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Eliminate the Corporate Tax

We received another disappointing jobs report Friday, which now continues an annual pattern of ‘jobs report’ disappointments in the beginning of Spring.  Some will blame the sequester, some will blame the tax increases, and some still will find a way to blame George Bush.  It is obvious, however, that four years into our “recovery” a different idea than government spending is needed to create jobs, and get the kind of growth in our economy that we used to get after recessions.  This is why the best jobs program would be to eliminate the tax on romney corpCorporations, and move to a simpler system where all taxes are paid at the individual income level.  This idea solves two problems with our tax code: a perception of fairness; and slow jobs & economic growth. 

Thanks to Warren Buffet and Democrats, there is a complete misunderstanding of why the individual capital gains and dividend rates are lower than those for regular earned income.  Those who understand that these earnings have already been taxed at the corporate level, and involve risk taking, have chosen not to explain it.  The President has used the fact that these rates are lower as a battering ram to mislead people into believing the system is set up against them and unfair.  Stories such as ‘Mitt Romney not paying as high a percentage as someone who works’, helped steer this perception.

The United States has the highest corporate tax rate in the industrialized world at 35%.  Politicians have talked of corporate tax reform that would bring this rate down to 25%, while eliminating loopholes.  Even with this idea many countries will still be below ours, such as Ireland whose rate is 12%.  Going to zero would end the competition, since other countries could only match us.  There do need to be safeguards put in place so that C-Corporations are not individuals masquerading as a company (perhaps a 50 person minimum for a C-Corp).  The other types of companies (LLC’s, Sole Proprietor, Partnerships, and S-Corps) are already taxed as personal income.  The revenue loss would be made up by taxing dividends and capital gains at the individual earned income rates.  In other words, rather than having a different (lower) tax on these types of income, the rate would be the same regardless of how your income was earned.  Imagine the flood of companies that will want to relocate to the United States to get the zero rate, and the jobs that will accompany these moves.

When you hear people from all sides of the political spectrum playing the blame game for continued anemic growth and jobs creation, listen if anyone has a solution.  You will hear ideas from the administration with words like investment, infrastructure, education, etc.  Just remember that we have never had a recovery lead by government spending.  Since 1978 there was an understanding among the parties in Washington D.C. that a lower Capital Gains rate spurs investment, which helps the economy.  The current crop of Democrats led by the President would rather engage in class warfare than solve problems.  The idea of eliminating the corporate tax will spur growth, create jobs, and make sure that Warren Buffet the same percentage as his wealthy secretary.

Where is the Press on the Cost of Obamacare

The House Republicans recently came out with a budget that repeals Obamacare.  There have been numerous interviews with budget committee chairman Paul Ryan (R-WI) about the budget he has presented.  All of the reporting seems to be focused on the political angles, or the practicality of the proposal.  Asking about who this will help politically or how this would ever happen while the President is in office must be more interesting.  Ryan has stated that the elimination of Obamacare, and the tax increases that were to pay for it, will save over $700 billion in the next ten years.  How can that be true, since the President promised that his healthcare law would not add a dime to the deficit?dime

No one has challenged Mr. Ryan’s conclusions.  They have simply questioned the prudence of the document politically.  The media loves the politics of this issue so much, that they have completely overlooked a big story.  In his September 9, 2009 address to a joint session of Congress, the President said the following…

“And here’s what you need to know. First, I will not sign a plan that adds one dime to our deficits — either now or in the future. (Applause.) I will not sign it if it adds one dime to the deficit, now or in the future, period. And to prove that I’m serious, there will be a provision in this plan that requires us to come forward with more spending cuts if the savings we promised don’t materialize.” (Applause.) http://www.huffingtonpost.com/2009/09/09/obama-health-care-speech_n_281265.html

The costs are obviously higher than estimated.  Where are the calls from the media for the President to come up with additional spending cuts as promised?  This, in a nutshell, is what is wrong with our press.  They should be questioning either the numbers that Mr. Ryan is presenting, or the President’s promise that Obamacare will not add “one thin dime” to the deficit.  The law was passed only three years ago, and it hasn’t even been implemented yet.  If it does not add one dime to the deficit, then how can repealing it save $700 billion?

