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Saturday, December 31, 2005

Mr. President, My Wish for 2006; Make America Decide !

As Americans we say good-bye to 2005 and look to the future in 2006, we know the President will continue to lead boldly on all fronts of the War on Terror but my wish for 2006 is to focus on the Country’s Domestic Agenda.

Where America Debates but America also makes a Decision.
On Tax Reform ( Fair Tax, Flat Tax, or Tax Panel Report); On Border Security ( Guest Worker, Federal Crime status, Border Fence, Employer Enforcement ); On Social Security and Medicare Entitlement( Raise the payroll tax, Means Test, Tier 2 Solution and the Fair Tax)

The President will be preparing his 2006 State of the Union Address in which the following items should be debated and decided in 2006 to insure a better and brighter future for all Americans – Republican and Democrats. (Of Course it would be a lot easier to actually accomplish something if “Chicken-Little” Democrats weren’t spending all their energy saying, “the sky is falling” on every issue.)

Dear President George Bush, January 1st 2006

Topic: 2006 Domestic Agenda and the State of the Union Address
Possible title or theme for Speech: Let’s Debate but America must decide!

Set the Stage, Frame the Debate, Propose Solutions with choices for the American People and Congress to pick from not just One plan for “Chicken Little” Democrats to pick apart. Congress must produce legislation and Democrats must stop obstructing

Mr. President, the American people want clear choices not fuzzy general plans. Yes, you have laid the groundwork for Social Security Reform and Tax Reform, but you have not laid down clear choices. In the Social Security debate, you waited and waited on defining the plan and others defined it for you. Later, you lobbied around the country for 2 months on private accounts but you waited to long to do it. You were always playing catch up and never seemed to be in the lead.

Similarly, on Tax Reform, you proposed it in your 2005 State of the Union, and put a decision off to a Presidential Panel that delayed and delayed its scheduled report. When they did submit it, the country gave them a Grade of D to F. The report did not meet the criteria you set out at all. In 2005 State of the Union, You asked for a change or replacement of our archaic income tax code that would promote economic growth with a tax reform plan that is “ Fair To All “. The Panel’s report did not even come close.

The Challenge for 2006 is to be bold and specific but also give choices. A “Good, Better, Best” approach to each issue. Let the American people decide.
The “Good” Choice” may be a poorer choice but frame the debate as the Country has three choices and it is time to decide not put these off to future generations.
No more fiddling with our future: It is time to make the hard choices.

The President should use the bully pulpit to push for the “Best” Choice but present all 3 variations; clearly state that the status quo is not acceptable and that he will veto any Legislation that only tinkers around the edges of the problem as Congress traditionally does. These programs must change and Congress must act.

The President states his preference but demands the three choices be debated and voted on by Congress (Framing the debate). He also can and should state some ground rules to work within. This will not turn in to class warfare and the President will not support legislation on any of these issues that is based on a myth that taxes have to be raised on one family more than another in percentage terms. These are problems that all American families must share in and all must contribute to their solution fairly. Honest numbers must be used in the debate of these issues.

If Democrats can’t propose and can only oppose than force them to choose between the three choices on each issue. A vast majority of American support will fall within one of the three choices made by the President. Americans will see that Democrats will oppose all of them. The President wins because he has proposed defined choices that a majority of Americans support. Democrats lose because they play the “status quo” line, “class warfare” line, or the “Chicken Little” the Sky is falling” line.

Every proposal should have 3 choices for the American Families to consider and the President should lead by stating strongly that Congress must Act now. Americans understand and support the idea of “pay me now (little pain) or pay me (a lot more) later”. The later is a vast and overwhelming burden on our children and Grandchildren.

My Three Domestic Wishes for 2006 are Issues that will overwhelm and burden our Children and Grandchildren unless we act.

1. Tax Reform with Strong Economic Growth, Simplicity, and American Job Growth .

2. Border Security and Illegal Immigration Reform.

3. Social Security and Medicare Entitlement Reform.

Tax Reform has 3 possible choices that the President should outline and explain. Let the American people decide, not lobbyists and special interests but American voters and families. The Status Quo of an archaic income and payroll tax system is not consistent with the global economy in the 21st Century. Congress must act in order to insure a bright economic future for our Children and Grandchildren. Otherwise the current tax system will continue to support outsourcing, job loss, American manufacturing loss and economic inefficiency as billions is wasted on compliance with our archaic tax code.

Choice #1 - Accept and adopt the Presidential Tax Panel report, which includes changes in rates and elimination or restrictions of Home Mortgage Deductions and Local State Tax deductions. This is closer to a tinkering than a substantial change but the Panel must be given a spot at the tax reform table in 2006. The President should point out that many have given the panel a poor grade but that he thanks them for their contribution and leaves it to the American people to consider.

