Election Day Is November 8, 2016

Why is it so hard to get ahead nowadays?  Why do rich folks seem to be getting much richer, and everyday folks seem to be getting much poorer? 
The Four Point Plan

We’ve all heard about the economic problems in our nation on the national and local news: the gap between rich and poor and how it is getting wider every day, the ‘one percenters’ getting richer at the expense of everyday people, the growing inability for two earner families (let alone single earner families) being able to make ends meet, how real earnings are getting lower and lower, how difficult it is for recent graduates to find any employment, much less employment that utilizes their new found skills, and a whole list of other ills in our economy.


Everyone thinks that something needs to be done, but what? Some think that the government needs to step in and do more. Some think the government does far too much. After the pigeonholing of various views as liberal, conservative, right wing, left wing, libertarian, socialist, and so on by different special interest groups, it is difficult to judge any idea solely on its merits, rather than respond to the label stuck to it. But one thing becomes apparent after careful analysis – few of the ‘solutions’ being offered address the root causes of the various problems. Most just try to ‘treat the symptoms’ rather than ‘cure the disease’.


The Four Point Plan addresses the real causes of our economic woes by addressing the base issues. Some will call the Four Point Plan too simplistic. Others will say it won’t work and then cite numerous ‘studies’ and other works of scientific research to back their claims. Let’s look at why each point in the plan is important, and what it means to everyday folks like you and me.


Point One: Back the US dollar with gold, silver, platinum, and palladium so it once again becomes stable in value.


Why is it important to back the US dollar with gold, silver, platinum, and palladium? What does it mean for everyday folks like you and me?


Do you remember when the Federal Reserve Bank began the QE (Quantitative Easing) program? What QE (and ZIRP, QE II, etc.) did, in effect, was to devalue the dollar. Those with substantial net worth (the one percenters) complained how their net worth had been chopped by forty percent just because policy makers who have no accountability to the public deemed it should be so. Many of us everyday folks cheered when we heard the wealthier folks complain, thinking that it was about time they ‘took it in the shorts’ just like we have for years. But let’s think about that for a minute. When the more fortunate among us lose on a scale like that, they just take some of the excess capital they have (they have far more money than they need just to get by) and ‘plant it’ in another venture or investment, and soon recover their losses. They will grumble for a while, but soon enough, recover and go on with life as usual.


But let’s not forget that everyday folks lose out, too. Our skills, our experience, our knowledge, and our personal value in the job market and to our families are devalued. The purchasing power of our dollars gets whacked by the same forty percent as the wealthier persons' investments. Our dollars buy less. It becomes even harder for us to make ends meet. It gets harder to buy food, for working parents to pay for daycare, to save for large purchases, go to the movies, eat out, set aside money for our children’s education, or to do any of a host of other things. And all because of decisions made by policy makers who have no accountability to the public and no real idea of how hard it is for ‘everyday’ folks to make ends meet.


Everyday folks don’t have the excess money to ‘plant’ to recover our losses like the wealthier people.  We just have to make our dollars that are worth far less do much more, and keep falling farther and farther behind. So why do the policy makers keep hurting everyday folks by putting policies in place that devalue the dollar?


It has become engrained in our consciousness that inflation is a good thing. But inflation is not a good thing. If we buy now, and then pay later with dollars that are worth less, we seem to come out ahead. But the fact is we really come out farther behind. We pay much more for things that have the same value as they did before. Food has the same value now as it did a thousand years ago.  Without food, we starve to death. That makes food pretty valuable. Shelter, transportation, education, entertainment, and all the other things in life are (generally speaking) just as valuable now as they were before. But it takes more dollars to buy things because the dollar continues to be worth less (keeps getting devalued by policy makers). If you had an item of value and you wanted to sell it for dollars, would you accept the same amount of dollars if those dollars were worth less? Unless the item for sale was obsolete or damaged, you probably wouldn’t. You would expect more dollars for an item that still had the same value in the marketplace. The same applies to work. Your skills, experience, and knowledge still have value in the job market. So having to accept the same amount of dollars today for the work you have done and the skills and expertise you have acquired in your career means your personal work has been devalued, and just because policy makers who have no accountability for their actions deemed it should be so.


Since the dollar was completely freed in 1971 of any tangible backing by gold or silver, it has no intrinsic value, only conceptual value. That has led to wide swings in its valuation – and the extent of those wide swings in value has mainly been determined by political and other interests. In other words, valuation of things in the marketplace has been surrendered to people and institutions that have no real interest in everyday folks’ economic well-being. Because the dollar has no intrinsic value, and therefore no limitation in its expansion or contraction, business cycle booms have continued to get ever larger, and busts have continued to get ever deeper and longer.  

