This column originally appeared in the Williston Observer on April 30, 2009.
Fighting Poverty, Preventing Piracy
Any time revenues decline, whether in a business, family, or government, there is an inevitable search for a place to cut costs.
One place that financial advisers will not advise a family to cut, though, is in investing for the future. The "magic" of compound interest means that a dollar not invested now could cost you four dollars in thirty years.
Similarly, there are investments in the future that we, as a nation, must think carefully about when we are looking to cut. If we are to invest in our nation's future, one way to do that is to provide non-military foreign aid. If we do not invest in foreign aid, we risk putting our future in jeopardy.
One need only look to the piracy crisis that has recently grabbed the nation's attention to see the results of poverty and chaos. Though the attention is recent, the problem has been festering for quite some time. In 1991, for example, the World Food Programme was having trouble finding shipping companies willing to take food aid to Somalia because of piracy off the Somali coast.
Because of overwhelming poverty, some of the people of Somalia have chosen piracy as their best choice for survival, even with all the inherent risks.
Is there anything we could do to reverse the piracy problem? It seems we may be doing all we can at this point - the solution is a military one.
According to the International Maritime Bureau (IMB), another hot spot for piracy is the Strait of Malacca. In all of 2000, over 75 attacks were recorded in the strait. By 2004, that number had decreased to 38, and in the first quarter of 2009, to only one. According to the IMB, the difference is in the patrols, which have dramatically increased over the past ten years, especially by the navies and coast guards of Malaysia, Indonesia, and other littoral nations.
While the key to stopping piracy seems to be military diligence, preventing piracy from even starting is where our money could be well-spent.
The budget for USAID, the United States Agency for International Development, which distributes American foreign aid, was almost $19.5 billion in 2007, $17.6 billion in 2008, and budgeted to be $18.8 billion in 2009. These number are nothing to sneeze at, but they are a pittance compared to our military budget.
Our foreign aid budget covers a lot of important things, according the USAID's Citizen's Report. Counter-terrorism, peace support, conflict mitigation, good governance, promotion of human rights, and combating AIDS, malaria, and tuberculosis. The budget also pays for programs to improve infrastructure, agriculture, water supply safety, economic opportunity, and financial transparency.
This last group of programs, under the category heading "Promoting Economic Growth and Prosperity", is where our money can help end the conditions that lead to problems like piracy. If a nation has a sound government, a reliable food and water supply, and provides opportunity for its people, the lure of easy money from piracy or other crime is suddenly that less strong.
The change in administration has brought change to the philosophy behind foreign aid. The 2009 budget was built by George W. Bush's State Department. The 2010 budget, built by Barack Obama's State Department, increases the department's budget by 40%, and the budget for USAID would go up a similar percentage.
With this increase, our efforts to fight poverty, both with direct aid and developmental aid, could make a big difference in peoples' lives. Could this increase also be a piracy prevention measure? We can only hope - as with any investment, the return is not guaranteed.
---
On a personal note, with many of you, I mourn the death of Williston Central School teacher Al Myers. Over the years, I'd seen Al show off his musical skills at the FAP Variety Show, show off his Civil War knowledge in presentations to the Cub Scouts, and show off his encyclopedic knowledge of the history of Williston schools and FAP as he recounted the evolution of our current system.
Al's fellow teachers in Swift House and throughout the school system are coping bravely with the loss as they simultaneously help all the kids cope with the loss.
While I salute his memory and his legacy, I also salute the continued professionalism of our entire teaching staff. Al's death will leave a hole, but I know it will be quickly filled.
Thursday, April 30, 2009
Thursday, April 16, 2009
Tempering Faction
This column originally appeared in the Williston Observer on April 16, 2009.
Tempering Faction
I was recently asked a question about the Constitution that comes through my email box every so often in one of two forms. The first is "Where are political parties mentioned in the Constitution?" The second is "How does the Constitution support the two-party system?"
The first question is the easier one to answer. The Constitution does not mention political parties at all. Political parties evolved in our system after the ratification of the Constitution, so it would have been great foresight for the Constitution to have included them.
