Common-Sense Proposals

               In last night’s State of the Union Address, President Obama laid out proposals to increase economic growth and build a stronger middle class. Such proposals included widening the pre-school education system so everyone can get a fair shot at an early age; restricting gun ownership to law enforcement and military personnel; and raising the minimum wage to $9.00 an hour. These are common-sense proposals that everyone should accept as right, right?

                I’d like to live in a world surrounded by free puppy dogs and ice cream too, Mr. President, but this is not the united states of Candyland. This term, “common-sense proposals,” has been thrown around by many Democratic members in Congress and the White House but they couldn’t be farther from common sense. 

Pre-school education is important, but not necessary. Recently, a government study showed that any benefits from the pre-school program, Head Start, will wear off by the time that child reaches third grade. At this time in a child’s development the family should be responsible for nurturing their own child’s education and curiosity. If we put the responsibility back in the family’s hands and save the taxpayer money for growing the higher educational system, then maybe they can, once again, afford to go to a good college. The family unit should focus on teaching the child basic human morals as this stage and that should provide the strongest foundation in preventing adulthood crime, drugs, and violence.

                If we would just provide our children with basic morals then maybe we can drop the argument of excessive gun control. Restricting gun ownership of private citizens is not only harmful to their own self-defense, it’s unconstitutional. The drafters of the Bill of Rights wrote the second amendment so that, in the face of a tyrannical government, the people could rise up against it—after all, the government is supposed to be of the people, by the people, and for the people. Even though this situation has little chance of happening today, situations have recently arisen in Newtown, Denver, and Los Angeles in which American citizens needed a weapon to defend themselves. How many innocent victims could have been saved from these unnecessary tragedies caused by out-of-control aggressors? We can agree on background checks and securing those weapons in a safe. But we cannot agree to give up our second amendment right and open ourselves up to becoming a victim. However, our threat of becoming a victim does not stop there.

                Our economy is in no state for this President to demand wage increases. The State of our Union may be strong, but the state of our economy remains weak. And proposals to increase the minimum wage to $9.00 an hour crush business’s hopes of hiring additional employees and growing our economy. I’m not sure whether our President is betting on inflation, half the population going into retirement, or just promising more things to a people already disappointed by false promises of the past; but this policy of raising the minimum wage to such an excess will only cause massive firings and a higher unemployment rate. If someone cuts your budget, then you must cut your costs—which means cutting employees. This is the common-sense repercussion.

                It’s not difficult to see the false promises made in last night’s speech if we only think about this rationally. Someone, somewhere, somehow has to pay for these policies. Unfortunately, it will fall on my generation—most of whom voted for this President because of his liberal social agenda. So I say to my generation: when you’re broke, jobless, drowning in college debt, and are not living your dream, just remember that this could have changed with real common-sense proposals. Let’s think before we vote so we may have the opportunity to be the greatest nation on Earth.

Good or Bad Economy, We’re in Trouble

Whether or not the economy and the labor market are improving, we will still be left with an overconfident President for the next four years. If we create jobs and growth we will hear the triumph of President Obama’s economic policies and how they worked to free us from the fear of another recession. If we tumble further down the rabbit hole of anemic growth and rising unemployment then we will hear that it’s because we haven’t raised enough revenue through taxes.

President Obama spoke this weekend on CBS and his message was no different than before: “There is no doubt we need additional revenue.” What’s appalling to me is the sheer arrogance of a man who gets what he wants and then continues to ask for more. The fiscal cliff was partially solved through raising tax revenue for the government; however, this policy goal was not coupled with a strict plan of necessary spending reduction. To put this more colloquially, would a credit card company really authorize such an out of control spender that had no plan of paying off their debt? Doubtful.

I agree with many out there that this fight over the debt ceiling and the fiscal cliff have been delayed and propagandized long enough. But, I will not have such irrational spending plans be the answer. Call me selfish, but it is my generation that will eventually have to pay for all this out-of-control spending along with a ballooning social security fund—which, by the way, my generation will reap none of the benefits of—and don’t forget our wonderful educational programs that slapped us with a large bill of student loans that we must repay by acquiring jobs that do not exist. This is the economy we look forward to due to bickering political positions.

This is not how the economy is supposed to work. Let’s leave the economic policy initiatives to those who studied economic policy and, when we are growing again, we can share it better with those who need it. Government finances are not so different from family finances—eventually you must cut costs to balance the checkbook.

Make the Rich poorer or the Poor richer?

An issue at the forefront of the today’s fiscal cliff disaster is how to get the economy going again, but there is really only one positive solution for the economy: make the poor richer.

