Recently in Economy Category

Yesterday Richard W. Fisher, the president and CEO of the Federal Reserve Bank of Dallas, gave a speech concerning America's entitlement programs at the Commonwealth Club of California. He gave a run through of the numbers that the future tax payers of America were going to have to deal with, absolutely mind blowing numbers.

They were extremely sobering and inspired me to write a series of articles about it, this will be the first article, covering Social Security.


America's Entitlement Programs Must End: Social Security


The first issue, of course, is Social Security. It's a hot-button issue that everyone knows about, one everyone talks about; well, everyone aside from most politicians, they don't want to lose votes by stating the unpopular facts behind the issue.

The amount of money necessary to keep our Social Security system running as it is now is absolutely staggering. To simply cover all of the unfunded liabilities of our Social Security system from now on would cost the American tax payers an astonishing 13.6 trillion Dollars. Yes, that is an amount nearly equal to an entire year of our nation's Gross Domestic Product; for those of you that don't know, that is the yearly amount of all of the goods and services produced in our country. This is well known of course, but seeing the number represented in Dollars really hits home.

The problem is that there simply aren't enough new workers to take care of the aging baby boomers of our country. You see, our Social Security system was not very well conceived, little foresight was used and little consideration was given to future generations.

The issue now is that people are living for a much longer period of time, yet they still retire and begin to receive their entitlements at the very same age that they did during Social Security's inception. So while in 1940 only 53.9 percent of American Males and only 60.6 percent of American Females survived from their adulthood all the way to their retirement; in 1990 those numbers jumped to 72.3 percent for Males and 83.6 percent for Females. While that is undoubtedly a good thing, it is one of many things that have put tremendous strain on our entitlement programs.

Not only are people living even longer thanks to our medical technology; but thanks as well to the post-war baby-boom, the number of American citizens aged 65 or older has more than quintupled since the inception of our Social Security program. That number is huge on its own, but it is only half the story, many baby boomers are still working and will reach their retirement in the coming years.

The population of the United States aged 65 and older is also expected to double in size within the next 20 years. By the year 2030 it is estimated that nearly 1-out-of-5 Americans, as many as 72 million people, will be 65 years of age or older. The 85 and older age group is currently one of the fastest growing segments of the population.

The fact is that there simply aren't enough workers to pay for that many retirees. The birth rate has decreased dramatically as well, for various reasons. All of these factors combined have led us to our current predicament. Something has to be done about this, we cannot continue passing our debt on to future generations.

Social Security is not the only entitlement issue: In my next article I'll discuss Medicare, as well as my views on how to fix the problem.

So this whole gas tax issue has been popular lately; since John McCain and Hillary Clinton both stated that removing the tax on gasoline and other fuels would be something that they would do, and something that they believe would be good for Americans; while Barack Obama opposed the idea.

I'm not going to argue whether I believe John McCain, Barack Obama, or Hillary Clinton is correct in their stance and their beliefs on the issue. What I am going to address is what exactly all of these tax payer dollars in fuel tax revenue are supposed to be going to:

You may have seen the word hypothecation used in reference to the gas tax; what that means is that the revenues from the motor fuel tax are supposed to go directly towards the infrastructure used by motor vehicles, such as roads, bridges and highways; as well as to help with the infrastructure for the fuels themselves.

Many people's main argument against both John McCain's and Hillary Clinton's idea to relieve the American people of this motor fuel tax for the summer has been that this money is indeed going towards the repair and upkeep of our roads, bridges and highways; and why would we not want better and safer roads, bridges and highways.

Yet just last summer we had two different bridges collapse right here in the United States; including the absolutely devastating Minneapolis I-35W Bridge in Minneapolis, Minnesota; which sadly cost the lives of 13 innocent Americans and hurt at least 60 more. A horrible and unnecessary travesty, that undoubtedly could have and should have been prevented.

Several independent research institutions have also pointed out several other bridges in need of repair; as well as vast stretches of other infrastructure that is in need of upkeep. So where is all of this tax money going if not on this very necessary infrastructure maintenance?

In fiscal year 2005, nearly 36 Billion Dollars in revenue from the Motor Fuel Tax was received by state and local governments across the United States. An additional 18.4 cents per gallon in Federal Tax is also currently charged; which is also the tax that the three Presidential candidates and their supporters are debating over. That is a lot of money that is supposed to be used to keep Americans safe.

The 18.4 cents per gallon Federal tax, if voided for the summer as John McCain and Hillary Clinton wish to do, would "cost" the government 10 Billion dollars. What "cost" actually means in this case is that the American people would be able to keep 10 Billion of their hard earned dollars over the summer, while the government would theoretically have 10 Billion less tax dollars to waste.