The press is certainly biased, and that may be the case here.  If someone were to show that the Republican budget and the President’s promise don’t jive, it may lead to some tough questions for the President.  It’s much more fun to talk about the next election, or ask some more poll questions.  Even a biased media that paid attention to facts, or had a memory beyond last weekend, would have challenged Ryan’s numbers in order to keep the President’s promise intact.  This issue seems to point out more of a laziness in the media than bias.  Keeping score of how one side is doing over the other, just leaves all those hoping for solutions as the losers.


What Cypress Portends for America

Cyprus is a small island country in the Mediterranean.  Their government did something last week that should be a wakeup call to all citizens of debtor nations.  In order to continue to receive support in the form of loans from the European Union, they agreed to tax 10% of all bank deposits.  They later withdrew this idea after public outcry, and it is not clear what their ultimate solution will be.  The reason it is important is that it shows what governments will do when they are desperate.  When the U.S. debt crisis comes, and there are no more buyers of our bonds, our government will take a similar step.

There are many particulars to the problem in Cyprus that are not the same as the United States’ debt problems.  The problem there was caused by the banking system making bad bets on Greek debt.  These differences are important, but it really doesn’t matter how a debt crisis begins they all lead to similar decisioATMns.  What is instrumental is that when confronted with a crisis, the first reaction was not to slash costs, cut employee benefits, or lay people off.  There are no calls to cut retirement programs, or shrink the government.  The reaction was to go get money from those who have it.

Those media outlets that chose to cover this story were quick to put analysts on the air to remark about how FDIC insurance and personal property rights in the Constitution would not allow this type of step to happen here.  FDIC deposit insurance is only a protection in the event that your bank becomes insolvent or declares bankruptcy.  There is nothing in our Constitution that prevents the implementation of an Asset tax.  The Congress can pass a law that grabs a certain % of all deposits in lieu of a later tax return (think withholding).  When the United States cannot sell bonds in order to borrow more than it spends every year, the budget will need to be balanced immediately.  The total assets of the United States amount to roughly $188 Trillion, is it so inconceivable that a future government faced with this situation will just tax assets 1% every year, thus solving their problem? (http://rutledgecapital.com/2009/05/24/total-assets-of-the-us-economy-188-trillion-134xgdp/)

How this look into the future relates to the current budget standstill is an interesting exercise.  Republicans are very concerned about the country’s current and mounting debt.  The recent budget put out by the Republican Party gets the budget to balance within ten years.  They also address the future drivers of our debt, namely the entitlement programs of Medicaid and Medicare.  Democrats are not all that concerned about the debt, and have put out a budget that proves this.  They are not that concerned about getting the budget to balance, nor do they choose to address any of the unsustainable entitlement spending.  In a recent interview with ABC news, the President said, “My goal is not to chase a balanced budget just for the sake of balance.”  Is it just a coincidence that the party which does not want to raise taxes makes hard decisions to bring the budget into balance, while the party that seems to relish raising taxes doesn’t think that balancing the books is all that important?

We have been given a look into how government leaders react to a debt crisis with the events in Cyprus.  They go after who has the money for immediate relief.  Why will our politicians be any different in a debt crisis?  When you need to balance the budget immediately, taxing assets will be sold as the only solution.  This is why Democrats don’t really care if the debt keeps going up, or if we ever solve the long term unfunded liabilities.  They look at America as one giant piggy bank, and when the crisis hits they will be all too happy to act as a hammer to crack it open.

