Economic Insanity

By Ron Beasley

“The definition of insanity is doing the same thing over and over again and expecting different results” ~ Albert Einstein

Doing the same thing is exactly what Ronald Reagan's son, Michael, is suggesting Obama do to cure our current economic woes.  The Bush recovery was based on increasing credit availability instead of passing on productivity gains to the labor force.  As we are seeing a recovery based on credit cannot be sustained.  So what does Michael Reagan suggest we do?  Use the tax code to encourage more borrowing and give the wealthy additional tax breaks so they can buy more expensive toys.

To begin with I’d give the economy a powerful shot in the arm by eliminating a lot of federal taxes that are hobbling economic growth.

There is a better way to boost our economy than the socialistic programs now being both used and considered. It’s called free enterprise, and it works by loosening the death grip now strangling America’s small business community, which provides the majority of jobs in this country.

I’d start by reinstating the tax deductibility of the interest rates we now pay banks on vacation or second homes, cars, motor homes, RVs, boats and yachts.

Instead of following the lead of the Governor of New York by putting a luxury tax on these items — thereby killing the free market — I’d revive the market, and those houses in foreclosure and owned by banks would find eager buyers seeking to invest in real estate.

If buyers knew they could write off the interest that they would be paying a bank on the loan, you wouldn’t need a government bailout, because the people with money to invest — not government — would be the ones who would bail out the economy.

Giving them a tax break for getting involved in the economy by investing in income-producing real estate is the sensible way of bailing out the marketplace.

What are we thinking when we plan to give General Motors a bailout with money we don’t have? Why should we need to borrow from our grandchildren and great-grandchildren and their offspring?

Instead, why not allow us to deduct the interest on a second home we might buy? Do the same with boats, with RVs, with second homes, with automobiles.

We’d undo much of the damage the downturn in the economy has done to our retirement accounts, causing most of us to lose at least 25 to 30 percent or our retirement savings.

Moreover if we also cut taxes on capital gains to zero and slash corporate taxation by half, the economy would grow and the nation’s economic engine would be restarted and roar into life, and it would all happen with raising one cent of taxes.

This is just more of the same failed Reagonomics that have destroyed the US and world economy over the last 28 years.  What should be done is to drive a stake through the heart of Reagonomics - supply side economics and "free trade" once and for all.  It's time to return to the industrial policy of Alexander Hamilton.