SEPTEMBER 2012
THE OFFICIAL NEWSLETTER FOR GENERATION AMERICA MEMBERS
Shall not be
infringed
ALSO INSIDE
PAUL RYAN INVESTING FOR THE LONG TERM FREDRICKSBURG, TEXAS
OPENING REMARKS
The Campaign Throughout history, Americans have always fought for the personal freedoms our founding fathers secured for all of us.
and is widely recognized as the turning
(election) can be won! Look back at the mid-term elections of 2010 when supporters of ObamaCare suffered the largest defeat in the history of the Progressive movement. Those defeats were in almost every race from the Senate to Gubernatorial seats and local elections.
point in the American Revolution and
The Winning Campaign
our fight for freedom.
With a coalition of the Tea Party, Republicans, Libertarians, Independents and Democrats who are abandoning the Obama agenda, we can defeat President Obama and his supporters in the Senate while retaining the majority in the House of Representatives.
October 7, 1777 marks the defeat of the British in the second battle of Saratoga
On June 6, 1944 General Eisenhower committedAllied troops to the largest invasion in history that led to preservation of the free world. November 6, 2012: Our Election D-Day This November 6, 2012, can be viewed as a similar turning point in the battle to restore the freedoms, the opportunities and the economic stability that have been systematically destroyed. In fact, this November 6th could just be the most important day in all of our lives. On this Election D-Day, a battle will be waged and we must mobilize to prevail. This election can’t be lost or there will be four more years of bankrupting this country, destruction of our individual savings and security, and loss of our personal freedoms. Generation America is committed to protecting the economic safety, security and well being of seniors and all Americans. This was our mission when we started and it is the motivation that gets us out of bed every morning. The first step to victory is to stop the implementation of The Patient Protection and Affordable Care Act (ObamaCare), which will destroy the America that seniors have protected and nurtured. The good news is that this Battle
If Americans are educated about what is really happening in Washington, they will be motivated to stop this destructive movement. For America to prevail on November 6th, we must inform everyone we know. With our standard of living and freedoms on the line, everything must be done to educate, gain support, and get people to vote. It is simple. The most votes win. An educational grass roots mobilization is a critical component for victory. We are asking you to help with this effort. With each member “acting individually and in concert,” this battle will be won. With your commitment, we can elect citizens who oppose The Patient Protection and Affordable Care Act and take back America: Generation America will produce weekly, informative emails for everyone who joins this effort. They will be accompanied by either a short survey or petition, which will be used to impact current elected officials or those who hope to be elected in November. Everyone who knows the TRUTH can’t help but be energized to pass along the emails to their family and friends and get them involved.
Your Participation Is Essential For Success What we are asking you to do is to forward these emails to your friends and ask them to forward them to their friends. If each member forwards these to only 20 people and they continue the forwarding of this information, the truth will reach millions of voters. Not A Solicitation Let me make one thing perfectly clear, this effort is not a fundraiser or a membership drive for Generation America. This initiative is simply focused on November 6, 2012, and this crucial effort to stop the destruction of our Country. As members, just to remind you, the policy issues we are developing include: taxes, national security, deregulation of healthcare, fiscal responsibility, social security protection, term limits and shoring up Medicare (not reducing its growth by $500B over the next 10 years and forcing many seniors to buy additional coverage). It all begins with getting a new President as well as Senators and Representatives that take a stance this election season on repealing The Patient Protection and Affordable Care Act. Our fight is simple. Forward the emails to 20 family members, friends, and acquaintances. The truth will get out and America will win. As Thomas Jefferson said, “Educate and inform the whole mass of the people... they are the only sure reliance for the preservation of our liberty.” Sincerely, Michael Young Founder, Generation America
GENERATIONAMERICA.ORG
SEPTEMBER 2012
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In this issue:
14
What’s Really in the Ryan Budget Definining Ryan 15
20 29 ReduceYour Risk of Falling
31 Food & Your Health
The Success of Chile’s Privatized Social Security
10
Shall Not Be Infringed Plus: What They Didn’t Tell You About Mass Shootings 9
4
