America’s Entitlement Programs Must End: Social Security

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.

The Facts Behind The Gas Tax Holiday

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.

Ride a Bike

Posted on Various Thoughts on Culture

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I am very pro cycling myself. I have an
extreme dislike for the car culture that we have here in the US in
general. I absolutely feel that if mass public or self transportation
without the use of a motor vehicle is possible, then it should be used
in nearly all cases.

Personally I do not drive currently and I do not even own a car.
Using mass transit and self transportation is environmentally sound and
much more cost effective than operating a motor vehicle of your own.
That’s why I don’t understand the car culture that we have, I don’t
understand how it has spread and is generally accepted everywhere, even
in our large cities.

That’s why I thought that Bloomberg’s tax was a brilliant idea for
NYC. Having actually biked through New York on a regular basis, it’s
not exactly the greatest experience that I’ve ever had, and certainly
not something that I would want to do every morning to get to work. If
there were less vehicles, less congestion and less hostility in general
though, then I would be all for cycling to work most of the time. But
still it isn’t a huge issue as we have a fine public mass transit
system in our subways.

Anyway, I’m hoping that the recent housing issues in the US will
make more and more people come to the cities, which should lead to less
reliability on vehicles for people in general if they have a quality
system for public transportation in place.

I have other huge issues with suburban sprawl and the whole suburban
culture here in the US as well, a different topic, I know; but it has
to be stated as it undoubtedly plays a key role in the want and need
for motor vehicles by many Americans. If we didn’t live 20 miles away
from where we go to school and work, then there would be much less of
an issue and the car culture in the US would simply dissolve. It is
honestly ridiculous to live so far away from the places that you need
to go on a regular basis when you could just as easily live in the
city, much closer to the places that you need to go.

Both are huge issues that people need to get over in my opinion. You
don’t need an acre or two of land surrounding your home, really. There
is absolutely no need for that, it’s wasteful and harmful to all of us
in the long run. Living in the city is a much better option. Hopefully
more and more people in our future generations realize this and stop
moving into and building new unnecessary suburbs.

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