by Stephen Seufert, The Seufert Papers, January 15, 2014
“It is our duty now to begin to lay the plans and determine the strategy for the winning of a lasting peace and the establishment of an American standard of living higher than ever before known. We cannot be content, no matter how high that general standard of living may be, if some fraction of our people—whether it be one-third or one-fifth or one-tenth—is ill-fed, ill-clothed, ill-housed, and insecure.” FDR, January 11, 1944, State of the Union Address
Now more than ever, there is a fear of what the future will bring. Americans of all walks of life are struggling to make ends meet. It has become abundantly clear that “trickle-down” economics bore little fruit. The millennial generation, my generation, is looking for leadership and solutions to guide them through these difficult economic times.
Several economists and policymakers have suggested a minimum income in order to combat rising economic inequality and sluggish economic growth. The idea would be to provide each citizen over the age of 18 with a minimum income of $11,945 each year. Unfortunately, such an idea would cost well over $2 trillion a year to fund. Another, less expensive alternative could serve to reignite the American middle class.
For example, say the United States instituted a minimum income of $2,500 every year from birth to 18 years of age. Much like Social Security, those children wouldn’t see the money until their 18th birthday: which by that point would amount to $45,000(give or take about $200 billion overall for one year of funding). This “trust fund” could then be spent on paying college tuition (student loan debt averaged $29,400 in 2012), buying a car (average cost for a new car was $32,769 in 2013), putting a down payment on a home, or one could defer spending and save for a rainy day. Ultimately, the purchasing power of millennials would increase tenfold; thus bolstering America’s consumer driven economy.
Perhaps the program could start off with a progressive increase in funding. The first year of the program those turning 18 would receive only $2,500, the second year those turning 18 would receive $5,000, and the third year $7,500 and so on. With a gradual increase in funding, the American people could witness the benefits the program had year-to-year on economic growth.
This “Youth Social Security” would benefit youth, adults, and seniors alike. Parents, instead of having to help their children pay for a new/used car or college tuition, could instead focus on saving for retirement. With parents being able to save more means the burden on traditional Social Security funds would in turn decrease; allowing the retirement age to be pushed back.
How would such a program be paid for? According to the nonpartisan Tax Policy Center, raising the estate tax by 10% could produce more than $250 billion in added revenue over the next ten years. Closing tax loopholes could be another source of funding. A study by the U.S. Government Accountability Office discovered that in 2011 alone, $181 billion in revenue was lost to tax loopholes that benefited major corporations. Simply put, benefits for Wall Street have only risen the last few decades, while Main Street struggles to pay the bills. Additionally, there is the hope that such a program would lower costs of safety net programs (i.e. food stamps, housing assistance).
With the creation of a Youth Social Security, a new era of prosperity and growth could be ushered in for the middle class. The idea is firmly rooted in both liberalism and libertarianism. Liberalism believes in the collective spirit of the nation, while libertarianism in the strength of the individual to make their own choices in life. For those that say millennials would waste the funds; I would counter that they couldn’t do any worse than the bureaucrats in Washington or the bankers of Wall Street. I have much greater faith in the average American to spend wisely then those currently holding the reins of power and influence. Youth Social Security would promote economic liberty and freedom in a way in which the most positive and liberating aspects of free market capitalism is maintained and strengthened. I hope to expand and refine this idea in future writings.