NYC Nanny

This is not the latest Lifetime TV reality show, but the state of affairs in the nation’s largest city.  The past few years New York City has taken some pretty big “Nanny State” steps.  They have eliminated smoking indoors and at outdoor stadiums, stopped the use of Trans fat, reduced salt in cooking, and most recently crNannyacked down on the dreaded “Big Gulp”.  In all of the reporting about these steps, you would think there would be more analysis as to why.  There are those who think this is just the natural progression of the liberal mindset, and NYC is certainly controlled by liberals, but there is a bigger issue at play here.  The overriding reason for all of this intervention in the free lives of New Yorkers is that near 40% of the population of NYC is on Medicaid.  The decisions in regards to health, by the people of New York, have a tremendous financial impact on the city.  How long before more city and state governments come to this conclusion?   

Medicaid was a program developed for the poor, but do-gooder lawmakers with an entitlement mentality have increased the coverage from the truly needy to as many as possible.  The funding for Medicaid is shared by the City, the State, and the Federal government.  The State of NY has capped its contribution, and the feds are an unreliable future source of money, so the funding going forward will increasingly fall on the City.  (http://www.nypost.com/p/news/local/city_medicaid_near_critical_condition_gXDExUBXUJRS2hAZiXZ2EJ).  Faced with these facts what would a forward thinking executive do?  Try to Big Gulpreduce costs. 

As more and more people are enrolled on Medicaid, there develops a parent-child relationship between the government and the people.  These citizens have no incentive to keep themselves healthy, because they do not pay for the consequences of their bad decisions.  Mayor Bloomberg has decided that he will reduce the cost to NYC by eliminating unhealthy choices for all New Yorkers.  His steps, even with all of the collateral damage, are reasonable when viewed in this light. 

One of the major provisions of Obamacare is to cover more Americans through a further expansion of Medicaid.  This allows people at 133% of the poverty level to be covered by Medicaid.  (http://obamacarefacts.com/obamacares-medicaid-expansion.php).  This is akin to the policies of New York being spread nationwide.  Is New York City just the first place to make the preemptive decision to force healthy decisions on its citizens?       

mini big gulpThis is a look into the future for all Americans.  With the government increasingly picking up the tab for healthcare costs, it will create an excuse for control over all citizens’ daily life.  The feared implementation of a “Twinkie tax” (a tax on fatty foods) is nothing compared to the elimination of the unhealthy choices.  Now that the government is covering so many, this will be justified.  If all states accept the new Obamacare Medicaid expansion, America will end up like New York.

State of the Union – Why Don’t They Ask?

The President laid out his agenda in the State of the Union Address, and it was filled with initiatives and statements similar to what he has said before.  It gives the media the opportunity to ask questions that they have neglected in the past.  Statements that were presented as facts also need clarification.  Up until now, the President and the White House press secretary have escaped answering important questions.  We should continue to wonder why the following clarifications and challenging questions are not asked.

Mr. President:  In your speech you spoke about universal preschool.  Almost every study concludes that there can be temporary effects, but by the 3rd grade there is no lasting impact of preschool.  In these challenging budgetary times, why are you pushing for increasing a program that has shown such a universally agreed lack of results?state of the union

Mr. President:  With your interest in raising the minimum wage, can you show any time this policy has led to more employment?  Didn’t unemployment increase when you and a Democratic Congress raised the minimum wage in 2009?

Mr. President:  You said that you have cut two and half trillion dollars of the $4 trillion that economists say is needed to show a sustainable path.  If it is assumed that part of your $2.5 trillion claim is the $1.2 trillion sequester, then why are you advocating delaying and reducing these cuts, before they’re even implemented, while counting them toward this goal?  The figure of $4 trillion was put out more than three years ago.  With your delay in dealing with this problem, many groups have changed it to $6 trillion to make up for the time squandered.  Are you aware of this?  Is there going to ever be a year in our government’s future where we will spend less than the year before?

