My Plan to Save the Economy & Create Jobs via Unspent Stimulus $$$

First of all, let me start off by saying that I believe in a small federal government with firm regulations in place allowing for the free market to operate within a “broad box” with distinct borders. That being said, we are in sad state of affairs right now, with nobody in Washington steering us in the right direction. So below, I have outlined a temporary plan in order to get this ship back on course and let the free market & the private sector take over from there.

Bulk Government Buying Plan

The Government(via use of unspent stimulus money) agrees to buy X number of products(in bulk) from Industry A @ wholesale/discounted price, by way of a contract as long as participating companies in Industry A agree to hire Y number of employees. The number of products purchased from each company in Industry A would be proportionate to their market share.

Once the contract is agreed to and signed the Government would begin to setup/lease warehouses, retail outlets, stores, etc… to sell the items for a predetermined profit(to be agreed upon between all contracted parties, as not to undercut Industry A by a substantial amount). The profits would be used to sustain the operating costs of running these warehouses, stores, etc… Financing would also be a form of profit for higher priced products such as cars.

Under this plan, jobs would be created in both the private sector, as well as creating Government jobs. Additionally, this would increase sales among the private sector, in turn boosting GDP, thus helping to sustain our economy. Obviously, this would have to be a temporary plan and only a certain amount of product could be purchased by the Government, as to not run private sector retailers out of business. See auto manufacturer example below:

Government enters into a 12-month contract with American Auto Manufacturers. Government agrees to buy $3 Billion dollars worth of vehicles at a 25% discount. Let’s say, for simplification purposes, Chevrolet holds 50% of the market, Ford holds 33% of the market and Chrysler owns 12% of the market. The Government would buy $1.5B worth of vehicles from Chevrolet, $990M from Ford and $360M from Chrysler. In turn, those companies agree to proportionately hire more employees – a certain percentage of the $ they received from the government would go directly to new salaries, say 10% - 15%, creating thousands of jobs for the private sector. The Government would also need to hire employees to run its operations, warehouses, dealerships, etc… The Government in turns, sells the purchased vehicles at a 10-15% markup, which would still be 10% less than what the private sector would be selling at. Again, the supply would have to be more limited than the private sector in order to a) drive demand and b)to not directly compete with the private sector. In other words, while the supply wouldn’t be as little as a local police auction, it certainly could not have the same volume as private sector dealerships.

The numbers, percentages & details would be left to experts, far smarter than I, but this is basically a similar principle to buying Mortgage Back Securities, with two distinct differences: A) Mortgage Backed Securities(as a whole) was buying a bad product, whereas these products are of quality B) This Plan creates jobs in both the private sector & government. This is only a temporary plan and I would hope that if this were to make it to Congress, that they would give the majority of the power to the private sector, in the case where the government tries to overstep its bounds. This plan would be used proportionately across all American Industries, according to their GDP percentages – referring to the money that is left over from stimulus – let’s say $500B. And this may not be the perfect solution, but maybe, just maybe it will get someone in Washington to devise a similar plan or at ANY type of plan at this point.