumers of the future.>>

That's the topic sentence of this comment thread. I attacked that statement, you defended it. But now you're saying that you do not agree with the topic sentence that you defended? You agree with me, that we not forgive the debt, but instead delay repayment? Please clarify, because you're covering both sides of the discussion. Do you agree with me or not?

If you agree, then “how” they repay isn't the question. The question is “when” will they repay.

The rest of your comment has nothing do to with the discussion, and is a fallacy of logic known as “an appeal to emotion.” Was the man that killed his family trying to repay a student loan? If not, then you are using the appeal to emotion to confuse cause and effect.

Reply
February 11, 2009

Aithene

You know, if I could get a $100,000 loan, I could afford to hire myself and start my own business. And if I paid myself the whole$ 100,000, but spent it wisely, it would give me 2 years to get it up and running w/out too much worry.

Reply
February 11, 2009

aithene

You know, if I could get a $100,000 loan, I could afford to hire myself and start my own business. And if I paid myself the whole$ 100,000, but spent it wisely, it would give me 2 years to get it up and running w/out too much worry.

Reply
February 11, 2009

aithene

You know, if I could get a $100,000 loan, I could afford to hire myself and start my own business. And if I paid myself the whole$ 100,000, but spent it wisely, it would give me 2 years to get it up and running w/out too much worry.

Reply
February 11, 2009

EdRoberts

Maybe I'm confused here…

Are the businesses getting the bailout money required to pay it back? I'm assuming so. If not, then inflation should be through the roof. Or.. are we assuming that many of these businesses will fail anyway, and the government never gets back the money?

I totally understand the employment side of things though. Anything that creates jobs, and increases consumer confidence is a good thing.

Reply
February 11, 2009

EdRoberts

Maybe I'm confused here…

Are the businesses getting the bailout money required to pay it back? I'm assuming so. If not, then inflation should be through the roof. Or.. are we assuming that many of these businesses will fail anyway, and the government never gets back the money?

I totally understand the employment side of things though. Anything that creates jobs, and increases consumer confidence is a good thing.

Reply
February 11, 2009

EdRoberts

Maybe I'm confused here…

Are the businesses getting the bailout money required to pay it back? I'm assuming so. If not, then inflation should be through the roof. Or.. are we assuming that many of these businesses will fail anyway, and the government never gets back the money?

I totally understand the employment side of things though. Anything that creates jobs, and increases consumer confidence is a good thing.

Reply
February 11, 2009

Scott Sigler

Why should my tax dollars to go giving you free employees? Just because the government is throwing money at failing businesses doesn't make it a free buffet for additional businesses to line up and take their piece. You take a $100,000 loan that you don't have to pay back? That's not “stimulus,” that's “theft.” Theft from the taxpayer. Taxes should not go to propping up failing businesses.

Reply
February 11, 2009

Chris Hooley

That's actually a pretty damn decent idea dude.

Reply
February 11, 2009

Eric Garland

Pay everybody's student loans. Then, those kids will be free to innovate, start new businesses, and be the consumers of the future. Otherwise, they will be tied down by crippling debt, purchased at the top of the education bubble.

Reply
February 11, 2009

Christopher S. Penn

As opposed to the current plan of handing the same amount of taxayer money to banks and hoping they do something with it?

What's the better plan than this?

Reply
February 11, 2009

Jay M.

Seesmic video reply from Disqus.

Reply
February 11, 2009

jaymartinez

20,000 tax credit per employee to companies who hire and keep them for at least 12 months.

20,000 x 3.5 million jobs = roughly 60 billion

same for folks who purchase and close homes for the 2009 calendar year

first one will get people working and second will do the same. not my idea heard it on the dave ramsey show

Reply
February 11, 2009

Scott Sigler

I see, so in your eyes it's okay to take the taxpayers money, you just think it should be given away, for free, to someone besides the banks, yes?

Reply
February 11, 2009

Scott Sigler

Why should my tax dollars to go pay some deadbeat's student loans? If the kid can't work to pay back the money he/she borrowed in good faith, that doesn't say much about their business sense to begin with. They borrowed it, they can work to pay it back. That's how business is supposed to work.

