Baby Boomers Vs Millennials

Welcome to the new reality; generational competition. The world is getting more economically competitive and so will generations against each other. It should be obvious to everyone we cannot do everything we want for everyone.

The world’s middle class is growing rapidly and most of the growth is happening outside the United States in places like China, India, Russia and Brazil. Other regions of the world are also advancing including South Africa, other parts of Asia, South America and Central America. This is going to put significant pressure on our citizens to maintain their standard of living.

It starts today with the United States needing to evaluate its priorities and to figure out how we optimize  our greatest resource, our citizens. For the sake of our future, do we spend more on preparing younger generations to compete or do we maintain or increase the living standards of the retired or soon to be retired generations?

The obvious first step is to get more efficient at what we do and cut out any waste. The second step is to evaluate our policies towards foreign aid and should any of it be cut back or altered. After doing the above steps it is back to our priorities within our own boundaries and among groups of citizens. We have not had to do this for at least sixty years.

President’s Economic Plan

The President is doing a poor job of explaining our economic problems, and the solution, to others in Washington and the public. Those who disagree with him that we need further government stimulus now, when private spending has declined, say these are not ordinary times.

These economists and politicians say an error was made when the country continued to run up deficits in times when the private sector was doing well.  The last decade was a good example. While the boom in the housing bubble was growing the government continued to run deficits and refused to pay down any debt. Two wars were draining our treasury while our President encouraged us to continue buying ice cream at Cold Stone.

As a result, when this near depression hit we had very little to spend. The proponents of austerity point out that we have put ourselves in a corner where increasing our debt further could result in a total collapse of the economy. I am convinced we are not there yet. However, there is a large portion of politicians and the general public who need convincing.

The President needs to take on the role of explaining his position. This will not be accomplished with one grand speech. It will take an F.D.R. type campaign where the President, with assistance from professionals,  talks directly to the public about the problems and solutions.

The President needs to explain why we still have room to borrow, how government spending on infrastructure, education, research and development will not only spur the present economy but allow us to be more competitive in the future.

The President also must describe the future, stating how our debt will be paid down over time and running deficits by the government during times of growth and prosperity can no longer be allowed. The President’s economic plan has not been accepted because he has done a poor job of explaining it. He needs to use his excellent campaign staff to run this campaign to convince the public.

This will define his presidency.

Solving Debt Problem

We are facing a “fiscal cliff” because our politicians, President Obama and Congress, did not solve our debt problem in 2011 and pushed it off until the end of this year. They did this by agreeing to spending cuts that were deemed to be unacceptable by all parties. The logic, or lack thereof, was after the 2012 Presidential election both parties would be forced to reach a compromise in order to avoid such drastic measures. They put a gun to their own head. This is not a way for the government of the largest economy in the world to operate and we should be mad as hell.

Below is a quote from the Congressional Budget Office (CBO) that describes the current budgetary problem facing the country if we do nothing, including not enacting the above mentioned fiscal cliff agreement.

“… the persistence of large budget deficits and rapidly escalating federal debt would hinder national saving and investment, thus reducing GDP and income relative to the levels that would occur with smaller deficits. In the later part of the projection period (2022), the economy would grow more slowly … and interest rates would be higher. Ultimately, the policies… would lead to a level of federal debt that would be unsustainable from both a budgetary and an economic perspective.”

There are two parts of our nations budget that cannot be ignored if we truly expect to get a handle on our fiscal problems; defense and entitlements.

“We currently spend more on defense than the next 13 countries combined. Defense spending accounts for about 20 percent of all federal spending — nearly as much as Social Security, or the combined spending for Medicare and Medicaid. The sheer size of the defense budget — $680 billion in the current fiscal year — suggests that it should be part of any serious effort to address America’s long-term fiscal challenges.”

The defense budget for China, the country with the next largest budget, is a little over 20% of ours. Our nation cannot do everything that it desires. We must ration our resources. Below is a chart showing how our government spends its dollars. We need to decide how to rearrange our priorities.

Our future depends as much on education as it does defense. We need to improve the knowledge level of our citizens or we continue to decline in power and influence. For the defense of our countries position in the world, we need to reduce our budget for defense and transfer much of that reduction to education, research, development and infrastructure. We no longer can be the military of the West.

With limited resources we must collectively decide how much are we willing to help our less fortunate citizens. Further, what demands should we place on those who are less fortunate to help themselves dig out of poverty? Everyone agrees that each individual should provide for themselves whenever possible. The debate is going to center around “whenever possible”.

We cannot agree on a plan to solve these problems by December 31, 2012. Therefore, we should extend the payroll tax extension, eliminate the Bush tax cuts for the top 2%, implement expense cuts that can be agreed on and set a new date to address the bigger problems by March 31, 2013.

Time To Be An American! Fix The Deficit!

This is not a time to be a Democrat or Republican. It is time to be an American.
We are addressing our deficit problem in a piecemeal fashion, rather than addressing it in total and finding the best solution possible. The focus for the Democrats is to raise taxes on the wealthy. The Republicans seek to reduce entitlements and other expenditures that would hurt the less wealthy the most.
When a family has a budget problem it takes a comprehensive look at its budget and prioritizes what needs to be done. It starts looking at spending and decides what are necessities, luxuries and what is waste. The first cuts is waste and then whether to pursue more income to keep some of the luxuries and all the necessities..
From the outside looking in, I don’t see our government doing this. Until we do, we will not have the right plan and the argument will continue.
There is a divide in America between those who want a smaller government and those who want a more active, and thus larger, government. The issue is what is governments role. This will dictate the size of government and spending.
The Preamble of the Constitution says:”We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.” Read More:

GO BIG: Do It Right So Do It Later.

The Super Committee is not super enough to “Go Big” now and as my Dad use to say “If you can’t do it right, don’t do it at all.” There has been much skepticism whether the committee could find $1.5 trillion in cuts by their due date Why is everyone now pushing to have the Committee even go bigger?
We need to reduce our debt substantially greater than $1.5 trillion; however, we need to do it with forethought. Our leaders need to show some leadership instead of getting up every morning and sticking their finger out the window to see what way the wind is blowing. The decisions that are made by the Super Committee will affect the country for decades to come. IT MUST BE DONE RIGHT! A few extra months to do it right makes sense..Here is an outline of what must be done: