Taxes and The Rich | Political Blog

The battle of Washington and the question with our economy, is what to do about our taxes and our spending? First off, to clear the air, tax cuts on the rich do not create jobs.  Every time there has been a tax cut on the rich the following decade has seen tremendous job loss and economic suffering.  Every time taxes have been increased on the rich, the following decade has seen tremendous growth and prosperity for all.  The rich do create the engine of the economy, no one can deny that, but just like in a car an engine does not drive itself.   The rich may create the engine of the American economy, but it is the poor and middle class that drive that engine.  Throughout the last 100 years there is ample evidence to suggest that a fairer and higher progressive tax system on the wealthiest Americans is what propels this country forward.  When the rich are taxed less they are given less incentives to invest.  I know that sounds backwards to the common perception of how to run a business, but it is true, especially to those who run a business.  In the end we can fix our economy but it needs be done by implementing tax rules and breaking barriers for what we think grows the economy.

The rich build companies and provide products for everyone to buy.  This has been more true the last 100 years then at anytime in human history.  How a company to makes money however is not always what is best for the country or an economy as a whole.  As a country we can lower taxes on the wealthy but it is up to them to invest it.  The problem with that thinking is businesses make decisions on whether to invest in growing their engine based on demand , not tax cuts.  By simply taxing them less you are only giving them money to sit on.  You’re not incentivizing them to pay their people more, not to hire more workers, and not to grow their bottom line.  Guess what? Through the tax cut, you grew their bottom line for them without needing to do any work.  If you want to spur investment and stimulate the economy you need to raise taxes on the wealthy.  This will encourage investment, encourage increased pay, and encourage hiring.  Again, sounds backwards, right?  If you own a business you see taxes as a business expense that does nothing for your company, and does nothing to grow your company.  How do you avoid those taxes when tax rates are higher if you’re a company?  You avoid taxes by investing back into your company, you avoid taxes by hiring more people, and you avoid taxes by expanding your business.  You avoid taxes by doing everything possible to get the deductions that would have otherwise gone to unproductive taxation and turned it into productive capital that is used to grow the company, pay people more, and expand the economy overall.

Lowering taxes on the rich does not spur investment, it never has and it never will.   This is propaganda that politicians have used for over a decade and have zero evidence to their claims.  The very reasons why increased taxation on the rich spurs investment are the same reasons lowering taxes kills the economy. Sure the rich get that money, but the reason people are rich is because they know how to hold on to it.  If they are making money from tax cuts, what’ss their incentive to grow their engines for the poor and middle class to drive them.  If taxing the rich less boosted the economy then we should have never had the recession of 2008.  We were at that point, head deep in the Bush tax cuts which, by Republican backers of the cuts, should have accelerated our economy.  Well it did no such thing, all it did was line the pockets of the wealthy with borrowed money.  This idea that lowering taxes on the rich started under the Reagan administration.  Reagan was a fine President who truly cared about our country.  He was a strong leader, communicator, and knew when to compromise and when to be firm.  The Reagan tax cuts are generally used as evidence to show that tax cuts to the rich help boost the economy.  While the economy did improve following the Reagan era tax cuts, it is false to say He cut taxes on the wealthy.  The truth is that He created a flatter, fairer tax system which actually raised the overall tax burden on rich in America.  While Reagan reduced the tax rate of the wealthiest Americans from 50% to 28% He eliminated most loopholes and tax deductions that only the rich benefited from.  The result of the Reagan tax cuts was a net increase in what the wealthy paid in taxes, not because the economy improved, but because the rich couldn’t hide their money in loopholes.  Reagan did indeed lower tax rates but He did not lower taxes.  In fact, the first year after the supposed tax cuts went into effect the overall tax burden to GDP on the US economy went up from 18% in 1986 to 18.8% in 1987.

While it is false to say that lowering taxes on the rich stimulates the economy it is also false that raising taxes on the rich hurts an economy.  The Reagan era is but one of several instances where taxes were actually increased on the wealthy and it netted a stronger economy.  There is also many instances where the economy suffered after the tax cuts on the rich.  While we are all aware of the tax cuts on the rich since the beginning of the Bush administration and the result of those cuts, many are not familiar with the host of cuts passed in the 1960′s on the rich.  Following many years of high taxation John F Kennedy agreed to start decreasing taxes on the wealthy and a few years later Lyndon Johnson followed suit.  The economy we got, following those cuts were years of stagnate growth, high inflation, and a separation of earning power between the rich and poor, sound familiar?   Now just because rising taxes on the rich does not effect the economy doesn’t mean you can raise taxes on the poor and have the same affect.  In the early 30′s Herbert Hoover made the mistake of raising taxes, but He didn’t raise them on the wealthy, but the poor and middle class.  The drivers of the engine of our economy got starved by his tax policy and sunk the nation into a deeper depression.

