Saturday, June 14, 2008

Social Security: Another Tax Plan

Barack Obama is using fear tactics in describing Republican plans to fix the social security issue. This in spite of the fact that the only plan Obama and the Democrats have is to increase taxes. Increasing the social security tax on people making over $250,000 sounds like a great idea but....

Obama has already proposed taxing the so called "rich". He plans on allowing the Bush tax cuts to expire. He plans on a costly socialized medicine plan that would tax the rich. Obama plans a environmental program that would further tax the "rich". Obama's energy plan would increase the gasoline tax by 50 cents a gallon. Every time we turn around Obama wants to further increase taxes.

Our economy is a mess right now. I do not believe it is as bad as the alarmists would have us believe but we do need real plans to reduce energy costs and food costs. Yesterday's CPI shows that energy and food are making up the brunt of our inflationary concerns. The core rate of inflation is relatively flat and under control but food and energy are creating chaos.

Obama has no real plans to fix any of these issues. His plans are to fear monger seniors on social security. He asked yesterday "imagine if your social security was invested in the dow jones". Yes please imagine this. While the market is in a state flux right now the trend over the last 100 years is always up. In the last 30 years the market climbed from 1000 points to over 13,000 points. This means that $1,000 invested 30 years ago would be $13,000 today. Does not this increase over the long term make more sense than the democrats plan?

The democrats plan is to tax more. In order to fix social security without investing funds one has to raise taxes. Why you ask? This is because social security as we know it is a pyramid scheme. Todays workers are not paying into their own account but rather into an account for today's retirees. The baby boom generation has more people than the current workforce. There is no possible way of staying ahead of the game without further increasing taxes and even that will not be enough to keep social security solvent. Allowing younger workers to pay less into the pyramid and pay into their own account would change the pyramid. It would allow people to be in control of their own retirement rather than the government. Investment will assist in allowing the system remain solvent.

Now if the democrats would stop trying to scare our seniors and think about the future they could be a part of the solution rather than a part of the problem. They could raise taxes for social security while allowing younger workers to invest a part of their social security into private retirement accounts. This would be a win for the American people. It would make social security a real program instead of a pyramid scheme.

I am not sure how much Obama believes the rich will absorb in the form of taxes. Taxing the "rich" makes great rhetoric but poor policy. The increased taxes on the "rich" reduce jobs, reduce incomes, and reduce revenues. This year was a record year for the Treasury Department. America collected more in taxes than ever before. Yet we pay a lower percentage of our incomes in taxes than in the 1990's. Taxing is a policy that comes from a lack of imagination. Leaders have vision and fix problems. The Democrats lack vision and will implement a future in the image of their past failed policies. Talk about back to the future.

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