Mr. President:  You have said that you are waiting for Congress to act on climate change, and if they don’t, you will.  If climate change is truly as devastating to our future as you have expressed, and you have this power that you stated in the speech, then why won’t you act now?

Mr. President:  You said that none of your proposals will add one dime to the deficit. Certainly, most of these proposals cost money.  Can you tell us what you are proposing to cut or what taxes are you proposing to increase in order to pay for each of these new initiatives?

Mr. President:  You continue to reference the Cayman Islands and people having bank accounts offshore as a loophole in the tax code. Can you tell us the loophole in the tax code that you’re referring to, and your proposal to eliminate it?  Could you be misstating the fact that other countries have lower taxes, and it is wise for a company to locate their headquarters outside the United States for that reason?

Mr. President:  You had a very emotional appeal on gun control in you speech.  Gun control has not proven to be effective in reducing gun violence anywhere that it has been tried.  What is your reason for supporting the proposed gun-control legislation?

Mr. President:  You implied in your speech, and have stated in the past, that the Washington “dysfunction” and arguing over policy are causing the economy to underperform.  A time period that you often refer to in terms of economic success is the 1990’s.  During that time, Newt Gingrich was Speaker of the House, and the Republicans controlled the Senate as well.  Their disagreements with President Clinton led to two government shutdowns. This shows how the “dysfunction” in Washington was much worse at that time than it is now.  Shouldn’t we look at your policies and actions to explain the lack of economic performance rather than the fact that there are continuing arguments in Washington?

Perhaps some adventurous reporter will now have the opportunity to ask for clarification on these issues…but probably not.

An Inconvenient Polar Bear

The story this week that hasn’t received much play in the mainstream media is about a new book by environmentalist Zac Unger titled “Never Look a Polar Bear in the Eye”.  His goal was to document the decline of the Polar Bear population.  He undertook this task by moving his wife and 3 children to remote northern Manitoba, Canada.  Normally, books from these types of authors get tremendous coverage since they are usually peddling the latest hysterical fear of what humans are doing to destroy the planet.  The problem in this case is that he found the exact opposite of what he expected.  The problem this presents is that Polar bear with youngit counters an assumed domino effect in the theory of Climate Change:  Global Warming causes the polar ice caps to melt, the lack of ice decimates the Polar Bear habitat, their population goes toward extinction, oceans rise, all humans die.  This book challenges an almost religious orthodoxy on the liberal left.  It does not fit the media template and has been almost ignored.  If this story got the attention that it deserved, there would be the natural question…What else is not true about Climate Change?

It turns out that this story is not that unique.  A recent Canadian Government study claimed that the population of Polar Bears has been increasing since the 1970’s.  The local Inuit people go even further to say that the population is increasing even in areas where the study had population flat or down.  Why isn’t the environmental movement celebrating this fact?  Why can you only find stories about this new book on Fox News?  Why are environmentalists still lobbying the US Fish and Wild Life Service to change the classification of Polar Bear’s from “threatened” to “endangered”?  The ongoing myth about Polar Bears fits the political agenda of Climate Change, and the truth would really get in the way.    

Bison in North America were once headed toward extinction.  It has been reported that their numbers were as low as 2,000 near the end of the 1800’s.  The Bison population has recovered to over 500,000, and it is a wonderful success story about restoring a species.   The wild Bison have come back, and farm raised Bison are popular due to their very lean meat.  Bison burgers are moving from posh eateries to everyday restaurants.  The media has reported this story, and they usually like a feel good story like this.  Yet we have not seen similar attention to the good news about Polar Bears.    

Even before Al Gore’s movie about Global Warming (which he has morphed into Climate Change and now calls Climate Crisis), the NY Times, Washington Post, and the major networks bought into the theory, hook line & sinker.  They are now committed to promoting this belief, regardless of the facts that may surface.  The current President also is a true believer, and is determined to do what he can to, “Heal the planet”.  Eventually, McDonalds or some other restaurant will solve the Polar Bears overpopulation problem with a new menu item.  This does not deal with the shamelessness of the media taking an advocacy position on a issue that will have wrenching policy ramifications.  Lack of reporting on these new facts shows this complicity, and it won’t be solved with a special sauce.

