Credit Crisis?

Sure, we’re in a credit crisis, in fact anyone that doesn’t acknowledge that we’re in a recession is deeply in denial.  There is a fix, and it can be done by the same folks that caused the problem in the first place.  Congress…

We all know that the American consumer (along with Congress) is woefully too far in debt and buried under various loan payments.  We are talking about expensive cars, mortgages, and excessive credit card debt.  This huge debt load is also bringing about the destruction of the family unit that made this country so fabulous.  Everyone has to work and bring in some income.  It’s rare that I meet someone whose spouse is not also holding down a full-time job, in fact there are some families where one spouse is holding down two jobs (that’s three incomes, if you have trouble with the math).  All right, so what did Congress have to do with this?

There was a time when all loan interest was tax deductible, sadly, I don’t know the history of that, so I don’t know how long it was in effect.  However it was used to spur the economy.  You could deduct your car loan interest, credit card interest, mortgage interest, and virtually any other interest you paid to borrow money.  This certainly spurred the economy – we bought all kinds of stuff.  It wasn’t long before the marketing gurus got involved and pressed the public with all kinds of ideas about what they needed to be successful and beautiful.  We began to borrow more, spend more, and worked very hard to “keep up with the Joneses.”  It was a nice environment, really… you could treat loan money as free.  After all, who was paying the interest?  Congress!  Well, as you can guess, it wasn’t long before our elected officials wanted the same treatment.  I can just picture them asking each other, “Who do we get to pay the interest on our excessive spending?”  “We can’t tax the public, they’ll throw us out of office.” “I know… let’s let the IRS take the blame.”  And the interest tax deduction was removed for all interest except mortgages.  Congress got their income, and families took on two jobs.

So, here’s the easy credit crisis fix:  Restore the tax deduction on all loan interest.  Cars, homes, credit cards, RVs, planes, trains, whatever you can get a lender to loan.  We’ll have a lot more spendable income (certainly more than the silly $600/person relief program that is coming your way).  The only bad part is that the government will lose a lot of tax income.  Well, that’s not so bad, here’s the fix for that…

Congress… eliminate pork barrel spending.  And that’s not hard to do, just stop promising your campaign contributers that you’ll send money their way!  There’s nothing that I would like better than to have a legislator that will promise to do nothing, and that no new laws would be implemented without first removing two stupid laws in it’s place.  Need more ways for the government to cut back on spending?  Eliminate the IRS through the adoption of Fair Taxation legislation.

Of course, for any of that to work, all of us need to be a little bit less greedy.  We need to stop doing business with companies with unfair business practices… like raising your credit card interest rate whenever you add a credit card, or default on someone else’s card.  Banks should only adjust rates based on your performance with their card.  Ah well, that’s another post, someday… Greed.