If you had the opportunity to visit our “Guidehouse” at Upper Saranac Lake this week, on any given day you would see 5-10 trucks and as many as 20 workers. The Guidehouse was built in the 1880’s and my wife and I recently decided to perform a major renovation of this classic Adirondack home.
Is this a government program? No, and thank goodness! Why? Because we estimate we will spend $150,000 on this renovation, and if this was a government program, probably $25,000 would find it’s way to our private economy once the government laundered it and covered it’s own bureaucratic overhead and served it’s crony interests. In our case, all $150,000 will find it’s way into the American private sector economy, and it will have its own snowball effect, multiplying the impact by many times more than $150,000 we spend.
Let’s think about this for a minute. Where is my wife’s and my money going? The contractor pays his skilled laborers $42/hour, and his unskilled laborers $36/hour. These people, in turn, will buy clothes for their children, a new truck, shrubs for their home landscaping, a snowmobile, or whatever they want or need. Every one of these purchases has a downstream effect. From us it goes to the worker, from the worker to the people he buys his chosen items from, and from the people he buys from to the people they buy from, and so on.
Let’s think beyond the labor. We are buying a refrigerator, stove/range, dishwasher, 22 new windows, insulation, 2×6’s, drywall, 2 toilets, 1 shower, 1 bathtub, 2 sinks, 2 vanities, shower/bath/sink fixtures, new roof, granite counter top, tile flooring, paint, and much more. Consider the effects of these purchases, all with a downstream effect on American income, employment, and the expenditures they decide to make. Salesman, accountants, order entry people, manufacturing employees, truckers, miners, home improvement suppliers, and many more professions/people are positively effected by our decision to renovate.
This is how our economy recovers, grows, and thrives. It’s our project times 100,000. While our Congress and President try to apply primarily government based and government run programs to generate a recovery, they miss the real solution: create incentives for American citizens and private sector companies to start spending again.
How? Here are just a few examples. Remove uncertainty on tax rates and declare current rates to be “permanent”, create an “investment tax credit” allowing tax credits for capital expenditures, implement a 1 year “tax holiday” on gas taxes, eliminate “millionaire” taxes, and stop making anyone who earns over $250,000 a year feel like a thief and the enemy of America and this Administration. Postpone the implementation of many elements (not all) of healthcare reform by 3 years while it is studied again. The above steps are easy to do, and the President with this Republican House of Representatives could implement it in a week. Top it off with tort reform and a long term economic plan to eliminate our national debt and balance our budgets (which would take longer), and we’ll add 500,000 jobs a month and drop our unemployment rate to 5% in no time. And President Obama, do this and you will be re-elected in a Reagan-like landslide.
As for my wife and I, well, we are doing what we can to provide our own stimulus!