Taxing the rich at no point in our recent history has hurt our economy, in fact, the opposite has occurred every time we have shifted the tax burden to a fairer more progressive system.  In the 1940′s, tax rates on the rich were boosted to 90% and stayed there well into the 1960′s.  Our economy flourished those 20 years after World War 2.  In the 1980′s Reagan raised taxes on the wealthy, followed by Bush raising them again, and followed by Clinton raising them again during his administration.  By the late 1990′s the rich were paying the largest portion of their income they ever had in taxes.  We had the best economy we had ever seen, we had a 5 trillion-dollar projected surplus, and investment and technology were booming.  Bush Jr.  steps in and promptly removes most of the taxes the rich paid the previous 20 years, added expensive programs, and we were thrust into 2 wars, one of which was highly questionable.

The historical evidence speaks for itself,  at no point over the past 100 years has taxing the rich more hurt our economy.  There is little evidence over the past 100 years that tax cuts on the rich helped to jump-start our economy.  From the increasing of taxes on the wealthy after World War 2, to the actual increasing of taxes on the wealthy during the Reagan years, raising taxes on the rich is exactly what we need now to jump-start our economy.  If we want to incentivize companies to spur job growth, tax them more, not less.  By doing so we will encourage companies to once again grow their engines and in turn create better drivers to control that engine.  Right now we have a weak engine with no drives experienced enough or skilled enough to push the engine forward.

Discussions

The Statements Via @ObamAmerican48 on Twitter:     The children of boomers are in better shape financially & socially because of their parents. GET THE PICTURE?  The children of boomers are quite selfish and tend to not feel any sense of obligation to anyone older than themselves. That selfishness and sense of entitlement will come back to bite them in the ass big time when they get old. Guarantee.

The Response:    I will agree that the children of boomers have grown up in a far more socially and economically prosperous time than the boomers themselves as children.  The children of the boomers being selfish is actually more of an indictment of the lack of parenting skills the boomers have than the natural selfishness of the children,  there is a reason for this.

When the “Greatest Generation” came home from WW2 and had children, they had no control over their children and allowed them to run wild, frankly because of the horrible things they had gone through during WW2.  They parented very loosely as a generation and frankly wanted their kids to enjoy life and gave in to their every whim and didn’t really care, as a generation, what they did.  The 60′s and 70′s were so tumultuous because the boomers were not raised right, and allowed to go and disrupt the status quo socially and politically.    The boomers were very influential in all the social change not because they fought harder for them than others, they simple had the numbers to overwhelm the system to affect change.  The boomers feel that they worked harder and were more successful than any generation because they have the results to prove it.  The results, however do not come from them working harder or smarter, it comes from their sheer size as a generation.   Boomers in fact didn’t have to work nearly as hard to see results because their was so much demand created because of their size as a group.  Their size fed upon its self and created more wealth and prosperity.  Boomers took this to parenting and told their children , things always get better, they always improve, because in a boomers lifetime that is what had happened up until a few years ago.  Boomers didn’t teach their children to respect what they have and that it can be lost at anytime.  The boomers also have always taken care of their kids a little too well.  Instead of teaching the value of the dollar, boomers as a generation just gave things to their kids instead of making them work for it.  That is why you got such a selfish generation of kids.   Children are not born selfish it is something that is taught and something that parents always need to parent away from.  It’s hard to make a child not selfish in this world of “things” everywhere, but it can be done.  You just have to actually be there and parent your children and not give in to their every whim and make sure they respect what they have, that’s what parenting is.

