A REAL Economic Stimulus Plan

[freddyv]

January 24, 2008
Ron Paul Unveils a REAL Economic Stimulus Plan
Four-pronged approach will strengthen the economy by reforming taxes, cutting spending, improving monetary policy and eliminating burdensome regulations

FOR IMMEDIATE RELEASE

January 24, 2008

ARLINGTON, VIRGINIA –Republican presidential candidate Ron Paul has unveiled a comprehensive economic revitalization package. The four-pronged plan is designed to stem the current economic slide and address the unsound governmental policies that are harming Americans’ pocketbooks.

“Real economic reform must address the underlying reasons for the current economic malaise,” said Ron Paul. “This plan is more than just a band-aid for our economy; it fundamentally reforms four areas where government policies are damaging our national economy. When enacted, my plan will provide both short-term stimulus, and lay the groundwork for long-term prosperity.”

The comprehensive economic revitalization plan is available online at: www.ronpaul2008.com/Prosperity

The four areas that the plan covers are:

1. Tax Reform: Reduce the tax burden and eliminate taxes that punish investment and savings, including job-killing corporate taxes.

2. Spending Reform: Eliminate wasteful spending. Reduce overseas commitments. Freeze all non-defense, non-entitlement spending at current levels.

3. Monetary Policy Reform: Expand openness with the Federal Reserve and require the Fed to televise its meetings. Return value to our money.

4. Regulatory Reform: Repeal Sarbanes/Oxley regulations that push companies to seek capital outside of US markets. Stop restricting community banks from fostering local economic growth.

Congressman Paul has written or co-sponsored numerous bills to enact the policies in his plan. In Congress, he has been a champion of lower taxes and limited government.

Congressman Paul is the ranking member on the House Financial Services Committee's Subcommittee on Domestic and International Monetary Policy, Trade, and Technology. In Congress, Dr. Paul has never voted for a tax increase or for an unbalanced budget.

[HBGOnline]

freddyv said:

The four areas that the plan covers are:

1. Tax Reform: Reduce the tax burden and eliminate taxes that punish investment and savings, including job-killing corporate taxes.

2. Spending Reform: Eliminate wasteful spending. Reduce overseas commitments. Freeze all non-defense, non-entitlement spending at current levels.

3. Monetary Policy Reform: Expand openness with the Federal Reserve and require the Fed to televise its meetings. Return value to our money.

4. Regulatory Reform: Repeal Sarbanes/Oxley regulations that push companies to seek capital outside of US markets. Stop restricting community banks from fostering local economic growth.

Ron Paul was on Fox yesterday talking about something similar.

Here's my take

1. Great idea, but let's make it simple and enact a flat tax. EVERYBOBY pays the same rate no matter what you make and NO deductions. Studies have shown a flat tax of 15% on everybody would generate more income than the current complex system. Steve Forbes was just on CNBC recently and said 10 - 12% is all that is needed.

2. Better said then done. Every Prez since Reagan has been asking for a line item veto yet congress fails to produce. Why not freeze entitlement spending too. These programs are the ones increasing with the highest percentages each year.

3. Not sure what having TV's in a Fed Meeting would do for economic stimulus. I think it would have more harm than good. Just look at the market now over the last few weeks, when Bernanke speaks, they twist it around and try to second guess his words. The Fed could easily increase the dollar by raising interest rates. However, that would increase the curent problems faced with housing and the credit crunch. Once the dust settles the dollar will be back up in value.

4. From what I remember Sarbanes/Oxley was passed to protect investors from corporate fraud and hold corporation legally responsible for their actions. I think this was passed after the Enron mess. As far as I know nothing prevents corps from obtaining capital within the USA. I'm also not sure why banks are restricted from local economical growth? Never heard that one before.

[freddyv]

found this on Sarbanes-Oxley:


Wharton study: Does Sarbanes-Oxley Hurt Shareholders and Hide Poor Management?


In April 2004, minutes after posting healthy increases in sales and earnings, the publicly traded Niagara Corp. announced it was "going dark," delisting its common stock. The company, a steel manufacturer with sales last year of nearly $300 million, was hardly alone: During 2003 for example, 198 firms went dark, up from only 67 in the previous year. While most companies say they are deregistering from major exchanges to escape the steep costs associated with regulatory filings, some investors and others see darker reasons, rooted in serving insiders' self interest. A new study co-authored by Wharton accounting professor Christian Leuz entitled, Why Do Firms Go Dark? Causes and Economic Consequences of Voluntary SEC Deregistrations, analyzes this recent trend.