WHAT TO DO WHEN THE STOCK MARKET DEFIES LOGIC
FREDRICKSBURG, TX
SECTIONS
Special Feature: Your Second Amendment Rights and Freedom 4 News & Opinion 10
32
Your Finances 20 Health & Wellness 29 Travel 32 On the cover:
Minuteman Statue, Battle Green Square, Lexington, Massachusetts, by H.H. Kitson, dedicated on April 19, 1900. PHOTO: Ian Britton
Shall not be
infringed
GENERATIONAMERICA.ORG
If the Constitution of the United States is the most important document of man’s historical quest for liberty and selfgovernance, the Second Amendment to that document is the single most liberating phrase man has ever written. “A well regulated militia, being necessary to the security of a free state, the right of the people to keep and bear arms, shall not be infringed.” What do those words mean to you? What do they mean to us, as Americans, as seniors? How can a single line, a single law, make the difference between a society of free citizens and one that is socialist? To answer these questions, we must look into the fundamental principle from which the Constitution derives its true power. That principle is that the rights spoken of in the Constitution are not granted to us by the government; they are endowed upon us by our Creator and are unalienable. The Constitution’s power is that it forbids the government from acting in a way that violates those rights. In other words, it insures that those rights shall not be infringed. This is the heart of what defines this nation as more than just another constitutional republic; it defines us as a nation of free men. It was that philosophy that brought the world, by America’s example, out of tyrannical darkness at the end of the 18th century, and into the modern age. It has guided man from a world where every significant nation on earth was ruled by an absolute monarchy, to one where only a few, such as in Brunei, Qatar, and Swaziland, remain. Do we really feel that our current leaders are more qualified to guide us than the men who crafted the document that brought this about? The liberal media and left wing politicians want us to think that government-imposed regulation and the outright banning of arms are not an infringements upon our right. The nonsensical message repeated by them is that “sensible” gun laws pose no threat to liberty or law-abiding citizens, and we, the people, shouldn’t resist them. However, in order to allow the restriction of our God-given right to defend ourselves and our loved ones from violence, theft, and oppression, we must relinquish that right to the government.
BY SETH DISARRO, GENERATION AMERICA
Therefore, any law infringing upon our right to bear arms is, by definition, a threat to our liberty because it establishes that the rights enumerated in the Constitution can be considered nothing more than privilege. Once the government has authority over what was once our rights, it can measure out freedom, as it sees fit. The burden of voting to preserve America’s civil liberties, such as freedom of religion and freedom of speech, has often fallen to the older generation, and this civil liberty is no different. In total, about half of Americans report owning a gun, and Americans who are 55 and older, as a group, have the highest percentage of gun ownership. This statistic is also reflected in the membership of the National Rifle Association, which is predominantly over 55. In other words, seniors in this country are more likely to own a firearm than any other age group, and they are also more likely to vote. As a group, that means we are in a position to have our opinion and our vote taken very seriously by those who would seek to dissolve our rights. If half of Americans own guns, and seniors have the highest percentage of ownership, and we vote more than anyone else, how is it that our right to own guns is being legislated away? The answer is that those who seek to disarm the citizenry know that it must first be divided. They need to break apart gun owners into manageable groups. In this way they are able to avoid their combined voting power as they remove liberty from one group without invoking the outrage of the other. The myth the media, activists, and many politicians want us to believe is that all they are after are military style guns, handguns, concealable weapons, and those weapons that are very powerful, and that if we let them just outlaw these guns, they will leave us alone. Politicians need to convince the older Americans that they are not after our dove gun, or our deer rifle. They claim that those guns have a purpose, and are
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See also: What They Didn’t Tell You About Mass Shootings PAGE 9
SPECIAL FEATURE: YOUR RIGHTS
not used in crime, and, therefore, will never be a target of their restrictions. However, there is no reason to believe that the actual goal is anything short of the removal of all firearms and all ammunition from the populace.
The notion of freedom has become little more than a placating campaign slogan.