Reply
February 11, 2009

Christopher S. Penn

Well, we're going to do it anyway regardless. Washington is hell bent on that course. The question is how the money will be spent.

Above all else, the 11.6 million people out of work need to be employed, or at least a good chunk of them. Employment is what will hold the line on foreclosures, on decreasing business output, on declining retail sales, etc. Without jobs, nothing else matters.

The basic formula for growth – GDP – is C+I+G+(X-M). Consumers can't buy without jobs. Investors won't invest in businesses with no productivity. Exports are in the toilet, as are imports. That leaves the big G – government – as the catalyst to reverse the vicious circle into a virtuous one.

If you oppose this or any other stimulus plan, that's fine – what's your proposed solution to 11.6 million people out of work?

Reply
February 11, 2009

Scott Sigler

I object to “free money.” If business need the $100k loan, they should be able to get it, but they have to pay it back, with interest. Want money from the government? Fine, let the government turn a profit from that.

My tax dollars are not here to subsidize failure. Where in the hell did we as a culture decide that it was fine and dandy to just take taxpayer money, give it away, and expect nothing in return?

Your “solution” assumes that the basic principle — taking someone else’s money and giving nothing in return — is acceptable. Your argument is simply for a better method to give away our money — you clearly have no problem with the underlying principle that it’s fine to give it away.

The point is that free money is not free. Who holds the final bill? Every tax dollar you take is a dollar I can’t spend to buy products and contribute to the GDP.

A stimulus plan shouldn’t be a blank check. Money isn’t free. I pay over 50% of my income to federal, state, local and sales taxes. That means I work — for FREE — until July of each year before I make a penny for my own family. The cavalier attitude that it’s fine to give that money away and expect nothing in return shows a basic misunderstanding of how business works.

You want money? Let’s make that happen. Let’s get your business to be successful so you can pay it back. You want free money? Go be the panhandler that you really are.

Reply
February 11, 2009

Christopher S. Penn

I'll partly disagree. Yes, the taxpayer pays the money into the system, but the money itself is engineered. It's not tied to anything substantive. The difference between a trillion dollar economy and a ten trillion dollar economy is a single keystroke on the mainframe of the Treasury.

Your money, such as it is, does not exist beyond the faith you place in it.

That said, I still want to hear what YOUR idea is to rein in rampant unemployment, declining wages, and all the other crap that's occurring now. With or without taxpayer money, what is your idea?

Reply
February 11, 2009

JD

I like the idea – I also consider jobs to be the top priority and fixing the jobs issue will have a knock-on effect on banking by propping up the assets that otherwise would become more toxic (i.e. more job losses lead to more foreclosures). I would tweak the idea somewhat (hopefully without overcomplicating – I love the simplicity of your idea) to incent a longer term effect. Maybe something like a hybrid load – they get cash immediately (because they need the cash to hire people), but it is pre-payment against tax credit that they get to claim over time. The timeframe and the amount of the credit depends on how many net new hires (i.e. if they are laying off people while hiring, they don't get the credit) and sustained employment (i.e. if they lay off all their new hires the following year, they don't get the full credit because the credit is claimed/paid over 3 years). JD46

Reply
February 11, 2009

Scott Sigler

Tax money isn't tied to anything substantiative, like schools, roads, police, fire department, public transportation, water and garbage retrieval?

If my money does not exist, then why are you taking it? That's a rhetorical argument that has nothing to do with a discussion on how to spend said money.,

How about we simply modify your idea to make it have some basic business sense. You need an employee? You need to pay that employee $100k? Then borrow the money to hire that employee from this bottomless pool drawn from people who work for a living. What's the free market interest rate? Cut that in half. Now you get the money to build your business if you meed the qualifications you listed, and you get it a below-market rate.

Will some of those loans go unpaid because that business fails? Of course. But some of the businesses will not fail, and will pay the money back. Net result, far less “imaginary money” taken away from the taxpayer.

So, same play you've created, with the exception that we change it from welfare to an actual business relationship.

