Thread: Jim DeMint's Proposal for Resolution of Financial Crisis

Email from Jim DeMint with solutions to the financial crisis.

"The proposed bailout is a trillion dollar band-aid that does not contain a single item that will stimulate our economy," said Senator DeMint. "Now is the time to cut taxes on American investment, reform government failures, and expedite energy exploration so we can grow our economy. We must enact pro-growth economic solutions that will create jobs, open up our vast energy resources, encourage investment, and pave the way for long-term prosperity. Instead of giving government more power after its past failures, this plan provides our economy the tools it needs to work through this crisis and gives Americans the freedom to succeed. Given the serious problems we now face, we should all agree that a bold pro-growth economic plan is urgently needed with or without a bailout."


REFORM A TAX CODE THAT DISCOURAGES CAPITAL FORMATION

• Suspend Capital Gains Tax for 2 Years, Index it for Inflation: Immediately suspend the capital gains rate from 15% for individuals and 35% for corporations on assets, including stocks, homes, and commercial real estate investments. This provision would unleash funds and materials to create jobs and grow the economy. After the two-year suspension, capital gains rates would return to present levels but assets would be indexed permanently for any inflationary gains.

• Reduce the Corporate Income Tax Rate: Reduce the corporate income tax rate, which discourages job creation and investment in the U.S., from 35% to 25%. For over a decade, the U.S. corporate tax rate has been 50% higher than the average among our counterparts in the industrialized world and nine key trading partners cut their rates during 2007. According to the Tax Foundation, the corporate tax quietly taps family pocketbooks for nearly $370 billion per year, over $3,000 per household, in the form of higher prices, lower wages and poorer return on investment.


REFORM FAILED GOVERNMENT REGULATION

• Suspend "Mark to Market" Accounting: Suspend the mark-to-market regulatory rules for long-term assets. These rules require financial firms to mark assets at current market levels, even where no market exists and any immediate transactions would result in fire-sale prices. Instead of allowing firms to mark these assets to their true economic value, these rules contribute to a downward spiral as firms have to evaluate their assets not on the basis of their long-term investment but rather on a short-term panic.

• Reform Section 404 of Sarbanes-Oxley: Make voluntary the duplicative reporting requirements under Section 404 of the Sarbanes-Oxley Act, allowing companies to comply with standards that better fit their size while still insuring that they protect their investors. The average compliance cost for a business under Section 404 is $3.8 million, with smaller businesses paying over twice as much in percentage of revenue as large businesses. Relieving this burden will reverse a policy that is chasing capital offshore and encourage more companies to go public in the United States.

• Repeal federal mandates for risky loans: Repeal the Carter-era Community Reinvestment Act, which requires banks to make loans available to borrowers who would otherwise be deemed as too high a credit risk, and who often cannot afford to repay the loans. Under this law that contributed to our current crisis, if banks don't make enough risky loans, community organizers can take financial institutions hostage during regulatory proceedings when banks try to merge, acquire or otherwise alter their status.


EXPAND ENERGY EXPLORATION

• Repeal Bans on Energy Exploration and Expedite Production: Expedite offshore and oil shale exploration, ensure states share in energy revenues, and prevent endless litigation from frivolous environmental lawsuits. American reserves offshore are estimated to hold over 20 billion barrels of oil and 97 trillion cubic feet of natural gas. In the West, oil shale is estimated to be between 800 billion and 2 trillion barrels of oil — that is more than three times the proven oil reserves in Saudi Arabia alone. Permanently ending these bans on American energy will help fuel our economy and stop sending billions of dollars overseas for foreign oil.


REFORM FAILED GOVERNMENT INSTITUTIONS

• Schedule the GSEs for Privatization: Transition Fannie Mae and Freddie Mac over a reasonable time period to truly private companies without special government privileges and expose them to real market competition. This reform would 1) establish commonsense limits for their capital requirements and portfolio holdings relative to their size, 2) focus their mission on affordable housing only, not profit making, 3) require them to pay an appropriate risk-based amount for the government guarantee they enjoy, 4) subject them to state and local taxes and accurate SEC filings like every other private for-profit corporation, and 5) ultimately provide for the phase out of their GSE charters once their conservatorship has ended.

