A New Economic Agenda I Can 99% Agree With.

I was reading the latest issue of Kiplinger’s and came across an article by Knight Kiplinger, Editor in Chief of the magazine, that laid out what his thoughts were on a new economic agenda. I so rarely agree with these guys on issues like this because most of them lean right and I tend to lean left. But his points on what he thought we as a country needed to do really hit home with me, and I wanted to see what you guys thought of them. So without further ado, here is a a very shortened version of his ideas for a new economic agenda, along with my thoughts on each.

1. Increase the savings rate to encourage more saving. We Americans are very good at spending money and very bad at saving it.

2. A reduction in spending. Yes, I do think the government spends way too much on useless projects while leaving the important ones unfunded. The article basically says the same – reduce spending on military hardware, subsidies to businesses, and reduce money spent on healthcare costs. Not by cutting anything, but by managing it better.

3. Reform the tax code by taxing consumption rather than income. I am on the fence about this one, but I do think if done right it could really straighten things out.

4. Restrain some entitlement programs. But not necessarily by cutting them from the budget, but instead by reworking them to have the maximum benefit with the lowest costs. For example, with Social Security, he says that we could raise the benefit age to 70, trim future hikes, and subject more upper-income earnings to the payroll tax.

5. Curb fossil fuels. This is the biggest one that I have a disagreement on. While I agree we should be working on a renewable energy future, the author wants to drill everywhere and anywhere for oil. I say we should spend those billions that they would use for exploring to invest in the new fuels rather than the old fuels. But yes, we do need to get away from fossil fuels as one day they will run out – and I hope we will be ready.

6. Limit foreign intervention by our government. I agree 100% – there are way too many “bad” regimes for us to go chasing all of them down. And some of them are our allies, so what would we do about them? He says the primary responsibility should rest with the people of any said country, occasionally aided by our military. Stopping aggression and terrorism is one thing, but just going into countries to overthrow dictators we don’t like is awfully expensive when we don’t even have enough money here to take care of ourselves.

7. Improve education. This to me is a no-brainer, as our kids are falling further and further behind most other industrialized nations. If we want to compete, we have to educate our kids. Teachers should be paid more, tuition assistance should be offered to more high school grads, and the cost of education should be moved to state and federal governments rather than on homeowners through property taxes. You have to spend money on education, and it should be done in every school district equally.

8. Provide universal health care. Not to get into that debate again, but every person in this country should have access to good, affordable health care through their employer, an individual policy or a government program. Right now over 46 million Americans don’t have coverage, and that is just embarrassing.

9. Reform immigration. Not by rounding everyone up and kicking them out, but by figuring out a way to integrate them into the legal workforce. Let’s face it – if we rounded up and kicked out every illegal immigrant, you would not have anything to eat nor anything to wear. These are the people working in the fields picking crops and in the factories sewing shirts. Let’s make them legal so they pay taxes into the system!

So, what do you guys think? Agree? Disagree? Coming from a personal finance magazine I didn’t really expect to agree with so many points, but I was pleasantly surprised. Let me know your thoughts on this!

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Comments (22)

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  1. FFB says:

    I agree that the savings rate should be higher and there should be more encouragement to save but if bank rates went up then there would be a rush of foreclosures from people with ARM’s. Maybe we need to stabilize the mortgages somehow by converting them to standard 30 yr loans first.

    This country grew based on consumerist growth – bigger, more, better. Maybe we have to think about what cost there is to always push the next big thing. We need a fundamental change in thought which may be tough. We need to find a way to make profitable scientific advances and health car reform otherwise companies won’t be interested.

    We’ve got a lot that needs fixing but I think it can be done if we can figure out a way to get everyone on the same page.

  2. Emily says:

    I agree with most of it. The most frustrating thing about watching all this play out is that America is a nation built on credit. For too long people have been spending money they don’t have. It’s going to be very very hard to change the mindset we’ve all had for too long and turn into a nation of savers. I get p*$$ed every time the interest rate drops b/c all it shows is where the importance is placed: On keeping credit rolling and savings from increasing.

  3. working poor says:

    Raising the benefit age to 70 would be HIGHLY REGRESSIVE and is a shameful proposal.

    One-third of Americans (disproportionately low income) don’t live long enough to collect Social Security benefits. It is just wrong to redistribute more of the Social Security tax dollars of low income workers to the middle class through a higher benefit age.

  4. Miranda says:

    This is a plan I can largely agree with as well. One of my biggest beefs with government spending has been the priorities: We subsidize profitable businesses (socialized capitalism), we subsidize the militaries of other countries, we throw money by the fistfuls for obscure pork barrel projects. If we stopped all this nonsense, we would have money to provide some sort of universal healthcare and increase what we spend on education (and maybe introduce *gasp* national standards). I also agree that there is a lot of waste and inefficiency. We have a plethora of redundant federal agencies and a complex tax code that is hard to enforce.

  5. david says:

    working poor = “Raising the benefit age to 70 would be HIGHLY REGRESSIVE and is a shameful proposal” If we dont do anything, there wont be any benefits for any age, so what do you suggest? I am 110% against putting it in the stock market (imagine if your SS money was in the market right now and you were about to start receiving it) but something needs to be done. What would you suggest as an alternative?

