Billy Glynn's venture capital plan for reforming American spending
Now, he's out to raise some ire with his new book, "The United States of Bankruptcy: 20 Great Ways to Save the American Way of Life" (Franklin Green). In it, Glynn maintains that America has gone bankrupt -- socially, spiritually and financially -- and that our nation's politicians have become "nothing more than [objects of] consumer branding led by commercials designed for us to buy a political product." Ouch.
So where does economic recovery begin? As Glynn told WalletPop, Americans need to start acting not merely as citizens, but shareholders with everything at stake: "If we allow our government to do more of the same, we will lose more international confidence in our economy than we have already." he says. "We will be cut off from those nations buying our debt and keeping the U.S. from bankruptcy right now. As bleak as all this sounds, I believe solutions can be brought to the political process."
But those solutions, as Glynn outlines them, would involve some wholesale changes many in power would find hard to swallow. Likewise, Flynn has some harsh words of rebuke for Americans who have spent themselves into all sorts debt.
WalletPop: This seems such a huge issue--one that you, or I, or that average person could do little about. So what motivated you to tackle it?
Glynn: I just don't rant in the book. I have 20 solid things the government could do to fix our problems and they do not cost a dime. Also I truly believe that we live in an oligarchy -- rule by the few, the rich and the powerful, and the masses are ignorant and uneducated when it comes to geopolitical, economic or large-scale social issues. And guess what? That's exactly how our "leaders" want us to stay. So my goal is to rip the wool off the eyes of Americans and show them how things work: how the financial collapse happened and ways we can repair the social, moral, economic and political bankruptcy in our country.
WalletPop: You say "America needs a CEO." How would this work?
Glynn: If you want a real solution to the crisis in D.C. and our country doesn't elect someone to do it, hire them. We need an American CEO, an American Board of Directors, and a fiscal management team that would never be elected in and out of office, but can be fired at any moment just like in the business world. The CEO and his staff would oversee the budget, investments, trade deals, currency hoarding and printing, and all fiscal parts of our government -- even some areas in concert with the Federal Reserve. We have set up an Office of Homeland Security; why not an Office of Homeland Financial Security? We are, after all, a capitalist country and economic war and chaos are looming.
Pork, special interest, waste, and abuse have been running rampant in Washington for so many years that we are desensitized to the actions of Congress. Our nation needs financial managers -- not lawyers and career politicians -- to oversee our money. Worse, foreign nations, individuals, and corporations contribute to campaigns and unduly influence Washington and expect favors in return for their contributions. This is at the heart of the problem; don't you think we can clean it up if the budget is managed outside of Congress or at least a compromise that forces considerable civilian oversight? Take away the ability to spend our money like drunks and see how fast special interests lose interest!
WalletPop: Can you help put in perspective how the state of financial affairs in American has hurt, or impacted, the pocketbooks of everyday Americans?
Glynn: The future doesn't just appear to be bleak: It is! The numbers are up and down -- mostly down -- and despite rhetoric and pandering, the country is not heading in the right direction. The "double dip" [a second recession] is coming because of the policies our leaders are implementing. The dip may not be as bad, but we are right on the edge of the toilet already. And I assure you when all the taxes, [the recently enacted health care plan] , Cap and Trade [a proposal under which the government would asses fees for companies that produce carbon emissions that exceed certain limits, and grant credits to those that stay below the limits], financial reform and global austerity are in place, Americans will get hurt and badly and this may cause a dip to be much worse.
Instead of dealing massively with the many issues we face, politicians are spending billions on media and most of their time pandering for votes to defend their shoddy consumer brands, their jobs and to give the people their opinion. There is no "Invisible Wall" as Alan Greenspan says -- I can see it clearly. It is the blind leading the blind who can't see it.
WalletPop: What's your evidence of this?
Glynn: Seventy percent of the U.S. economy is consumption. Businesses live or die by this. We cannot tax our way out of debt -- there is too much of it. But taxes are what we're in for and logic would say that people already can't or won't buy enough products, goods and services to sustain any recovery. And now new levies will take even more money out of their pockets. Add to that the global pull back on debt and tax hikes, and now the world can't borrow and spend more either. Am I just stupid or does that mean people will have less money to spend?
WalletPop: As I understand it, you'd keep the Bush tax cuts in place for those earning more than $250,000 a year. How come?
Glynn: Tax the "rich" and businesses and see how much they buy and invest. A Value-Added Tax (VAT) is coming, too; it is just a matter of when -- and there you go again, making more products, goods and services more expensive. And financial reform already guarantees more taxes. The cost will be passed right along to you and me in more fees and lending will be severely affected, breaking the other leg and the backs of many Americans. Consumers are broke already, so why don't we just tax them more?
WalletPop: You also see the fact that Americans don't save as a major stumbling block. Any ideas for that?
Glynn: My proposal to turn this tide is to allow Americans to buy economy bonds. The bonds should be tax free and become part of an individual investment program aimed at strengthening the economy by giving Americans incentive to invest in our nation, encouraging Americans to become savers instead of borrowers, and finally creating supplemental accounts to reinforce Social Security.
I suggest 5 percent of all personal taxes be swapped for the bonds each year to give Americans ownership in our country. And instead of sending a large portion of the other 50% that don't pay taxes a "refund" check, they get a bond. As a result, Americans will have savings accounts, and the government can still use the proceeds without depleting tax revenue and borrowing more just to send hundreds of billions of dollars to people. When Japan's financial institutions failed in the 1990s, Japan was rescued by the fact that she was a savings nation. America is not a savings nation. This major fact will perpetuate our financial crisis and it will surely cause huge problems in the future if we do not solve it.
WalletPop: What about the credit crisis?
Glynn: The last 20 years of American economic growth were largely fueled by consumers using credit to buy goods and services. Now, many consumers are in rehab for credit addiction and will continue to be in rehab for many years. The credit transformation in America and around the world can no longer support all of the businesses that need consumers to buy things and won't even allow many businesses to use credit to help their businesses survive.
I believe the credit bureaus need to be tweaked during this economic crisis to weigh the last 18 months and next 18 months differently. You want to provide relief immediately? You want to reduce anxiety and hopelessness and increase consumer confidence? Then allow people to get access to decent loans and relieve the stress on families just trying to get by and pay their bills. If Americans cannot refinance or borrow in the future -- and millions won't be able to for years -- huge segments of our economy will continue to underperform or collapse.
WalletPop: Yet some of this is going to take a lot more than mere tweaking, isn't it?
Glynn: Who is going to clean up the bad credit card assets held by banks? What about defaulting student loans? What about the commercial loans hitting presently? And worst of all, the government. There is no credit methadone to ease the withdrawal. As a nation, we have spent, borrowed, and sold ourselves into bondage. The sucking sound you hear isn't just money; it is the lifeblood of our nation, our economy and its consumers.