What will bite the boomers kids in the butt is not the selfishness as they get older, but the overwhelming drain on our medical system, government, and social network the next 20 or 30 years that the boomers will create as they pass on.  The boomers who drove our great prosperity in the 80′s and 90′s will now thrust us into stagnation for the next 20 years.  The reason for this is not because Gen X is lazy, it’s because simply there are not enough people and resources to take care of the boomers.  The boomers have 80 million people in their generation, Gen X has a mere 55 to 60 million.  Fewer people means less demand in their prime years of consumption(20′s, 30′s and 40′s),  and less productivity paying for the retirement and medical coverage of the boomers.  That is why you have the drain on economic demand we have today.   There simple are less people needing stuff in their highest consuming years.  The younger generations have it very hard because their pay will be lower than boomers because of lower demand (and frankly because everything has been moved overseas, but that is a whole other discussion), boomers at least had 20 or 30 years to build up their assets and nest eggs.  Gen X’ers Have not had the time to do that, they have no equity and because boomers aren’t retiring until later are not getting paid either like the boomers did.  To blame one generation or another is not really fair because no one intentionally created this situation in a generational sense.   This problem we have is a macro – economic problem that only time will get us passed.  The boomers created prosperity from their sheer numbers, and they are now bringing down our economy as their sheer numbers move away from the productive years of life and the generation replacing them is signficantly smaller.  There is hope however, the millennial generation is also 80 million strong, so in 15 or 20 years as they all reach those most productive years and demand goes up for their needs, so will the economy.

Everything I say here is in a generational sense, individual families and people always can run against the norm in the ability to parent or not parent.  As a whole however the boomers were not parented as children and allowed to run a muck in the 60′s 70′s,  they saw unbelievable growth and prosperity in the 80′s and 90′s.  They took these two experiences to their parenting and frankly as a generation didn’t parent their children and didn’t prepare their children for the tougher times that were always going to happen.  Demographics play a huge role in our economic prosperity and downturns.  The same thing happened that created the great depression.  The civil war vets came home, had a baby boom in the 1870′s and 1880′s,  huge economic advancement and demand in the 1900′s, 10′s, and 20′s, followed by 20 years of a lack of demand.  It was partly caused by demographics.

I enjoy your colorful comments on your twitter account and hope we can have more discussions.

The Baby Boomer Economy | Political Blog

Here we are in 2011, the stock market has failed to consistently go above where it was in 2000, housing values have been dropping for 5 years, and unemployment has been increasing for 4 years.  None of it seems to be improving,  Why is this?  Is Washington to blame for failed economic policies?  In some respects, yes.  Would a different approach to our economy over the last 10 years have changed how severe this downturn has been?  Could it have been far worse? What can we do to help improve our economy?

These are the questions we all are facing everyday living in the US and in our stagnate economy.  While housing, politics, and war are easy reasons to why our economy has failed to grow, they are not the main reason.  The main reason we have the economy we do today is because of our baby boom generation.  Every positive as well as every negative to our economy can be attributed to the demographic anomaly that the boomers are. That generation, along with medical advancement, and government policy have created a demographic anomaly that has dominated our country since the 1950′s.  The boomers are the reason for our unprecedented growth through the 80′s and 90′s, control our economy today, and will determine how successful our economy is for the next 30 years.   Through the boomers lifetime, you can see how they have affected economic policy, expanded our money supply, and the demand in our country, and how they affect our economy as they age.

The end of World War 2 ushered in a time of amazing prosperity for America.  Soldiers came home and began having families.  Our country expanded and our economy grew by leaps and bounds.   From 1946 to 1964 over 80 million children were born creating enormous demand for products and housing as well as allowing the federal reserve to print more money.  Currently, the federal reserve is allowed to expand the monetary supply for every child born in the US.  More births equals more dollars added to the system.  This leads us into the first great effect of the baby boom generation.  In the 1970′s and 1980′s the boomers were starting to have families and came into their own.  They needed products for their families, homes for their children, and they had the sheer numbers as a generation to supply all of it.  However, because you had such an increase in demand our monetary system could not keep up.  Inflation ran rampant and the fed was virtually helpless to stop it.  The fed was able to combat the demand by raising interest rates to 15% in the early 80′s to try and cool it.  Again, this demand and inflation was created by the sheer size of the boomer generation.  Individually they did not consume more than anyone else, but as a group of 80 million strong they overwhelmed the system with demand.  Fast forward to the 2000′s, the boomers are no longer needing large houses and all the products and services that a family needs.   Today in 2011, even with interest rates near zero, inflation is relatively low compared to the 6% and 7% they had at times in the 70′s and 80′s when they had 15% interest rates.  Why would this happen? No demand.  The boomers are now heading toward retirement.  Some may ask, why aren’t the younger generations consuming as much?  As individuals they are not consuming less, but generation X is far smaller than the boomer generation.