    Miranda – *gasp* – imagine that, actually educating our kids instead of teaching them on how to take a test. What a CRAZY idea!

  6. working poor says:

    Simple solution: Privatize Social Security and let each worker keep the money earned by their contributions.

    It’s not currently the most popular idea out there but it’s the only one that doesn’t screw low earners.

    Stocks aren’t desirable short-term investments but the stock market broadly has been very profitable over long periods of time. I have heard that the broad stock market has not declined over any 10-year period, so it is unlikely anyone would go broke putting their retirement funds in index funds.

  7. David says:

    Right…and what if you were going to start pulling that money out now, but it had lost 50% of its value in the last couple of weeks? Then it would have to go up by 100% to get back to where it was. Would that help at all?

  8. Merna says:

    On the immigration issue, I can agree to making their status legal once they go through a rigerous process and get in line behind those who are trying to get here legally but aren’t here yet.

    But my main point is this: those people who immigrated to this country illegally should never be eligible for citizenship. They can keep their green card as long as they stay out of trouble with the law, but they should not be granted citizenship. This would take all of the politics out of the movement, since all the politicians can see from this is future voters.

  9. David says:

    Merna, there are 18 million+ undocumented workers in the US, and there is no way we can round them all up like cattle. They are here and working, and without them you would not have fruit or vegetables from California. Believe me, I used to live there – there wouldn’t be any workers in the fields if you were able to round them all up. They are here, they are not going anywhere, and they are required to keep this economy going. Why do you think nothing has been done about it? Cause the politicians know that illegal immigrants do a very large portion of the work that other people will not do. I think we make them all citizens slowly, as we find them, and have them start paying into the coffers. It really is the only way to both certify them as citizens while keeping that segment of our economy working.

  10. Merna says:

    Why does everyone jump from “illegal” to citizen in one step?

    I have plenty of friends who are here legally and have had only a “green card” for over 20 years. There’s no need to rush into citizenship other than the fact that they can vote. Otherwise, people with green cards pay taxes just like you and I do.

    It’s the citizenship step the politicians want so they can register them to vote. I say no. If they came here illegally, they shouldn’t get the citizenship. But they could get the green card and start being legal residents.

  11. david says:

    Fine, we can give them green cards. But as I said, you cannot take 18 million + workers out of the workforce and send them back to their country; we would all go hungry. I have no problem with green cards instead, besides I consider citizens the same as those with green cards – both are “permanent” residents for all intents and purposes in this discussion.

  12. Merna says:

    Why do you keep thinking I want you to deport them? I don’t. I know that’s not realistic. But I also am very adamant that they shouldn’t automatically be in line for citizenship. Nuff said.

  13. Hey David, great post. I agree we need to address each of these issues. If only we could get everyone to sit down and calmly work out what needs to be done without regard to who gets the credit for the successes and who gets the blamed for the failures.

  14. David says:

    Ron, when that happens I will probably drop dead. Maybe you and I should go to Washington and present our two sides and work this damn thing out!

  15. I mostly agree with this plan. I think the key is to increase savings and decrease spending. taxing consumption, not income, and increasing interest rates are a great way to do this.

    I disagree with hiking up retirement age, but I propose that we review government contracts and stop paying for things at 300% increases just because it’s the gov’t paying and the govt’s friends getting paid.

    I also agree with the legalization of undocumented peoples. Maybe if these people were legalized, California wouldn’t be going bankrupt. Also, many undocumented people have tax IDs and do in fact pay taxes, thus they should reap the benefits too, just as we tax paying citizens do.

  16. working poor says:

    As a working poor person, I see an issue with illegal immigration nobody else ghas raised.

    Question: To what extent have rents been inflated due to illegal immigration? How many extra millions or billions of dollars are legal low earners paying iinflated rents?

    Doesn’t government owe us something for the excess costs (e.g. depressed wages, inflated rents) imposed on legal low earners?

  17. cwaltz says:

    Speak for yourself on the not have anything to eat or anything to wear David. While I do not consider it economically feasible to kick everyone out I do not think we need to attempt to integrate people who broke the rules to get here. Amnsety didn’t work out real well last time, we now have 12 million more people who snuck in to be integrated. I have an idea how about Mexico taking care of its own citizens.

  18. […] My Two Dollars:  A New Economic Agenda I Can 99% Agree With […]

  19. Donna says:

    I’ve got one – ban the use of FICO scores for anything but obtaining credit. This would remove the incentive for many people to take out credit in the first place. Not all people get into trouble with credit because they wanted to “build” their FICO scores to get lower insurance rates or because a prospective employer would not hire them, but plenty have.

  20. david says:

    It’s weird because people always talk about FICO being used for that stuff, but living in CA and now NM, no one ever checked it for insurance, etc. Does that only happen in certain states? I agree that it should not be used for that stuff!

  21. Donna says:

    I think it varies from state to state, employer to employer. IMO, it should be banned across the board. No one should be punished for choosing to opt out of the credit game altogether.

  22. david says: