Gordon C. Boronow
Social Security is unsustainable at its present level of benefits and taxes. To put Social Security on a sound footing, Congress will have to cut pension benefits or increase tax rates. Congress will not raise tax rates to pay for Social Security. Why not? The reason is simple.
This week the Federal Open Market Committee (FOMC) of the Federal Reserve will meet to consider the next phase of monetary policy. The Fed, through the policy decisions of the FOMC, has been engaged in a policy known as "quantitative easing", or QE. You would not be too far off the mark if you interpret QE as the equivalent of printing money.
The Tea Party sprung up in spontaneous protests at "town hall" style meetings, and then in more organized rallies to push back on the government takeover of their lives. The Tea Party took a principled stand for Constitutional, limited government, committed to the freedom and liberty of the people, and to fiscal responsibility. They did more than protest, they voted.
It seems that every day a new review of Thomas Pikkety's book, Capital in the Twenty First Century, appears on the scene. I've certainly gained new insights about political economics from reading these essays, both pro and con. Thankfully, as a result, I feel safe in using the time I would have needed to read the 700-page tome for more productive activities.
This week CNBC reported on its quarterly All America poll, a survey on a variety of political economy topics. One of the topics in the report was the attitude of people towards increasing the minimum wage.
Last week, the Congressional Budget Office (CBO) reported that the Affordable Care Act (aka Obamacare) would likely have a significantly larger negative effect on the labor supply decisions of Americans than previously estimated. They now estimate that workers will choose to work fewer hours, to avoid losing eligibility for Obamacare subsidies; an amount that further decreases the labor force by the equivalent of 2 million full-time jobs, or 1.5-2 percent of the labor force.
According to the 2012 Social Security Trustees Report, benefit payments under Social Security are 36% higher than what is provided for by the scheduled Social Security tax rates. This is only one example of the fiscal irresponsibility we have allowed our leaders to engage in. Fortunately, at least for Social Security, the deficit problem is fixable in an equitable way, with minimal damage to the economy.