FEDERAL PROGRAMS and HORSE MANURE

An 1894 newspaper piece from the Times of London predicted that, in 50 years, “every street in London will be buried under nine feet of horse manure.” New York, home to another 100,000 horses, was knee deep in trouble too.

Personal transport, commerce and carriage rides all depended on horsepower, which had “emissions” of 15 to 30 pounds of manure per animal daily. It was a stinky situation; three million pounds of horse manure and 40,000 gallons of urine filled the streets with no end in sight.

Then came buses, the subway and automobiles (like the Ford Model T).

The Great Horse Manure Crisis is, even to this day, used as an example for how new technologies can solve problems that appear unsolvable.

Doomsday prophets are as old as the world itself, and can be easily traced into the BCE era. Today’s headlines often focus on the federal government and retirement programs.

Here’s a few things a possibilist may consider regarding Social Security and the US National Debt:

10 Levers the government could pull to improve Social Security’s projected shortfall:

·         Increase Social Security taxable wage base (currently capped at $184,500)

·         Increase SS tax % on employer or employee (6.2% ea, 12.4% total)

·         Make social security income fully taxable (0-85% is taxable)

·         Increase Full Retirement Age (67)

·         Increase the minimum retirement age (62)

·         Stop paying COLA increases (2.5% in 2025)

·         Change the computation of benefits for dependents (inc. ex-spouses) who can claim a primary payer’s benefit

·         Increase the benefit computation years (currently 35)

·         Increase benefit eligibility (40 credits)

·         Fund the program with an unrelated surtax (tariff revenue, AI token tax?)

I expect to see a higher wage base + graduated social security tax rate (tax more on what you earn) as the first move... government always loves more tax dollars. But Social Security has been in trouble before (1983, anyone?), and we still have an opportunity to fix the math today.

The National Debt is a big deal.

But there are a lot of counterpoints to the alarmist headlines that have probably staved off an apocalypse (thus far):

·         Focus on US debt ($39 Trillion) completely ignores US assets in play (think “public” land/student loans/gold reserves/patents/military, etc.), which total $200 Trillion plus

·         The US government issues debt in our own currency (so we can theoretically keep printing more)

·         There’s a clear global appetite for US bonds and their “low issuer risk” relative to other countries and their economies

·         The US government has taxing authority on the most productive economy in the world (which is a valuable asset)

·         Annual spending to tax revenue isn’t 1:1, but there’s clearly plenty of room to cut spending and/or increase taxes

·         Annual deficit has been a topic of doomers going back to the 1970’s (remember when the US abandoned the Gold Standard)

·         The current path of inflating our way out is a working theory (paying off old debt with more, yet less valuable) dollars

Not sure how or when our path will change, but the current situation may not be as dire as some predict. As Herbert Stein wrote “If something cannot go on forever, it will stop.” We just need to figure out how.

Written by Joe Sweeney