Friday, July 8, 2011

A Contrarian View on High Unemployment

What great timing! The dismal Unemployment numbers dovetail right into this time period when the Obama Administration and Congress are in the middle of negotiations on the debt ceiling. This is absolutely perfect timing to "force" these people to make some significant changes.

Yesterday, I was a little disturbed by some rumors floating around that there will be no legislation done, because there simply is not enough time. The rumor was that they will all agree to something in writing. This is a manipulative tactic in my opinion to get one side or the other to back down. What concerns me about this is that the piece of paper that it would be written on would be technically worthless. The other side could simply exclaim that the terms of the agreement were violated and they are not beholden to it any more. Let us hope this kind of shenanigan does not happen.

I would like to think both sides have their "feets to the fire" now with these dismal Unemployment numbers. Hopefully, we can get some tax simplification legislation passed. In addition, instead of the cuts in Social Security, Medicare and Medicaid, or "throw granny off the cliff" as the Democrats try to claim the Republicans want to do, I would think that they could do things like raise the retirement age and perhaps raise the earning limits for paying into Social Security. The earning limit right now is $106,800. They could easily raise this a little bit and help shore up Social Security. Further, raising the Social Security retirement age a year or two is not going bother anyone. These steps do not entail throwing granny off a cliff, either.

In addition, they may be able to lower corporate tax rates, granted while eliminating loopholes. Further, there may be some risk to personal returns on eliminating some deductions, but this should also tie in with lower tax rates. Regardless of what the Democrats say, lowering tax rates is what will get us out of this economic malaise. We need tax simplification and clarity!

Stay tuned. It is about to get very interesting.