Would Economic Development Be a Better Use for Mexico Border Wall Funds?

            As I write this, 2pm on Saturday, December 29, 2018, parts of the US Government are still shutdown from since December 22 due to not passing a Continuing Resolution (CR) to fund all of the government, that includes funds for a border wall with Mexico. While the House of Representatives did pass a CR with some border wall funds, there has been no vote in the Senate, plus the President has said that he would not sign any bill that did not have the border wall funds of around $5 billion. At the moment, it does not even look or sound like there are any negotiations even going on to resolve the impasse between the administration and Congress.

            While this has all been going on, it occurred to me that maybe a better use of boarder wall funds would be a program of development for the areas of Mexico that are next to the border with the US so that people would be able to find work in Mexico and not want and/or need to somehow get into the United States to survive. A border wall with Mexico, if and when built, will not really do much to help anyone get a job or develop anything and even cost money to maintain for the decades to come. Economic development on the border areas has the possibility of making the areas in Mexico much better off than they are now, and the program could even turn some kind of a profit if done properly. In some quick research on the internet, it looks like the cost of a border wall is on the order of about $21 billion USD and expected to take 3.5 years, but some sources seem to think the total boarder wall would be around $75 billion USD in total.

            It seems that with all of the money spent on various government programs, that maybe spending $20 billion per year to improve the areas of Mexico that boarder the United States would be a good program to try. The hope is that at some point people arriving in Mexico or in Mexico would be able to make a decent living in those areas, plus maybe once the areas are improved there would be demand for good and services from the United States to those areas at some point. I also expect that spending money in Mexico to improve the areas in Mexico would get a lot more purchasing power and benefit from the money than building a boarder wall with much more expensive labor and material sourced from the US side.

            While this may all take a while to see how it works out, I expect the end results would be worth the effort and settle the arguments on the issue instead of having  the current budget and legislative grid lock with nothing getting done by anyone.

Good Luck and Take Care,

Louis J. Desy Jr.

LouisDesyjr@gmail.com

Saturday, December 29, 2018

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Social Security Can Be ‘Fully Funded’ Anytime Congress Decides To Do So!

Various media source keep running stories over the past several years about ‘How Social Security Is Going Broke’, which is entirely true if NOTHING is done to change anything about the system. The problem with such articles is that it is well within our means to make changes to the system at any point and to FIX the problem.

Social Security is basically a ‘pay as you go’ system. People work until retirement age, and then apply to retire and start collecting benefits. Retirees also get a Cost of Living Adjustment (COLA) every year based on the Consumer Price Index (CPI). The full retirement age use to be 65, with people being allowed to take early retirement at age 62.5 and a 25% reduction in the monthly payout, or delay retirement to age 70 and getting an 8% increase in the monthly payment for every year beyond their full retirement age. The full retirement age has been increased a little over the years, such that for many people they do not qualify for full retirement until age 67 now.

The system is called a ‘Pay as You Go’ because current payments for retirement benefits to retirees are paid with money collected from workers at the same time. There is no money saved up from the past to make the payments with. This system of ‘Pay as You Go’ works as long as there are enough people working to be able to make the payments.

When the system was originally started, most people only lived a few years in retirement, meaning that payouts were not for that long, plus there were a lot more workers per retiree years
ago. In past decades the number of workers per retiree was 5 or more; today it looks like the number of workers per retiree may drop to only 2 or 3. This drop in workers per retiree is a problem since the system is a ‘pay as you go’, that means each retiree is only supported by the taxes collected from 2 or 3 workers. As a result, over time, there will be a problem with collecting enough money to keep paying the promised Social Security Benefits BUT it is well within the power of Congress and any administration to fix the problem.

There are many ways the problem can be addressed and a number of web sites that post ‘social security fund’ calculators to show various options and how the changes would effect the situation. C-SPAN’s Washington Journal one morning several weeks ago had a guest on that mentioned the web site at http://www.crfb.org/socialsecurityreformer . Using that social security calculator, my simple options for fixing the problem was two parts: 1: Slow Benefit Growth for the top 70% of earners which would close 58% percent of the predicted gap between tax collection and retirement payments and 2: Subject all Wages to payroll tax which would close the gap by 72%.

These two simple items, that I selected from many, would close the gap by 129%, meaning that the fund would start to run surplus as time went on and build up finds for future generations. This change was a large change from the current course of systematically and slowly drained of all funds and causing a crisis with social security payments.

While there are all kinds of other options that could be looked at or done, this simple exercise shows that it is very well possible for Congress and the Administration to fix the shortfall in Social Security funding at ANY point that they choose to do so; the real problem is that all sides need to get together, compromise and agree to make the changes!

It would seem that the real problem is NOT the funding gap for the social security payments, the real problem is for all sides, Congress and the Administration, to get together, compromise, and pass legislation that would fix the problems for decades to come!

Good Luck and Take Care,

Louis J. Desy Jr.
LouisDesyjr@gmail.com
Monday, November 26, 2018

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