The Capital Homesteading Initiative, based on the expanded ownership concepts and credit mechanisms of Louis Kelso and Norman Kurland, is a national exemplar to be launched as part of a Super Empowerment Zone located in the District of Columbia. It is designed to foster vigorous private sector growth that gives every citizen, particularly the poor, a piece of the action.

1) How access to "self-liquidating" or "capital" credit for D.C. citizens can complement a new flat tax strategy, to transform the D.C. economy from a mini-welfare state to a just and vigorous market economy.

2) How the D.C. government can be significantly downsized while (a) creating widespread equity ownership and profit sharing in Zone enterprises; (b) reducing the cost to all D.C. taxpayers and employers, of social security and pension plans for employees; and (c) opening up a new source for financing private sector growth within the Zone.

3) How many public sector functions can be privatized ("people-ized") in a manner satisfactory to workers and their unions.

4) How the District's operating deficit and pension fund liability can be reduced, while providing dividend income and private sector job income for D.C. employees, present welfare recipients and those citizens who lose their jobs as a result of downsizing of both public and private sector work forces in the District.

1) The Federal Reserve Board's long dormant discount mechanism would be reactivated to provide low-cost, unsubsidized capital credit to banks in the District of Columbia. The banks in turn would offer self-liquidating credit to D.C. residents to enable them to partner with investors or entrepreneurs who wish to help finance and commercialize advanced technologies created with taxpayer dollars, or to launch new productive enterprises within the Super Empowerment Zone.

2) Through the Fed's discount mechanism, self-liquidating credit would be made available to all citizens of the District as a means for acquiring assets and dividend income for the latter years of a person's life. Through ownership-expanding mechanisms like ESOPs, CSOPs, ISOPs and CICs, some of the pressure can be taken off of our Social Security, pension funds, Medicare and Medicaid programs in "out" years.

3) A professionally managed D.C. Community Investment Corporation would be established as a vehicle for planning and coordinating land development by and through the private sector. Every D.C. citizen would be eligible to become a shareholder in the CIC; shares would be purchased with non-recourse, Fed-facilitated capital credit. The initial CIC Board would be appointed. Board members would consist of private sector and community leaders who support the Capital Homesteading Initiative and who have the experience necessary for supervising the professionals to be hired by the CIC Board. This initial Board would eventually be replaced by representatives elected by the CIC shareholders.

4) A flat rate tax system for the District would be established together with a host of other tax reforms that will facilitate the implementation of these innovative approaches to stimulate and broaden the ownership of the private sector.