In 2002, responding to a spate of accounting scandals that threatened to undermine confidence in the American securities market, Congress enacted the Sarbanes-Oxley Act of 2002 (SOX). Designed to promote transparency, the Act mandated increased disclosure, required new board oversight and internal controls, and promised to give investors better information. But in the year following its passage, the number of firms that went dark and ceased to issue detailed financial reports tripled, meaning more investors were receiving no information at all.

When a company goes dark it can no longer be listed on a big exchange like the NYSE but can continue to trade on the Pink Sheets, an electronic quotation medium for over-the-counter stocks. Stocks that list here do not have to meet minimum requirements or file with the Securities and Exchange Commission (SEC).

Why did they go dark? Cost was certainly a factor in some of the decisions, says Leuz. "Some smaller companies estimated that the cost of complying with SOX was as high as $500,000 per firm, while the cost for bigger companies could be in the millions," notes Leuz, who co-authored the study with Alexander Triantis and Tracy Wang from the University of Maryland's Robert H. Smith School of Business. Among the estimated increased costs are those related to "higher audit and legal fees, new internal control systems that need to be implemented, higher director and officer insurance premiums, and a host of other expenses associated with compliance."

Wharton study: Does Sarbanes-Oxley Hurt Shareholders and Hide Poor Management? knowledge.wharton.upenn.edu/article/1080.cfm

[freddyv]

admin said:

3. Not sure what having TV's in a Fed Meeting would do for economic stimulus.

I think he is looking for transparency in the process. as of now, the fed meets without any oversight and we have no idea what goes on at these meetings.

[freddyv]

to comment further on Sarbanes-Oxley, I've seen similar things happen in the pharmaceutical industry. I worked at Wyeth in Marietta before it shut down. The FDA put the plant under consent decree and that crippled it. The guidelines were so strict that the plant was unable to operate and as a result over 2000 people lost their jobs and the area lost a valuable source of tax revenue.

you could argue that they wouldn't have been under consent decree if they did things right in the first place, but the reaction was so severe that the plant could not possibly survive.

Sarbanes-Oxley as it is now stands sounds like it gives corporations operating in other countries a competitive advantage as they do not have to comply to such strict regulations.

[HBGOnline]

"In 2002, responding to a spate of accounting scandals that threatened to undermine confidence in the American securities market, Congress enacted the Sarbanes-Oxley Act of 2002 (SOX). Designed to promote transparency, the Act mandated increased disclosure, required new board oversight and internal controls, and promised to give investors better information. But in the year following its passage, the number of firms that went dark and ceased to issue detailed financial reports tripled, meaning more investors were receiving no information at all. "

That's what I thought it was. Again not sure how repealing this would create economic stimulus. There are more "private" owned companies than listed on the "public" stock exchanges. Maybe most of the firms that "went dark" did have something to hide from investors.

Plus most economist agree we are just going over a little bump/slow down in the economy. Basically with the credit crunch and uncertain home values, people are watching more closely what they spend.

Consumer spending accounts for 70% of the economy. Perhaps if the major media outlets woud report the actual facts and stop with all the doom and gloom catchy headlines of late, the slight problems would pass.

Hopefully not before I get my $600.00. That's almost 30 bottles of Jager!!!

[HBGOnline]

freddyv said:

admin said:

3. Not sure what having TV's in a Fed Meeting would do for economic stimulus.

I think he is looking for transparency in the process. as of now, the fed meets without any oversight and we have no idea what goes on at these meetings.

From what I understand about the Fed, that's how it's supposed to be. Free from politics and all the other BS on Capitol Hill. Plus the Fed Chairman does appear before congressional commitees, televised, and answers all questions asked by members.

[freddyv]

admin said:

Consumer spending accounts for 70% of the economy.

this is true, but it's not solely people making cash purchases...it's people racking up huge credit card debt by charging everything. hence the big dilemma with citicorp et al.

[freddyv]

admin said:

Again not sure how repealing this would create economic stimulus.

people can invest in publicly traded companies. this is good for the economy.