Outgoing taxes

Bobby Jindal, the Governor of Louisiana, has proposed eliminating the state’s income and corporate tax.  His plan is to join the other 9 states that fund their government primarily through a sales tax.  He is attracted to this method by the fact that these states have done better economically.  There are 5 other states Cut taxconsidering lowering or eliminating their income and corporate taxes to attract business to their states.  It is no coincidence that these states are run by Republican Governors, while Democrat led states are raising taxes.   There is a more important reason to change the state’s main source of revenue to a broad sales tax.  This step will help the public hold government accountable.  The voting electorate has been removed from feeling the effects of inefficient government over time, and this change will reverse that trend.    

When any government wastes money, the only way they can be held accountable is by the voters in the next election.  If the majority of the electorate are not affected by this inefficiency, due to the fact that they do not pay taxes, there is little accountability.  Another way that these voters could track the effectiveness of government would be an aggressive investigative media.  With the press bias towards bigger government, this critical eye is missing.  It has been reported that roughly 50% of the cost of the NYC government is funded by 1% of taxpayers.  This, and a lack of media scrutiny, has been a recipe for out of control government.

Most people have such busy lives that it is difficult to track the performance of their various levels of government.  Politicians and governments are notorious for adding all different taxes and fees in order to find new ways to fund their spending.  This shell game has made it difficult for even the most interested voter to understand the efficiency of their leaders.  How easy would it be to keep track of your state government by simply looking at the sales tax?  Maintaining the sales tax will allow spending growth to be matched to the state’s growth in commerce.  The Governor can simply run for reelection by saying I did not raise the tax.

Under the sales tax scenario, imagine if there were a teachers strike.  The way that the press usually reports this event is to typically side with the striking teachers.  Invariably, there are sympathetic reports resorting to pull on the public heartstrings about “the children” and how we cannot risk the future.  Now, a Governor who wants to hold the line on spending can have a simple message by saying that if he/she gives in, the sales tax will go up 1%.  Just think of the difference in the way people will look at this issue.

These moves by Mr. Jindal and other Republican Governors are great differentiators from the Democratic Governor tax raisers.  They are also a good way to bring attention to the economics of the state.  This change ensures a larger majority to be affected by the cost of government, and the consequences of each decision.  Republicans are always trying to make the case that people don’t want bigger government.  Making sales tax the main way that the government is funded not only makes it affect all the people, but gives citizens and easy way to measure their government.

Smart Grid is Kinda Dumb

Smart Grid is one of those phrases that everyone likes the sound of, but know little about.  What is the Smart Grid?  On the surface it would seem it is like the electric grid we have now, only better.  Wikipedia says…”A smart grid is an electrical grid that uses information and communications technology to gather and act on information, such as information about the behaviors of suppliers and consumers, in an automated fashion to improve the efficiency, reliability, economics, and sustainability of the production and distribution of electricity.” (http://en.wikipedia.org/wiki/Smart_grid)  Wow, that sounds great when do we start? electrocuted man

Whenever “experts” are interviewed about this they concentrate on the supply chain “smartness”, but they rarely dwell on the demand solutions of the “Smart Grid”.  Supply chain changes are very good, in that they reroute supply of energy on the fly, to make sure the grid stays electrified.  The demand side is where manufacturers install devices on your appliances, so the Public Utility can control them.  This is said to be necessary if you as the consumer are using more than your fair share of electricity, and more is needed for high priority customers.  So the solution to not enough power, is to ration who gets the power.