Choice #2 - Flat Rate Income Tax: The most well known is that outlined by Steve Forbes or Dick Armey. It is a plan that simplifies the income tax code and provides a substantial exemption up to $40,000 in income. Unfortunately, it leaves in place the most regressive tax on the working poor; the 7.65% payroll tax that comes from each working families paycheck and the additional 7.65% payroll tax paid by each of their employers which suppresses wage growth. A family of 4 making $25,000 pays no income tax(after refund and EIC) but does pay the payroll tax. With the 17% flat income tax plus the 7.65%, American middle class families have a total inclusive income tax burden of 23.65% under the Flat Tax. There would be no Mortgage interest deduction or local property tax deductions to offset the Flat Income tax only the $40,000 exemption and fill out a post card.

This is a revenue neutral proposal and has merit but does it go far enough to create jobs, improve exports, and grow our economy so that we can afford the programs of the future that we want our children and Grandchildren to inherit from this generation? American Families must choose and Congress must Act.

Choice #3 - The Fair Tax Legislative Package – HR 25/S25.
This plan has the most Congressional Co-sponsors to date. It is the most complete Legislative tax reform package currently on the Hill. Sponsored by Congressman John Linder in the House and Senator Saxby Chambliss in the Senate. It deserves serious study by the American people. The Fair Tax has been well researched over the last 10 years and is supported by many tax payer groups and other organizations. Congress and the President received an open letter by 75 Economists and Economic Professors last spring in support of the Fair Tax. See Article at:

The Fair Tax answers the President’s call for simplicity, promotion of ownership by having more take home pay, fairness, Growth in good paying American jobs, Economic growth on American Soil. In addition, the Fair Tax provides a broader tax base that supports future concerns in Social Security and Medicare. The Fair Tax eliminates the payroll tax and truly untaxes the working poor. The Tax inclusive rate of 23% is less than the total of the Steve Forbes Flat Tax combined with the payroll tax. The Fair Tax sends a rebate to every family of 4, $479 / month to pay the National Sales Tax on all purchases up to the poverty line. American families take home 100% of their paychecks.

See Articles:
Give Every American Family a Raise

Fair Tax Solution for American Manufacturing and American Jobs

Top Ten Economic Benefits of the Fair Tax

In Tax Reform there is a lot to consider but these are the 3 choices the President should talk about with emphasis on the best choice – The Fair Tax. The Status quo of an archaic Income tax and payroll tax with Billions wasted in Economic dollars just to comply with the Tax code must end. The American people must decide and the Congress must Act.

Border Security and Illegal Immigration. The President cannot be lukewarm on this anymore. No matter what big agribusiness and other contributors want. He must be bold and he must give choices and ask the Congress to act.

Choice #1 – 1000 more Border patrol agents and a Guest worker Program.
The President has this on the table and the response from many is “ It is not enough”
Again, put it out there and let the American people not the lobbyists for business or the Mexican government paid lobbyists influence Congress anymore. Is this Good Enough?

Choice #2 - Recent House Bill passes will President and Senate Support?
Recent Bill that cleared the house does several things;
Adding 698 miles of fence to our Border with Mexico;
Make illegal immigration a federal crime and those that support illegal immigration would be accessories to that federal crime. This includes employers.

Choice #3 – Stiffen Penalties at all levels.
Create strong deterrents to this crime by not only making illegal entry a federal crime but with a strong minimum sentence of 5 years. Don’t fine employers but put them in jail. One South Carolinian State Senator proposes this and added the fact that large farmers are treating these illegal aliens like it was the old plantation days. The South argued that if they lost their cheap labor their economy would collapse. It is time farmers and other employers gave up their support of illegal immigration and the unfair wage many pay. The prison term will be the deterrent but put the illegals on work farms to pick the vegetables but charge the farmers an appropriate wage to pay for the cost of housing, feeding and deporting them.

Social Security and Medicare Entitlement Reform;

The President needs to take a new approach and take his original version of private accounts off the table so as to address long term funding of Social Security and Medicare together. Solvency Choices for both.

First, reset the stage, this is a problem that cannot be put off to the next generation. Both Social Security and Medicare Entitlement spending will swallow the national budget whole, if we do not act sooner than later. The American people and Congress must study this issue and Act on it to safeguard these programs for future generations.

But first there is one additional point we must all start with and it is time that we be honest with the American people about. Social Security is really a pay as you go system by the taxpayers of America. There is not a separate account where your payroll taxes were put and interest was earned. It is not a savings account. Those working today today pay retiree benefits. Social Security and Medicare need to be reformed to be solvent for future generations. If we only tinker, than these programs will swallow up our children and our grandchildren. The American people and Congress need to act and not pass this off again. It is time to make a Choice!