• Stabilize the Dollar: Repeal the Humphrey-Hawkins Full Employment Act, which diverts the Federal Reserve's attention from long-term price stability to short-term economic growth. In an effort to fuel the economy, this additional mandate has encouraged the Fed to keep rates artificially low, leading to economic booms and busts, a rise in inflation and the decline of the dollar. This reform would require the Fed to establish a numerical definition for price stability and maintain a policy that promotes it over the long-term.

Makes alot more sense to me then what Bushie wants.

I'm not sure I understand 100 percent of it, but unlike Bush at least this guy has a plan that makes some sense.

Originally Posted by dman1200

Makes alot more sense to me then what Bushie wants.

I'm not sure I understand 100 percent of it, but unlike Bush at least this guy has a plan that makes some sense.

So does Newt Gingrich. In fact, American Solutions did a poll on it last week and he gave stats on it on Hannity and Colmes last night.

I like this better too. Just goes to prove that there are better solutions out there than giving inept government more money to waste.

I don't buy the "sky is falling-gotta do this yesterday" crap either. Our glorious leaders knew about this mess long ago and choose to let it happen. Just another scheme to give a socialist government more control over the people.

Right we SOLUTIONS not rhetoric. Anyone who is blaming and not giving solutions and specifics, I don't listen to them. It was funny last night. Alan Colmes was his usual obnoxious self. When he tried to corner Newt said, here's part of the solution. 1, 2, 3. Alan just sat there and said OK good to see you we'll see you next time. LOL

Originally Posted by dman1200

Makes alot more sense to me then what Bushie wants.

Exactly! And isn't it surprising that such a lame-duck as Bush always gets his way? Uh, maybe not so surprising.

Originally Posted by Gogo

Right we SOLUTIONS not rhetoric. Anyone who is blaming and not giving solutions and specifics, I don't listen to them. It was funny last night. Alan Colmes was his usual obnoxious self. When he tried to corner Newt said, here's part of the solution. 1, 2, 3. Alan just sat there and said OK good to see you we'll see you next time. LOL

Exactly. SOLUTINS not rhetoric. Has anyone seen a copy of the "2 PAGE BAILOUT"?

DeMint's plan makes sense. Cutting capital gains tax will motivate potential investors into action, rather than taxpayers footing the bill. This whole time I've believed that if the taxpayer bailout plan failed and nothing was done, it wouldn't take 6 months for the richest of the rich to say "hey, now I'M not making any money! Time to do something on my own!" Of course it would be tough for the rest of us, but we always somehow manage to survive, don't we?

Of course many other steps need to be taken as DeMint has outlined in his plan. His is the most logical approach I've seen yet.

!. Set a mim. bid on each loan.
2. The current owner of the loan gets the proceeds of the sale.
3. Put the info on the loan, its terms, the property, ect. up on the net for every one to review.
4. Take bids over the net, high bid wins, deposit money via pay-pal or such, the full amount in 10 days from sale.
5. Have current loan servicing companies bid to service the loans to these new loan owers if they wish.
6. If in fact its a good deal the current borrower can buy their own loan by paying the highest bid and own the home free and clear.
7. Any loans to Illegals in the system, the current lender has to deal with it they made the bad deal to an Illegal deal with it themselves.
like that

Not one dime of tax payer money would be needed other than the very few loans that would get no mim. bids at all. The few left, hand them off to FhA current repo operation to deal with.

Right, Apache.
JP Morgan Chase just got the $307B assets of Washington Mutual for pretty cheap. And Warren Buffett, probably one of the smartest in regards of the economy and making money, said earlier this week that he just wished he had the $700 billion to dissipate this mess. Undoubtedly, he would have received assets, lots of them priced at 20cents on the dollar of value.
I am sure Dubai, Saudi Arabia and other sovereign wealth funds will be getting in on the fun.
And, the euro is falling against the dollar, because suddenly the assets backing the dollar are more valuable.