Saturday, March 15, 2014

FDR's Economic Bill of Rights- "Necessitous Men" Part III

Necessitous men are not free men.”- FDR 

In part III of my focus on FDR’s Economic Bill of Rights, I will cover two issues in particular: hunger and housing. Congress recently cut $8.6 billion from the Supplemental Nutrition Assistance Program, or SNAP, to 47 million Americans. In 2008, the budget for SNAP was at $35 billion. As of 2013, that funding stood at $80 billion.

The spike in funding was largely due to the great recession; a recession the nation is still recovering from despite claims to the contrary. Poor areas of the nation don’t have the food variety that those in the middle and upper class enjoy. Therefore, more times than not those receiving SNAP benefits will purchase cheap, processed food instead of healthier, more costly alternatives. [End Sample] 

Wednesday, January 15, 2014

FDR's Economic Bill of Rights- "Full Employment" Part II

President Reagan working at Camp David; which was a WPA project.
"The WPA was one of the most productive elements of FDR's alphabet soup of agencies because it put people to work building roads, bridges, and other projects… It gave men and women a chance to make some money along with the satisfaction of knowing they earned it.
Ronald Reagan

In my last article, I explored the idea of Youth Social Security. Many said it was a good idea in theory but would be difficult to pay for. Sure, it would be difficult for us, the average American, to pay for. It’s well known that nearly 70% of income taxes are paid by the wealthiest Americans (keep in mind their rates have also steadily dropped over several decades); while almost half of those currently working don’t pay any income tax. However, has one ever considered that half of the country is too poor to pay? All the while, the shrinking middle class is wondering whether it will end up richer or poorer. 
                 That being said, Youth Social Security affords more people the opportunity to enter the middle class. But hey, if it doesn’t bother you that the wealthiest eighty five people in the world own more wealth than the bottom 50% (3.5 billion people) then by all means disregard everything I write. As of 2014, the top 1% controls $110 trillion out of $241 trillion of the world’s total wealth. This economic trend isn’t abating.     
Youth Social Security’s primary goal is to address student loan debt ($1 trillion and rising), the depressed purchasing power of millennials due to stagnant wages, and the 11.8% unemployment rate among 18-29 year olds. Simply put, these issues won’t disappear by maintaining the status quo.  
FDR’s 1944 State of the Union address laid out a bold goal- full employment. That may not be possible, but it should be every elected official’s singular obsession. In previous articles, I wrote about FDR’s Works Progress Administration. The WPA alone could never hope to fully employ every American- let alone every millennial. However, to encourage full employment, every 18 year old should be given these options: work, go to college or a trade school, join the military, or sign up for the WPA. Anyone who doesn’t do one of those things wouldn’t be eligible to receive the benefits of Youth Social Security. Any idle American between the ages of 18 and 21 not contributing to the general welfare of the nation is making it weaker as a whole. Such a plan echoes the timeless American motto, “united we stand, divided we fall.” 
One of the strongest supporters of the WPA was conservative icon Ronald Reagan. During the Great Depression, Reagan’s father- Jack Reagan, unemployed and seeking work, became an administrator for the WPA in Dixon, Illinois. President Reagan spoke fondly of the work his father and the WPA did in his childhood town.
Silver Lake Park in Bristol, Pennsylvania is a local example of work done by the WPA. The Pennsylvania Turnpike, famously dubbed, “America’s First Superhighway”, was one of the more prominent accomplishments of the WPA. At one point or another, I’m sure nearly every Pennsylvanian had to use the PA Turnpike. For decades, it has faithfully served the general welfare of the commonwealth and nation.
National service and hard work is crucial to the strength and stability of any nation. Time and again, I’ve stressed the importance of the common defense and general welfare. A more coordinated plan of action tied to national service is the necessary remedy to the nation’s economic woes; as opposed to Herbert Hoover’s well-intended “self-government” volunteerism or Ayn Rand’s idiotic Objectivism.      
Look at it this way- Youth Social Security tries to maximize probabilities. Regardless of the individual outcomes, the key to the nation’s success has always been that we never stop being bold, creative, and innovative. Additionally, what’s more important: how one starts out life or how it ends? I would say the former.     
At the end of the day, Youth Social Security is about investing in the future. It’s the sincere hope of this millennial that Americans of every age recognize that truth and act accordingly. In the final analysis, the nation can choose to lift up the youth of America or leave them behind.

FDR's Economic Bill of Rights- "Youth Social Security" Part I

“It is our duty now to begin to lay the plans and determine the strategy for the winning of a lasting peace and the establishment of an American standard of living higher than ever before known. We cannot be content, no matter how high that general standard of living may be, if some fraction of our people—whether it be one-third or one-fifth or one-tenth—is ill-fed, ill-clothed, ill-housed, and insecure.” FDR, January 11, 1944, State of the Union Address

