Economic solutions without costing $3 Trilion USD

So how could the $1.3-2.0 Trillion USD savings spelled out in the previous post on Government savings be spent to stop the recession and begin the recovery?

1. Since banks are hoarding the money given to them under the ESA 2008, the Government should immediately rescind all monies given to financial institutions and put back into place the following financial procedures:
• Re-enact Glass-Steagel Act
• Remove the "mark-to-market" FASB/SEC accounting rules for mortgage operations
• Re-enact the Resolution Trust Corporation
• Rescinding of BHCA of 1956 to allow private equity to purchase GSE assets
• Return to no paid interest on FRS required deposits by banks (reserves)
• Dissolution of GSE's with assets sold to private equity & mortgage operations
2. With the successful implementation of action #1, the Government without any expenditure of taxpayer funds have shown the banks that they will lose there place in the financial system to the Government since now the Government can take over foreclosed properties, auction them to the highest bidders or lease them to qualified investors.
3. Guarantee mortgages to qualified buyers with 10-20% down payment and proper income requirements via the FDIC-RTC operations.
4. Exchange regulation of and listing of all CDS (credit default swaps).
5. Changes in corporation board membership and operation to provide transparency
• The CEO and Chairman of the Board (COB) can not be invested in same person
• Internal auditor function must report directly to COB not CEO/COO/CFO
• Internal auditors' report summary must be made available to shareholders
• The Executive compensation must be annually approved by shareholders
• Option-based pay must be expensed annually as regular compensation
• Executive performance must be "pay for performance" based & implemented
• Golden parachutes must not exceed 3X average last 3 years compensation
6. No bail-outs for private companies. Normal bankruptcy laws must be implemented.
• Failed corporate business models must be left to bankruptcy procedures
• Union contracts must be broken and compassionately renegotiated
• Assets of failed companies sold to entrepreneurs and innovators (capitalism)
• No government ownership of private company equities.

These actions will not have costs the over $2.5-3.0 Trillion USD that the current government operations are now moving towards, left the US as a capitalistic country, and reduced the size of the government largely expanded via the inept actions of the Bush-43 and Republican/Democratic Congresses of the last 3 decades from 1976-2008.

Solutions are simple, but not easy to swallow since most people in the US are not of traditional character, ethics or discipline. They have been swilled a steady diet of governmental hand-outs, welfare, and intervention. The US population is quickly adopting a "bread & circus" mentality which is the beginning of the end of the USA.

Opportunity is missed by the young today

BHO has said many times on the campaign trail that he is not looking to hand-out money, but opportunity. I guess he needs to tell some of his supporters like Ms. Peggy Joseph (see previous post) who believes that with just BHO's election, "share the wealth" will make it so she doesn't have to work to "pay her mortgage..."

However, according to one of last century's most prominent inventors, Thomas A. Edison, said:

"Opportunity is missed by most people because it is dressed in overalls and looks like work."

This is the reason that I have taken the title that American Can't Be Fixed! The children of today have not been taught that its hard work that will generate their successful futures. They are taught that society, meaning the US Government, owes them a living.

The future of American is unfortunately in the hands of the young that believe that do the election of a particular politician, they will not have to work at success.

Sad, but telling.

OK, let's begin

Since the premise is that "America can be fixed" let's start with the most important issue that is facing our country: unity. We are a divided country with more and higher shrill rantings from both sides of the "isle" to coin a phrase. The country is about evenly divided on issues such as the Iraq war, taxes, abortion, God in public life, gay marriage, etc.

Now the founding fathers never imagined that the constitution would be such a divisive document, and for the most part they were correct. The divisiveness comes from the fact that most citizens do not feel that they have control over their government, and therefore, can not effect changes. The founding fathers tried to limit the federal government by 2 means: strict delineation of powers -- that being only 3 listed in the constitution, and second, by severely limiting the revenues that the federal government could collect and fund its operations.

Now, as the enlightened public we are today, the US citizenry has allowed both these controls to be slowly altered through the slow passage of time. First, we did not object to the institution of the federal bureaucracy whereby Congress passed on their legislative control to the bureaucracy's rule making control: Department of Education, OSHA, FEMA, FCC, FAA, etc (to name just a few). With the growth of the federal bureaucracy, the public lost control of their government's involvement into their lives and businesses, and this is clearly in violation of the 10th amendment. Secondly, with the passage of the now extremely important 16th amendment (establishment of an income tax), the people allowed the growing federal government to tax their citizenry's incomes without direct control of the amount or disposition of funds collected.

These 2 very important changes that the founding fathers' never envisioned has finally grown to the point where they are the crux of apex that now divides our country. Let me see if I can explain my point: since people don't feel they can effect control of their government since they can't control the revenue of the government since controlling a public entity is only effectively controlled by controlling its purse strings. This point the founding fathers knew very well.

Thus, we have become divided in that we try to force laws that will ultimately try to enforce our views or beliefs on the rest of the US citizenry when this is clearly not conducive to unity. Therefore, let me suggest the quickest way around this problem:

1. Give control of the purse strings (on a macro-level) back to the citizenry by imposition of 2 changes: a) forced balancing of the federal budget, b) giving the citizenry the right to allocate 75% of the taxes to particular federal operations: social programs, defense, education, etc. The remaining 25% of the taxes goes into a general fund.
2. Effect term limits on Congress and Judges to reduce the desire to become "career politicos": Congressional limits like Presidential limits should be 12 years in the House, and 12 years in the Senate with the House seats changed from 2 to 4 years terms to reduced time spent campaigning.
3. Complete and open transparency of public campaign financing: no limits on how much anyone person can give to any candidate or incumbent, but such funding must be openly and timely listed on the politician's web site so that anyone can determines clearly and easily where the politician derived his/her funding. In addition, all legislation favoring such donors must be clearly marked for public information.

These changes will begin the process of return the control of the government to the people, and will most likely reduce the feeling that "I am funding via my taxes" operations that are against my beliefs since each citizen will be able to fund only those operations in which they believe. The federal government will have to operate within those wishes of the governed.

This is a good place to begin this discussion of "fixing America". Please feel free to offer your comments, suggestions, opinions in a civil manner. As a systems engineer, I am interested in only solving problems, not the politics that have come to destroy the unity this country once was known for around the world.

America has problems, but not such that we can not solve them if we are willing to do the hard work and have the civil discussions.

Tomorrow, I will offer a civil solution to the very difficult issue of abortion or pro-choice/pro-life as it has become to be known.