Tuesday, February 21, 2012

United States of Purple Presidency - Some Final Words And Observations

We have spent the last  week or so presenting the solutions that the United States of Purple Presidency will bring to the nation's major problems. These problems have been plaguing the nation for decades and include the lost war on drugs, failing public schools, leaky borders and the resultant illegal immigration, a counterproductive tax code, and skyrocketing national debt.

During those decades, the political class, Republicans and Democrats, have proven that they are incapable and/or unwilling to put aside their drive for personal enrichment to address the root causes of our problems and launch courageous solutions to them. The United States of Purple solutions will work because we examine the root causes of the problems and do not care what lobbyists or campaign fund raisers are hurt by the implementing real solutions to our real problems. These solutions can be reviewed by reading the posts of this blog over the past week or so.

Today's post cleans up some loose ends and provides some additional details supporting our approach:

- This week, Federal law enforcement authorities arrested a Moroccan citizen in Washington D.C. who planned to carry out a suicide attack in the Capital building. The man thought he was dealing with fellow terrorists when he bought what he thought were suicide vest components and explosives. Fortunately, the man was dealing with FBI undercover agents who had been keeping round the clock observation of the man for about a year. The materials they provided to the suspect were dummy explosives.

How is this related to the issues we discussed this week? The man is in the country illegally and had been illegally in this country for years. How many other potential bombers are likely already in this country or will be able to easily enter the country via our leaky borders, potential bombers who may not end up dealing with undercover agents and fake explosives? The need to secure our borders is made more vivid by this failed attack.

- One of the tenets in our income tax reform proposal was to change the situation where about 45% of Americans pay absolutely no Federal income tax. While our plan would increase the effective tax rate for wealthier Americans, we overlooked a way to get more Americans to have "skin in the game," i.e. pay at least some share of taxes.

Our proposed income tax reform package reduced the number of Americans not paying income taxes by about 50%. However, that meant about 24% of Americans would still pay no income taxes but still get all of the benefits of the Federal government. Thus, one enhancement we need to add to our income tax reformation is a minimum Federal income tax on all Americans of at least 3%, i.e. all Americans will pay at least a 3% income tax regardless of their income.

This minimum tax rule would collect about $16 billion a year in additional Federal income taxes, taxes that would be directed towards paying down our national debt. The political class would never get their hands on this money. The tax percentage of 3% would be reduced to 2% once the national debt was reduced 20%, it would drop to 1% once the national debt was reduced 40%, and would disappear once the national debt was reduced by 50%.

By taxing every single American, the leverage that could asserted on the political class to finally get our out of control spending under control would increase significantly. For the first time in a long time, every America has an incentive to force the political class to cut government spending and waste since they will see the impact in their own wallets when that is done. It all has to do with leverage and taking everyone's money is leverage.

- We proposed a series of both long term and short term solutions to the the Social Security system. This system, in reality a giant Ponzi scheme, is about to collapse as more and more people will soon be receiving Social Security checks (as a result of Baby Boomers retiring) and there will be fewer and fewer working Americans to provide the wealth to fund these checks.

Our short term solutions would shore up the financials of the system so that the neediest elderly Americans would be more likely to get support in their older years. We proposed a long term solution which is to find a way out of the current system altogether. Social Security as a retirement option stinks. It would be far more beneficial to put Social Security funds into individual investment accounts than to give it to the government and the politicians to waste.

We know this is the case because of the studies cited and our own analysis that we did which prove, without a doubt, that the Social Security system is a horrible way to save for retirement. Chile has proven our point since for the past few decades, Chile did exactly what we proposed: they eliminated a centralized, government/political class controlled retirement scheme and replaced it with tax deferred personal savings accounts that enabled Chileans to invest their retirement funds anyway they wanted.

