Washington D.C. -- (ReleaseWire) -- 04/08/2014 -- Nationally Syndicated Financial Myth Busting Radio Show with Host Dawn Bennett, CEO of Bennett Group Financial Services, LLC, on March 23, 2014, interviewed Don Watkins, a fellow at the Ayn Rand Institute and co-author of the book, "Free Market Revolution: How Ayn Rand's Ideas Can End Big Government."
The show airs live on www.WMAL.com each Sunday at 11 am EDT. It now has over a year’s worth of achieved interviews for listeners free on-demand at http://www.financialmythbusting.com.
Dawn discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included Rock Legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN as well as take podcasts on the road and forums for interaction. The show is a great complement to Dawn’s monthly investing seminars that take place at Tysons Corner in McLean, VA, where she discusses investing.
Don Watkins is a fellow at the Ayn Rand Institute and co-author of the book, "Free Market Revolution: How Ayn Rand's Ideas Can End Big Government." Watkins is one of today's most vocal champions of laissez-faire capitalism. Mr. Watkins has been interviewed on hundreds of radio and TV programs, and is a regular speaker at conferences in university campuses including Stanford, Brown, the University of Virginia, and the University of Chicago. Now, recently, Don wrote and published an article about our individual rights as American citizens called, “End the Draft Campaign," in which he writes that millions of young Americans are being drafted into debt thanks to America's old age welfare programs like Social Security and Medicare.
Here are some thoughts from Mr. Don Watkins:
“Just in the way that the military draft treated young people as property of the state and sent them into wars regardless of their desires, regardless of their own pursuit of happiness, so, thanks mainly to Social Security and Medicare, the future of today's Millennials and then our children is really being treated as the property of the state. We're being drafted into debt in order to provide people with retirement and medical benefits. And let me just give you one number to keep in mind, that's the payroll tax today is about 15.3 percent just for Social Security and Medicare Part A. Now, for the average millennial worker, that's more than the equivalent of paying for the monthly fee on a new car for somebody else.
“The way that we're headed, in few decades, to the point where they're going to have to pay for a brand new car each year for the elderly. Now, think of what you have to set aside in your life to buy your own car. We can't afford it in part because of these programs that are forcing us to set aside our hopes and dreams. We aren't allowed to spend the money we earned to send our child to school, to buy a car, to plan for our old age. We are being forced to serve the goals and needs of other Americans. That's inconsistent with the pursuit of happiness.
“Think about the essence of what your freedom is for. Your freedom is to build a life for yourself. To go out there, find a career you love, earn money, and then use that to serve your hopes and dreams. And whenever the government then takes your money and says, ‘No, we're going use it for other purposes. We're going give it to other people for their purposes,’ what that really translates into is, for instance, maybe someone can't live in a low-crime neighborhood, they have to live in a high-crime neighborhood.
“Maybe someone can't pay off student loans, which is what a lot of the kids we see when speaking at universities are struggling with. Well, that is completely unfair, and the fact is that if the government didn't have these programs, the vast majority of Americans are responsible, financially successful, and if the government wasn't taking so much of their money, they would be able to support themselves, and indeed, they'd be able to support themselves far better than today. Social Security, for all that it takes from us, for the average person, it only gives them about $1,000 a month, whereas if they were free to keep their own money and prepare for old age, there's no reason they couldn't get multiples of that.
“If the government had to do accounting the same way that businesses do, the shortfall we're talking about is not $12 trillion, which is about the debt today. Economists put the number at $205 trillion. That's the present value calculation. So, that means that we would have to take $205 trillion today and invest it in order to pay that number. Now, that's more money than exists on the earth. What it means in practice is that if we were to really pay that off by raising taxes, every federal tax would have to increase by upwards of 50 percent. That would just eviscerate our standard of living. It would really bring the economy to a halt. So, something has to change because the burden on young people's shoulders if you look at lifetime taxes versus benefits, the Baby Boomers today are on track to receive more than $300,000 of benefits than they ever will pay in taxes.
“The Millennials will do a little worse. They will have to be taxed $10,000 to $20,000 more than they ever receive in benefits, but their child's generation, what's going to happen to them is complete corruption. We're talking $400,000 more in taxes than they'll ever receive in benefits. Now, obviously, that's not really going to happen because that would just bankrupt people and we would never be able to do it.
“What it illustrates is the scale of our problem and the immorality of these programs that we would put such burdens on our children and grandchildren. Think of the outrage when we think when we hear about a Hollywood family whose child stars in movies, makes millions of dollars, and then by the time the child is 18, the parents spend it all on their own consumption.
“Well, we're doing something way worse to a whole generation of Americans, and we're doing it in the name of programs that are supposed to be these great moral achievements. And indeed, you have people like Senator Elizabeth Warren, talking about expanding Social Security and giving more benefits to seniors and taking more money from our children, which is just atrocious.