Generation X, those born from 1964 to 1982 are much smaller than their predecessors.   While 80 million people were born during the boomer years, only 60 million were born during the Generation X years.  This has created a vacuum in demand that we have only really begun to see these last few years, but has been affecting our economic policy for over a decade.   Generation  X has had to pick up after the boomers and frankly don’t have the numbers to compete in the wake of such a large demographic.  One example is housing;  housing expanded rapidly in the 80′s and 90′s and early 2000′s.  Early on it was demand created by the boomers having their own children, and then later in the 2000′s it was demand created by loose regulation in Washington over the types of loans that were available.  The general public became so use to owning homes that when prices increased everyone felt they still deserved a home.  Negative amortization loans, adjustable rate loans, and interest free loans were created and allowed by the government.  There was also zero overcite on whether people had income to afford the homes they were buying.  This created a large false demand for housing because it was so cheap to get into a house.  Had the government not originally allowed all of that to happen, housing demand still would have dropped like it has today, we just would never had seen the huge run up in prices along with the huge drop.  Boomers, who are no longer having children and don’t need as big of a house were replaced by generation X, who as a generation are 20 million people fewer.  They don’t have the numbers to fill the demand void created by the boomers.  What you get is a housing collapse, partially created by government policy, but also created by lack of demand from a smaller generation of families.

The government lowering interest rates on everything also created false demand for products and services across the board through out the 00′s.   Then there is the little known fact that if you add up our deficit spending over the last 10 years it accounts for all of our yearly GDP growth numbers.  In fact, our GDP has shrunk 1.2% in total since 2001 if you take out the government’s deficit spending.  The government has been propping up our economy for 10 years with deficit spending and lowering interest rates.  How did we get to this point of such poor growth?   Medical advancement and government policy came about at the wrong time to create an anomaly in our demographics that will continue to affect us well in to the 20′s and 30′s.

In 1960 a new medical advancement was approved,  the birth control pill.  The pill allowed for people to have sex without worrying about pregnancy, far less than they ever have before.  Birth rates, soon after the invention of the pill began dropping dramatically.  The end of the boomer generation in 64′ gave way for generation X and much fewer births.  At the time no one thought anything of it, but on the heals of the baby boom it accelerated the anomaly that would have already naturally been created.  Then a second event happened in 1973 that further accelerated the demographic anomaly that has affected our economy.  Abortion rights were passed that year, further eliminating more potential births in the United States.  Those two events, along with the boom in births naturally slowing in the 60′s, lowered birth rates from 25 births per 1,000 women in 1955 to less than 15 by 1975 and created a demographic that was lopsided.  Early on in the demographic cycle it would be a boom to our economy, which the 80′s and 90′s were.  Later in the cycle, without proper numbers to replenish that early demand the economy would sink and struggle.  That is what we are heading into today.

The boomers are now only just beginning to retire and the simple fact is that generation x is too small to make up for the demand hole created by the boomers.  We will spend the next 20 years dealing with what is left of the baby boomer effect and it will not be fun.  The boomers, when they were young created large demand and large surpluses in productivity, housing, product demand, pension accounts, and job creation.  Now that the boomers are retiring and the following generation is too small to make up for those deficencies, retirement accounts have and will be sucked dry, demand for products have decreased, the need for housing has decreased, and there are fewer jobs to provide to everyone.  The reason we have seen relatively low inflation is because there is no demand, yet we have seen drastic price inflation in one area, the health care industry.  Now that the boomers are retiring they are inflating the price of medical care with their enormous demand for it as they get older.  This is just like the inflation created in our monetary supply in the 70′s and 80′s, the stock market inflation of the 90′s and the housing inflation of the 00′s.  The boomers have been the cause for all of it.  They didn’t intentionally do it, it is just their sheer size as a generation which has created and enormous amount of demand and now no longer demand as much as they age.

