Obama Wins

From Politico: Obama to GOP: 'I Won'

“We expressed our concerns about some of the spending that’s being proposed in the House bill,” House Minority Leader John Boehner said after meeting with Obama.

“How can you spend hundreds of millions of dollars on contraceptives?” Boehner asked. “How does that stimulate the economy?”

It doesn't. This is a hint of what our new stimulus package is going to include: millions of dollars of worthless pet projects that will do nothing to turn the economy around. But that's the way politics operates. A nice spending package is put together, full of worthwhile projects. Then this is added, and that is added. The millions pile up. And suddenly contraceptives have become an important piece of the legislation.

How do these people get away with this? And how do they sleep at night? This is not how I want my tax money spent!!!

Pelosi suggested that the package, currently at $825 billion, could become even larger.

“It has grown,” Pelosi said, “and we’re still in the process.”

It's going to be funny to see what else these people can find to spend our money on.

But worst of all are the refundable tax credits that will be paid out to those who don't earn enough to pay taxes. In essence, the government will now be using my tax money to pay people for being poor!! How do I get in on that deal? Why would people want all these new jobs the government is creating if they are going to be paid by the government to sit around and do nothing?

My Bailout Proposal

I think the government has this bailout mess all wrong. They are bailing out the wrong people!! They need to use a bottom-up approach rather than a trickle-down approach. And it all needs to start where the mess began...home owners.



I propose the government give all homeowners the option of taking a tax credit of 10% of the purchase price of their primary residence each year for up to ten years. That puts money into taxpayers' pockets now, and provides added incentive for people not only to work harder to stay in their home, but gives potential new home buyers a little more motivation to get into the market.



This would not necessarily be a tax cut, but rather a tax deferral. Each year that a taxpayer chooses to write down the value of his house by 10%, it reduces the cost basis of the house. When the house is later sold, the government would collect a larger amount in capital gains. For example, if the house is sold after ten years, the entire amount of the sale would be taxed at the capital gains rate.



I think this would result in the following:

1. Distressed homeowners could use the money they receive from the tax credit to get caught up on their mortgages.


2. More people would be inclined to buy their first home in order to receive the tax credit. This would reduce the inventory of homes for sale and help to stabilize prices.


3. Homeowners would be less likely to sell their homes as a greater percentage of the sales price would be taxable. This would also reduce the inventory of homes for sale, and would drive up prices.

I'm sure there are many kinks to be worked out of this system. What do you think? Any ideas for making this plan better?