A Modest Solution to Our Economic Woes

Yesterday, I was doing homework in the early afternoon at Azo Vino, and the news was on. The owner, Galen Metz sits down with me and he alludes to me of an idea of how to stimulate the economy without putting the U.S. into more debt than it already is, in fact, saving the U.S. billions of dollars.

I made a comment in response the AIG bonus debacle and he goes on to add, “We’re doing this all wrong,” said Galen. “Stop giving money to the banks. That isn’t going to solve anything. Instead, give the money to people. Think about it. Give every able bodied adult 18 and older, $485,000. Of course, let the IRS tax 25 percent off the top. The rest let the American people spend it however he or she likes”. He went on to say, “The majority of people will get themselves out of debt and maybe even pay down their mortgages, for those who own homes. Others will not spend so wisely, and that is expected. But, that doesn’t matter. What matters is this money is being put BACK into the economy. That is what’s ultimately going to trigger the economical surge.” This statement raised my interest.

At first, I scoffed at the idea, but then I really thought about it. This isn’t such a bad idea. So, I decided to go home and look at some actual numbers:

As of February 2009, the total population is approximately 306 million people that resident in the U.S. and 27% percent of the population is under the age of 20. So, that takes this number down to about 223 million able bodied adults. If the U.S. Treasury gave $485,000 to 223 million people instead of giving trillions to bank executives that only think of themselves, that comes out to about $108.1 billion. That’s over $717 billion below Obama’s current budget plan.

Galen brought up some valid points. The money that the government is currently paying out to banks isn’t helping anyone except for banks executives. None of that money is going to help the people who are losing their jobs and losing their homes. If each person is given a net check of $363,000, it could be used to pay off credit cards, pay off student loans, pay for college tuitions, purchase cars, buy houses, and pay for travel and entertainment. In return, we would have a stimulated economy and a positive cash flow for businesses, thus the creation of new jobs.

Not only would it help the U.S., it would also benefit all countries that produce foreign goods. It would also stimulate other countries economies, especially for the cities that solely rely on the American travel market.

If we maintain the current pace of the stimulus plan while the Obama Administration continues to throw money away without any real solution, the economy will continue to struggle, and we as a country will fall deeper and deeper into debt, we will see the value of the dollar continue to plunge beyond recovery.


*Disclosure and correction:
Although this seemed like a great concept, I was totally incorrect. I thought my fact checking was right on. It turns out that we both made a mistake in our figures. Someone read my article and alluded to my attention that I was off by three zeros, so instead of every person receiving $485,000 - we only get $485.