Choice #1 - Means Test Social Security and Medicare Benefits.

The original goal of Social Security was to keep Seniors out of poverty. The Goal was not to give those with already generous pensions additional monthly income to play golf.

Payroll taxes are taxes not a savings plan. The revenue is spent each year like any other tax. Lets send these benefits to those who truly need it. Those that can afford their own Health Insurance and have investments or pensions that give them an upper middle class retirement do not need full Social Security or Medicare benefits.

This is one choice but a choice should be made. Democrats often say, “Taxi the rich more”. This is a class warfare argument that backfires because the rich are taking their money legally offshore and they proportionally pay more than their fair share now.

Choice #2 - Raise Payroll taxes now and place it in an Investment Lock box.

To Keep Social Security and Medicare Solvent( without reducing benefits) you must start raising payroll taxes gradually to meet the needs of the Baby Boomers. We have 3 workers for every retiree now and will soon go to 2 workers. Raise the payroll tax over the next 5 years from 7.65% to 10% on all wage income and invest it in a portfolio of Blue chip stocks and Bonds.

This takes the surplus money from these programs away from Congress to use or to hide the true nature of their deficit spending. Put all Social Security and Medicare excess revenue into an investment Lock box of high quality conservative investments and don’t let Congress touch it. This could grow to support future deficits in these programs.

Choice #3 - Tier 2 Solution for Social Security and Medicare.
Provide a broader tax base for these programs that will grow to meet the needs with a faster growing economy. Combine Tax reform Choice #3 – The Fair Tax Legislation with the Tier 2 Solution for Social Security.

A National Sales Tax under the Fair Tax plan provides for a broader consumption tax base to support Social Security and Medicare. The wealthy do not support these programs with their investment income, stock dividends, capital Gains or inheritances. Under the Fair Tax a fixed portion of the sale tax goes to each of these programs.
Instead of these programs being supported by 2 workers per retiree, America will have the Personal consumption of all Americans supporting these important programs for Seniors.

The Tier 2 Solution for Social Security follows the retirement reform of States like New York who long ago new their overly generous programs were unsustainable. New York developed Tiered Retirement systems. Options for Tier one were greater than for Tier Two who were hired at a later date. Tier 2 solution is similar.

Read Article: New deal for a New Century – Fair Tax plus the Tier 2 Solution.

Tier 2 Solution Summary:

1. Start the Tier 2 system with those people currently 30 years old or younger. Americans
born in 1975 or later would be the Tier 2 Generation.

2. Grandfather all other retirees under the old system if born before 1975.

3. Redesign the system to match the realities of the new century and the global economy.

4. Using the Fair Tax as a catalyst set up a new 3 legged stool to retirement security. Three
separate accounts;

5. Account #1- Social Security Safety Net - Provide a standard fixed amount safety net for all
Tier 2 Seniors set at the poverty level for an individual. HHS poverty line in 2004 for an individual is $9310/ yr or $776/m. Maid or Millionaire every one born after 1975 receives the same $776/m.

6. Account #2 Social Security and Savings Plan - For Tier 2 Generation establish a Thrift
Savings Plan/Pension style account with matching funds from Uncle Sam. For every dollar theTier 2 Generation saves in this account the Federal government will provide a 50% match up to $1,000 per year. Save $2000 in your Pension savings and Social Security matches with a
maximum of $1,000. Similar to 401(k) programs, portable and worker owns it.

7. Account #3 – Universal Savings Account – Under the Fair Tax plan, American families take home 100% of their paychecks. An average American family will take home an extra $5,000 to $7500 more in spendable income above paying for the Fair Tax. This money can be saved and provide the vehicle for true “Ownership”. The Fair Tax provides the increased take home pay for a family to save for retirement and participate in Account #2 as well as extra take home pay for Health Care, Child Care, College Tuition, Down Payment on a Home and other Family needs. They own the account with no tax gimmicks and they decide what is best for them.

8. Economic Growth estimated 6 to 10 % with the Fair Tax. This helps the Social Security and Medicare to have increased revenue to support the needs of all future retirees.

The President must Lead boldly but not give America one choice but 3 on these issues. Let them decide which is the best but lead them to action on these issues; not tinkering and putting it off to future generations.

Lead us to Action Mr. President.
Choices must be made for a brighter America

Merrill Bender


Anonymous Blue Cross of California said...

The universal savings account sounds like a great idea as it can help many with health care.

Thursday, January 05, 2006 2:39:00 PM

Blogger PHL Taxi said...

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Thursday, March 07, 2013 4:01:00 AM


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