Mission: Protect the future of the US (Part 1) - laying the foundation

I haven't written anything in a while due to work, travels but also because I've been preparing a lengthy mini-series blog. Tax season has just passed and now the 2012 presidential election looms on the horizon - with the US facing significant challenges:

 -As CNN noted in the last week (although this was fairly widely known), Social Security and Medicare face shortfalls that are sooner than was previously expected - the programs will be unable to pay full benefits within 2 decades.

 -The national debt now exceeds GDP.

 -The United States spends more on health care per capita than any other country in the world - and does not come close to achieving the best health outcomes.

 -The United States spends more on defense than the rest of the world combined.

 -Unemployment has stubbornly remained above 8%, despite the monetary supply increasing by nearly 10% in the last year.

 The United States is in dire need of a long term plan to stabilize the economy, fix social security/medicare and create a sustainable fiscal/monetary structure. The following multi-part series will present a fiscal policy designed to achieve those aims. This is not the only plan that could achieve those aims, but in my humble opinion it is a plan that is the most likely to achieve these objectives.

 The plan is based on the following principles: 1) Risk taking must be rewarded without invoking moral hazard. When a person starts or invests in a business, he or she is inherently taking a risk. They are risking their capital, time and other resources in hopes of a higher long term return. Taxation erodes the return from that risk - as such taxation upon capital investments and business investments must be taxed at the lowest levels possible. At the same time, we must create a situation where we will not reward individuals who have over-leveraged themselves in an irresponsible manner - failure must be allowed.

 2) Barriers to employing Americans must be reduced. When companies are taxed on employing individuals, this increases the marginal cost of labor and therefore reduces the demand for labor.

 3) Due to health care costs, health care is the largest risk to the middle class' prosperity - it must be addressed in a substantial way that minimizes the risk of health issues jepoardizing Americans' future. Despite advances in medicine, the availability of nutritious food, and the opportunity to exercise, all our bodies will eventually break down. As previously noted, the United States spends more per health care than any country and does not achieve top tier health outcomes.

 4) Transfer payments and welfare packages are not affordable. The United States spends over $1.40 for every dollar that it takes in. It cannot afford to tax individual A to provide for individual B. The answer to most 'why was X cut?' questions boils down to a fairly simple answer: The United States cannot afford it.

 5) The Tax code can and should be simplified. Economic decisions should be made in maximizing individual welfare - those decisions should not be artificially altered and has created bubbles (see housing) - tax breaks should be accounted as representng spending while the tax rate represents the actual taxation. Sources for the myriad statements I present in the series will be presented in the final edition.

 Future editions will be as follows and will be released weekly for the next several weeks. Part 2 - Accompanying/Preceding Legislation Part 3 - What will we spend? Part 4 - How will we pay for it? Part 5 - Goals.