[freddyv]

admin said:

From what I understand about the Fed, that's how it's supposed to be. Free from politics and all the other BS on Capitol Hill. Plus the Fed Chairman does appear before congressional commitees, televised, and answers all questions asked by members.

reference a previous thread I started:
www.hbgonline.proboards62.com/index.cgi?board=politics&action=display&thread=1200577018

monetary policy writing by ron paul

[HBGOnline]

Thanks for the link. Despite what Mr. Paul thinks about the Fed. I would not want to change anything. The Fed needs to stay independant.

Anything our elected officials touch, they fuck it up. Good intentions usually turn into nightmares years later.

Watch everytime Bernanke or one of the Fed governors speak, right away the market goes up or down. You want flip flop politicians to get in there too? Would be a total disaster.

The Fed was set up for a reason. Let's leave that one alone.

There are a lot more things that could easily be changed and do more good, then fuckin with the Fed.

[freddyv]

I don't mean to speak for dr. paul, but I think that what is he suggesting is let the market decide, not have the government interfere.

the fed controls inflation by controlling key interest rates and by controlling the supply of money. our money isn't physically worth anything...so the dollar's value is essentially determined by people's confidence in it.

with a "hard" currency, there is no need to try to artificially manipulate the market.

p.s. - ron paul favors a return to gold standard

[seanx]

some people think this guy knows what he is talking about.........depends on the issue for me:

(for those who put trust in the Fed blindly..........you're fucking idiots....and I REALLY mean that because I've got firsthand experience)

Cramer Calls For Investigation Of Fed
Popular financial expert questions Bernanke's obsession with wild interest rate cuts, "the man has no idea what he's doing"

Popular financial expert Jim "Mad Money" Cramer has called for the Federal Reserve to be investigated in light of recent wild interest rate cuts, insinuating that the Fed is following a different agenda to the interests of the American people as the economy teeters on the brink of a recession.

"I actually want to call right here for an investigation of what the Fed did. An investigation of the institution, because I think the institution has been behind almost every boom and bust that we've had for many many years. And its really starting to [be the] time to look to see what this institution is all about," Cramer told TheStreet.com in a video report yesterday.

Cramer slammed those that gave the Fed carte blanche to take whatever action it wanted without scrutiny, stating, "You should never give a blank check to anyone - particularly someone as inexperienced as Bernanke," and questioned the bizarre slap-dash nature of recent rate cuts when compared to Bernanke's rhetoric.

"When you look at the statements that have accompanied every Fed rate cut, you could reach no conclusion other than the fact that the man has no idea what he's doing," scorned Cramer.

Cramer has turned up the heat against the Fed in recent months, famously stating they had "run amok" and were "an unregulated group of people who frankly are not responsive or held accountable to anybody," during an interview with Congressman Ron Paul.

[freddyv]

more on Sarbanes-Oxley...

February 19, 2008

Discover what Ron Paul has done as a congressman. Imagine what he will do as president.
Most members of Congress saw the implosion of Enron as an opportunity to grab headlines by passing new legislation to "crack down on corporate crime." Congressman Ron Paul saw that new federal legislation would make matters worse, in large part because Enron was the creature of existing governmental regulations, corporate welfare, and bad monetary policy.

Dr. Paul stated:

I would like to suggest that before Congress imposes new regulations on the accounting profession, perhaps we should consider whether the problems the regulations are designed to address were at least in part caused by prior government interventions into the market.

Increased federal interference in the market could also harm consumers by crippling innovative market mechanisms to hold corporate managers accountable to their shareholders. As former Treasury official Bruce Bartlett pointed out in a recent Washington Times column, during the 1980s, so-called corporate raiders helped keep corporate management accountable to shareholders through devices such as the `junk' bond, which made corporate takeovers easier. Thanks to the corporate raiders, managers knew they had to be responsive to shareholder needs or they would become a potential target for a takeover.... Ironically, the federal power grab which killed the corporate raider may have set the stage for the Enron debacle, which is now being used as an excuse for yet another federal power grab!

