Political silliness is at an all-time low. Politicians are arguing over whether to raise payroll tax to 6.2% or keep it at the lower 4.2% rate for two more months. Or to maintain it at the 4.2% rate for 12 months. The Social Security system is in a state of disarray at the moment, but this discussion proceeds without mentioning it. Due to an aging population, the Social Security “trust fund”, is rapidly falling apart. The total amount of money that the Social Security system receives and pays in is less than it was in the past. It is scandalous to even consider extending the payroll tax cut without restructuring the entire security system.
Worse, there’s no evidence to suggest that the payroll tax cuts have had any effect on the economy or on the average American’s wallet. This is consistent with past political maneuverings like the homebuyer credit and cash for clunkers, as well as bank bailouts. The proponents of these programs often use the impossible-to-disprove argument that things would have otherwise been worse. We can only conclude that they created a debt crisis that is a mess.
A typical American family received just below $1000 from the 2011 payroll tax cut. This and much more went into the gas tanks that now account for 8.4% in income for the median family. It seems to me that a better and more lasting way to address weak personal finances is to lower the cost of energy bills every household must pay. It would be great if there were a way. The Keystone XL pipeline, which runs from Canada to the U.S. Gulf Coast, would reduce our dependence upon oil imports from faraway, unfriendly places and bring us closer to home. This would lower our energy costs. The current administration has put off the construction of the Keystone XL pipeline until after the 2012 election. Although it seems that this is for the protection of the environment, most people know that the decision was made by political forces.
The government bureaucrats are able to blame others and claim to have all the answers as the economy worsens. The general public succumbs to the fancy-speaking presidents or Congress-people who tell us it would be better if they could manage things, no matter how many times they fail.
Over the past 40 years, the United States has changed from being the largest creditor in the world to becoming the largest borrower. The U.S. Treasury will need to refinance $5.67 TILLION (60%) of total debt over the next four-years. We don’t have any other way to pay this except printing more dollars, which isn’t good for anyone. Yet, our leaders continue to sacrifice long term recovery in favor of short-term political gains, while the zombie citizens simply ride along.
Adam Mcbrian, a San Diego mortgage note investor, is located in California. He is a broker and mortgage note investor who can purchase mortgage notes in almost all 50 states.