THE ELECTION

It is easy to get lost among the weeds in an election campaign that goes on so long. Both candidates are saying things they know are misleading in an attempt to paint the other candidate as just too naive. Rest assured, neither of these candidates is naive. Both are very bright but often take some liberty with the truth in their pursuit of the biggest political prize on the planet: the Presidency of the United States. It is not necessary to fight your way through all of the rhetoric or rely on who looked better in a debate. This election is not about small or close issues. It is about a very big and clear choice facing the country. Let’s shed some light on it.

The big choice in this election is about the economy and the nature of our society. It is a choice between: (1) the Republican view of smaller government that privatizes health care and reduces Social Security costs; and (2) the Democratic view of a government that oversees a system where all citizens get basic health care insurance, Medicare and Social Security. Under the Republican plan, taxes would be substantially lower than the Democratic plan.

If you want a society where all Americans have access to quality health care, you have to be willing to pay for it. If you want people with pre-existing conditions to have access to affordable insurance, you have to realize that costs will rise for the insurers and you have to be willing to pay your share of it. If you want Social Security for all, you have to be willing to pay for it. How much will you have to pay? You will have to pay quite a bit more than you are paying now.

Most countries that provide private or public health care and a Social
Security type program have government spending that runs about 45% to 50% of GDP. Some examples:

Denmark 52%
France 53%
Germany 44%
Italy 48%
Netherlands 46%
Poland 43%
United Kingdom 47%

These countries have tax revenue that run on average between 40% and 50% of GDP.

Denmark 49%
France 45%
Germany 43
Italy 43%
Netherlands 40%
Poland 35%
United Kingdom 39%

In the United States, we are spending about 40% of GDP and our revenue from state and federal taxation is about 27% of GDP. It is hard to find any data to support having significant medical and retirement programs as part of federal spending without tax revenue of at least 40% of GDP. The data suggests that if we go with keeping and broadening these programs, everyone’s taxes will have to go up significantly – probably an eventual increase of 35% to 40% over what you pay now.

Most of the industrialized world has chosen to have these programs because they find it unacceptable to have large numbers of citizens die due to lack of medical coverage or live in poverty because there is no adequate pension or benefit plan provided by business. These social benefit programs cost tons of money. So this is our choice:

(1) THE DEMOCRATS – We all pay substantially more in taxes to live in a society where everyone has access to medical care at an affordable price and some form of Social Security; or

(2) THE REPUBLICANS – We go to a small-government model where tax increases are lower, where everyone fends for themselves, where the portion of the population that is financially successful lives in comfort and where a large portion of the population lives with the barest of social safety nets.

This is the choice we are faced with in November. The deficits we are currently running are not sustainable. We will end up like Greece if we continue to kick the can down the road. We are about to start down one of these two paths. THIS IS WHAT THE ELECTION IS ABOUT.

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2 thoughts on “THE ELECTION

  1. Good breakdown. Is the Democratic model sustainable in your view? You mention kicking the can down the road and Greece. Do you mean we’ll end up this way if we don’t commit to one path or the other?

    • The Democratic model is sustainable with a substantial increase in revenue. As far as going the way of Greece, we have to get our expenditures in line with our revenues whatever path we go down. Even if we stay static on the expenditure side, we will need more revenue. Any tax increase will take time because the economy is still fragile. We will have to handle tax increases slowly over time.

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