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The Rise Up Theory of Economics
By Dick McDonald
Managing Director
Ownership Society Institute

Our Founding Fathers conceived our republic as one without taxes on income or wealth operated by a small central government. They believed that government was always the problem, never the solution. They believed that the citizen, able to earn and invest their own money free of government interference, would always, through free market competition, achieve greater prosperity than any government-directed policy could ever do.

Unfortunately Americans have been on a holiday from those philosophical roots for almost a century. It all started going in the wrong direction with the passage of the 16th amendment and the imposition laws to tax incomes in 1913. Then came a serious flirtation with communism/socialism/New Deal policies in the 1930’s. With the advent of World War II income tax rates were hiked to 91% on incomes over $50,000.

Shortly after the war the modern conservative movement was born – a movement to return to the economic principles of our Founders. It would be a long hard climb.

Strangely enough a Democrat got that movement going. President John F. Kennedy dropped the top income tax rate from 91% to 70% in 1962. However, it wasn’t until "conservative" Jack Kemp led the charge in the early 1980s to drop that rate to 28% that the American people started again to believe in the no-tax principle of our Founders. They saw for themselves that income tax receipts at the Federal level doubled in a mere seven years. Given an incentive, the American people delivered. Those Founders knew a thing or two about people and economics.

The Democrat Party derisively called this supply-side tax reduction "trickle-down" economics because the investment of those tax savings would create businesses and jobs the economic benefits of which would trickle down on ordinary Americans. After 25 years, America has the richest poor people on the planet but when compared to America’s rich, there is no comparison. Trickle-down disproportionately favored the rich – and America is filthy rich.

Unfortunately the poor and middle-class in this country believe the policies of modern conservatives have failed them and are seeking a way to participate in the American Dream that has so far eluded them.

In 2008, the American people are ready for a "change". They are so desperate for a change they listen to a man and a philosophy which promises more poverty and reduced expectations because his sole tool to effect change is to take money from the rich which is usually invested in new businesses and jobs and they want to take that investment capital and distribute it to the poor and middle-class. As those monies are just spent and not invested, America suffers from the lack of investment capital in its own economy.

Unfortunately that failed philosophy of trying to buy ourselves out of poverty has never worked. Spending money only makes us poorer. Investing money makes us richer. This reality escapes notice from a population programmed to rely on its leaders to head them in the right direction.

So it is up to the modern conservative to create an economic theory that will enable ordinary Americans to achieve the American Dream in the same way the rich did with "trickle down". In order to achieve that goal it becomes necessary for the American economy to soar to heights heretofore thought unattainable. We at the Ownership Society Institute believe we have perfected that plan. We call it the Rise Up America plan and it is built on the –

Rise Up Theory of Economics.

The author of that theory, Dick McDonald, is not a classically-trained economist but a tax man who spent his working life helping rich people get richer. He has turned his attention in Rise Up to the poor and middle-class. His theory is constructed to do for them what Rise up did for the rich – to make them wealthy but without the necessity of having the educational tools to make the big bucks - if they are just stable and industrious the American Dream will be theirs.

In order for the poor and middle-class to become rich they need a pool of capital to invest in the world’s most profitable investment vehicle – the American economy. As it is counter-productive to take from the rich and deplete the country’s investment capital, it was necessary to find a new source of capital to fund each person’s pool of capital.

Fortunately for Americans, the new source of capital OSI identified is now being wasted in supporting the government’s entitlement industry. In fact by diverting the payroll taxes (currently running at $1.3 trillion a year in support of entitlements) into personal investment accounts owned by the taxpayer and then immediately invested in stocks and bonds on his or her behalf the average household in America making $40,000 a year will generate a $3.2 million nest egg during their 40-year working life and retire with a $27.000 a month retirement check (all in 2008 dollars).

Ordinary Americans are now investing 15,3% of their lifetime income in payroll taxes (if employed half is paid by their employer). That $40,000 a year household has $6,000 paid to the government every year. That $6.000 a year invested for 40 years generates a $3.2 million nest egg at a 10% rate of return. The S&P 500 stock index has been averaging 12.8% for the last 30 years. As any investment broker will tell you long-term investments in stocks are golden.

Making ordinary Americans achieve financial independence is the American Dream. Rise Up delivers that dream and restores the self-reliance of individuals our Founders wrote into our Constitution. Rise Up doesn’t rid us of all taxes on income as our founders envisioned, but it will embolden ordinary Americans to again believe in the power of the individual and reject the current dependence they have on their government.

If for no other reason, the investment of payroll taxes in the American economy will accelerate the wealth-producing capability of the country so dramatically, that old standards of success will have to be rewritten. The 170 million households today worth $54 trillion would have been worth over $500 trillion today had Rise Up been in place for the last 40 years. For every day we retain the present inefficient pay-as-you-go method of funding entitlements is a day we lose in making ourselves a happier and more prosperous nation.

The benefits inuring to ordinary Americans and our Republic by enacting Rise Up are numerous. The national budget would be cut in half, the tax load Americans are asked to carry will be cut in half, the $45 trillion of unfunded debt would be immediately extinguished as would $4 trillion of our $9 trillion national debt, the entire public and private "retirement" industry including Social Security, Medicare and 401(k)s could be eliminated.

The list of benefits are numerous and can be reviewed in the Mission Statement on the website www.riseupamerica.us as can many tables, graphs and material in support of the Rise Up America plan.

The immediate objection to a plan that would annually divert $1.3 trillion into the stock market and still guarantee to pay $1.1 trillion in existing benefits under the old plans in perpetuity is – "where are you going to get the money to do both?". The Rise Up plan has solved that problem and in the process will improve the stability and value of the US dollar as well.