England is one of many examples of this “divide and conquer” tactic being used to eliminate the individual right to bear arms. Starting with the 1920 and 1937 firearms acts, ownership of firearms in England was restricted. Just as in the United States, the early approach was to ban or restrict the possession of those weapons considered dangerous to the public or the government. Ownership of a firearm now had to be justified. Once the government established that possession of a firearm required a specific “need,” they had only to limit what “needs” they considered justifiable. At first, some hunting and sporting use was considered an acceptable justification, but, defense of one’s person or home was not. If self-defense is not considered important enough to justify owning a gun, is it really that far of a stretch to imagine that there would be no “need” to allow people to hunt or to target shoot? It didn’t take long for the British to realize that. By 1968, England was outright banning hunting arms and ammunition. By 1997, the ownership of all handguns and almost all hunting arms was outlawed. So complete was England’s ban on firearms of all types, that British athletes training for shooting sports of the 2012 London games were forced to train off of British soil. The same is happening here at home. If the right to keep and bear arms is allowed to be within the control of the government to limit, how far will it go? What else will the government see that you have no reason to own? Will it be all ultra-high power “sniper rifles,” capable of assassinating a person at 500 yards, such as a scoped Browning bolt action with a walnut stock chambered for 30-06? We are expected to believe that these kinds of restrictions on our way of life are justifiable because they will eventually reduce crime, when, in fact, the opposite is true. Reducing the legal access to guns does not reduce violent crime, it causes it to increase. As the population becomes less able to defend themselves, the criminals,
being opportunistic in nature, commit more crime. With less risk inherent in committing violent crime, there is naturally more violent crime committed. The effect has been consistent in cities and states in the U.S. where ownership has been restricted, and on a national scale in other countries where it has been almost entirely forbidden. Again, we can look to England as an example. In the first five years after England implemented the 1997 firearms act, banning most weapons, gun-related crime sky rocketed from 13,874 to 24,070 incidences, and has remained about the same ever since. As a result, England now has a higher overall crime rate than the United States. Of course, the elderly were the hardest hit by this rise in crime, as they no longer had any means to protect themselves or their property. The myth that gun control will somehow limit criminal access to a gun is demonstrably false. Illegal guns, like any other black market commodity, operate on fundamental economic principals: So long as there is a demand, there will be a supply. The only people who will have their access to guns limited are those not willing to commit a crime by owning them. Banned firearms are easily illegally imported from other countries and transported across state lines like any other illegal item in demand. An extreme case of this level of circumventing gun laws can be found in the horrific case of Behring Breivik, the terrorist who perpetrated the 2011 mass killings in Norway. Some of the most restrictive gun control laws in the western world did not prevent him from obtaining weapons and explosives and using them to murder 77 innocent people. England, Australia, Canada, and the U.S., have had the same experience: As gun ownership decreased, gun-related crime dramatically increased. If the goal of disarming law-abiding people is truly to decrease crime, why do governments continue to systematically eliminate the ability of their people to own firearms when the crime rates rise, rather than fall? The political message most often repeated during these failed efforts is that if the restrictions were more severe and more universal they would eventually cause crime be reduced. The more
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SPECIAL FEATURE: YOUR RIGHTS
logical motivation for perpetuating such a failure to a large person, but it is a great equalizer in is to increase the balance of power in favor of the another way, too. It insures that the people are government, and to decrease the perception and the equal of their government whenever that expectation of individual liberty among the government forgets that it is servant and not governed citizenry. It other words, the purpose is master of the governed. When the British forgot to make people into subjects; to make them that they got a revolution. And, as a result, we more dependent upon their government and Americans got a Constitution; a Constitution that, more likely to accept or demand the expansion as those who wrote it were determined, would of its size and power. Is this not the goal of the keep men free. If we give up part of that Constiliberal government? Is this not the unspoken goal tution we give up part of our freedom and of such things as socialized healthcare and Social increase the chance that we will lose it all.” Security? If we allow ourselves to believe that we —Ronald Reagan, 40th President of the can trade liberty for security, we are destined to United States have neither. The Second Amendment is the most extraordinary and extreme symbol of a truly free population. The guarantee that the people will not be
Today, understanding the importance of preserving our civil liberties seems to be lost on many of our politicians. Many treat it as an extreme or outdated philosophy, one to be cheered in political speeches, but not cherished in policy. The notion of freedom has become little more than a placating campaign slogan. Are we, as Americans a free people, or have our freedoms been so infringed upon over the decades that we have come to redefine the concept of liberty in order to allow it to fit within
PHOTO: aitcheye.com
the limits imposed upon us by ourselves and our government? How much of our liberty have we voted away over the past couple hundred years? Is it so much that we no longer know what it means to be free? Have we been misled so far from the noble path blazed for us that we are willing to give up the very tools that forged this nation? It was the individual ownership of
If we allow ourselves to believe that we can trade liberty for security, we are destined to have neither.
military grade weaponry that allowed us to rend this land from the British, and build the nation that inspired a world to seek freedom. Now, safe and prosperous, we debate the merits of
disarmed insures that the power of governance will remain with the people, for unjust laws cannot be enforced because the whole of the people are armed. What could possibly show more clearly that this country is ruled by the people than to show that the government is powerless to disarm them? Ronald Reagan may have put it best… “The gun has been called the great equalizer, meaning that a small person with a gun is equal
allowing or preventing the people from owning this or that kind of weapon, while the very bones upon which our laws are built forbid the limiting of such ownership, in any way. If we don’t see individual ownership of arms for what the Constitution intended it to be—an unalienable God-given right—we will watch it eroded away until we are no freer than an Englishman. Wasn’t that how all this got started in the first place? G
GENERATIONAMERICA.ORG
9
What They Didn’t Tell You About Mass Shootings
GRAPHIC: TIME. Sources: James Alan Fox, Northeastern University; Bureau of Justice Statistics; Gallup.
