Friday, January 25, 2013

Piece of Cake

How easy would it be to save our future?

I often laugh at the silliness played out in government theater.  I wonder, like everyone else, why elected officials cannot see the obvious issues in front of their face and make good decisions.  So, I often catch myself day dreaming about what would happen if politics were not an obstacle and we could really be honest about fixing the problems plaguing our future.  Or just put me in charge for a day and you would get the following "tweaks":

1) Change to a flat tax and eliminate ALL special deductions.  I did some back of the napkin math that says you could tax every dollar of personal, corporate, and investment income at 25%, give every man, woman, and child a $10,000 deduction and the government will collect 20% of GDP in income.  This would be progressive, fair, and simple.  I could drone on for days about details, but if we want to treat people 'fairly', why not move to a tax code that treats all Americans the same way, and quit trying to force behaviors with tax incentives.

2) Raise the Social Security Age to 70 and change to chained-CPI indexing.  When the program was created people only lived to be 65 and now live to be 78.  Due to our current inflation adjustments, the benefit for each generation gets BIGGER than the previous one.  In other words, new and current retirees get a much bigger benefit than their parents, and their kids and grand kids pay the tab.

3) Raise Medicare age to match Social Security.  Why are these two ages decoupled?  One retirement age should suffice for everyone.  Further, arguments that raising the eligibility age will not help the deficit are silly.  Detractors say it will cost more for Medicare because the healthier "young" retirees will be off the system.  That may be true if we look at costs per person, but we are looking at total costs, and taking away any portion of patients lowers that cost. People of course now may need to work until 70, but alas I am not selling unicorns, nothing comes for free.  However, you can phase in these things to make sure people can plan and save accordingly.  But this phasing window is closing with each passing day.

I would implore you to go to this blog (you, as I am, will be shocked I'm sending you to the NY Times). This blog spells out very clearly what is driving our spending growth and is very clear and easy to follow.

4) Frack.  Allow as much drilling on federal land as possible.  About half of our trade deficit comes from importing oil and the other half comes from importing other goods (mainly from China).  By greatly increasing energy production, we both reduce our oil imports AND lower our domestic manufacturing costs.  This would be a silver bullet in raising GDP by increasing exports and reducing imports.  Higher GDP = More Jobs = More Tax Revenue.  Pretty simple stuff.

Notice I really don't give a damn about short term budget problems.  The real problem in our country is economic growth, which when moving ahead full steam tends to fix everything else.  Flattening the tax code, reducing LONG-TERM projected debt, and lowering energy costs would unleash an economic boom like we saw starting in the early 80s (oddly, look at what Reagan did and I may have stolen from his playbook).

Also, what I suggested above comes at minimal sacrifice as retirees only have to accept the same benefit levels their parents got.  Tax reform and fracking are on the whole very cheap to the American taxpayer, with suspect cost fears generated by environmentalists and special interest groups wanting their tax incentive handouts. 

Sadly, our President has chosen to focus elsewhere.  He hiked take RATES with little long term deficit reduction attached, expanded the entitlement state with the Affordable Care Act, and of course stands in the way of increased oil production and refining (i.e. Keystone).  I would like to believe that the actions of the President are purely about helping Americans and are not about inflating his party's influence, but no matter his motives, he clearly has no issue letting our children pay the price while he expands the power and reach of the federal government.   

All I would need is one day as King...