WWRD?

September 6, 2012 Jack

How has Romney run his successful businesses in the past?

First he looks around for a company that isn’t producing as well as it should with the assets it has.

He then acquires the company at a reduced rate, since the company isn’t producing as well as it could. He goes to cronies to borrow the money needed to make the purchase, using the assets of the company being acquired to guarantee the loans. The cronies may slice and dice the secured loans and resell them to other investors.

Then he brings in his crack Management Team to revamp the operations to use those precious assets to the best of their potential. Quite often the company employees are not considered part of the assets and will be made redundant while the work they do is outsourced to low-cost contractors. Said contractors may be off-shore so the jobs are no longer in the US.

Facilities, now empty, may provide some excellent real estate opportunities. Sub-divisions can be sold off, reducing overhead. Pension funds are other assets that can be better used elsewhere. All the while, the Management Team is racking up their consulting fees.

And in the end, Romney may have made the company a leaner producer and can sell it to the public, keeping the original loans on the companies books to be repaid over time. What he gets for selling it is the additional profit, over the management fees, that goes to his pockets. If he can’t sell it because the company is too lean and can’t exist with the remaining assets then he and his team can bail out without a loss (all the loans are on the company’s books) and leave the company to resolve its debts through bankruptcy and leaving the secondary loan investors to collect their loan repayments from the courts, if they can.

Then he turns his attention to the United States. We certainly have a lot of idle or under-performing assets: National Parks, National Forests, Public Lands, Military Reservations, an Air Force, a Navy, an Army, a Coast Guard, lots of Government Buildings, a large Pension Fund. He has something to work with.

Economics, Politics

A Simple Solution?

August 16, 2012 Jack

How to save Social Security, Medicare, get rid of the deficit, reduce the debt, and save the state’s budgets in one fell swoop.

First extend Medicare to all citizens and incorporate Medicaid into Medicare, taking it off the backs of the states. Basically, go to single payer health care.

Then take Social Security and Medicare off budget. Congress doesn’t even have a chance at the monies in these trust funds.

Enable a 20% payroll tax that is directed to SS and Medicare. Employer matching as well. For people receiving income without a paycheck, or over and above a paycheck, they would pay a flat 20% tax to the combined trust funds.

The US income is ~$14T. Medical expenses run ~$2T. So that 20% payroll/income tax should cover the all medical expenses and the remainder goes into Social Security. The citizen is receiving a retirement fund safety net and basic health care for life.

This takes States and Employers off the hook for providing health care services to their citizens and employees, removing a big drag on their budgets.

For the remainder, Congress passes a budget for the year and must pay for that budget with revenue. It must authorize collecting enough revenue to pay for that budget, keeping SS and Medicare off the table. And unless there is a declared economic emergency, the budget will include paying 5% of the principal of the outstanding national debt.

The base of the taxpayers are already paying 20% of their income to the trust funds, so I suggest that for citizens making more than the median household income or $75K or some amount that won’t crush the lower-income household, that they pay enough income taxes to cover the budget. Congress can determine if it a flat tax or a sliding scale tax. Either way deficit spending ends and the debt starts to come down.

Or we can leave the national debt part out of the previous equation and say that all corporate taxes collected go to pay down the debt, but then it will never go away.

(I just did a quick check and if we pay off the debt at 5% per year, in 60 years it will be @ 5% of the of the current debt. )