Prior to May 1, 1981, the Chilean government run retirement system required contributions from workers and was clearly in financial trouble. Instead of making minor changes, like reducing benefits or raising the tax rates, which would have fixed the problems for a short time only, José Piñera, Secretary of Labor and Pensions under Augusto Pinochet, decided to do a major overhaul of the system:

"We knew that cosmetic changes — increasing the retirement age, increasing taxes — would not be enough. We understood that the pay-as-you-go system had a fundamental flaw, one rooted in a false conception of how human beings behave. That flaw was lack of a link between what people put into their pension program and what they take out. So we decided to go in the other direction, to link benefits to contributions. The money that a worker pays into the system goes into an account that is owned by the worker."

This is exactly what the United States Of Purple proposes. How did it work out in Chile after 30 years? Consider the findings of  John Tierney, a writer for the New York Times, who wrote about his personal findings in 2009.

Tierny apparently went to visit Pablo Serra, a friend of his in Santiago, Chile a few years ago where they compared notes on how well each of their respective retirement programs were doing. It turned out that they both had been contributing about the same amount of money, so the comparison was apt, and startling, said Tierney:

  • Pablo could retire in 10 years, at age 62, with an annual pension of $55,000. That would be more than triple the $18,000 Tierney was told by the Social Security Administration that he would be receiving.
  • Pablo could also choose to retire at age 65 with an annual pension of $70,000. That would almost triple the $25,000 pension promised to Tierney by Social Security who would have had to wait an additional year.
  • Pablo could also choose to retire at age 65 with an annual pension of $53,000 and also a one-time cash payment of $223,000, an option not available under Social Security.
Looks like our plan might be viable and certainly a better deal for Americans than the current Social Security set up.

But this is only one case. What has the more global impact been? Tienery continued the positive news in the rest of his article:

  • According to Investors Business Daily, the average annual rate of return for Chilean workers' retirement accounts over the last 30 years has exceeded 9% annually, after inflation, whereas “U. S. Social Security pays a 1% to 2% (theoretical) rate of return, and even less for new workers.”
  • As expected, the capital accumulated in these privatized accounts have generated substantial growth in Chile’s economy, making it one of the most stable and prosperous nations in the region.
  • High domestic savings and investment rates helped drive Chile’s economy to average growth rates of 8% during the 1990s. The privatized national pension plan (AFP) has encouraged domestic investment and contributed to an estimated total domestic savings rate of approximately 21% of GDP.
Unbelievable. Compare this to our 2-3% annual economic growth over the past decade or so, fiscal insolvency fast approaching for our Social Security system, our low savings rate, and the other bad economic news the U.S. has been experiencing. But Pinera anticipated all of this positive economic momentum thirty years ago:

“The Chilean worker is an owner, a capitalist. There is no more powerful way to stabilize a free-market economy and to get the support of the workers than to link them directly to the benefits of the market system. When Chile grows at 7 percent or when the stock market doubles … Chilean workers benefit directly, not only through high wages, not only through more employment, but through additional capital in their individual pension accounts.”

Sounds like a win-win solution to me. However, it is a solution you will never see form the Democrats or the Republicans. Only the United States of Purple will have the courage and the leadership to pull this off, even though the proven benefits and upside are so obvious and enormous.

- Regarding our lost war on drugs, we discussed how the lost war is tearing Mexico and other countries apart as the drug cartels become more and more powerful, rich, and violent. Since we posted that solution a few days ago, we have come across some more examples of the absurdity and the carnage from this lost war on drugs that should have been included in that post to illustrate the need to change our strategies:

  • According to an article in the January 27, 2012 issue of The Week magazine, five of the top ten deadliest cities in the world, outside of war zones, are now in Mexico, according to a Mexican research group. 40 of the top 50 deadliest cites were in Latin America. One cannot help but conclude that many of these dubious rankings are a result of the violence spawned off of the war on drugs.
  • A recent Associated Press report reviewed how the bodies of two decapitated people were found inside the burning remains of an SUV at the entrance to one of Mexico's most luxurious malls.  The mall was located in an area that was the location of major international corporations, diplomats and some of Mexico's wealthiest individuals. There is little doubt on the part of the police that these were drug cartel related killings.
Imagine living in a country where just going out shopping can be fraught with concerns about violence and killings. Our war on drugs is a big part of the violence and breakdowns in sovereignty that we are witnessing right in front of us.