I
t seems like there is another mass shooting in the news every few days. Some of these shootings, such as the recent one that took place in Aurora, Colorado, involve what is commonly, and incorrectly, referred to as “assault rifles.” The rhetoric is always the same; if people didn’t have access to these types of weapons there would be less shootings, and the shootings that did happen would result in less victims. What they didn’t tell you is that the availability or the use of military style weapons has little statistical effect on either the frequency of shootings or the number of fatalities caused by the shooters. Over the past 40 years the number of mass shootings in the United States has remained, more or less, consistent at an average of around 20 per year. The
highest number of mass shootings and the victims of those shootings in the US reached a 40 year high at the end of the decade long assault weapons ban and the height of the Clinton “Crime Bill.” There are a variety of factors that contribute to the number of victims caused by a mass shooting: the intent of the shooter, the proximity of the shooter to the victims, the ability of the victims to exit the area, and the duration of the attack. What has proven to not be a consistent cause of a high number of victims is the type of weapon used. The data shows that common handguns are just as likely to cause a high number of fatalities as a semi-automatic AR-15 carbine with a 100 round C-Mag, such as the one used in Colorado.
What does appear to be the most significant and consistent factor in determining the number of victims is if the shooter was stopped by a citizen or by law enforcement. In the cases where the shooter was stopped by a citizen (armed or unarmed), the number of victims are consistently low. In the events where the shooter was stopped by law enforcement the number of victims are consistently high. The facts that the media will not bother to report are that there are no more mass shootings occurring today than normal, the type of weapon used is not the problem, and the best way to end a mass shooting, with the least number of victims, is through the bravery of those being attacked. —SETH DISARRO
NEWS
OPINION
The Success of Chile’s Privatized Social Security I
By José Piñera
t’s an honor for me to share with you some of the experiences we have had in Chile with our new private pension system. I would like to comment on how the new system works, how we were able to make the transition from the old system to the new one, and what have been the main economic, social, and political consequences of the new system. I will not explain the shortcomings of the old pay-as-you-go system in Chile. Those shortcomings are very well known because that is the system that is failing all over the world. In Chile we accomplished a revolutionary reform. We knew that cosmetic changes—increasing the retirement age, increasing taxes—would not be enough. We understood that the pay-as-you-go system had a fundamental flaw, one rooted in a false conception of how human beings behave. That flaw was lack of a link between what people put into their pension program and what they take out. In a government system, contributions and benefits are unrelated because they are defined politically, by the power of pressure groups. So we decided to go in the other direction, to link benefits to contributions. The money that a worker pays into the system goes into an account that is owned by the worker. We called the idea a “capitalization scheme.”
José Piñera, who as Chile’s minister of labor privatized the state pension system, is president of the International Center for Pension Reform and co-chairman of the Cato Institute’s Project on Social Security Privatization.
