The Porter Plan - Not the bailout


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LizziePooh is offline LizziePooh Post #1  January 19,2009, 5:53am

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(Sorry for the multiple threads - my computer had a mind of it's own!)


Hi Everyone,


I heard this man on the radio this week (never heard of him before)and he has a three step plan for the economic mess that we are in. I am not a financial wizard.I am not even a financial novice but his plan seemed to make perfect sense to me.


Here is a link to his plan.


http://billporterusa.blogspot.com/


The plan is basically three steps and I would be interested in knowing what you guys thought of it.


Step 1 - 25% tax credit for the purchase of a home


Step 2 - Fade out capital gain taxes over a five year period


Step 3 - $10,000 tax credit for every new full-time hire that is over the current number of full-time employees
 
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neardc is offline neardc Post #2  January 19,2009, 7:21am
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Hmmm.... interesting. The notion of a 25% tax credit seems terribly expensive, though. I buy a house (more like a condo in my area) for $400,000 and the government basically writes me a check for $100,000? That is way, way more than my tax burden -- in fact it would cover my taxes for many years ahead so I would basically not be adding to the budget coffers for years. It would be very nice for "me," but I'm not so sure it would be good for the economy in the long run. A smaller incentive could still do the job...
 
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chawks64 is offline chawks64 Post #3  January 19,2009, 7:28am
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neardc,439097 wrote :

Hmmm.... interesting. The notion of a 25% tax credit seems terribly expensive, though. I buy a house (more like a condo in my area) for $400,000 and the government basically writes me a check for $100,000? That is way, way more than my tax burden -- in fact it would cover my taxes for many years ahead so I would basically not be adding to the budget coffers for years. It would be very nice for "me," but I'm not so sure it would be good for the economy in the long run. A smaller incentive could still do the job...
I agree. With the average mortgage loan being 30 years, that has the government giving homebuyers enough money to pay the principle on a new home for more than 7 years. It just doesn't figure.


Is there maybe a missing decimal point somewhere?
 
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godlessinseattle is offline godlessinseattle Post #4  January 19,2009, 8:53am
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The big big problem facing all of these efforts to buy our way out of the present economic crisis is that we enter this crisis with an already unsustainable debt burdern and we wish to add way, way more to this debt. Already a good portion of our economy is mortgaged outside our boundaries. This is potentially very risky.


Another big, big problem facing us is that the same stupid, greedy actors who brought this crisis around us are still out there and will, for sure, be the biggest beneficiaries of any bailout package.


We really need to take the hard medicine, now. Any attempt to buy us out of this mess will only further increase the debt we pass on to other generations.
 
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LizziePooh is offline LizziePooh Post #5  January 19,2009, 9:09am

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The point of this plan is that we can not get ourselves out of this mess with the bailout. Doing the bailout will only prolong our troubles.


The tax credit for someone who purchases a home will actually stimulate the economy. The housing crisis needs to be fixed and the only way to do that is to get mortgages from people with real money. There are thousands and thousands of jobs related to the housing industry. If people with real down payments and with real money to pay for their mortgages purchase housesthen the housing crisis can end and all of the jobs that have been lost due to their assocation with the housing industry (irrigation, construction, window companies, interior designers for model homes, etc) will be needed again. The tax credit is the incentive for investors to invest. Also, Bill Porter mentioned that even with the bailout money that has been given, banks are still not lending money becausetheydo not know what bad loans are out there. If you can get some good loans and let the other bad loans go bad, we can get this under control.


Government does not make jobs - businesses do. And the more we let government try to fix this the more we are all going to hurt.
 
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p5cents is offline p5cents Post #6  January 19,2009, 9:38am
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godlessinseattle,439249 wrote :

The big big problem facing all of these efforts to buy our way out of the present economic crisis is that we enter this crisis with an already unsustainable debt burdern and we wish to add way, way more to this debt. Already a good portion of our economy is mortgaged outside our boundaries. This is potentially very risky.


