While economists and politicians lament the troubles of Wall Street and argue about the impact on Main Street, what they have overlooked is the “other” street. And this other street is the one that concerns you and me even more than the first two. You see, America really operates on a three-street economy: Wall Street, Main Street, and for the sake of genericism, we’ll call it Third Street.
Actually, according to a 1993 census, Third Street is the most common street name in America. Ironic that it comes to represent the third street in this triangle.
So what is Third Street in the triangle? It represents the residences of those who invest on Wall Street, work on Main Street, or in these sad times, the residences of those who are barely holding on to any address. 
You see, while many acknowledge that Wall Street impacts Main Street, no-one has shown the downstream impact to Third Street in quite this way before. However, the news of the impact and its evidence are all around us.
The incoming administration will need to recognize that the balance between these streets is a tenuous one and that inattention to the troubles of one will almost certainly serve to exacerbate the troubles of one or both of the other.
For instance, what good does it do to bouy Wall Street and bail out automakers if the consumers cannot keep a job and have money to invest, get a loan to buy a car, or for that matter, even make the mortgage payment? At the heart of this question is a bigger one: Where does the economic greatness of America really reside? I believe it resides on Third Street.
George W. Bush had it partly right on two occasions. The first was after 9/11 when he told Americans to go shopping. The second was when he pushed his stimulus plan that put money back into the pockets of taxpayers. Where Mr Bush missed the mark is in not doing enough to reduce the pain and burden on the taxpayer and in not doing enough to keep down consumer prices so that when the money is in the taxpayer’s pocket, it goes farther.
If you take care of Third Street—ensuring the American family can work, make an honest and fair living—the confidence level of the country will increase, goods will be bought (Main Street), stock values will climb (Wall Street), and the economy as a whole will recover.
I’m not advocating more socialism! We’re about to get more of that than I care for with Mr Obama. No, I’m suggesting a few measures that could be implemented over time so as to improve the economy at the place where any economy begins: With the consumer.
I warn you, some of these are radical ideas and open to flawed logic. But then again, I have not heard any better ideas either.
Suggestions:
- Allow laid off individuals to amend a previous year’s tax return following six consecutive months of unemployment. In doing so, allow the taxpayer to treat the period of unemployment as a capital loss against the previous year’s taxes paid, thereby potentially receiving a tax return or receiving a reduced tax payment burden which might be difficult to still satisfy.
- Change the child tax exemption to end in the year in which the child attains the age of 19—not 17. A 17-year-old is challenged when it comes to finding a job and is likely still in high school. The teen is also a good source of financial drain on the parents who are facing increased financial headaches with college tuition and other educational expenses. Allow for the teen to remain at home and be a full tax credit through the year in which the age of 19 is attained. (Besides, why 17??? It seems somewhat arbitrary and should be changed.)
- Institute a Federal Unemployment Subsidy, paid to the individual along with the state payment. Essentially, the Fed pays a subsidy to the state who then reissues it to the jobless. It should come out of Federal tax funds, whether gas tax, income tax, estate tax, etc. This would not reduce the state’s portion, but actually allow the maximum amount paid to be greater than $390 a week.
- Link public transportation to unemployment rolls, allowing jobless individuals to access public mass transit at a reduced rate or for free. Subsidize this with proceeds from local lotteries and/or state gas tax. Worst case, use state income tax.
- Disallow community tax incentives for new businesses. Level the playing field for communities. The goal here is to make the rolling hills of Tennessee no more or less attractive from a tax perspective for an auto assembly plant than the outskirts of a large, northern city. The attractiveness can come in the form of lower-cost utilities or labor, but that’s about it.
OK, that’s about all I have for ideas. Some of you who read this will have your own ideas or will be able to point out the good and bad of the ideas stated above. Who knows? Given enough thought and discussion, one of these ideas just might get some legs!
What do you think?
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