Submissions that have been rejected by the Creativity Pool. - The Docks aren't necessarily the final destination, if a broken idea gets fixed it may travel to a more appropriate category.
By tracyjoe
Financing the Debt

Today, it is often in the news that much of our debt is held by foreign countries such as China. This results in a tremendous export of national wealth as we make interest payments on this debt. Yes, the debt is not good to begin and yes we should adopt policies to reduce the debt. However, this will take some time and until we are able to eliminate the debt, it will need to be financed.

Would it not be better if we were paying the interest to residents of the country who would be more likely to reinvest this money back into our country's economy by either purchasing goods and services here, building new business here, or saving this money in domestic banks?

Why don�t we adopt policies that encourage US citizens/residents to invest in our own country by financing an increased portion of our own debt?

We already have the vehicle to do so: the I and EE savings bonds. We just need policies that encourage such investments.

1. Make the rates on I and EE bonds comparable to the rates one can get on other Treasury instruments.
2. Allow less taxation on the interest paid on these bonds to US citizens/residents as long as the money received is not moved offshore.
3. Increase the liquidity of these bonds by allowing them to be sold and traded without penalty.
4. Make interest paid be tax free to all people regardless of income level when this money is used for education or medical expenses or retirement. This is the reward to people for supporting the needs of their country.
5. Exempt savings bonds from the inheritance limitation on how much that can be passed on tax free (or set up separate limitations).
6. Provide incentives to companies based upon the percentage of their employees (and amount of money they invest) that participate through payroll deductions. Perhaps companies could offer to match.
7. Require a certain (increasing) percentage of US debt to be financed in this manner.

By financing the debt domestically, the interest being paid will be actually strengthening our economy rather than weakening it and that will raise revenues helping us to bring down the debt.

Here is a related idea. How about empowering the public as a set of individuals to decide which expenses were worthy of financing with debt whether it be infrastructure, energy, health, or perhaps national security instead of politicians fighting influence from one lobby or special interest group or another? Perhaps there could be variation of the bond that would be targeted toward one purpose or another. This would allow the purchasers of the bonds to have a say where we as a country are going to spend the money that we borrow.

There are a lot of people that would love to help if they could afford to do so. This sort of solution allows us all to own the problem and work together toward its resolution.

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