Reply
February 11, 2009

Christopher S. Penn

So in other words, still free money, since the Federal Funds Rate is effectively zero. That works. Lend out money directly from Treasury at no interest, with a repayment term. I like it.

Reply
February 11, 2009

Chel Wolverton

Scott, there are two problems here.

One, people can't find jobs to make your dollar worth it's value. They can't make money, they can't spend money, they can't drive the economy. What's your money going to be worth if the US financial system collapses? As trust dwindles down, nothing.

Two, those “deadbeat” students graduated with debt they can't pay because the current market is dumping jobs in the thousands daily.

I'd really rather not crash and burn. I'd really rather those people that NEED to feed their families be able to find a job to do so. Right now they can't. Something's gotta give.

Reply
February 11, 2009

Scott Sigler

Then we agree, although it looks like the rate is 0.25, not zero (but I might not understand that correctly). So, half would be 0.125, a pretty damn good interest rate if you want to borrow money to hire an employee.

The important thing here, however, is that the money gets paid back. Everyone wins. Businesses can grow and hire employees courtesy of Joe Taxpayer, and the money gets paid back — it's not “free.”

Reply
February 11, 2009

Scott Sigler

What is everyone's fascination with totally forgiving someone's obligation to make good on their agreements? Chel, if the economy is such that the students can't pay the bill they agreed to pay, then we can delay the repayment — not forgive it entirely.

There are basic principles at stake here. What you're saying is that as soon as times are hard, the government should step in and pay your debts.

It's not a pay/don't pay situation. That's simplistic. Delay repayment if you don't want to “crash and burn,” but no, you don't get a free ride. These students made an agreement, to repay the money they borrowed. They need to live up to that agreement, if not now, then farther down the road.

Someone is paying for it. Shouldn't that someone be the person that borrowed it?

Reply
February 11, 2009

Chel Wolverton

Scott, I'm not saying they shouldn't repay what they owe the government. In fact, I didn't say that.

I did ask HOW they are expected to when we're tanking jobs day after day in the thousands. If you want to delay, sure, that's reasonable. Let's talk about what's going to start happening soon.

What happens when a family runs out of unemployment benefits because the providers can't find jobs because there are no jobs? A few weeks ago a man killed himself and his family. Right or wrong, he did that because he looked a future and saw nothing hopeful about the situation he was in.

That is the reality that we're facing right now. There isn't enough to go around. Even if people aren't killing themselves left and right, they won't have food or heat or electricity if they can't find a job. Which is again, becoming even harder by the day.

You have to make the economy's wheels turn, they are stuck in mud right now. Your money? It's going to banks exec who want their comfy little vacations and bonuses. Does that really make you feel better? If so, more power to you for being angry at the people who need to feed themselves.

The fact still remains that unless something rational is done with the stimulus that the government is going to take out of our pockets like it or not, then we're going to continue down the path we're currently on.

It won't matter if your money is blown, it won't have any value anymore. Then you face the question of how can you repay something when you can't determine the value? So the point will be moot.

So please, tell me what it is that is a better idea. Because G*d knows we need them.

Reply
February 11, 2009

Scott Sigler

You're being very evasive. I responded to this comment: <<Pay everybody's student loans. Then, those kids will be free to innovate, start new businesses, and be the consumers of the future.>>

That's the topic sentence of this comment thread. I attacked that statement, you defended it. But now you're saying that you do not agree with the topic sentence that you defended? You agree with me, that we not forgive the debt, but instead delay repayment? Please clarify, because you're covering both sides of the discussion. Do you agree with me or not?

If you agree, then “how” they repay isn't the question. The question is “when” will they repay.

The rest of your comment has nothing do to with the discussion, and is a fallacy of logic known as “an appeal to emotion.” Was the man that killed his family trying to repay a student loan? If not, then you are using the appeal to emotion to confuse cause and effect.

Reply
February 11, 2009

Aithene / Chris Wilson

You know, if I could get a $100,000 loan, I could afford to hire myself and start my own business. And if I paid myself the whole$ 100,000, but spent it wisely, it would give me 2 years to get it up and running w/out too much worry.