Where do we go from here?  Are there solutions to this in the short-term?  From here we don’t really need to worry about inflation, in fact a bigger issue is deflation.  With lower demand and fewer people in the prime family building years, the amount of money in the system is actually decreasing and the federal reserve has spent the last 10 years pumping money into our money supply to keep prices from deflating.  If the fed had not pumped money into the system over the past 10 years through lowering rates and stimulus programs, deflation would have been rampant and collapsed our economy even harder than we have seen to this point.  Without the fed in place we would have had hyperinflation in the 70′s and we would have seen a complete deflationary collapse right now that would have destroyed our system already. In the 70′s and 80′s the fed took money out of the system to cool it, where now for the last 10 years they have pumped money into the system to keep it growing and offset the demographic deficiencies that we have.    If you are an investor, the stock market may be a dangerous place for quite sometime especially as the largest generation heads into retirement and change their allocations more into safer investments such as treasuries and bonds.  This is actually a good thing for government debt because it will keep the price of servicing our enormous debt cheap, for now.   As far as solutions to overcome this demographic anomaly, all we have is time.  The government has been doing what it can to combat the demographic anomaly by dropping interest rates, instituting deficit spending to create fictitious demand, easing monetary and regulatory systems, but it all has pretty much been exhausted.  The only solutions at this point are reduced funding for our social safety nets and to encourage education so that the following millennial generation will have the tools needed to innovate our way forward. We will spend the next 20 years battling a stagnate economy as boomers retire and become even more reliant on our social structure and zap demand away from our economy.  The good news is that the millennial generation is just as big as the boomer generation and will create demand once again for housing, products, and services as they age and start having families.  However, this will not happen for a good 10 to 20 years.   Generation X is too small to make up for the lack of demand the boomers have left, while the millennials are too young and not in a position of power yet to generate the demand needed to move our country forward.  Just like Japan in the 90′s and 00′s, just like China will face in the 30′s and 40′s, the US is in a demographic anomaly that will challenge us and persist for another 10 to 20 years.  All we can do is learn to live with what we have and have patience as our demographics change back to a normal cycle of equilibrium.

The Pulse: Taxes | Political Blog

What are the problems and misconceptions with our tax system in the United States?

• People falsely assume that we are overtaxed
• Currently the US is ranked 62nd in the world in taxation to GDP ( including local, state, and federal taxes)
• Our system is overly complicated and taxes us from too many sources
• Our system threatens to tear our country apart
• The rich feel that the poor do not pay taxes
• Rich pay more in federal taxes but have many deductions and tax breaks not available to lower-income citizens
• Poor and middle class citizens pay more as a percentage of income than the rich in Social Security, Medicare, sales tax, etc.
• Poor also pay property, gasoline taxes, vehicle registration, toll roads, etc.

What is the solution to our complicated tax system?

• We all, rich and poor, need to realize we all pay our share of taxes
• Institute a flat tax
• Eliminates the current tax structure, social security taxes, medicare taxes, sales taxes, deductions, etc
• Opponents of a flat tax say that it favors the rich, but with all the taxes the poor pay it benefits them as well
• Simplifies the overly complicated system we have currently
• Opens up the ability for commerce to move without layers of taxation
• Eases the animosity between high and low-income earners
• Gets our country moving in the right direction, Forward.

Taxes, the full length post

Taxes | Political Blog

Taxes in the United States are an issue that founded this country.  From the Boston tea party to the Bush tax cuts, taxes have been at the fore front of policy in our country.  It’s an issue that polarizes this nation and an issue that could serve to tear us apart.  We need to fix our tax system before it destroy’s the United States.  Is it possible to fix our tax system at this point?  How do we reform a system that is so complex and so polarizing?  I believe we can fix our system, but we need to get people to understand how we are taxed and that we all, rich and poor, do pay taxes.

The first issue with our tax system in the Untied States is the belief that we are all taxed too much.  The reality is that we are one of the least taxed developed nations in the world.  When accounting for local, state, and federal taxes the US is ranked 62nd in the world overall in taxes collected to GDP.  27% of our income is taxed on average, that is far lower than France (49%), Germany (43%), and even Great Britain(39%).  The reason it feels like we are overtaxed is that we are taxed from so many sources and there are so many levels of taxation.  Everywhere we turn there is a tax for this, a fee for that.  When you add it all up though, we are taxed less than most other major economies.

The other problem with our tax system is the misconception that the rich pay all the taxes and the poor pay none.  This too is false and the truth needs to be established before we can effectively reform our system.  Yes, the rich pay higher federal income taxes and the poorer you are the less federal income taxes you pay.  What is not mentioned are the enormous amounts of deductions and loopholes that are in place for the wealthy to side step needing to pay for many of their taxes.   Through buying extra homes, moving their money to stocks, owning a business, to donating to a charity.  The deductions are available left and right to the wealthy, many of which are not available or are not beneficial to lower-income citizens.  The poor in fact pay many taxes, and in some cases pay more in taxes as a percentage of their income than wealthy people do.  While lower-income citizens don’t pay a large amount in federal income taxes, they do pay a very large share of many other taxes and fees the wealthy do not.