- Our proposed solution to our illegal immigration problem needs to be fashioned so that we still have a viable, coherent, and effective immigration strategy, not a lock down the borders and let no one into the country strategy. Our plan is to lock down the borders but only allow in the people we want to allow in.

A primary reason for that is the energy, the fresh ideas, and strong work ethic that many immigrants bring to our country, our culture and our economy. This was reinforced in a short  article in the January 20, 2012 issue of The Week magazine, an article that was originally from Reuters.

According to the article, immigrants founded almost half of the recent, top start-up companies in the U.S. Of the top 50 venture-backed companies today, 23 have at least one immigrant founder and 37 employ an immigrant in a key management position.

We need an immigration policy that encourages these types of immigrants so to come to our shores and discourages and blocks illegal immigrants with intentions of blowing up themselves and the Capital building from ever getting close to our borders.

- We proposed a solution that would address both the global warming issues and the fact that this country does not have, or ever had, a coherent and strategic national energy policy that would eliminate our dependence on foreign energy sources. Our solution was market driven, leveraged the values, freedom of choice, and needs of every American, did not require a massive new Federal bureaucracy, and greatly minimized the role of government and the political class in attaining our goals.

We pointed out this was in stark contrast to what the Obama administration wants to do. They want to install a massive new Federal government bureaucracy under their Cap and Trade strategy. Under their plan, a new market would be created that involved energy and carbon credits and offsets, all run out of a central government organization. In other words, their plan would credit a new currency in energy credits that would be managed by political type people.

The amount of fraud and mismanagement that could happen in this type of craziness is unimaginable. Given how poorly the political class manages existing bureaucracies, there is no reason to believe they would be able to handle something as widespread and complicated as energy usage.

This point was proven in an article in the March 14, 2011 issue of Business Week, "The Great European Carbon Heist." Apparently, Europe already has a Cap and Trade system in place but according to the article, "The Continent's carbon trading market has become an easy mark for cyber-criminals."

The article starts off reporting on a case involving a company called Blackstone Global Ventures, a small Czech firm that trades emissions permits through the European Union's market. One day, the Blackstone people came to work to find out that a cyber-criminal had stolen 475,000 of Blackstone's permits worth about $9.7 million.

But Blackstone is not alone. In the five months prior to their loss, over $80 million worth of carbon credits had been stolen throughout all of Europe and where they went and who stole them is still unsolved as of the writing of the article. So much for Europe becoming the benchmark of how to run a successful cap and trade program.

Given our politicians' inability to run any efficient government organization and the already crime riddled Cap and Trade experiences in Europe, it is clear that our decentralized, individual approach to solving the global warming and energy independence problems are the better solution, if only because government bureaucracy is minimized.

There you have it, our solutions to all of the nation's problems. It is high time that we try some new approaches and fresh ideas, lord knows that waiting for the Democrats and Republicans to solve anything is long overdue and high unlikely to occur. That is why the United States Of Purple is the only chance of finally solving something, anything. 

“We cannot solve our problems with the same thinking we used when we created them.” Albert Einstein

We invite all readers of this blog to visit our new website, "The United States Of Purple," at:


The United States of Purple is a new grass roots approach to filling the office of President of The United States by focusing on the restoration of freedom in the United States, focusing on problem solving skills and results vs. personal political enrichment, and imposing term limits on all future Federal politicians. No more red states, no more blue states, just one United States Of America under the banner of Purple.

The United States Of Purple's website also provides you the formal opportunity to sign a petition to begin the process of implementing a Constitutional amendment to impose fixed term limits on all Federally elected politicians. Only by turning out the existing political class can we have a chance of addressing and finally resolving the major issues of or times

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

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