However, even in the later amendments, right up to those proposed and ratified in the 20th century, we managed to keep any mention of parties out of the Constitution.
The harder question is the second one, and it is a good question. Since the Civil War, the Republicans and Democrats have traded the presidency and control of the Congress. Rarely has a third party had a lasting effect.
Third parties have had a role to play in our political history, even if it was a fleeting role. Free Soil, Anti-Mason, Prohibition, Socialist, Reform, Green - these parties raised issues that the major parties eventually had to deal with.
The second question usually has a masked underlying question: Is the two-party system something positive, something worth retaining?
While there is something to be said for third parties, I think that we have a good thing with our two-party system, something worth retaining.
However, we also have something that some of our most influential founding fathers found to be a real issue in politics. The faction, better known today as "special interests."
Alexander Hamilton and James Madison, writing in the Federalist Papers as Publius, warned against special interests tearing at the fabric of society. Madison saw two ways of controlling factions: "The one, by removing its causes; the other by controlling its effects."
Madison knew it was pointless to remove the cause of faction, dangerous even. Only by removing liberty or by making all persons the same could the cause of faction disappear.
Better, then, to control the effect of faction. The federal system, with representative democracy, was his solution for the nation, the solution offered by the Constitution. In such a system, majority opinion is important, but minority rights are just as important, and protected.
Of course, factions still emerge. We see the divisions starkly, at the national, state, and local levels.
Pro-life versus pro-choice; for and against gay marriage; Option B versus Option C for our schools.
When factions are truly destructive is when the two sides cannot find common ground. On the most polarizing issues, common ground can be hard to find, especially when there are some on the fringes who will not budge. But there is almost always common ground to be found.
This is where discussion, compromise, and agreement come into play. The fringes can sabotage agreement, but only if they're allowed to. The larger part of any faction will be willing to compromise. Take the gay marriage debate as just one example.
When the state Supreme Court forced the issue in 1999, the state legislature heard from both sides - those who were adamantly opposed to gay marriage and those just as adamantly for it. By April of 2000, a compromise was reached, and civil unions became the law of this state.
Today, after nine years under that law, Vermonters decided that the advent of civil unions did not cause the downfall of society, and, in fact, enhanced it by granting similar rights to committed same-sex couples. In September, we will take the final step, and make marriage an institution available to any committed couple.
Through compromise and patience, the factions came together enough so that equal rights could be guaranteed.
It is a model for all factional disagreements that we face. The solution might not be perfect, but if found by compromise, it can at least be a shared victory, and when the opportunity arises again to reexamine the issue, lessons learned from the past can be applied.
This nation, this state, this community, all have had to deal with the passions of faction in the past. We deal with them now. We will deal with them in the future. The one thing I'm certain of is that through compromise, and patience, a suitable solution can always be found.
Tempering Faction
I was recently asked a question about the Constitution that comes through my email box every so often in one of two forms. The first is "Where are political parties mentioned in the Constitution?" The second is "How does the Constitution support the two-party system?"
The first question is the easier one to answer. The Constitution does not mention political parties at all. Political parties evolved in our system after the ratification of the Constitution, so it would have been great foresight for the Constitution to have included them.
However, even in the later amendments, right up to those proposed and ratified in the 20th century, we managed to keep any mention of parties out of the Constitution.
The harder question is the second one, and it is a good question. Since the Civil War, the Republicans and Democrats have traded the presidency and control of the Congress. Rarely has a third party had a lasting effect.
Third parties have had a role to play in our political history, even if it was a fleeting role. Free Soil, Anti-Mason, Prohibition, Socialist, Reform, Green - these parties raised issues that the major parties eventually had to deal with.
The second question usually has a masked underlying question: Is the two-party system something positive, something worth retaining?
While there is something to be said for third parties, I think that we have a good thing with our two-party system, something worth retaining.
However, we also have something that some of our most influential founding fathers found to be a real issue in politics. The faction, better known today as "special interests."
Alexander Hamilton and James Madison, writing in the Federalist Papers as Publius, warned against special interests tearing at the fabric of society. Madison saw two ways of controlling factions: "The one, by removing its causes; the other by controlling its effects."