First of all, the poor and middle class pay 8.8% to medicare and social security on every dollar they earn.  The wealthy only pay that on their first $102,000 of income.  If a person makes $1 million a year they are paying less than 1% in those taxes. Businesses also pay 8.8% for medicare and social security for their employees, but that is money that could have been paid to employees, so in reality poor and middle class people pay as much as 17% in just medicare and social security taxes.  A wealthy person earning $1 million a year pays only 2% for the same programs.  Then the poor also pay property taxes whether they own or rent.  If they own, then they pay property taxes, if they rent, property taxes are most definitely part of their monthly rental charges.  Then there is sales tax, which in some states can be as high as 10%.  There are vehicle registration fees, gasoline taxes, local taxes, state taxes, toll road fees, utility bill fees, etc.  I could really go on and on about the taxes and fees that are paid by poor and middle-income citizens.  The argument that they pay no taxes is absurd and needs to leave the conversation when we are discussing tax reform.

The solution is in fact very simple once everyone, both rich and poor, understand that we are not overly taxed in this nation and that we all do in fact pay our fair share currently.  The problem with our system now is that it is far too complicated when it doesn’t need to be.  Our tax system actually favors those who are the wealthiest and who able to afford the smartest accountants.  A tax system should never be built to favor one segment or another.  We have deductions for this, and credits for that, rates for this group, and rates for that group.  We need a rate structure that is simple, fair, and eliminates all the needless fees and various sources of taxation.

I propose a progressive fair and flat tax rate.  One that has no deductions, one that has no tax credits, one that eliminates sales tax, one that eliminates social security and medicare taxes and one that includes everyone.  Opponents of a flat tax say that it favors the rich and hurts the poor, but when you factor in all the taxes the poor and middle class pay ie. SS, medicare, sales, property, vehicle registration, etc. it works out in their favor as well.   A flat tax would take away the advantage wealthy people have of being able to navigate a complex tax system with expensive accountants, and it would allow people to know exactly what they are taxed and move on with their lives.  It would allow businesses and the wealthy to anticipate exactly what their tax bill will be and focus their attention on what they do best, which is create jobs and make money.  It would also allow the poor to know exactly what they pay in taxes and allow them to live their lives and move the economy forward by buying products without the worry of being nickel and dimed to death by taxes and fees coming from everywhere.

Are we an overtaxed nation? NO.  Are we taxed by too many different sources and is our system far too complex? YES.  Do the rich pay taxes? YES.  More importantly, do the poor pay taxes? YES.  We all are in this together and we all pay into this system, a simplified tax system would allow us all to see that we pay our fair share and eliminate some of the animosity between various income groups of our population.  A simplified tax system is in everyone’s best interest, except for maybe accountants, but the rest of us would be able to focus on what we all need to do to improve our lives, build our families, and ultimately move this country forward.

The Pulse: Fixing Social Security | Political Blog

What is Social Security’s purpose?

• Provide a safety net for the elderly and poor
• Started in 1935 by FDR during the great depression
• Now provides disability and unemployment benefits
• Intended to help people in retirement, not be their sole funding for retirement

What are the problems with Social Security?

• It will go bankrupt if not reformed
• Recipients making it their sole form of retirement
• When started it provided full benefits at age 65, now they provide fill benefits at age 67
• When started, Life expectancy was 62, today it is 78
• The program does not allow enough productive years to fund retired years
• There are too many baby boomers and too few workers to fund the program in the future
• The program was never indexed to life expectancy
• People will keep on living longer as technology advances requiring retirement ages to rise as well.

These are the solutions to Social Security’s problems

• Move the full retirement age to 71, where it would be today if it had been originally indexed to life expectancy
• Index the system to life expectancy the way it should have been from the start of the program
• As people age, move them into mentoring, counseling, managerial roles for easier working years as they age to not lose their knowledge and expertise.

Fixing Social Security | Political Blog

Social Security was started in 1935 by Franklin Delano Roosevelt when America was still reeling from the great depression.   The program itself has kept millions of elderly citizens from living in poverty at a time when they are unable to earn money that would pull them out of poverty.    Today though, Social Security needs to be fixed, or it won’t be in place for our future generations. As a country we need to understand what Social Security’s original purpose was, understand the problems, and come up with the solutions to fix it.

Social Security never was intended to fund a persons full retirement.  It was there as a safety net to ensure older Americans would not starve or become homeless in old age.  However, as the years have gone on, more and more people use the program as their sole form of income in retirement.  The government never intended the program to be used in this way.  Over the years the government has added provisions to Social Security; providing disability, unemployment, and benefits for needy families.  All of these additions have gradually added strain to the program and led us to the point that we now will have funding issues in the future.