Another big, big problem facing us is that the same stupid, greedy actors who brought this crisis around us are still out there and will, for sure, be the biggest beneficiaries of any bailout package.


We really need to take the hard medicine, now. Any attempt to buy us out of this mess will only further increase the debt we pass on to other generations.
Godless,


Are you sure you're 24? Your comments all over this board are so much deeper than your age. You're not really 42 are you?


I'm not too sure that cutting capital gains tax will help anyone. That is core Republican, trickle-down thinking. And trickle-down has been pretty much shown to be a lie perpetrated on a democracy so that those who are richest can get the people to allow them to be even more richer. As I understand it, if a company invests its profits back into the company, those profits are already not taxed. The capital gains only come when the company passes profits to the owners. Economically it would be better for the government to take some of that money and invest it in transportation and research than for a rich owner to buy more Italian shoes or Japanese toys.


One point that I thought of from godless' comment is that we got into this mess (from a number of reasons, but one in particular) because for 50 years we have been promoting a consumer-oriented society that depended on borrowed money. We've now come to a point where most of the economy was running on money borrowed from the value of people's homes--which were escalating due to easily borrowed money.


The bubble burst. Propping up home values might save us for a time, but it will return us to the consumer economy. We need an economy based on production and savings. Toward that end we probably need to suffer through a few years of poor economy while governments invest in infrastructure and basic research. I'd also support tax credits and grants for new and expanded businesses in the areas of R&D and manufacturing. We can build an economy based on non-oil energy and using the fairly highly educated population. We just need to reverse 25 years of Republican policies that encouraged dependance on imported oil and decimated our research base.
 
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dito is offline dito Post #7  January 19,2009, 10:07am
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Wow do we have some Austrian Economists in here??? Too bad Obama doesn't get it and is going to do more of the same.





If the government wants to fix things they can cut taxes and cut spending. Then make it easier for the private sector to hire employees. But nope they are going to keep on borrowing and spending and printing money. Can anyone say 10 dollar loaf of bread? I just hope Volcker will lay the smack down on Obama and Geithner.
 
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dito is offline dito Post #8  January 19,2009, 10:11am
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Very good read here: http://www.house.gov/htbin/blog_inc?BLOG,tx14_paul,blog,999,All,Item%20not%20 found,ID=090119_2616,TEMPLATE=postingdetail.shtml
 
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chawks64 is offline chawks64 Post #9  January 19,2009, 10:39am
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Basic Econ 101 tells you that, as home prices drop, more buyers (like me)enter the market, driving the prices back up again.


I was workingin escrow when all of this happened. By LAW escrow companies and employees are are disinterested 3rd parties and not allowed to give advice. We would see buyers come in, agreeing to even the worst loans, just so they could get more house than they could really afford. Most of them did it so they could either have the big "I'm successful" house, or to turn a quick profit with the assumption the market would keep climbing. It didn't.


Most of the time, they took on an adjustable loan, assuming they would just refinance when the rate went up, but then they couldn't. So they ended up stuck with an even higher payment than the one they originally really couldn't afford. Many of the mortgage brokers were "helping" these people get loans they shouldn't have (creative paperwork), and some of the lenders looked the other way as well.


Maybe it's a bit of a rant for me, but I'm TRULY tired of bailing everyone else out when I did the responsible thing and stayed out of a market I couldn't afford.
 
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LizziePooh is offline LizziePooh Post #10  January 19,2009, 11:25am

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chawks64,439444 wrote :

Maybe it's a bit of a rant for me, but I'm TRULY tired of bailing everyone else out when I did the responsible thing and stayed out of a market I couldn't afford.

I feel the same way about this as you, Chawks.


And people can argue that it was de-regulation that got us into the mess (and I really do not want to argue about that here). But even if everything was de-regulated - we still would not be in this mess if people could afford their loans.Loans were made to people that should never have gotten them in the first place. We can all want someone to have the American dream and want them to qualify for aloan, but just giving someone the mortgage does not help them. So unless you plan on paying their mortgage for them people who do not qualify should not be given a loan. End of story.
 
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