It’s time for honest consideration of the problems facing Social Security but first, the good news. The Social Security Trust Fund, from which benefits are paid, has a balance of $2.9 trillion. The money that was deducted from our paychecks and the matching contributions from our employers built that bala Continue reading FUNDING SOCIAL SECURITY
Tag Archives: deficit
THE ECONOMY MUST SERVE PEOPLE
“The economy must serve people, not the other way around.” That is the opening sentence of the US Conference of Catholic Bishops’ statement “The Dignity of Work and the Rights of Workers“. Regardless of your religious beliefs, I encourage readers to look it up on the internet. It’s easy to understand the values being taught but challenging to apply them in our lives, businesses and government. Continue reading THE ECONOMY MUST SERVE PEOPLE
IS THE FINANCIAL END NEAR?
The cartoon made me laugh. Maybe it’s funny because it’s based in truth. Although I hope that our national litany of mini-crises and scandals will end soon, I don’t expect it. These stormy times are distracting us from more important issues, particularly our national financial situation. Continue reading IS THE FINANCIAL END NEAR?
Paying Donald Trump’s Taxes
“If this is what happens when you vote Republican, then why vote Republican?” – Rush Limbaugh, May 1, 2017. It’s a good question.
The most thorough analysis to date of President Trump’s tax plan is 
the Tax Policy Center’s report on a very similar plan that he proposed last year. It projects that the 20 percent of Americans with the lowest incomes would gain $110 annually. The 20 percent with middle incomes would gain $1010. The 20 percent with the highest incomes would gain $16,660. And, most stunning of all, the one tenth of one percent of Americans with the highest incomes would save $1,066,460 every year.
That will be paid for by increasing our federal deficits and debt at the rate of more than $700 billion per year. Every year, every American (even children who can’t vote) will become responsible for repaying $2153 in new debt. Counting principal and interest, Trump’s tax plan would burden every child born in 2017 with about $64,000 in new debt by their twenty-first birthdays.
That’s a great deal for children born into extremely wealthy families because they will get over a million dollars a year in tax savings. But for a child born to a poor or middle class family, the debt will be a barrier to success in a nation that can’t continue living on borrowed money. Here are a few examples of what President Trump is trying to sell us and some alternative reforms that would serve the nation better.
Trump’s plan would eliminate the estate tax. He calls it a “death tax” and says it impedes the inheritance of small businesses and family farms. But the estate tax only applies to assets in excess of $10.9 million passed on by a married couple (half of that for an individual). Repealing the estate tax will allow heirs of the super-rich to receive millions of dollars as tax-free inheritances while those who work for their money pay income taxes. This idea is the ultimate example of an entitlement mentality among American aristocracy. If President Trump has been truthful about his net worth, the estate tax repeal will allow his heirs to receive $10 billion tax free.
How is an inheritance not income? Some of the wealthy will argue that they already paid income taxes on the money to be passed on. I hope that is true. When a middle class family pays to have their home repainted, they have already paid taxes on that money. The painter will be taxed on his income too. Taxing earned money while not taxing inherited money – what a way for the President to treat the blue-collar workers who elected him!
President Trump wants to eliminate most itemized deductions but keep the one for mortgage interest. It serves the purpose of making home ownership easier but wealthy Americans frequently mortgage homes and use the proceeds to pay for second homes or income producing investments. With that in mind, we should cap the size of deductible mortgages at an amount that subsidizes ownership of a nice home. There is no justification for subsidizing million dollar mortgages.
The President wants to cap corporate taxes at 15%, which he says will encourage business expansion here by making our taxes competitive and slightly lower than other nations. He’s right about that. Corporations should be viewed as tax collectors not as tax payers. They collect from customers and then pass some of their income along as taxes.
A better idea is to pass the tax liability for corporate profits (and deductions for losses) along to shareholders at whatever rate they pay on earned income. This will allow lower-income families to invest and begin accumulating wealth while paying low or no tax. Those with higher incomes would pay more. Under that policy, each taxpayer would pay the same rate on wages as on investment income.
Our tax code offers more advantages for the extremely wealthy than can be covered in a column of this kind. The Trump plan will move us further down the road toward establishment of an entitled American aristocracy – exactly the wrong direction to go if we want upward mobility into the middle class and beyond.
