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Re: Social Contract

Mike McCarty wrote:
> Mumia W wrote:
>> It's not Social Security that's failing. It's your Republican President
>> and Congress that have failed. The entire problem with Social Security's
>> funding is that the President cut taxes five times.
This is another one of those myths perpetrated in our wonderful public
educational system (the bit about taxes, that is).  Please understand,
lower taxes *improves* the economy.  Repeat that for a while until it
makes sense.

Now, if taxes are lowered across the board by 5% and you make
$50,000/year (gross), you now have an extra $2500/year or about
$200/month of disposable income.  What do you do with that money?  You
spend it, of course!  What does that mean?  That means that goods and
services are in greater demand and that their supply needs to increase.
 Well, what does *that* mean?  That means that more companies start
operating, existing companies expand and, either way, new jobs are
created.  So, you see, the government *increases* the tax base most
effectively by *cutting* taxes.

Now, here is the rub for a lot of people.  This works best when you cut
taxes for the wealthy, since they buy the bigger ticket items.  The
bigger ticket items usually require more manufacturing
capacity/infrastructure/whatever and they usually result in more jobs
created as their demand increases.  For example, a small shoe company
may be able to get away with hiring two new workers for the plant to
increase their output by 10%.  A small yacht-building company may need
to hire 25 more workers to increas its output by 10%.  Obviously there
are exceptions to the rule, but that is generally how it works.

So, want to improve the economy?  Want to lower unemployment?  Then
lower taxes, or push for the FairTax, which lets people live tax free up
to the poverty line and only charges tax after that.  Thus, regardless
of your income, you *directly* control the amount of tax you pay.

> Eh? People have been predicting the demise of SS for quite a few
> decades, and every administration, bar none, has refused to take
> effective action. Has nothing to do with Republicans, Democrats,
> or whatever political leaning.
Personally, I think that the reports of social security's demise have
been greatly exaggerated :-)

The system has its warts and will be painful as the working population
shrinks and the retired population grows, but I don't think it will
collapse catastrophically.  I think it will sort of peter out after a
while.  Though, I guess that is still a demise.


Roberto C. Sanchez

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