The International Monetary Fund chair, Christine Lagarde, says global economy will be poor in 2016 citing among other things that the West has an ageing population. That, coupled with very low oil prices affecting oil producing nations and China struggling with its own economy, Lagarde suggests growth will be spotty at best.
Western nations, including the USA, should be willing to receive as many immigrants as possible from any source to balance their populations. Already, extremely conservative economists are predicting total economic failure in the US and predict that next year is the last year for Social Security (SS). This is not likely, of course, but we all know that the fund is in trouble for a variety of reasons including an ageing population.
Many financial structures within the nation’s discretionary spending group, most of which is SS followed by health, are in need of restructuring and refunding. Al Gore campaigned for President saying he would put SS funds in a black box not to be transferrable to other uses; this should have been done from FDR’s time! The issue with opening Pandora ’s Box of restructuring SS is that the republican party wants to throw it to the wolves of Wall Street or do away with it altogether. Democrats, on the other hand, want to reinvest in SS by throwing borrowed money at SS without fixing its issues.
Restructuring SS requires a number of things:
Put a cap on coverage. Wealthier folks and retirees who have other supplemental income, do not need SS. Require payroll deductions for employers and employees for all hours worked, not just for full time. Remove some of the expanded coverage that belongs in other programs, for example, disability. A difficult but culturally necessary task is to develop new employment regulations, job descriptions and programs that keep older employees in their jobs as primary contributors to production; today, it is common for employees in their fifties and older to be pushed out before retirement age while SS qualification is raised to older and older ages. Business should return to its role of offering some form of retirement which funds can’t be used for other purposes – a barrier removed by the Reagan administration. Finally, the tax relationship between SS and earned income should be modified to treat both as earned income, thereby refunding SS as retirees increase earned income. Even better would be to add a graduated SS tax on investment income.
Across the board every discretionary program is long overdue for a restructuring of the tax code. Income and business taxes are grotesquely skewed to favor the wealthier end of the spectrum. Part of this issue is to disassemble the oligarchy and give governments back to voters – which is a subject of its own.
Further, returning to Lagarde’s prediction for a spotty economic future and assuming SS is not rescued, our next generation will not have SS. Further, do not be drawn into consumer debt regardless of what banks say. If the reader is young enough, use the 401k or SEP to its fullest extent. Establish a savings and investment budget matching no less than 10% of gross income; establish a ROTH IRA and pay in your limit each year. Chances are SS will be trimmed back in one way or another for all of us.
Ancient Mariner