Now more than ever, there is a fear of what the future will bring. Americans of all walks of life are struggling to make ends meet. It has become abundantly clear that “trickle-down” economics bore little fruit. The millennial generation, my generation, is looking for leadership and solutions to guide them through these difficult economic times.
Several economists and policymakers have suggested a minimum income in order to combat rising economic inequality and sluggish economic growth. The idea would be to provide each citizen over the age of 18 with a minimum income of $11,945 each year. Unfortunately, such an idea would cost well over $2 trillion a year to fund. Another, less expensive alternative could serve to reignite the American middle class.   
For example, say the United States instituted a minimum income of $2,500 every year from birth to 18 years of age. Much like Social Security, those children wouldn't see the money until their 18th birthday: which by that point would amount to $45,000(give or take about $200 billion overall for one year of funding). This "trust fund" could then be spent on paying college tuition (student loan debt averaged $29,400 in 2012), buying a car (average cost for a new car was $32,769 in 2013), putting a down payment on a home, or one could defer spending and save for a rainy day. Ultimately, the purchasing power of millennials would increase tenfold; thus bolstering America’s consumer driven economy.
Perhaps the program could start off with a progressive increase in funding. The first year of the program those turning 18 would receive only $2,500, the second year those turning 18 would receive $5,000, and the third year $7,500 and so on. With a gradual increase in funding, the American people could witness the benefits the program had year-to-year on economic growth.
 This “Youth Social Security” would benefit youth, adults, and seniors alike. Parents, instead of having to help their children pay for a new/used car or college tuition, could instead focus on saving for retirement. With parents being able to save more means the burden on traditional Social Security funds would in turn decrease; allowing the retirement age to be pushed back.
How would such a program be paid for? According to the nonpartisan Tax Policy Center, raising the estate tax by 10% could produce more than $250 billion in added revenue over the next ten years. Closing tax loopholes could be another source of funding. A study by the U.S. Government Accountability Office discovered that in 2011 alone, $181 billion in revenue was lost to tax loopholes that benefited major corporations. Simply put, benefits for Wall Street have only risen the last few decades, while Main Street struggles to pay the bills. Additionally, there is the hope that such a program would lower costs of safety net programs (i.e. food stamps, housing assistance).
With the creation of a Youth Social Security, a new era of prosperity and growth could be ushered in for the middle class. The idea is firmly rooted in both liberalism and libertarianism. Liberalism believes in the collective spirit of the nation, while libertarianism in the strength of the individual to make their own choices in life. For those that say millennials would waste the funds; I would counter that they couldn’t do any worse than the bureaucrats in Washington or the bankers of Wall Street. I have much greater faith in the average American to spend wisely then those currently holding the reins of power and influence. Youth Social Security would promote economic liberty and freedom in a way in which the most positive and liberating aspects of free market capitalism is maintained and strengthened. I hope to expand and refine this idea in future writings.       

Saturday, November 9, 2013

The cost of doing nothing

In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing. Theodore Roosevelt
            The October jobs report by the Labor Department shows unemployment rising to 7.3 percent. However, that doesn’t account for those who stopped looking for work or are underemployed. Not factored in unemployment numbers is the over 300,000 people who stopped looking for work in the last month alone. Add to that the Labor Department’s “alternative measures of labor underutilization,” which stands at 13.6 percent and you find a crippled workforce.  
            According to numbers from the Department of Labor, 8.7 million jobs were lost during the Great Recession, which lasted from February 2008 to February 2010. Since 2010, about 7.2 million jobs have been added. Unfortunately, many of the jobs created were seasonal or part time.

            Closing the shortfall in jobs will take years, if not decades, to reach pre-recession levels, and even then economic growth will be weak. This much is clear: Maintaining the status quo is essentially the same as doing nothing.

             In order to combat sluggish economic growth, there needs to be a coordinated jobs bill that focuses on certain sectors, such as construction and engineering. There are over 697,000 construction workers currently unemployed. The prevailing mindset is there’s not enough work to go around. That simply isn’t true. The real reason for unemployment is a void of vision and foresight by policymakers to properly utilize those construction workers. Few in Washington have the courage of conviction to consistently promote a national jobs bill geared towards infrastructure.

             A centralized, coordinated plan of action must be formulated when it comes to infrastructure and job creation. In my view, bringing back FDR’s Works Progress Administration would restore confidence in the American worker, rebuild aging infrastructure, and propel the economy into sustained growth and prosperity.

            The WPA of the New Deal improved infrastructure, assisted in disaster relief, and provided valuable logistical experience to military officers before entry into World War II.

            Under the Constitution, the government has a responsibility to provide for the common defense and general welfare of the nation. The common defense is fairly straightforward. Unfortunately, over the last few decades, common defense has meant the United States intervenes militarily overseas rather than protecting citizens.

            Just look at Iraq and Afghanistan. These countries remain hopelessly unstable and violent despite massive financial, material and physical investments by the United States.

            Conservative estimates for the total cost of the wars in Iraq and Afghanistan are around $1.4 trillion. However, that figure doesn’t include health care costs for veterans and interest on war debt. The American Society of Civil Engineers estimates it will require $3.6 trillion in funds by 2020 to keep up with the nation’s aging infrastructure. Resources used to wage war would’ve gone a long way towards meeting that goal.

            In short, the general welfare has been neglected and the common defense hijacked in order to benefit the few instead of the many. New policies must be advocated that restores a measure of balance and fairness.

            This much is clear, the cost of doing nothing will only add to slow economic growth and cause financial markets to continue to doubt the vitality and strength of the United States. Furthermore, job creation must take priority over balancing the budget. Spending cuts equal job loss and hiring freezes; not just in the public sector but in the private sector. The government shutdown made that truth abundantly clear. Only when the economy is healthy should there be a focus on balancing the budget.

            Investing in the American people is the surest bet moving forward. The national discussion shouldn’t be about how much the nation spends, but rather if that spending promotes the common defense and general welfare of the nation. In the final analysis, doing nothing is an admission of failed, incompetent leadership.

           Far too many policymakers are afraid to do the wrong thing and end up doing nothing instead. What ensues is government gridlock and delay, which in turn depresses economic conditions for the middle class and poor. That being said, when will the nation stand up and demand decisive action?