Of course, while the supporters of increased regulation claim Enron as a failure of “ravenous capitalism,” the truth is Enron was a phenomenon of the mixed economy, rather than the operations of the free market. Enron provides a perfect example of the dangers of corporate subsidies. The company was (and is) one of the biggest beneficiaries of Export-Import (Ex-Im) Bank and Overseas Private Investment Corporation (OPIC) subsidies. These programs make risky loans to foreign governments and businesses for projects involving American companies. While they purport to help developing nations, Ex-Im and OPIC are in truth nothing more than naked subsidies for certain politically-favored American corporations, particularly corporations like Enron that lobby hard and give huge amounts of cash to both political parties. Rather than finding ways to exploit the Enron mess to expand federal power, perhaps Congress should stop aiding corporations like Enron to pick the taxpayer's pockets through Ex-Im and OPIC.

If nothing else, Enron's success at obtaining state favors is another reason to think twice about expanding political control over the economy. After all, allegations have been raised that Enron used the same clout by which it received corporate welfare to obtain other `favors' from regulators and politicians, such as exemptions from regulations that applied to their competitors. This is not an uncommon phenomenon when one has a regulatory state, the result of which is that winners and losers are picked according to who has the most political clout.

Congress should also examine the role the Federal Reserve played in the Enron situation. Few in Congress seem to understand how the Federal Reserve system artificially inflates stock prices and causes financial bubbles. Yet, what other explanation can there be when a company goes from a market value of more than $75 billion to virtually nothing in just a few months? The obvious truth is that Enron was never really worth anything near $75 billion, but the media focuses only on the possibility of deceptive practices by management, ignoring the primary cause of stock overvaluations: Fed expansion of money and credit.

The Fed consistently increased the money supply (by printing dollars) throughout the 1990s, while simultaneously lowering interest rates. When dollars are plentiful, and interest rates are artificially low, the cost of borrowing becomes cheap. This is why so many Americans are more deeply in debt than ever before. This easy credit environment made it possible for Enron to secure hundreds of millions in uncollateralized loans, loans that now cannot be repaid. The cost of borrowing money, like the cost of everything else, should be established by the free market--not by government edict. Unfortunately, however, the trend toward overvaluation will continue until the Fed stops creating money out of thin air and stops keeping interest rates artificially low.

Congressman Paul also warned that new congressional legislation, far from benefiting investors, would have unintended consequences that would harm the American economy since "new regulations inevitably raise the overhead costs of investing. This will affect the entire economy as it lessens the capital available to businesses, thus leading to lower rates of economic growth and job creation. Meanwhile, individual investors will have less money for their retirement, their children's education, or to make a down payment on a new home."

Unfortunately, Congress chose to ignore Congressman Paul and passed the Sarbanes-Oxley Act. Dr. Paul was the only member of the House Financial Services Committee to oppose this bill, and one of only three members to vote against final passage.

However, it did not take long for Dr. Paul's warnings about the unintended consequences of this law to be proven correct. In 2000, nine out of every 10 dollars raised by foreign companies were raised in the United States. In 2005, nine of the 10 largest public stock offerings were not registered in the United States, and, of the largest 25 global offerings, only one took place in the US.

According to some estimates, Sarbanes-Oxley has cost the very investors the law claims to protect at least $1.4 trillion, money that cannot be used to create new jobs for American workers and innovative new products for American consumers.

Seeing the damage done by Sarbanes-Oxley, Congressman Paul knew he had to act. He studied the ways Sarbanes-Oxley was harming the economy and determined the most important priority was to repeal Section 404, which imposed such a strict standard of liability on American corporations that research showed "a CEO possibly could be found liable for not using the latest version of Windows! Financial analysts have identified Section 404 as the major reason why American corporations are hoarding cash instead of investing it in new ventures."

Dr. Paul introduced legislation to repeal Section 404, using the legislation as a platform to continue educating his colleagues. Eventually, in no small part due to Congressman Paul’s efforts, even many of Sarbanes-Oxley’s biggest cheerleaders came to admit the law was heavily flawed.

Today, Congressman Paul is working with a bipartisan group of members on several pieces of legislation to repair the damage Sarbanes-Oxley has done to America’s economy. Thanks to Dr. Paul, there is a good chance that Congress may actually repeal significant parts of Sarbanes-Oxley.

As a congressman, Ron Paul fought a lonely battle against Sarbanes-Oxley, but has been vindicated by bipartisan consensus that the law was a mistake. Imagine what he will do as president.