Governments tend to like the dollar having no intrinsic value. It allows them to have a large degree of control over the value of money.  Governments have spent far more money in recent decades than they can ever hope to repay. The government solution is to make the dollar worth less so it appears that debt is being repaid, even though it is not. The real downside is that as dollars buy less and less, and everyday folks continue to get squeezed tighter and harder, the public clamors for more government intervention. That in turn increases government spending and debt, forcing politicians and policy makers to borrow more and devalue more, making the problem even worse.


Other institutions like the dollar having no intrinsic value, too. They can borrow money and repay the debt in money worth far less than it was at the time of borrowing. But for everyday people like you and me, the squeeze just gets tighter and tighter.


How can we fix the problem? Restore real, stable value to the dollar by backing it with gold, silver, platinum, and palladium. Those precious metals increase in supply by a finite amount each year. If the value of a dollar is pegged to specific measures of the precious metals available and actually on hand, increases in the money supply will be restricted. If governments and institutions cannot continue to increase the money supply through inflation, stable value will return to the dollar. A dollar with intrinsic value (that is, backed by precious metals) will stabilize the marketplaceMeaningful dollar value will return to items, and any increase in wages, money saved, and so on will have real value to everyday people.  


The founding fathers understood the importance of keeping valuation of the money supply out of government and institutional hands. That is why Article I, Section 10 of the US Constitution says “No state shall…coin money, emit bills of credit, make any thing but gold and silver coin a tender in payment of debts,,,” In other words, the national government would coin money and it would be coined in gold or silver. Currency, or the dollar bill, evolved as a more convenient (portable) unit of measure that should represent a specific amount of gold or silver coins, as prescribed by our constitution. Although gold and silver have traditionally been considered to be the primary monetary metals, with the development and relative scarcity of platinum and palladium, the four precious metals together should serve well to restore value and stability to the dollar.

Point Two:  Replace the entire Internal Revenue Code with the criteria that everyone pays 15 cents on each dollar of all income, there are no deductions for anyone, but the first $20,000 is tax free for everyone. 

The US Constitution in Article I, Section 9 says that “No capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before be directed to be taken”. Until the ratification of the Sixteenth Amendment in 1913, revenue to operate the federal government was collected primarily through tariffs and other like taxes. That arrangement favored the wealthiest earners and adversely affected lower income citizens by sharply raising the cost of living.


The Progressive Era brought reform and the Federal Income Tax into focus for all citizens by promising a simple, fair, and equitable progressive tax that would cover income that was previously tax free (interest, dividends, and rent) and allow for lower tariffs (in turn lowering the cost of living), thereby easing the economic burden on everyday earners. The Sixteenth Amendment as passed in 1913 modestly met those goals.

In 1913, the tax rate for the highest bracket was 7% and the total taxes levied affected less than 5% of the income earning population. However, political pressure through the years has morphed the federal tax code into an indecipherable behemoth that favors the more affluent among us, allows many forms of income to escape taxation completely, and has become anything but simple, fair, and equitable.

But it does have one feature that makes it the most attractive option in collecting the money needed to run our country. It is (painfully) visible to everyone who earns money. As long as federal taxes are transparent, that is, visible to everyone who pays, we have a built in leash on the extent that the government can tax us.


Think back to when Ronald Reagan was elected to the presidency. The main selling point to voters for Reagan was his pledge to reduce the maximum federal income tax percentage and the number of tax brackets. To his and Congress’ credit, rates and the number of brackets were reduced during his first term. And in fairness to the revision, tax revenues from the upper five percent of wage earners increased by roughly 16% the first year after enactment.


As I go through the work day, I ask people if they think the federal income tax is simple, fair, equitable, or progressive. Usually they stare at me as if I am high on booze or drugs, or just plain insane. When I explain the solution in Point Two, without exception every person has said they agree with it and would support it.


Why? Because they feel it is simple (tax returns could be filled out on a post card), it is fair and equitable (because the percentage is the same for everyone on all forms of income), and it is truly progressive (in that those who cannot afford to pay a large tax without undue hardship to themselves and families would be the least affected because of the first $20,000 being tax free). For those taxpayers who now benefit from the complexity of tax laws, the reduction in filing costs alone should more than offset any increase in tax. Point Two presents an effective simplification of the tax code that will have the least disruption on federal revenues, while at the same time offering the fairness and transparency that taxpayers are demanding. 

Point Three:  Make sure that Congress understands that their few specific duties enumerated in the US Constitution must be satisfied completely first and foremost, and then if there is any money left over, they can do with it whatever We The People feel is appropriate, but there will be no tax increase to bring in more funds or policies implemented that devalue the dollar. 

In Article I, Section 8 of the US Constitution, the responsibilities and duties of Congress are laid out. Some of the responsibilities and duties are straightforward and fairly specific, such as setting up the judiciary, taking a census every ten years, creating the Post Office and roads needed to carry the mail, raising an Army and Navy, declaring war, determining the rules of war, deciding when the military can be used internally, having the power of impeachment, creating immigration and bankruptcy law, levying taxes, borrowing money and repaying that debt, coining money and establishing its value along with laws to cover counterfeiting, establishing standard weights and measures, regulating international and interstate commerce, creating patent and copyright law, defining maritime law, and creating and managing Washington, DC. While there will often be disagreement on the particulars of laws that are written to carry out those responsibilities and duties, they are generally concrete ideas that can be resolved through debate, the rule of law, and the judiciary system.