"For a 52 year old, government debt is actually going to make Medicare and Social Security promises almost meaningless for that generation because both are expected to run out of money within the next 20 years. So what is Senator Warren talking about? It's a real travesty. They are debt deniers because they're minimizing a real problem and keeping us from preparing for it, because the fact is every day you wait, the harder it is to deal with these issues.
“So, let's say that you were just going to try to do it the way that the liberals want to do it and raise taxes in order to pay these bills. First of all, and in the end, you can't do that. The level of taxation you would have to increase it today is something like 30 percent on all federal taxes. If we wait 20 years, we're talking 50 percent.
“We need to act now, but I think the question is what direction should we go? These programs are not bad just because they've suddenly gotten too expensive. They give people benefits that they didn't earn through savings and investment. Now, if you don't think that's going to end up in runaway costs, then you've never put Halloween candy on your front door with a sign that says ‘please take one.’
“If people can vote themselves benefits that they don't have to pay for, you're going to get these out of control costs. But the deeper issue is this. All these programs are based on the idea that rather than being free to earn money and use it to promote your life as you judge best, the government is going to take away the individual's control of his life. It’s going to force him into these programs like Social Security and Medicare, and it's, in effect, like we're all going to sit around a big tribal pot. We throw everything we earn in, and then hopefully, we'll get some scraps out of it. Right?
“But that's not the American way. The American way was you're free to achieve as much as your ambition and ability will make possible. What's crazy is this idea that even a person benefits from being in Social Security, if the government gives him more in the end than it took. Even that is not true, because the fact is that we're going to have different values and needs. Someone may have the goal to basically spend a decade or two in retirement playing golf. I'm a writer, and my goal is to basically do that until I can't do it anymore. And so, we have very different retirement needs. And if we were left free, I would save a different amount and use the money to promote different sorts of goals, say, putting my child into school, saving more modestly for old age, and he might put a lot more in his 401(k).
“All of that choice is taken away from us by the welfare state because a huge chunk of someone's income is just going to be poured into the laps of retirees, and then the government just gives a half-promise that says, ‘Hey, maybe one day you'll be able to tax your children and grandchildren to support yourself.’ It's bad for everybody. It takes away choice and control over our own lives, and pours this into these bureaucratic, one-size-fits-all systems.
“So every time the debt ceiling comes close to hitting, pollsters ask Americans what should be done, and often more than 70 percent say it shouldn't be raised. Yet of course it always is. So, there's the adult thing, American citizens do in order to end this debt draft manifesto, as well as how do we get young people to truly care about the debt? It's almost like they just seem to tend to gravitate to whichever candidate has the sleekest campaign or the hippest marketing, but almost none seem to care about the fact that they're going to have to work to pay off America's debt. It's almost like they just don't get it.
“Let me take young people first, and this is something I talk about at endthedebtdraft.com in detail. The problem is people have been throwing around the numbers about debt for a long time at young people, and they basically kind of shrug and go, ‘That sounds pretty bad.’ The reason is that these programs are always treated as moral, and young people are very idealistic. They tend to be idealistic, and what they're going to be motivated by is doing what's good and pursuing what's good, and yet, they've been taught that these programs are morally good. So they're not inspired to fight them. It seems like, ‘Yeah, that's kind of a policy wonk issue.’
“This is a moral issue, because it means instead of being free to make something of your life, you're going to be turned into a servant, and that's morally wrong. That’s not how individuals should interact with each other. We should have a society where nobody's forced to serve anybody, where we're all free to really make something of our lives and do something with our lives and build a life for ourselves and if they can see it in those moral terms, when it's not just a number, but they see, ‘Yeah, I wanted to start a business, and now I'm going to have to put that off for an extra year or two. That's awful.’
They can start to see that this really is a moral issue that they can get inspired by not just to ward off a disaster, but to really achieve something great, which is a freer, more prosperous, more moral society. As far as older Americans, most parents and grandparents don't want to devastate their children's future.
"We've been taught two things. One is that these programs are moral, and two is that they've earned their benefits, because they've been taught in effect that Social Security, these are big savings programs where you pay during your working career and then you get back your investment later in life. What they have to realize is there's no savings there. All they're getting back, every penny that they get has to come out of the pockets of their children and grandchildren. If they understood that, then they would be willing to question these programs as well. That's why I would like to see older Americans start giving political cover to those who oppose old age welfare programs. Why don't we have an organization called ‘Social Security Recipients Against Social Security,’ so that when somebody comes out and says, ‘What this program is doing to people is morally wrong,’ they can no longer smear them as people who just want to throw grandma off the cliff.”
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About Dawn Bennett
Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She hosts a national radio program on www.WMAL.com called Financial Myth Busting http://www.financialmythbusting.com. She can be reached on Twitter @DawnBennettFMB or on Facebook Financial Myth Busting with Dawn Bennett or email@example.com