Both sides of the Congressional aisle have presented their proposals and both sides present two fundamentally different theories about economic growth. The key component of the proposal from the White House includes raising the tax rate on the top two income brackets permanently while also increasing capital gains taxes and spending more money to stimulate the economy. Clearly the goal here is to make the rich poorer while trying to balance out what they determine as “fair.” I agree with Sen. Rand Paul’s response to this notion when he said on CNBC recently, “Do not send your money to Washington…People up here are not to be trusted with money.” Right now there are too many terrible spending policies that have failed to provide any assurance that the economy is growing to its true potential.

On the other side of the aisle, the Republicans in Congress proposed a new plan to the White House yesterday to keep the tax rates where they’re at, close loopholes and cap deductions to generate more revenue to bring down the debt, and to keep entitlements afloat. This seems more logical from a monetary standpoint. It brings in more tax revenue, continues pro-business growth, and secures the longevity of failing entitlement programs. This will allow businesses the ability to continue business as usual practices and hire additional workers to grow the economy.  It’s not about redistributing wealth, it’s about growing wealth.

As the battle rages on between the rich vs. the poor, business vs. the little guy, Republicans vs. Democrats, we have to understand that this game is bigger than political chess. Cut out the social media aspect of #My2k—which is just another political ploy to get people angry at the wrong issue—and show some leadership in coming together. This is an economic issue. Financial decisions are never easy for a family of five and even more difficult for the entire country, but money is money and sacrifices will be made. Let’s be fiscally responsible and get ourselves out of this mess.

Brain Drain in Spain?

            75 billion euros were withdrawn by Spaniards in the month of July, according to a recent article from CNBC. That’s roughly $94 billion. That’s also about 7% of the country’s overall output.  Are Spaniards losing hope that their money will be severely devalued? It looks that way. 

Even though the Spanish crisis is not quite at the levels seen in Greece, especially considering Spain has a stronger cushion to their economic output than Greece does, it’s not hard to see that there has been some concern. In an article posted on CNBC today, the memory of the, “corralito,” was mentioned. The corralito was the response to a bank run that occurred in Argentina in December 2001. It froze all bank accounts for 90 days and only allowed small amounts of cash to be withdrawn on a weekly basis. What it did, besides upset a lot of Argentinians, was lock the people into the Argentinian crisis and force them to accept the devaluation of the peso to the US dollar. Those who wanted to jump ship, like some have done recently in Spain, were unable to do so. Some lost everything in their Argentinian savings account, and some lost most of it. Either way, there is concern over potentially recurring events.

Great Britain has seen an increase in its employment, in part, due to the flight of individuals from these situations across Europe. People are seeking stronger currency and stability. Spain still has time to rectify it’s situation but if the major benefactors  lose faith in the economy then who will be left to save it? As much as people argue against the top 1%, they will always be needed to advance economies. Society never would have expanded if not for the man who invented the wheel. Innovators are the key prosperity and Spain seems to be losing them.

The Romney/Ryan Ticket

Friends and family were shocked this weekend when they received an early email from me, but there was no chance I was going to miss the announcement of Rep. Paul Ryan as the Vice Presidential candidate for Mitt Romney.  I had my doubts whether he would be interested in this ticket, but I always believed that if anyone could help Mitt Romney defeat the incumbent President, it would be Paul Ryan.

No one has been more of a thorn in the side of the Obama administration as Ryan. As the creator of the Ryan budget proposal, he went toe to toe with Obama in rectifying some of the biggest misuses of financial funding. Yes, this is not easy to do, but it is possible. It was quite amazing, really, how shortly after the announcement, political shows were discussing Ryan’s budget and, more specifically, his views on reforming Medicare. There has to be a right answer to social welfare and it has to take the first step of change, because, as many now realize, we cannot sustain this path of too much misguided spending. We must spend appropriate amounts and with a purpose if we ever want to ensure social benefits for those who need them.

I look forward to the political debates and the remaining election. With Ryan now on the ticket I think the Republicans will take the White House. The Republicans wanted a businessman; they got it in Romney. They wanted a political wonk; they got it with the seven term House member Ryan. All they have to do is play the game and stay on topic and they will have a victory in November. People thought Obama would be happy with the Ryan pick because it would be an, “easy target.” I don’t think people understand how fierce and charming a competitor Paul Ryan really is. A seasoned vet on Capitol Hill and a conservative favorite with a budget plan to fix our economy: this is who Paul Ryan is and he is a game changer.

Social Security: Let’s Call It Like It Is

                A government report came out yesterday stating that social security reserves, which pay for retirement and disability benefits, will run dry by 2033. When the year 2033 comes to a close, I will have paid my fair share of taxes to this fund through income taxes, but will only be forty-five years old. I will have to wait another seventeen years before I can start collecting early benefits and another four years after that before I will be able to collect full benefits. My future is looking very bleak.