Madison knew it was pointless to remove the cause of faction, dangerous even. Only by removing liberty or by making all persons the same could the cause of faction disappear.
Better, then, to control the effect of faction. The federal system, with representative democracy, was his solution for the nation, the solution offered by the Constitution. In such a system, majority opinion is important, but minority rights are just as important, and protected.
Of course, factions still emerge. We see the divisions starkly, at the national, state, and local levels.
Pro-life versus pro-choice; for and against gay marriage; Option B versus Option C for our schools.
When factions are truly destructive is when the two sides cannot find common ground. On the most polarizing issues, common ground can be hard to find, especially when there are some on the fringes who will not budge. But there is almost always common ground to be found.
This is where discussion, compromise, and agreement come into play. The fringes can sabotage agreement, but only if they're allowed to. The larger part of any faction will be willing to compromise. Take the gay marriage debate as just one example.
When the state Supreme Court forced the issue in 1999, the state legislature heard from both sides - those who were adamantly opposed to gay marriage and those just as adamantly for it. By April of 2000, a compromise was reached, and civil unions became the law of this state.
Today, after nine years under that law, Vermonters decided that the advent of civil unions did not cause the downfall of society, and, in fact, enhanced it by granting similar rights to committed same-sex couples. In September, we will take the final step, and make marriage an institution available to any committed couple.
Through compromise and patience, the factions came together enough so that equal rights could be guaranteed.
It is a model for all factional disagreements that we face. The solution might not be perfect, but if found by compromise, it can at least be a shared victory, and when the opportunity arises again to reexamine the issue, lessons learned from the past can be applied.
This nation, this state, this community, all have had to deal with the passions of faction in the past. We deal with them now. We will deal with them in the future. The one thing I'm certain of is that through compromise, and patience, a suitable solution can always be found.
Thursday, April 2, 2009
Securing Social Security
This column originally appeared in the Williston Observer on April 2, 2009.
Securing Social Security
My first brush with Social Security came at a very young age. I don't recall the event specifically, but I carry the effect: my first Social Security card with my signature on it. Judging by the handwriting, I was likely right around ten years old when I signed it.
According to the Social Security Administration, the first year I made any money at all was 1983, and I grossed $359. That year, 5.4% of my income went to the pay the Social Security tax. This year, the tax rate is 6.2% for employees. Employers pay the same amount. The self-employed pay the full 12.4% themselves.
What is it that we get for that money?
Social Security was originally designed to be a savings account of last resort, a forced retirement savings account.
Throughout your working career, you pay into the program, and eventually, upon retirement, you start to get some of that money back. The plan is basically a government insurance plan, complete with actuarial tables, qualifications, and exclusions.
The point was to prevent retired workers from becoming destitute, to prevent widows from being turned out on the street with the death of the main breadwinner, and to prevent those injured on the job from becoming a burden on society.
The plan counted on an ever-increasing population, ever-increasing productivity, an ever-increasing tax base.
Contributions to the program funded the benefits paid by the program. Excess money was put in the Social Security Trust Fund, to be invested in government bonds, which the government promises to repay the Trust Fund with some interest. When outlays outpaced revenues, the Trust Fund would be tapped to pay the difference.
Projections from the Congressional Budget Office in 2008 predicted that in 2019, the Trust Fund would not longer be pulling in more than it was paying out, and those government bonds would have to be called in to pay benefits. This negative trend was not a blip: by 2049, the Trust Fund runs out of money completely, unable to pay all promised benefits.
Social Security has become the backbone of many Americans' retirement planning. There is an obligation to pay back the benefits that the workers have contributed hard-earned money to get. Having the Trust Fund run out of funds is simply not a viable option.
Benefits could be cut, but the problem is that the cost of living never seems to go down, so decreasing benefits does not seem to be a good way to prevent destitution. The cutting of benefits is also a political third-rail, touched by politicians at their own risk.
There are several steps that could be taken, none of them painless.
First is to raise the Social Security tax. The tax started out at 1% in 1937, and has increased over time, but not since 1990. A rise to 6.5% might be in order.
