The beginning of 2009 has ushered in another debate over U.S. government economic stimulus legislation.  The $789 billion estimated price tag gives good reason for healthy discourse.  Again, I offer up some alternative suggestions to those put forth in the stimulus plan circulating.  If I were going to ask the citizens of the U.S. to help bear the three-quarter trillion dollar bill, here is how I would spend their money (all figures approximate):

Tax Cuts of $350 billion

• Reduction in corporate payroll taxes to help mitigate layoffs.  This will effectively allow employers to spend less per employee so they can keep payrolls more stable.
• Temporarily allow short-term investors to pay the long-term capital gains tax on income from stocks, bonds, mutual funds, etc. Currently, income made from securities held for less than one year are taxed at the individual’s normal income tax rate.  This would reduce that to the 15% that is paid on long-term (more than one year) investments.  This should encourage people to invest in the markets once again.
• Allow spending on public transportation in excess of $250 per annum to be taken as an itemized deduction on individual income tax returns regardless of circumstances.
• Adjust the Child Tax Credit program.  Increase the standard deduction per child from $1000 to $2500, but cap the deductions at two children.  Under the proposed system, a family with two children would get the same tax credit as a family with five children today.  All families with less than five children would get an increased tax credit whereas those families with five children would remain the same, and those with more than five children would see a smaller credit.  There are substantially less families with more than five children so the net benefit to families across the country would far outweigh the decrease in benefits to those families with more than five children.
• Include tax credits to hospitals, private practices, and insurers for migration to electronic patient record keeping and reimbursement. This will be linked to the Medicare and Medicaid reforms in the Government Overhead Revitalization section.
• Institute a “Good Credit Rating” tax cut to those individuals who meet certain credit standards.  These people are the ones who have been paying their banks back on time for the money they borrowed. This will help those who were not irresponsible instead of throwing money at the banks for absorbing losses incurred due to poor lending practices and individuals who entered into debt-obligations they could not repay.

Government Overhead Revitalization $100 billion

• Upgrade government departments’ administration services by implementing technological solutions and hiring a more modernized, educated workforce.  There are far too many manual, wasteful processes inherent to government agencies.  Private industry constantly strives to streamline processes and implement efficiencies to ensure profitability.  There has never been an incentive for government agencies to do the same.  Let’s change that.
• Medicare and Medicaid combined are the second largest expenditure of the U.S. government.  The poor management of records and financial information is due to arcane paper-based systems that result in unacceptably long reimbursement times. Implementation of a proper financial system including usage of private industry best practices such as a consolidated ERP (Enterprise Resource Planning) system, electronic patient and treatment records, imaging and workflow, e-invoicing, and pay via ACH could save the program huge sums of overhead dollars while increasing benefits to those they serve.  One of the reasons hospitals and doctors charge so much is due to the average six month lag time for reimbursement from the government.  The manner in which reimbursement is calculated is also in dire need of an overhaul.  Doctors and hospitals will sometimes order tests and procedures that are not entirely needed because they will be reimbursed by the government for it, instead of just providing the care that is needed because they may not get reimbursed for that course of action.
• Realign government employees’ salaries and benefits with those of private industry.  Typically, government employees have slightly lower salaries than a private industry counterpart.  The government employee has far more in terms of benefits and retirement plans than the private sector that offsets that salary difference.  In the end, private industry employees typically work longer hours with less vacation and benefits while contributing more progress to the business and industry than the government employee.  There is little incentive for government employees to perform at a high level because they are not held accountable for their performance in the same way as private employees.  The U.S. government needs comprehensive Human Resources reform to ensure high-quality work is being done with similar benefits and salaries to private industry.
• Implement more internet-based services to reduce government payrolls through offering greater access to services without the need for as many brick-and-mortar offices and employees.  You will lose some of the lower-earning government employees but you will gain higher-paid, more highly skilled government workers to design and maintain these systems.

Public Works and Infrastructure $250 billion

• Roads built in the 1960′s and 1970′s were not meant to handle the volume of traffic that exists in 2009.  Redesign these roads to reduce congestion and the average consumer now has more money to put back into the economy in ways other than helping oil companies dish out record profits.  Properly maintained road systems also cut down on the costs incurred by the consumer on vehicle maintenance.
• Airports are in dire need of expansion and upgrades.  Long security and check-in lines are due to poor design of airports and processes for handling traffic.  In addition, airplanes waste considerable amounts of fuel and time sitting in lines waiting to take off or circling waiting to land because there are no available runways.
• Bridges are becoming dangerously unstable across the country. Repairs and upgrades to bridges must be made in order to ensure safe travel.  In the end, it is cheaper and less tragic to repair a bridge than to rescue the 500 people precariously thrown into a river, in addition to the resultant healthcare and insurance claims.
• Rail systems are out of date for both passenger and freight trains. Improvements to rail systems and incentives for freight companies to use trains would cut down congestion on roadways from trucks and the damage those vehicles cause to the roads.  Also, there are significant amounts of accidents involving passenger vehicles and trucks leading to increased auto insurance and healthcare burdens.

[ad#babeled-ad-medium-square]

These are a few ideas from a layman sitting in his kitchen using $89 billion less than the House and Senate. The fact that an entire legislative body (Republicans – you are not better here because saying “no” without offering an alternative suggestion is just as bad as the Democrats’ misguided ideas) cannot come up with something that has a little more substance is not encouraging.  We pay taxes, they spend the money unwisely, and then everyone points fingers as to whose fault it is.  It is the citizens’ fault for not being more involved and holding their elected officials accountable, it is the elected officials’ fault for not producing work that is of acceptable quality, and together we will continue to fail if this is the path we choose to stay on in the future.

Image used in this post

Traffic-Stopping Accident on the Tappan Zee Bridge courtesy of Flickr user th.omas published under the CC license.