Solve the National Debt
January, 2018 |
Peter G. Peterson's consistent message is that we need to shift from an Entitlement Society to an Endowment Society.
He shows how the root of the national debt problem is Entitlements like civil service and military pensions, Social Security, and Medicare.
He demonstrates how we've succumbed to "Entitlement Creep." In the case of Social Security, for example, he shows how the program has morphed over time from a "Safety Net" to a "Padded Hammock."
For most of my career, I've followed the national debt. As an Economist, solving it is one of the greatest professional challenges. After reading all of Peterson's books in 2016 and mulling on them since, I believe I've arrived at the solution.
Here it is. First of all, recognize these two points:
Once this is done, in the same way, means-test all similar entitlements, again following the Safety Net principle.
Some may object, "But I paid into the system. I deserve to retrieve what's mine."
If you go to church, would you ever dream of taking money out of the offering plate? Of course not.
This is a naïve, self-absorbed, spurious, and disingenuous view that disregards demographic facts like birth and longevity rates. There has never been a direct mathematical relationship between an individual's contributions and benefits, and if you did the math on your own situation, you'd quickly find that you've received more than you've paid.
Instead of a personal investment, it's more appropriate to regard the 6.2% as a discounted tithe. Just as no one would dream of taking money from the offering plate at church, neither should we suppose that we are entitled to take from the Social Security program just because we paid into it.
Again: it's a Safety Net, not a Padded Hammock.
I wrote this web page to make it easy to get this message to those who are in a position to do something about it. Please, for the sake of national security, help get the word out. Thanks.
Respectfully submitted,
Kristofer N. Freeberg, Economist
Making End$ Meet
[email protected]
(360) 224-4322
He shows how the root of the national debt problem is Entitlements like civil service and military pensions, Social Security, and Medicare.
He demonstrates how we've succumbed to "Entitlement Creep." In the case of Social Security, for example, he shows how the program has morphed over time from a "Safety Net" to a "Padded Hammock."
For most of my career, I've followed the national debt. As an Economist, solving it is one of the greatest professional challenges. After reading all of Peterson's books in 2016 and mulling on them since, I believe I've arrived at the solution.
Here it is. First of all, recognize these two points:
- While the Social Security Trust Fund may be its own entity, its relationship with the rest of the national budget is interdependent. When the fund enjoys a surplus, that surplus is invested in the rest of the national budget. When it suffers a deficit, it becomes a drain on the rest of the national budget. Either way, it isn't really "separate." To suppose so is both spurious and disingenuous. It's a profoundly influential, interdependent piece of the national puzzle.
- Social Security (and Medicare) are but two examples of a much larger system of Entitlements. Social Security and Medicare are not the whole solution; but because they are so large and obvious, (the so-called "Elephant in the Room"), they are appropriate places to begin. Not only do we need to fix Social Security and Medicare; we need to fix the whole Entitlement system. Social Security and Medicare are just the beginnings.
- Remove the FICA cap, or ceiling ($128,400 at the time of this writing). This will vastly increase the program's income without imposing any undue hardship. People who got used to paying the 6.2% during most of their working life when they earned below the ceiling won't even feel the effect when they keep paying as they rise above it. Indeed, well-off folks of good will like Warren Buffett and Bill Gates have been asking to pay more taxes. They lament that their effective tax rate is lower than their employees'. This is a simple way to grant their wish. Remove the Cap.
- Replace it with a poverty line floor. This will relieve poverty in general, and Entrepreneurial Poverty in particular, since owners of start up businesses pay double, on every dollar of profit they earn, with no breaks, even if their profit is below the poverty line. Because budding business owners innovate and create jobs, relieving them of Entrepreneurial Poverty will have a multiplier effect on the economy.
- Means test benefits, so that they're only paid to those who truly need them. This will decrease the program's expenses. Restore the Safety Net Principle.
Once this is done, in the same way, means-test all similar entitlements, again following the Safety Net principle.
Some may object, "But I paid into the system. I deserve to retrieve what's mine."
If you go to church, would you ever dream of taking money out of the offering plate? Of course not.
This is a naïve, self-absorbed, spurious, and disingenuous view that disregards demographic facts like birth and longevity rates. There has never been a direct mathematical relationship between an individual's contributions and benefits, and if you did the math on your own situation, you'd quickly find that you've received more than you've paid.
Instead of a personal investment, it's more appropriate to regard the 6.2% as a discounted tithe. Just as no one would dream of taking money from the offering plate at church, neither should we suppose that we are entitled to take from the Social Security program just because we paid into it.
Again: it's a Safety Net, not a Padded Hammock.
I wrote this web page to make it easy to get this message to those who are in a position to do something about it. Please, for the sake of national security, help get the word out. Thanks.
Respectfully submitted,
Kristofer N. Freeberg, Economist
Making End$ Meet
[email protected]
(360) 224-4322