There are many reasons why Social Security needs to be reformed for it to survive, However opponents of any reform to the system argue that it has run a surplus for the entire length of the program. While this is correct, their points apply only to the program in the past, and will no longer apply in the future.   When the program was enacted, life expectancy was 62 years of age in 1935, and the age to receive full benefits was 65.  At that time the program supported a small number of people for a small amount of time.  You had people working 40 years and paying into a system that provided benefits for only the final few years of life.  Today the picture is far different, Congress has since raised the retirement age to 67 for those born after 1960, but life expectancy has risen  to 78 years old.  The average American is working only 2 years longer, yet living an extra 16 years.  That extra cost falls upon the workers who are supporting the retirees.  In productivity terms people are working 5% longer in life, yet expecting 25% more benefits, something in the long run has to give.  This is the same problem that state pension programs are having going bankrupt all over the country.

Another issue that is presenting itself is the baby boom generation.  The reason Social Security was in a surplus for so many years was because our population was young.  We had a very large working age population and a relatively small elderly population.  We were able to collect all those extra taxes , pay our retirees, and have plenty left over.  In 1950 there were 6 workers for every retiree, In 2010 there were 3 workers for every retiree, and in 2025 there will only be 2 workers for every retiree.  The reason for this shift is that the generation after the baby boom is far smaller.  A major policy change and a medical advancement are the reasons for the generation being far smaller. In 1973 abortion rights were passed allowing for legal abortions to be performed, as well in 1960 the birth control pill was introduced.  Those two events are not only directly responsible for the problems we will face with Social Security, but with the problems in state pensions and Medicare as well.  For the next 30 years we won’t have enough workers to fund our retirees.  There are solutions however, but the average person doesn’t want to hear what needs to be done.

First of all, we would have never been in this position had the government written a life expectancy clause into the program. Currently Congress is adjusting the age for social security to 67 gradually.  What congress first needs to do is continue that gradual rise in retirement age for those born in 1980 until we have reached 71 as the full retirment age.  From that point on we need to attach Social Security, Medicare, and our state run
pension systems to life expectancy increases.  For every 2 years in life expectancy increase we gradually raise the retirement age 1 year. A 2 for 1 increase is all we would have ever needed.  If they had put that into place when the program began, the retirement age today would be 71 and Social Security would be solvent indefinitely.  It would allow more productivity to be received from the workforce while still funding gradually more people and for more years in retirement.  Remember, in the 1930′s Life expectancy was 62 and many were lucky to live to 70, today the average person lives until they are 78. Many today live into their 90′s while still in very good health.

As for those working as they get older. The first problem is that the old rules
of working will and are changing drastically. Because of technology and the
basic nature of the corporate world, people need to learn to adapt. The age of a
person working for one company or even two for their whole lives is over. The
age of people generating an income solely from a corporation is also over.
People will need to adapt and beable to start their own consulting or contract
business that will allow them to be flexible for corporations to use. Today
there is a huge need for contracting work from companys not wanting to pay
people benefits but still need the expertise of those in a specific trade or
profession. The bottom line for workers in the future is adaptability.

Opponents of raising the retirement age say people can’t work into their 70′s, but with today’s jobs people can. 90 years ago jobs were very strenuous and hard on the human body.  Through technology in the work place, nutritional advancements, and medical breakthroughs a person who is 70 today is far more capable and alive then a person who was 70 years old in 1930.

We need to attach life expectancy to the retirement age otherwise we will face this issue again in the future.  As we become more technologically advanced, develop even better nutrition, and better our medical system our life expectancies will continue to rise.  Because of this we will have to address the productivity issue of a person only working 40 years of a lifetime, while living ever-increasing years of a non working unproductive lifetime.   To fix this we can move people from a working environment into a mentor or counseling role for companies and governments.  By doing this, we not only will keep people in the work place longer, but also not lose the valuable knowledge they have acquired from their time as employees.  The older worker gets to continue to work in a productive manner while easing the physical and mental strains on the body as we age.

Social Security is an important and vital program that was created at a time of great distress in our nation’s history.  With the proper reform, we can ensure that it will be sustainable forever.  For us to make sure of its solvency, we need to understand its limitations and intended purpose.  Once we all understand that Social Security is merely a safety net, we can make the proper changes that will keep this valuable program around for generations of Americans.

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Are Unions Really A Good Thing? | Political Blog

With all of the unrest going on in Wisconsin this week I thought of a question that many of these union protesters probably have not thought of. Are they truly better off being in a union? The purpose of a union is to work for its members to get them the best benefits and wages that are possible for their members. The question is, are they actually doing that and is it really beneficial to the members to be trapped by whatever the union decides?

