PAYGO system of government

While it is important to understand where the candidates are coming from, it seems obvious that the real test of any candidate is and will remain to be what they say and think today. Their thoughts about how they want to steer the country is the impetus for any American’s vote. An interesting back story cannot hurt a candidate and can certainly help them both in how it shaped them and how the public perceives them. There seem to be two issues that are dominating this year’s election.

One issue is purely domestic: the economy has gone down the proverbial tubes. How each candidate plans to manage an economic recovery has become paramount during this recession. The housing market has collapsed. Debt continues to rise. Millions of American are without health insurance. An economic plan that will benefit all Americans is probably the most important issue of the 2008 election. Finishing in a close second for most important issue of the election regards America’s standing in the international community.

This issue combines a plethora of areas, from arms control, to issues of diplomacy with nations termed as ‘threats,’ to America’s continued presence in Iraq, to even the current administration’s disdain for the Geneva Convention. The future well-being of Americans is predicated on two things: how America is doing at home and how it is doing abroad. At home America struggles financially. Abroad, the dollar is down, diplomacy has failed, and America’s international standing has taken a hit. Obama’s plan for these issues are extremely sensible and a change from the current Washingtonian culture.

The conversation will continue with the domestic issues and then move forward to conversations abroad. The central tenant for Obama’s economic plan is his plan for a middle class tax cut (“Plan for restoring fiscal discipline”). During the Bush presidency, the tax burden has increasingly been forced upon the middle and lower classes, as President Bush has instituted and maintained tax cuts for the upper class, following the trickle-down economics methodology began by Republicans under Ronald Reagan.

This increased tax burden has left the lower classes with less spending power, especially considering the consistently rising prices of food, energy, health care and education (Pethokoukis). It seems fairly intuitive that if the bulk of Americans has less money to spend, and the prices of necessary goods rise, then their quality of life would suffer. Critics would certainly respond that increasing the tax burden of the upper class would adversely affect economic growth. While a valid argument, it seems equally as likely that the Bush tax cuts have stymied growth themselves (Pethokoukis).

Limiting the purchasing power of the vast majority of American society has to limit growth; people simply cannot afford to participate in the economy at a level to ensure growth. The other important aspect of Obama’s fiscal strategy is his plan for government spending. As the Bush administration racks up the highest deficit in our government’s history (after succeeding a President who had been running budget surpluses), Obama sees the need to promote fiscal responsibility that will not harm future generations of Americans.

This plan of fiscal responsibility has three facets: to stop spending the Social Security surplus, to lower the spending deficit without adversely affecting the economy, and to continue the PAYGO system of government spending that prevents a government budget that does not match government income. Social Security is an interesting issue because of its changing dynamic. Presently, we run a surplus: more money comes in from Social Security taxes than goes out in payments to retirees.

However, as baby boomers retire, economists predict that those surpluses will quickly turn to deficits. There will be fewer American taxpayers trying to support more eligible beneficiaries. Obama’s plan is to tweak the system by stopping the spending of the surplus money, and by expanding the income that is taxable by Social Security, which is currently capped at $97,500 (Pethokoukis). Any money made over this mark is not taxable by Social Security.