Reply
February 11, 2009

chelpixie

Scott I'm not saying that they shouldn't pay but I'm saying that they either can't or are going to have a damn hard time doing so. It's not a matter of should they but can they do so.

I don't believe that we should randomly forgive student loans. That's not what Chris proposed. What he is proposing I agree with but agree further with your conclusion in the thread above. THAT is a workable solution that doesn't take money without giving it back.

The confusion is a result of me talking about two different things, student loans and the market as it stands and it's effects. I'm sorry for not making it abundantly clear that I was speaking about both students repaying their loans and unemployment of everyone, as well as money, it's value and current trust levels.

There are so many things at play here, so many pieces of the puzzle.

I do want to drive home the point that money has value sure, it has less value right now because trust has been ditched. What's going on now is an attempt to find a solution to fix both. Unless all the wheels start turning again we're going to keep heading down the crash and burn path where it won't matter what the dollar was worth but what currency we'll trust next.

FWIW, I'm writing this in the dark right before bed, but I wanted to send you a response tonight.

Reply
February 11, 2009

chelpixie

Scott I'm not saying that they shouldn't pay but I'm saying that they either can't or are going to have a damn hard time doing so. It's not a matter of should they but can they do so.

I don't believe that we should randomly forgive student loans. That's not what Chris proposed. What he is proposing I agree with but agree further with your conclusion in the thread above. THAT is a workable solution that doesn't take money without giving it back.

The confusion is a result of me talking about two different things, student loans and the market as it stands and it's effects. I'm sorry for not making it abundantly clear that I was speaking about both students repaying their loans and unemployment of everyone, as well as money, it's value and current trust levels.

There are so many things at play here, so many pieces of the puzzle.

I do want to drive home the point that money has value sure, it has less value right now because trust has been ditched. What's going on now is an attempt to find a solution to fix both. Unless all the wheels start turning again we're going to keep heading down the crash and burn path where it won't matter what the dollar was worth but what currency we'll trust next.

FWIW, I'm writing this in the dark right before bed, but I wanted to send you a response tonight.

Reply
February 11, 2009

chelpixie

Scott I'm not saying that they shouldn't pay but I'm saying that they either can't or are going to have a damn hard time doing so. It's not a matter of should they but can they do so.

I don't believe that we should randomly forgive student loans. That's not what Chris proposed. What he is proposing I agree with but agree further with your conclusion in the thread above. THAT is a workable solution that doesn't take money without giving it back.

The confusion is a result of me talking about two different things, student loans and the market as it stands and it's effects. I'm sorry for not making it abundantly clear that I was speaking about both students repaying their loans and unemployment of everyone, as well as money, it's value and current trust levels.

There are so many things at play here, so many pieces of the puzzle.

I do want to drive home the point that money has value sure, it has less value right now because trust has been ditched. What's going on now is an attempt to find a solution to fix both. Unless all the wheels start turning again we're going to keep heading down the crash and burn path where it won't matter what the dollar was worth but what currency we'll trust next.

FWIW, I'm writing this in the dark right before bed, but I wanted to send you a response tonight.

Reply
February 11, 2009

chelpixie

FWIW meaning I'm damn sleepy that I forgot to include why I was writing FWIW. 😉

Reply
February 11, 2009

chelpixie

FWIW meaning I'm damn sleepy that I forgot to include why I was writing FWIW. 😉

Reply
February 11, 2009

chelpixie

FWIW meaning I'm damn sleepy that I forgot to include why I was writing FWIW. 😉

Reply
February 11, 2009

EdRoberts

Maybe I'm confused here…

Are the businesses getting the bailout money required to pay it back? I'm assuming so. If not, then inflation should be through the roof. Or.. are we assuming that many of these businesses will fail anyway, and the government never gets back the money?

I totally understand the employment side of things though. Anything that creates jobs, and increases consumer confidence is a good thing.

Reply
February 12, 2009

Chel Wolverton

Scott I'm not saying that they shouldn't pay but I'm saying that they either can't or are going to have a damn hard time doing so. It's not a matter of should they but can they do so.