The argument of those against the tax holiday is, as I stated above, that this summer tax holiday is going to "cost" the government 10 Billion dollars, which would otherwise be going towards the upkeep of our nation's infrastructure.

Yet from our recent history, as well as simply keeping our eyes open as we drive on, ride on, and walk along our roads, we can see that our infrastructure is in terrible shape. From this we must come to the conclusion that the Billions of dollars in taxes that are supposed to be going towards our nation's infrastructure are actually being wasted. Which is not a surprise; the government wastes the vast majority of our tax dollars.

The other argument against the gas tax holiday is that it is not going to reduce prices at the pump at all. Those greedy oil companies are simply going to add another 18.4 cents per gallon to their bottom and top lines!

That argument is simply ignorance. Why? Because the Motor Fuel Tax is added onto the price of gas set by the oil companies, it has no impact on the price that fuel companies charge for their fuel. It is an added tax of 18.4 cents on every gallon of fuel sold in the United States.

That doesn't mean that the price of your gasoline will not continue to rise over the summer, as it does every summer. That is simply due to the increased demand for the product during the summer months. The tax being there or not being there is not at all relevant.

If the tax was there, then the price for gasoline over the summer would be the oil company's price plus an added 18.4 cents extra in tax. If the tax was not there, then the price of the gasoline would be 18.4 cents cheaper.

Hopefully that clears up the issue for everyone that was confused about it, and for those unsure of whether your candidate's stance is intelligent or not: Simply look at the facts and come to your own conclusion.

Increasing Food Prices is a Serious Issue

 

People are going to suffer due to the rapidly increasing price of foods and other commodities. No, not American people, and not the people in any of the more advanced countries. The people that are going to suffer are those truly poor and downtrodden people in our world; there is true poverty out there, people that simply do not have the opportunity to make their lives better.

These people aren't able to farm their own lands to feed themselves; they have to deal with the current global commodity situation just as every one of us does. But sadly these people, these many millions of people, they simply cannot keep up with these rapidly increasing prices. These are people that live on the equivalent of one dollar a day, one single dollar each day.

Living on a dollar a day is known as extreme poverty. Just imagine having the spending power of one single dollar every day and you will easily be able to see why these people can barely survive; that they do in fact go hungry, often to the point of starvation. And it is only going to get worse as the price of commodities continues to rise.

When we hear the politicians and our fellow Americans complaining about the increase in prices through various forms of media, it's them complaining about petty things such as Milk increasing in price and how outrageous it is. But the fact is that us Americans are not in any danger from this increase in commodity prices; no, we are going to be just fine. It is the truly poor in our world that will suffer.

All of us have heard the various reasons given for the increase in prices: From the recent popularity of bio fuels to global warming diminishing the harvests. Neither of these is the real reason for the increase in prices, no matter what the politicians and pundits tell you and want you to think.

Demand is the main reason behind the increase in commodity prices. It's as simple as that. Millions of people in both India and China, as well as several other emerging countries, are eating a much higher quality diet than they previously were. This is by no means a bad thing; we should all be very happy for these people, people that have brought themselves out of poverty through hard work and determination. It is a great thing.

We can't blame anyone or single thing. From the increased demand in countries such as China and India, to bio fuels and global warming; we can certainly debate which of these things has a larger affect on prices, but that is only going to lead us to continuing the avoidance of the real issue: That is the truly poor people in the world that are suffering now, and will continue to suffer as these elements weigh on the prices of commodities in the future.

Can we do anything about this? I'm sure that we can, yes. For example, I simply consume less and waste less. There is an incredible amount of waste in advanced countries; people don't give it a second thought. I witness people wasting without care every single day of my life. It's a terrible thing.

Knowing that our waste alone could feed millions of truly needy people is a very sad thing. We've all seen the studies, some saying that half of the food in the United States is actually wasted, never ingested by a human being at all. The first time that I read that I was shocked, sure; but I knew that it would be a staggering amount of waste based on what I have seen with my own eyes.

The fact is that less waste and more efficiency here in the United States would dramatically drop the demand for commodities, and as such, it would in turn drop the price of food throughout the world. This would allow more and more people to eat, to eat a better diet, and be healthier in general.

So the next time that you're in your local supermarket, don't complain about the increasing cost of your Eggs and Milk; instead think of the poor people that are going to go without due to you continuing your wasteful habits.

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This page is a archive of recent entries in the Economy category.

Downtime is the previous category.

Entitlement Programs is the next category.

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