We celebrate Independence Day on July 4th but how independent are we really . . . financially speaking - Part 1?Another thought provoking article by Ernie McDaniel - as seen in Forum News. |
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Among citizens of our nation there is one growing sub-group becoming increasingly dependent on the productivity of another sub-group, even as the latter sub-group shrinks in relative size and is therefore increasingly burdened. I'm talking about the dependence of Social Security retirement and Medicare recipients upon the tax dollars of the younger and still working population.
In a democracy it is usually the larger group that gets what it wants but even if overly burdensome Social Security and Medicare tax laws were legislated into existence (or allowed to continue) they would ultimately fail. The smaller, younger population would escape the burden somehow. These over-taxed folks might either leave the country to participate elsewhere in the global economy or find ways to avoid the taxes within the U.S. borders but outside the system - become outlaws, if you will. Or, they might simply stop being so productive, their take-home pay offering too little incentive to make the effort.
Good news! We do not live in a democracy. We live in a republic and we therefore elect representatives to make decisions for us. In theory, that means their decisions may be for the greater good -- rather than solely for the 50% plus 1 that defines a majority. We can hope for such results but in practice such leadership has seldom been seen. On the contrary, legislators too often put off tough decisions until the metaphorical dam breaks and calamity strikes, and/or they scapegoat, and/or they somehow otherwise endeavor to trick the public.
With regard to the Social Security issue, the trick might be that they reduce Social Security income indirectly by taking away or reducing cost of living adjustments (COLAs) then steadily reducing the value of the dollar. In other words, they might use inflation to advantage. Alan Greenspan, within the last few months, has suggested removal of the COLA -- step one.
Medicare benefits might be reduced more directly than the Social Security retirement income benefits but with the medical establishment on the frontline as the scapegoat in order that the politicians not be forced to take the blame. (As an aside, did you know that some health experts report that over half of Medicare expenses could be prevented merely by healthy diet and exercise on the part of participants?)
In the final analysis, the problem of the cost of income and healthcare for our older population is not a failure of either the government or the medical establishment, it is a failure of the public (you and me) to realize a fundamental economic as well as physical law: While we can get something FOR nothing, we can't get something FROM nothing. Somebody has to produce the wealth that is consumed.
Now let's talk briefly about the second possible interpretation of the question presented: Is our NATION financially independent? No way, Jose. Neither are we necessarily dependent. We are, however, definitely interdependent with other nations -- and becoming more so all the time. Is this a good thing or a bad thing? Well, I think we as a nation can make it either but there will be some (yes, even more) uncomfortable reality we must accept and for which we must adjust. This is such a big and important and complicated matter that I plan to repeat the question and continue discussion of this second interpretation of it in the next Forum. Please read the July 15 issue.
To learn more about how to establish your own financial independence, request the appropriate free guidebook from two available. Ask for Pay Yourself First if you are striving to accumulate for retirement and have more than ten years to go. Ask for Striving to Grow AND Preserve Your Retirement Assets Using the Equity Index Annuity if you are in retirement or within ten years of retiring. To make your request, call 318-798-9022; or write 2001 E. 70-th, Suite 407, Shreveport, LA 71105; or email ernie@mcdanielfinancial.net.
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