Another is to raise the retirement age. It has been done before - the age at which benefits could be collected was originally 65 and is now 67. A gradual increase to 68, 69, or even 70 could do much to aid the solvency of the fund.
Finally, the ceiling on the taxable income could be increased or eliminated. Did you know that all income over $102,000 is exempt from the tax? The reason for this eludes me - there are some who reach this limit in a month, even in a week, and once the limit is reached, no more tax is paid. If we taxed all income, the extra funds could bring a long and happy life to the trust fund.
One recent idea that history has shown to be an exceedingly bad one is privatization - allowing you to invest your contribution in any number of ways, including in the stock market. Can you imagine the financial tragedy if billions in Social Security funds had been invested in the recent stock market?
Social Security is a vital program that many people rely on today or will rely on in the future. We must continue to do what is necessary to keep the program viable.
Though there is not much in the news now about any partisan battles to keep the Trust Fund in the black, you can be sure they will come. In the meantime, do your homework, so that you can start planning how Social Security will enter into your own personal retirement plan.
Securing Social Security
My first brush with Social Security came at a very young age. I don't recall the event specifically, but I carry the effect: my first Social Security card with my signature on it. Judging by the handwriting, I was likely right around ten years old when I signed it.
According to the Social Security Administration, the first year I made any money at all was 1983, and I grossed $359. That year, 5.4% of my income went to the pay the Social Security tax. This year, the tax rate is 6.2% for employees. Employers pay the same amount. The self-employed pay the full 12.4% themselves.
What is it that we get for that money?
Social Security was originally designed to be a savings account of last resort, a forced retirement savings account.
Throughout your working career, you pay into the program, and eventually, upon retirement, you start to get some of that money back. The plan is basically a government insurance plan, complete with actuarial tables, qualifications, and exclusions.
The point was to prevent retired workers from becoming destitute, to prevent widows from being turned out on the street with the death of the main breadwinner, and to prevent those injured on the job from becoming a burden on society.
The plan counted on an ever-increasing population, ever-increasing productivity, an ever-increasing tax base.
Contributions to the program funded the benefits paid by the program. Excess money was put in the Social Security Trust Fund, to be invested in government bonds, which the government promises to repay the Trust Fund with some interest. When outlays outpaced revenues, the Trust Fund would be tapped to pay the difference.
Projections from the Congressional Budget Office in 2008 predicted that in 2019, the Trust Fund would not longer be pulling in more than it was paying out, and those government bonds would have to be called in to pay benefits. This negative trend was not a blip: by 2049, the Trust Fund runs out of money completely, unable to pay all promised benefits.
Social Security has become the backbone of many Americans' retirement planning. There is an obligation to pay back the benefits that the workers have contributed hard-earned money to get. Having the Trust Fund run out of funds is simply not a viable option.
Benefits could be cut, but the problem is that the cost of living never seems to go down, so decreasing benefits does not seem to be a good way to prevent destitution. The cutting of benefits is also a political third-rail, touched by politicians at their own risk.
There are several steps that could be taken, none of them painless.
First is to raise the Social Security tax. The tax started out at 1% in 1937, and has increased over time, but not since 1990. A rise to 6.5% might be in order.
Another is to raise the retirement age. It has been done before - the age at which benefits could be collected was originally 65 and is now 67. A gradual increase to 68, 69, or even 70 could do much to aid the solvency of the fund.
Finally, the ceiling on the taxable income could be increased or eliminated. Did you know that all income over $102,000 is exempt from the tax? The reason for this eludes me - there are some who reach this limit in a month, even in a week, and once the limit is reached, no more tax is paid. If we taxed all income, the extra funds could bring a long and happy life to the trust fund.
One recent idea that history has shown to be an exceedingly bad one is privatization - allowing you to invest your contribution in any number of ways, including in the stock market. Can you imagine the financial tragedy if billions in Social Security funds had been invested in the recent stock market?
Social Security is a vital program that many people rely on today or will rely on in the future. We must continue to do what is necessary to keep the program viable.
Though there is not much in the news now about any partisan battles to keep the Trust Fund in the black, you can be sure they will come. In the meantime, do your homework, so that you can start planning how Social Security will enter into your own personal retirement plan.
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