When you are a member of a union you are expected to pay yearly dues. Some of these dues can range in the hundreds if not thousands of dollars per year per member. Right out of the gate the members are paying a large some of money for an implied service. With this money, unions provide various services and negotiate contracts for the whole as a union. Of course most unions, like big corporations have a board of directors or council, of which men of great power get their share off the top. Many also get kick backs just like politicians to pull for one set of benefits and not others. The men who run unions can be just as corrupt as anyone in a corporation or in government.

Being in a union is often forced upon workers depending on what line of work you go into. Right off the bat you are limiting your right as a worker by not being able to decide if you want to join the union or not. Then as part of a union you do get to vote on changes the union makes, but what if you don’t agree with what the union is doing? OH well, you have no say if your in the minority of that union. What may be good for the union may not always be good for you or your family individually in the union.

The rights that union members speak so highly about are not rights for them as individuals but for the union as a whole. If the heads of the union decide or are paid to push one initiative or another then the members of the union have to follow what the union decides regardless if they agree with them or not. Yes the members of the union do have a say by voting for what the union does, but just like voting in government or as a shareholder of a corporation you have limited pull as to the outcome as an individual.

What many members of unions don’t realize is as an individual you can negotiate your wage and benefits just like a union, and if the company, school district, etc. don’t agree then you can take your services elsewhere. Competition and negotiating your own terms keeps your salary higher and benefits higher while also giving you the ability to decide for yourself and your family what is best, not some union heads who have their own agenda in mind.

Unions came about at a time when workers rights did not exist. Now many workers today who are not in unions have better rights than those who are in unions today. Being in a union means you are limited to whatever that union deems to be right for the union not right for you as an individual. The perception is that unions give you rights that are not available outside of unions and that is completely false. You as an individual have even more rights to control how, where, and for how much you work than even in a union. Before you go fighting hard for the union that your in, make sure that the union you have is best for you and your family, and not for some fat cat union heads out to maintain power at the expense of its members.

If you would like to contribute your own posts to this blog you can contact me at politicalpulsesite@gmail.com. I am open to creative ideas and welcome them.

Why Do Public Employees Need A Union? | Political Blog

With all the protests going on in Wisconsin I started thinking of a more interesting question. Why do public employees need to have a union? It makes no sense. The government is the people, is it not? Public unions were formed to fight against ourselves to get more from ourselves?  If that sounded funny, I couldn’t agree with you more, and is exactly why I bring up this topic.

Unions have been around for over 100 years and make total sense for employees of private companies. Each private company has different rules that they enforce on their employees and unions are needed in that case to ensure that those employees are paid a fair wage and not being taken advantage of. What unions did was make sure the employees were taken care of at a time when no rights were given to them working for a company. Companies took advantage of people to get max profits, and there was no recourse for doing this until the government allowed unions to form. As a result, rights for workers increased for many. I have no problem with that.

Public sector employees forming unions however makes no sense. Unions for them fight the government for better wages and better benefits. The thing is that government is the people. We are fighting against ourselves as opposed to private industry where employees are fighting against an entity (corporation). If something unjust is happening to public employees, we as citizens have the ability to vote and to decide when these employees get raises and more benefits, and to also keep them from suffering too much as well.

Unions in the public sector have created a situation where far too much has been given to public employees at the expense of the US taxpayer. Public employees enjoy far more benefits than their neighbor who is paying their salaries. There is no need and no reason for public employees to be fighting to get a decent wage, it makes no sense. If they truly did need wage increases, benefit increases, rule changes, or anything else the people will decide that at the proper time. To have a union to fight against ourselves looks like we are fighting each other. Again, it sounds ridiculous to read but that is essentially what is happening.

I am not against unions, I believe unions are very important in providing certain protections for employees from companies. What unions have done is make sure companies provide decent wages to employees of all industries in the private sector, even those who don’t deal in union workers. All unions are doing in the public sector is driving tax rates up and unfairly providing those workers with benefits that most Americans will never see.

Why do public employees need unions? The answer is that they don’t. They have gone far too long with too many privileges and power against their fellow Americans. Its time to dissolve public unions and stop fighting ourselves before we bankrupt our states and tax each other to death.

If you would like to contribute your own posts to this blog you can contact me at politicalpulsesite@gmail.com. I am open to creative ideas and welcome them.