President Obama needs a comprehensive plan for the economic future of America, including a strategy that achieves a $5-6 trillion debt-reduction package over the next 10 years.
The most likely way to achieve that goal and greater confidence might be to set goals that are phased in over a 10-year period. A phased approach allows everyone who will be impacted to adjust their life styles and budgets to accommodate the changes. If an effective debt-reduction plan must require sacrifices by everybody, appropriate levels of change and phase-in periods will be necessary.
Justifications for entitlement revision have not changed over the years: People who have acquired certain level of wealth should have their Social Security and Medicare benefits reduced to reflect that wealth. Social Security and Medicare are safety-nets designed to serve those who for various reasons may needs for such financial assistance. They are like buying home, auto, sick and accident, and term-life insurance to protect against occurrences which encumber expenses that the insured might not otherwise be able to afford.
But if the house is not damaged by fire or wind, if the car is not severely damaged, and if the insured does not get sick or die within the insured period, the insured does not expect to get any money. Protection was bought. Economic sanity demands that--at least for the foreseeable future--the same apply to Social Security and Medicare. Warren Buffet does not need Social Security and Medicare coverage--at this time.
And just as people who buy various other types of insurance make every attempt not to receive benefits, the goal of every employee should be to never need Social Security and Medicare. Just as people are happy when they don't have benefit from the various forms of insurance they have purchased, those who paid into SS and MC should be glad when their wealth makes such benefits unnecessary.
Social Security and Medicare could be phased out according to such income-benefit schedule as the following: Income, $50,000--benefits, 100%, $60,000-96%, $70,000-92%…….$280,000-4%, $300,000-0. Each benefit-income level might be phased in over five years. Beyond $300,000 of income, people who are 65 years of age will have earned enough--and accumulated sufficient wealth--to insure themselves. Medicare would still cover catastrophic illnesses.
The Bush tax cuts for the wealthy would end on December 31, 2012. Those for the middle class and working poor would be phased out over a 5-10 year period. After ending the Bush tax cuts for the wealthy, gradually increase their maximum tax rates to the Clinton rate of 39% over the next ten years. The Wealthy will have less money to invest, but the middle class will make up the difference by having more of it to invest.
Wealthy Americans obviously are in better financial condition to adjust to the changes in taxation than are the middle class and working poor; hence, there would need to be a phase-in period. Americans at all income levels would have the remainder of 2012 to begin anticipating--and hopefully making--any adjustments to their budgets that will make the transitions painless or less painful.
The contributions of business to the economic recovery is indispensable and must be present with the same vigor that they give to the success of their company. They have a crucial role to play in providing employment opportunities, but they have perhaps greater responsibility to help better educate America's children so they can qualify for the kinds of jobs businesses say they need.
The contributions of business to the recovery of the American economy is indispensable. Businesses provide employment opportunities. But they also should help address the problem of better educating American children so they can qualify for the kinds of jobs businesses say they have. Businesses must indicate not only the areas of need but the number of openings available. Then, they must hire and, along with governmental assistance, finance the education that qualifies local students for these positions.
Students will not pursue skilled areas if they don't have confidence that there will be job when they become certified. Therefore, businesses should target interested and qualified students in the eighth grade from which some determined number of students will selected for apprenticeships and employment. Financial aid would be for students who would not otherwise be financially able to receive such education. Announcements of such opportunities in the early years would be motivational for all students to perform better--even those not eventually selected.
If unions and workers are serious about jobs and job security, there would be agreements among union workers to share hours in economic down turns. No workers should be laid off. Hours would be shared, allowing worker skill-levels to be retained. The degree of sharing would depend on business needs to cut back on hours worked. Workers would save during good times to make up for lost income when they must share hours.
All wages and salaries would be tied to the salaries of the CEO of the business, with a fixed rate. The importance of CEOs relative to that of other executives and workers remains essentially the same: More proficient CEOs produce more proficient employees.
Finally, there may also be needs to phase pensions out for the wealthy and phase them down for the middle class. It would be better, especially for the working poor and middle class, to eliminate even the possibility of having to cut salaries, benefits and services by 25% or more all at once as is now the case with Greece. Where appropriate, benefits would be phased back as dictated by economic conditions and outlook.
These ideas need be discussed on c-span by a committee from businesses, unions, education, legislatures; all races, all political and religious persuasions: include Allan Simpson and Erskine Bowles; and be chaired by President Obama.
Americans and peoples of the world should be able to see an example of how economic and social problems can be resolved--and perhaps, in the future, prevented.
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