I don't believe that we should randomly forgive student loans. That's not what Chris proposed. What he is proposing I agree with but agree further with your conclusion in the thread above. THAT is a workable solution that doesn't take money without giving it back.

The confusion is a result of me talking about two different things, student loans and the market as it stands and it's effects. I'm sorry for not making it abundantly clear that I was speaking about both students repaying their loans and unemployment of everyone, as well as money, it's value and current trust levels.

There are so many things at play here, so many pieces of the puzzle.

I do want to drive home the point that money has value sure, it has less value right now because trust has been ditched. What's going on now is an attempt to find a solution to fix both. Unless all the wheels start turning again we're going to keep heading down the crash and burn path where it won't matter what the dollar was worth but what currency we'll trust next.

FWIW, I'm writing this in the dark right before bed, but I wanted to send you a response tonight.

Reply
February 12, 2009

Chel Wolverton

FWIW meaning I'm damn sleepy that I forgot to include why I was writing FWIW. 😉

Reply
May 25, 2009

Paul Affleck

I've paid back all but $9000 of my$ 62000 student loan and will pay the rest in the next four months. I'm obviously no deadbeat. But I had a hard time landing on my feet, for about three years after university.

However, some students simply will never earn enough to pay back massive debts. If there is a looming student debt crisis (as Suze Orman predicts), then we are all in big trouble. Furthermore, a crisis of that proportion cannot be explained by recourse to “deadbeat students”. Something larger is happening: We have been sold the idea that education equals security, and that is no longer the case.

This is not about deadbeats, this is about a societal shift, and we had best recognize that fact.

Reply
May 25, 2009

Paul Affleck

I've paid back all but $9000 of my$ 62000 student loan and will pay the rest in the next four months. I'm obviously no deadbeat. But I had a hard time landing on my feet, for about three years after university.

However, some students simply will never earn enough to pay back massive debts. If there is a looming student debt crisis (as Suze Orman predicts), then we are all in big trouble. Furthermore, a crisis of that proportion cannot be explained by recourse to “deadbeat students”. Something larger is happening: We have been sold the idea that education equals security, and that is no longer the case.

This is not about deadbeats, this is about a societal shift, and we had best recognize that fact.

Reply
May 25, 2009

Paul Affleck

I've paid back all but $9000 of my$ 62000 student loan and will pay the rest in the next four months. I'm obviously no deadbeat. But I had a hard time landing on my feet, for about three years after university.

However, some students simply will never earn enough to pay back massive debts. If there is a looming student debt crisis (as Suze Orman predicts), then we are all in big trouble. Furthermore, a crisis of that proportion cannot be explained by recourse to “deadbeat students”. Something larger is happening: We have been sold the idea that education equals security, and that is no longer the case.

This is not about deadbeats, this is about a societal shift, and we had best recognize that fact.

Reply
May 25, 2009

Paul Affleck

I've paid back all but $9000 of my$ 62000 student loan and will pay the rest in the next four months. I'm obviously no deadbeat. But I had a hard time landing on my feet, for about three years after university.

However, some students simply will never earn enough to pay back massive debts. If there is a looming student debt crisis (as Suze Orman predicts), then we are all in big trouble. Furthermore, a crisis of that proportion cannot be explained by recourse to “deadbeat students”. Something larger is happening: We have been sold the idea that education equals security, and that is no longer the case.

This is not about deadbeats, this is about a societal shift, and we had best recognize that fact.

Reply
May 25, 2009

Paul Affleck

I've paid back all but $9000 of my$ 62000 student loan and will pay the rest in the next four months. I'm obviously no deadbeat. But I had a hard time landing on my feet, for about three years after university.

However, some students simply will never earn enough to pay back massive debts. If there is a looming student debt crisis (as Suze Orman predicts), then we are all in big trouble. Furthermore, a crisis of that proportion cannot be explained by recourse to “deadbeat students”. Something larger is happening: We have been sold the idea that education equals security, and that is no longer the case.

This is not about deadbeats, this is about a societal shift, and we had best recognize that fact.

Reply