Guest post from Collin County resident, Phil Gray.
When we pay the debt, we prevent a future bond sale. Since Congress has already funded the current bonds, the money repaid becomes available to loan. Once loaned and as borrowers pay it back, principal and interest reduce the debt more, and, in turn, become available to loan or invest.
My idea is to use these loans in a variety of ways. First, I would give them to homeowners at 3.5% on a five-year note for compressors and conversions to use their natural gas as a transportation fuel. Second, to victims of usury (i.e., credit cards), at 8 % on three, five or seven-year notes, this allows them to pay off their debt while reducing ours, and saving them money. Each payment reduces the national debt and becomes available to loan again.
Banks will start to lower interest rates to maintain market share. They can pass their troubled loans to the debt fund, reducing their loan loss, while the IRS can collect on them, or count defaults as taxable income.
All this action occurs on the debt side. Consider the government side. Debt service is reduced. The jobs created for factory workers, drillers, gas men will increase the revenue. They will, in turn, create more jobs as they increase their own demand for goods and services, for us, the consumers. If businesses hire enough workers to service our demand. How many jobs do we create? There are 65 million homes in this country piped for natural gas. There are 100 million cars attached to those homes. Can we say a bunch of jobs? Can we say the deficit has disappeared? Not only that, but costs for aid to the poor will decline. Eligibility for Medicaid, AFDC, welfare and food stamps will decrease.
In addition, it will give us an opportunity to bring the undocumented out of the shadows. Let them pay 10% of his income for 10 years to the debt, and live free, demanding a fair wage for his work. In a sense, the 1040 becomes their Green Card. The need for ICE and the Border Patrol, as well as the expense of Immigration Court, will decline.
While we are at it, let’s decriminalize the use of drugs, and license vendors to ensure purity and quality, and the need for DEA will decrease. Property crime will slow, and the costs of law enforcement and the need for prisons will decrease.
Meanwhile, back on the debt side, revenue flows have reduced the debt. Money continues to accumulate, available to pay the monthly shortfall from Social Security and Medicare without further bond sales. If we can cash-flow Social Security, we knock off the need for 4.6 trillion in bonds that reside in the trust fund.
Each of these proposals reduces the debt. Most serve to reduce the scope of government. Many reduce government expenditure, allowing lower taxes. Savings to the public arise in reduced fuel cost, shipping expense, food cost, interest expense, travel expense, and taxation. These savings will allow increased economic activity, which will create the sustained boom, the rising tide that floats all boats. We are the job creator. When we have money left over, we buy stuff, and business ramps up to meet our demand. This will unleash that demand, and all business activity.