President Trump’s proposal is the proverbial pig wearing lipstick. This pig would require every American to borrow money that will pay for tax cuts for the extremely wealthy. Its lipstick, some nearly inconsequential tax cuts for the poor and middle class, is a thin disguise.
Links for additional reading:
https://www.nytimes.com/2017/04/26/upshot/winners-and-losers-in-the-trump-tax-plan.html
http://www.foxbusiness.com/politics/2017/04/25/stockman-trumps-tax-plan-dead-before-arrival.html
How high are American taxes compared to other nations? CLICK THIS LINK: https://data.oecd.org/gga/general-government-revenue.htm#indicator-chart
FEEDING OUR DINOSAURS
I was rambling around the house trying to mentally outline a column about tax policy when my wife asked me to fill the dinosaur feeder in our back yard. Actually she called it a bird feeder but we’ve only recently learned that birds are evolutionary descendants of dinosaurs, so we haven’t adjusted our language.
Thinking about how dinosaurs became birds is easier than imagining the how American tax code could evolve into something as practical as a chicken, so I changed the subject and my day is already better.
For the dinosaurs, the transition took a long time – something in the neighborhood of 150 million years is a widely accepted estimate. Dinosaurs didn’t need to elect a congress to create their future, they just adapted as best they could to changes in their environment, including the evolution of other animals and plants, and let nature take its course. Judging from the number and variety of them now having brunch outside my window, the dinosaurs may be slow, but they have been successful.
We humans haven’t been around nearly as long as the dinosaurs, or even as long as the birds. We’re evolutionary newcomers but most of us think we’re superior to the creatures sharing our back yards because we have sophisticated languages that we can speak and write to convey complicated ideas to future generations. Our “superiority” has produced science, literature, mathematics, religion, art, music, clothing, big buildings (and the American tax code).
Along our evolutionary way, we created customary ways of doing things that allow our descendants to survive and thrive. We build homes to shelter them. We feed them, teach them, and keep them safe as best we can. As I look around in my yard, I can see squirrels and dinosaurs (ok – birds) working at those same things. It seems that evolution or creation (or God if you prefer) built the desire to do those things right into our DNA. We are here today because our ancestors, going back millions of years, had successful families to care for their young.
As I watch the dinosaurs in my yard, they seem to be fully occupied in the present, the recent past and the near-term future. They are building nests that will be temporary, eating, and enjoying active sex lives. The squirrels still seem to be digging up some of last year’s acorns. Mostly they are living in the present but any observer can see their values – the sense of right and wrong that will assure the success of their families and their coming generations. Evolution rewards such behavior with survival and adaptation.
We humans expanded mutual support beyond family into neighborhoods, villages and cultures. We specialized, filling particular roles that help the whole group. Ants, bees, beavers, wolves, buffalo and others did that too and it worked for all of us.
With our long-term social memory, passed down by word of mouth and later in written form we humans are able to record our values as stories, religions, and laws. We’ve learned to use those as organizing principles for large societies – even empires. Incas, Masai, Cherokee, Egyptians, Chinese, Romans, and recently Americans organized themselves so that future generations could succeed. Their laws, customs and religions supported societies where future generations could thrive. That appears to have worked for all of them. But eventually some things need improvement.
The evolution of cultures seems to be a lot like the evolution of living species. Some have been overrun by more powerful competitors. Some fell prey to droughts, or natural disasters. Some fell when they were unable or unwilling to support their families and societies so their young could thrive in future generations. Dinosaurs became birds in order to thrive in a changing world. Romans became Christians and brought much of the western world along in the process before their empire collapsed. America emerged from that, much as birds emerged from dinosaurs – becoming a new creature that fed and supported each new generation toward ever greater success.
That, unfortunately, brings me back to the American tax code. Our congress will soon begin debating it. In our large and complicated nation, the tax code should collect resources from us and direct them toward creating a nation where all can achieve our potential and succeed together. Will we use it to evolve as dinosaurs did? Or will we become extinct?
