So let’s take this idea and explore and validate it:
Dear Mr. President,
Patriotic Retirement: There’s about 40 million people over 50 in the work force. Pay them $1 million dollars apiece Severance Pay with these stipulations
1) They leave their jobs. Forty million job openings – Unemployment fixed.
2) They buy NEW American cars. Forty million cars ordered – Auto Industry fixed.
3) They either buy a house or pay off their mortgage – Housing Crisis fixed.
I am below this age cutoff but that’s ok. So I take my household, spending levels, saving levels etc. Keeping the numbers round… let’s say I spend 100K a year (really it is much less). I payoff the mortgage, buy a new car for cash, and save the balance. So let’s say that’s 800K in the bank. My annual spending has dropped, I am retired so my savings “expense” is gone. So let’s say that I am down to about 65K yr in spending now.
At the same time, I start a small home based business to keep from going insane and generate 30K / yr from that. In addition I earn 5% return annually on my 800K investment. Between the two I am back to 70K in spending money for the year which covers my expenses.
If I ask my wife to go back to work, and she winds up making 50% of her pre-kids salary. Let’s call that 40K / yr. Nice chunk of change to put in the college fund for the kids, but the important part is that we now have health and dental insurance.
So, simple example and yeah I think it could be a valid solution. So let’s do the math:
40 Million individuals x 1,000,000 USD = 40 million spent. Versus how many trillion in stimulus????
Let’s even be more generous. Let’s expand the age range and say we were able to attract 50 million takers. Additionally, we increase the allowance to 10 million per person. By my math, if I do not earn (but not lose) any thing on investments (just keep the cash under the mattress) I could spend 200K / yr and not run out of money for 50 yrs.
So to summarize, I and my family could live well with in our means and in an improved lifestyle if we wanted and probably not run out cash in my lifetime. If the government were to say, I have 500 million dollars to give away to 50 million people that meet these criteria. In order to receive this stimulus you must:
A. Quit your current job and not take a job at another employer. However, you may start a new business if you like.
B. Purchase a new vehicle from a specified list of automakers and vehicles. The criteria for the list is that over 50% of the vehicle and it’s components must be fabricated and assembled in the United States.
C. You either payoff your current mortage or if you do not have a mortgage you must purchase either a second home or a replacement home.
At the end of this effort the government has put forth 500 million USD in stimulus to individuals who will in turn generate market forces in industries that have been directly impacted by the current economic “crisis”. Corollary forces will come into play as these families purchase private health insurance, and increased consumer spending across several sectors takes place. Additionally, jobs that were held by these individuals are opened up for other individuals to fill either through promotions or through new hires. Bottom line, the unemployment market is suddenly impacted by a huge opportunity sweeping through multiple sectors. In turn, businesses will have an opportunity to fill the open positions with (possibly) less expensive employees. This will be particularly true in unionized industries where the experience and tenure scales will be shifted.
$500 million vs. How many trillion??? Just to put this in perspective we could run 2000 of these stimulus packages for $1,000,000,000,000 (1 trillion) dollars.
Somewhere the math (and direction) in DC has lost it’s perspective in reality.
Or maybe it’s my math that’s off.