Two Simple Fiscal Policies To Match Bernanke's New Monetary Policy

On Wednesday, August 10, Federal Reserve Chairman Bernanke took a decidedly anti-Greenspan approach and disclosed to the world that he would hold interest rates low until mid-2013 to stem the hemorrhage on Wall Street. I believe it worked.

On the fiscal side, the President and Congress have done nothing so I have decided to think for them. To match the "full-disclosure" monetary policy, I propose two new fiscal policies to be implemented at the same time:

1. JOB CREATION BASED ON A TAX CREDIT - A dollar for dollar tax credit for any person or business that hires a new worker, part-time or full-time, up to a maximum of $100,000 per year per worker and,

2. PRIVATE SECTOR SPENDING BASED ON A TAX THREAT - Simplify the definition of the Accumulated Earnings Tax "AET" (i.e. close all loopholes), raise the AET rate to 75%, and enforce it, so that companies sitting on a mountain of cash would be encouraged to either pay it out in dividends, spend the money on new hires or otherwise use the money productively and grow their businesses.

More draconian actions: Federal Maximum Wage Law, reducing unemployment benefits by 50 percent together with a dollar for dollar tax credit for charitable contributions to benefit the jobless and the homeless, cut the number of legislators by 25 percent and reduce legislation by 25 percent, mandate no-fault insurance and eliminate tort and business fraud claims, postpone the effective date of Obamacare until the unemployment figure drops to 4%, etc.