                Social Security needs reform. With the baby boomer generation nearing retirement age the benefits will quickly run out. There are not enough employed young people out there to cover all these costs of retirement since the post-grad generation is fighting to secure jobs and pay off their student loans. The Wall Street Journal this morning reported that, in 2011, social security benefits paid out $596.2 billion to 44.8 million Americans. Right now the ratio of tax payer to beneficiary is 2.8 to 1, down from 3.3 to 1 in 2007. The baby boomers have hit their retirement age and the able bodies are struggling to cover the cost. According to the Social Security Administration’s current projections, the annual cost of social security benefits expressed as a share of workers’ taxable earnings will grow from 11.3 percent in 2007, the last pre-recession year, to roughly 17.4 percent in 2035. We are running out of people who can afford to pay into this archaically organized program and, hence, need a transition.

                One way to reform this program is an idea proposed by George W. Bush in 2005: privatization. Even though this legislation did not pass the Republican Congress back in 2005, it is an idea that needs to be reconsidered. Although politicians may find this a scary act to propose in an election year due to the fact that the older generation is one of the strongest majorities at the voting booths, action needs to be discussed now before it’s too late. My solution is to grandfather in a new privatized social security system. If we taxed for benefits and put the individual’s money into a social security investment portfolio, then we kill two birds with one stone. We invest tax dollars back into the economy to stimulate growth and the individual saves and grows their investment for their desired retirement package. A criticism of this would surely be the volatility of the markets; however, it’s better than being taxed my personal income that will be put into a fund that I may never see.

                I have been a proponent of this type of reform since I was a freshman in college. Investing in my future makes sense to me. If we work hard, then we should enjoy the nice retirement package that we earned. With money left over we can help those less fortunate; but, how are we going to help anyone if we run out of money to do so? Economic prosperity and sound financial planning is the way ensure America’s future.

Minimum Wage, Student Loans, and Unemployment: It’s All Related

                Coming across a few articles this morning I couldn’t help but think, “Has anyone connected the dots to bring the country out of the recession yet?” Countless ideas have been thrown into the mix of possible economic solutions, but few have any real merit. Student loan debt is approaching $1 trillion, we’re still at 8.2% unemployment with only 120,000 jobs created in the month of March, and we’re so focused on class warfare that we have essentially ignored what the free market can provide: good business. It is simply good business that people will want to invest in opportunities, however, when you stretch those opportunities in search of what one thinks is, “fair,” then you are only going to deplete business and string along a sluggish economy. In an article in Bloomberg Business Week, one advocates to raise the minimum wage so that lower income households have more money to spend the following year. Here’s the irony: by raising the minimum wage the government would put more pressure on small businesses, the main contributors to job growth according to congress’s recent small business tax break (JOBS Act), and would actually cause a disincentive to hire an additional worker. So, while the left is so bent on helping the less fortunate by raising the minimum wage, they’ll actually lose their jobs entirely. What’s fair now?

                If we see the world from the recent graduate standpoint, raising the minimum wage will hurt them. If a business is now required to pay a new hire $10 per hour then the business is more likely to hire less workers and be less willing to hire someone with such little experience. According to an article in USA Today, about 1.5 million, or 53.6%, of bachelor's degree-holders under the age of 25 last year were jobless or underemployed. Raising the minimum wage would only increase these figures. You have to let the market speak for itself. In any good business, when the business becomes profitable and the workload too great, they hire an additional worker to help. Raising minimum wage is a disincentive for the business to hire, thus stretching its business with as few workers as possible. Business growth is essential for the market and for the work force. The more business is allowed to grow naturally, the more people it will employ. 

                As mentioned earlier, the student loan debt is rapidly approaching $1 trillion. I understand the need to ensure good paying jobs for the recent graduates, but raising the minimum wage will not help this. If President Obama really wants to give everyone a fair shot, then he has to lower the cost. I’d love to have minimum wage start at $50 but basic supply and demand economics will not allow it. Right now, we have a low supply of jobs available due to the high cost of hiring in a slow economic recovery. Reduce the cost to hire an additional worker and the unemployment rate will drop. However, what incentive is there for an unemployed person to take a job believed to be slightly below their skill level when the unemployment benefits from the government are so good? 

                When one looks at minimum wage, unemployment, and student loans, they quickly realize how interconnected the three categories are. Raising minimum wage increases unemployment and student loan debt outstanding. Lowering minimum wage would decrease unemployment and student loan debt outstanding. Although I’m not advocating lowering the minimum wage, I believe that raising it would be detrimental. In this recovery we need to let business do what it does best: be profitable. Growth for business means growth for the people.