An early sign that we are headed in this direction is PSE&G’s (NJ utility) Cool Customer Program.  There may be similar programs being rolled out throughout the country.  It is said to “Save energy…save money…and help the environment at the same time.  An easy, voluntary way to manage your home energy use in the summer…and all year round.”  This voluntary program gives you a setback thermostat, and a $50 credit on your bill.   This sounds like an awesome program, since the setback thermostat is worth over $200.  If you read more of the details, they let you know how you get to save the environment too.  On those particularly hot days when the utility does not have enough supply of electricity to satisfy their customers, THEY TURN OFF YOUR AIR CONDITIONING!  Just think how much energy you will save when they cycle off your air conditioning every 15 minutes.  They assure you that this will only happen on the hottest days of the year.

Why wait for manufacturers to install the monitoring devices on your dishwasher, when Air Conditioning is one of the heaviest uses of electricity.  It is not surprising that this is the earliest demand target.  If there are not enough volunteers, however, we can logically assume where this program goes next.  Phase two probably makes the set back thermostat required in order to receive power.  Phase three is when they just come and take away your air conditioner.  Phase four they have another family move into your house.  You are probably using more than your fair share of electricity anyway.

In the old days, price would regulate the use of products such as electricity.  If you use more, you pay more.  Markets would lead us to the right balance between supply and demand.  As the price goes up, we find cheaper energy, or invent more efficient ways to use it.  This does not seem to be enough anymore.  ‘If we are to save the environment we must force people to behave a certain way’, seems to be the vision.  The standard solution to every problem out of government, or quasi-government such as public utilities, is more control and less freedom.    

Sick, not Stupid

In the aftermath of the Sandy Hook shootings there has been talk of trying to do something about mental illness.  The idea people are grappling with is trying to determine before the fact; who may be likely to commit the kind of horrific mass shootings as what happened in Connecticut.  Along these lines the President, in his media event of a week ago, wants to have the CDC do a study on the subject.  It should go without saying that there is certainly a mental problem no gunsinvolved when someone decides to commit mass murder.  The goal should be to find the best way to prevent these events from occurring.  Is this the best way to achieve that goal?  

John Lott (“More Guns, Less Crime” author) in a recent Wall Street Journal Op Ed pointed out that there has been only one shooting where more than 3 people have been killed, in the last 60+ years where the victims were allowed to be armed.  All other shootings took place where guns were prohibited.  In a country where 39 of our states allow concealed carry, this fact cannot be a coincidence.  Two recent examples of mass shootings drive this point home.  These examples took place in states that allowed concealed weapons, but the location of the shooting did not.    

Colorado allows the concealed carry of guns for those who have a permit.  In the Aurora Colorado shooting at the premier of Batman where 12 were killed and 58 wounded last summer, the theater strictly prohibited guns.  There were 9 theaters within a 20 minute drive of the home of the shooter that were showing this premier that night.  This was not the largest, it was not the closest, but it was the only one of the 9 theaters that did not allow guns.  This meant that he could kill with impunity without the risk of being shot himself.  The act surely shows the behavior of a sick individual, but the location was thought out.

In the Ft. Hood shooting in 2009 where 13 soldiers were killed and 30 more were injured, guns were not allowed.  It may seem strange that an army base does not allow weapons.  In fact, it was civilian police who stopped the shooter.  The largest Army base in the world called 9-1-1.  This federal property located inside the state of Texas is under federal law, not the concealed carry law that Texas has adopted.  If this sick perpetrator had tried this act anywhere outside the army base he would have likely been shot dead by a citizen or army personnel who are only allowed to be armed outside the base.  It seems surreal that these trained professional soldiers can carry their weapons outside the base but not inside.  The state of Texas trusts them more than the federal government who trained them.  Again, if you analyze the decision of where the shooter decided to commit this heinous act, there is logic to it.

