Most of the rhetoric coming out of Washington on fixing the economy focus on rescuing companies that are failures: GM, Chrysler, Citigroup, and AIG, etc. It ignores that the waters of economic woes are rising.
The true verification of economic recovery is the return of consumer and institutional confidence. Judging from consumer spending data and a continuing credit crunch, we see a clear indictment that the government actions of trillions spent on bailout and stimulus packages are ineffective and wrongheaded.
AIG’s bonuses paid to the very group that caused our financial crisis was the tipping point for the American public. They are extremely angry and outraged with the “reward for failure” orgy from the administration and Congress.
I propose the government provide a positive stimulus plan, the incentivize success plan — or IS! — to fund and incentivize successful companies to expand their U.S. businesses and to hire and retrain laid-off workers. The IS! plan consists of two pieces: low-interest, government-guaranteed loans and a tax credit for retraining U.S. workers.
1) Banks will provide low-interest loans to successful companies for their U.S. expansion plans with the government providing full loan guarantees.
So, what is a successful company, and who determines that? A successful company would be defined as a company, either private or public, that is doing well and has a “long- term U.S. growth plan.” It also should be a company whose current financial performance and balance sheet would have qualified it for additional credit from its bank a year ago, but cannot access such credit now because of tighter credit criteria.
For a successful company to qualify under the IS! plan for a bank loan that would be guaranteed by the government, it would need fully audited financial statements and its bank’s assertion that it would have qualified a year ago for the additional line of credit for its U.S. expansion plans.
2) The government will provide a full tax credit for the cost of training new job-specific skills for the company’s new U.S. hires.
The IS! plan will have a very high probability of success — expending very small amounts of taxpayer money when compared to the trillions wasted to date — because the successful companies are providing reliable products and services the consumers want; have long-term growth plans already in place; have the management to execute successfully; and have the infrastructures to expand, hire and grow.
This is a very positive national plan, applicable across all industries, all regions and all business sectors.
Most of the trillions of government loan guarantees to date have been used to rescue failures or to keep sick companies alive. The default rates are predictably high. The IS! plan is to provide low-interest loans to already successful companies for their U.S. expansion plans in growing the economy and creating and training 21st century jobs.
The IS! plan is totally aligned with our core American value of rewarding success. It will jump-start our declining economy, un-freeze the credit market, create new 21st century jobs, make us globally competitive, re-earn our leadership position in the world, and most importantly, it will restore our consumer and institutional confidence.
John J. Sie of Englewood is founder and former chairman and CEO, Starz Entertainment Group.