WE NEED MORE UGLY AMERICANS
Who was “The Ugly American“? Most of us know the phrase, but few are aware that the original Ugly American is the hero of the novel by the same name. Published in 1958, the book described American diplomacy in the fictional Southeast Asian nation of Sarkhan. Obvious similarities to actual events in nations where the US and the Soviet Union competed for influence (especially Vietnam) made the book a hot topic of discussion in the press and the congress.
The “Ugly American” was Homer Atkins, an American engineer who went to Sarkahn with a desire to help local citizens improve their own lives. Doing hard, physical work in the fields to design and build simple devices like a bicycle-powered irrigation pump often left Atkins sweaty and dirty, and that “always reminded him that he was an ugly man”. “Ugly” was a title that he applied to himself, not to others.
In 1958 the Soviet Union was spreading communist ideology into emerging nations around the world. They portrayed the US as an empire-building colonial power enriching itself and capitalists by dominating smaller nations. Our diplomatic corps was focused on influencing rulers (often dictators), business owners and military leaders. The Soviets were interested in the general citizenry, especially any movements to depose rulers or to create wealth among peasant classes and divide them from rulers. As far away as Vietnam and as close to home as Cuba, the Soviet approach was succeeding.
After reading “The Ugly American” a Senator from Massachusetts was so impressed that he bought a copy for every one of his Senate Colleagues and encouraged them to read it. Less than two years later, that Senator became President John Kennedy. Only six weeks into his presidency, Kennedy created the Peace Corps by executive order. Its mission was to recruit highly qualified volunteers, educate them about local language, customs and issues, then send them to emerging nations as representatives of America. Kennedy’s decision to create the Peace Corps was inspired by The Ugly American and based on his belief that talented young Americans working alongside local residents without compensation would be excellent ambassadors for our nation and our values.
Today, the Peace Corps remains active and successful, but it is woefully undersized to address needs and opportunities around the world. The Peace Corps budget for 2016 is $410 million. For comparison, the Department of Defense spent $437 million on military bands in 2015. The estimated cost of the Iraq and Afghanistan Wars (including derivative costs such as benefits for veterans) for the years 2003-2014 is $5 trillion. That is almost $52 million per hour. Eight hours of these wars costs more than a full year of Peace Corps funding.
The Ugly American argued that, “…we spend billions on the wrong aid projects while overlooking the almost costless and far more helpful ones…”. Today budget deficits are massive and our world seems increasingly dangerous. We should re-examine our spending, the results that we are getting, and our national values. Despite great sacrifice, uncountable deaths and heroic effort, military intervention in Iraq, Afghanistan, and throughout the Middle East has not produced peace, safety, prosperity or stable nations. Instead we see civil war, poverty, terrorism and refugees that no nation wants to accept. Americans and Europeans now fear home-grown terrorists who have been nurtured by brethren in the nations that we have invaded.
The three Middle Eastern nations with a history of Peace Corps involvement, Jordan, Morocco, and Tunisia have plenty of problems but seem more stable and less susceptible to anarchy and terrorism than their neighbors. We’ve supported a wealthy and radical dictatorship in Saudi Arabia that seems increasingly vulnerable to popular uprisings because oil revenues are down. The most stable large nation in the region appears to be Iran – the only one that has avoided our efforts at military driven nation-building.
One can only wonder what the Middle East might be like today if we had consistently offered Peace Corps style nation-building that helps individuals and families improve their own lives based on their own values rather than regime change and military solutions. People of the region might be more inclined to treat us well if we send “Ugly Americans” to help them build the kind of nation that they want rather than arming them to fight each other. Under the circumstances, it seems like an idea worth trying.
STICKS STONES AND STEREOTYPES
Election campaigns are under way and the name-calling season is open. Names, labels and stereotypes can influence our opinions and our elections so it’s important to be aware them. Continue reading STICKS STONES AND STEREOTYPES
JUST SAY YES TO MEDICAID
The decision by North Carolina’s governing Republicans (every single one of them) to reject Medicaid expansion will cost the state’s residents $37 billion by 2022. That is roughly enough money to run the entire state government for 21 months. They looked at the money and just said “no”. They looked at uninsured people living in poverty and just said “no”. They looked at hospitals and doctors who care for uninsured people, and they just said “no”. And they just said “no” to unemployed workers who would have found jobs in the Medicaid expansion. Continue reading JUST SAY YES TO MEDICAID