It is revealing that all of these sick, mentally ill, deranged people made the rational, thought out, logical decision to shoot people where they could do the most damage.  They were almost guaranteed that their victims could not shoot back.  Perhaps there are times when it can be determined who will commit such acts, but there is one sure way to allow people to protect themselves.  A federal law allowing concealed carry would permit people to greatly reduce the impact of these shooters.  The fact that these shooters and others made a cold calculated decision to only commit these killings where the victims were unarmed is instructive.  Concealed carry could have prevented the attempt completely.

Social Security and Medicare are already Welfare

We have a basic problem in this country that we are not willing to face.  Over time our retirement programs of Social Security and Medicare have changed from insurance type of programs into Welfare programs.  We have overpromised and underfunded retirement benefits that we cannot afford.  Even these current “fiscal cliff” negotiations, which were supposed to force some tough decisions on the main drivers of our debt, appear to be headed toward postponing hard decisions.  The continual avoidance of dealing with these issues is partly due to the false notion that people paid into these programs, and are entitled to the benefits they are receiving.  They did pay in, but not nearly at the rate they are collecting.  The US government is either the worst insurance company ever, or these are welfare programs. Cane batter

Any fair analysis must combine the pay in, and benefits of both Social Security and Medicare.  To analyze only the one that is reasonable (Social Security), without the other (Medicare) is completely dishonest, since nearly all seniors are on both programs.  This would be like getting a great deal on your cable and ignoring your lousy internet rates when both are supplied by the same company.  There have been many different studies that look at the pay in and pay out of both programs.  Generally each senior will get back $100,000 – $200,000 more in benefits than they paid in (http://money.usnews.com/money/blogs/planning-to-retire/2011/01/06/will-you-get-back-your-social-security-taxes-in-retirement).  The older you are the better your deal, since the current rates of pay into Social Security (12.4%) have only been in place since 1990.  A transfer of wealth like this from taxpayers to beneficiaries is usually defined as welfare. 

Medicare benefits are going to be roughly the same throughout the income range once the changes are in place to the drug benefit next year.  There is, however, a skew in Social Security benefits for low end workers.  Namely, those at the low end of the pay scale receive 4x their yearly pay in amount, while those the top end receive 2.6x their yearly pay in amount (http://www.justfacts.com/socialsecurity.basics.asp).  In addition, the program which was originally designed to distribute benefits tax free, now subjects nearly all benefits to income taxes.  This also lessens the benefits for those with higher incomes.  There is no private insurance plan that is set up to discriminate based on income, but this is an element in most welfare programs.

If we want to have a serious discussion about solutions, we need to start speaking the truth about these programs.  During everyone’s working life, they receive a document from the Social Security Administration which shows how much he/she has contributed, and what payout they can anticipate.  This document should add Medicare, and continue to be sent to people after retirement.  Perhaps if the numbers start going negative on retirees yearly forms, they will have a better understanding of the problem.  There may even be some humility on the part of seniors, particularly if they fear they are burdening their grandchildren.  This could be a good start toward appreciating our predicament.

Once people have a proper understanding of the problem, solutions are much easier to discuss.  When Social Security began, average life expectancy was about 65, it is now 78 (http://www.cdc.gov/nchs/data/hus/hus11.pdf#022).  The annual cost of living increase was in 1974.  There are some simple solutions to the problem once the mindset is corrected.  There was a proposal to raise the retirement age by 1 month per year for the next 48 years.  Perhaps add to this raising the eligibility of Medicare by 2 months per year until it catches up to Social Security.  Still allow people to still start on SS at 62, but at an even lower payout.  Even add Medicare at 62, but with higher copays.  Reduce the cost of living increase by 1%.  Even implementing just some of these will extend the solvency of these programs.  

People receiving the Social Security and Medicare Bundle are always willing to talk about reductions in Welfare programs, and not the programs they benefit from.  It is not their fault, because they have been told for decades that they are collecting on an insurance type of program that they paid into.  Until we change the understanding of how our retirement programs have morphed into welfare programs, we will not be able to deal with solving these problems.

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