In order to give future generations the flexibility to govern the country without having to rewrite the US Constitution when circumstances warranted change, though, two phrases were inserted that were more abstract and somewhat vague. Congress is given the responsibility of ‘providing for the common defense and general welfare’.


Providing for the common defense is often defined as defending our borders, but that can become abstract when determining just what it is we are defending against. Are we defending against an invasion? If so, is it an invasion of another military, an invasion of less expensive goods or services, or an invasion of foreign laborers? Does supporting another country against its enemies constitute providing for the common defense? Those questions are not as straightforward and are more difficult to answer.


Defining the concept of providing for the common welfare is even more abstract. For instance, does providing for the common welfare dictate that we create a public school system? If so, should it cover only basic education, or extend to more advanced education? Should it be publicly or privately funded, or should there be a combination of funding? Should research in higher education be publicly funded? Should research in private industry be publicly funded? It is generally agreed that a public school system benefits the general welfare of the nation and creating one is appropriate, but there is still serious debate on the extent and control of the system that should be provided and how it should be funded. There is also considerable debate on how public and private research should be funded.


Other ideas and programs that can be argued as providing for the general welfare of our nation have been proposed, seen (at the time) as appropriate, and implemented. However, debate still continues as to whether many of the programs implemented are really appropriate under the ‘provide for the common welfare’ responsibility prescribed by the Constitution.


What is the underlying cause of the disagreement on what constitutes providing for the general welfare? There are two important questions that stir controversies over the appropriateness of a law or program that falls into the category of providing for the general welfare:   first, does it really promote the general welfare or just an individual’s or group’s welfare (meaning, does it really help everyone) and, second, is it appropriate that everyone should contribute to its funding? Even though the debated laws or programs may be noble or fit a just ideal, those are questions that quite often don’t have cut and dried yes or no answers.


In our economy and everyday lives, organizations and individuals go out and create value in the marketplace by providing goods or services that businesses and consumers want. When those goods and services are exchanged for money, businesses and individuals use the money earned to obtain other items they want. But what businesses and individuals buy is limited by the value they create, or the money they earn. In other words, you can only spend what value you have created.


Government is different, though. It obtains money used to provide goods and services to its citizens and allies through taxation, not by creating value in the marketplace. That means for everything the government does, We The People have to give up some of what we earn.


One of the basic precepts of our nation is that what we earn or create belongs to us – not the government. It follows from that principle that the government can only take from us what we are willing to surrender. It is easier for us to surrender money for government programs or services that are fairly specific, straightforward, and relatively simple to understand. It is harder to give up earnings for abstract ideas that are difficult to justify as providing for the general welfare.


If the government takes more than what we are willing to give up or takes so much from us (either through taxation or devaluing the dollar) that our nation’s economy or general well being is harmed, then the government needs to be reined in, or its laws and programs reformed so that the damage done is rectified.


Point Three addresses the problem of government overspending by ensuring that Congress first provides for the straightforward things required by the US Constitution. It then allows us room to adjust our response to other issues that we feel are appropriate, but are more abstract or idealistic (and therefore harder to define and justify) without harming our economy or the general welfare.

Point Four:  Get the national government out of our personal lives. 

If it is so simple, why hasn't it been done before?

Some people may think that creating a simple plan is easy. But ask any physicist, mathematician, professional, or other problem solver you might meet about how difficult it is to achieve simplicity. Complex plans, models, and methodologies designed to address knotty problems are easy to build - see another part to the problem that wasn't noticed before, just add another function to the plan.  But the reason such plans are not as effective as they could be is their very complexity.  It is a daunting exercise to consider every possibility that needs to be addressed in a solution, and it may even be possible to cover most of them (at least for a short while), but it is impossible to nail them all down.  Because it is easier to add more complexity than to simplify problems, simple plans are hard to build. 

The beauty in making things simple is that finding solutions is not as difficult once the problems have been reduced to simple terms.  But the cause of any problem needs to be determined before it can be simplified and its solution craftedWe have tried for many years to find solutions to the problems in our nation, but have failed to determine the underlying causes of those problems before implementing the fixes.  And therein lies the rub - we have mostly addressed the symptoms of the problems rather than the causes.  And since the causes have not been defined or addressed, the solutions have become increasingly complex and ineffective.  Instead of making things better, we have unintentionally made them worse. 

The Four Point Plan is simple, because it is based on addressing the underlying causes of our issues. That does not mean it will be easy to implement - just far more likely to achieve the results we want, which is to make the opportunity to build a better life available to all the people of our great nation.