We decided that the minimum contribution should be 10 percent of wages. But workers may contribute up to 20 percent. The money contributed is deducted from the worker’s taxable income. The money is invested by a private institution, and the returns are untaxed. By the time a worker reaches retirement age—65 for men, 60 for women—a sizable sum
of capital has accumulated in the account. At retirement the worker transforms that lump sum into an annuity with an insurance company. He can shop among different insurance companies to find the plan that best suits his personal and family situation. (He pays taxes when the money is withdrawn but usually at a lower rate than he would have paid when he was working.) As I said, a worker can contribute more than 10 percent if he wants a higher pension or if he wants to retire early. Individuals have different preferences: some want to work until they are 85; others want to go fishing at 55, or 50, or 45, if they can. The uniform pay-as-you-go social security system does not recognize differences in individual preferences. In my country, those differences had led to pressure on the congress to legislate different retirement ages for different groups. As a result, we had a discriminatory retirement-age system. Blue-collar workers could retire at 65; white-collar workers could retire more or less at 55; bank employees could retire after 25 years of work; and the most powerful group of all, those who make the laws, the congressmen, were able to retire after 15 years of work. Under our new system, you don’t have to pressure anyone. If you want to retire at 55, you go to one of the pension-fund companies and sit in front of a user-friendly computer. It asks you at what age you want to retire. You answer 55. The computer then does some calculations and says that you must contribute 12.1 percent of your income to carry out your plan. You then go back to your employer and instruct him to deduct the appropriate amount. Workers thus translate their personal preferences into tailored pension plans. If a worker’s pension savings are
GENERATIONAMERICA.ORG
not enough at the legal retirement age, the government makes up the difference from general tax revenue. The system is managed by competitive private companies called AFPs (from the Spanish for pension fund administrators). Each AFP operates the equivalent of a mutual fund that invests in stocks, bonds, and government debt. The AFP is separate from the mutual fund; so if the AFP goes bankrupt, the assets of the mutual fund— that is, workers’ investments—are not affected. The regulatory board takes over the fund and asks the workers to change to another AFP. Not a dime of the workers’ money is touched in the process. Workers are free to change from one AFP to another. That creates competition among the companies to provide a higher return on investment and better customer service, or to charge lower commissions. The AFP market opened on May 1, 1981, which is Labor Day in Chile and most of the world. It was supposed to open May 4, but I made a last-minute change to May 1. When my colleagues asked why, I explained that May 1 had always been celebrated all over the world as a day of class confrontation, when workers fight employers as if their interests were completely divergent. But in a free-market economy, their interests are convergent. “Let’s begin this system on May 1,” I said, “so that in the future, Labor Day can be celebrated as a day when workers freed themselves from the state and moved to a privately managed capitalization system.” That’s what we did.
Workers have not lost a dime. Of course, we created a regulatory body that, along with the central bank, set some investment diversification rules. Today we have 20 AFPs. In 14 years no AFP has gone bankrupt. Workers have not lost a dime. Of course, we created a regulatory body that, along with the central bank, set some investment diversification rules. Funds cannot invest more than x percent in government bonds, y percent in private companies’ debentures, or z percent in common stocks. Nor can more than a specified
amount be in the stock of any given company, and all companies in which funds are invested must have credit ratings above a given level.
W
e set up such transitional rules with a bias for safety because our plan was to be radical (even revolutionary) in approach but conservative and prudent in execution. We trust the private sector, but we are not naïve. We knew that there were companies that might invest in derivatives and lose a lot of money. We didn’t want the pension funds investing workers’ money in derivatives in Singapore. If the system had failed in the first years, we would never have been able to try it again. So we set strict rules 14 years ago, but we are relaxing those rules. For example, only three years ago we began to allow the funds to invest abroad, which they weren’t allowed to do initially, because Chilean institutions had no experience in investing abroad. The day will come when the rules will be much more flexible. Let me say something about the transition to the new system. We began by assuring every retired worker that the state would guarantee his pension; he had absolutely nothing to fear from the change. Pension reform should not damage those who have contributed all their lives. If that takes a constitutional amendment, so be it. Second, the workers already in the workforce, who had contributed to the state system, were given the option of staying in the system even though we thought its future was problematic. Those who moved to the new system received what we call a “recognition bond,” which acknowledges their contributions to the old system. When those workers retire, the government will cash the bonds. New workers have to go into the new private system because the old system is bankrupt. Thus, the old system will inevitably die on the day that the last person who entered that system passes away. On that day the government will have no pension system whatsoever. The private system is not a complementary system; it is a replacement that we believe is more efficient. The real transition cost of the system is the money the government ceases to obtain from the workers who moved to the new system, because the government is committed to pay the pensions of the people already retired and of those
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NEWS & OPINION
who will retire in the future. That transition cost can be calculated. In Chile it was around 3 percent of gross national product. How we financed it is another story. It will be done differently in each country. Suffice it to say that even though governments have enormous pension liabilities, they also have enormous assets. In Chile we had state-owned enterprises. In America I understand that the federal government owns a third of the land. I don’t know why the government owns land, and I don’t know the value. Nor am I saying that you should sell the land tomorrow. What I am saying is that when you
contribution was seen by workers and employers as basically a tax on the use of labor; and a tax on the use of labor reduces employment. But a contribution to an individual’s pension account is not seen as a tax on the use of labor. Unemployment in Chile is less than 5 percent. And that is without disguised unemployment in the federal government. We are approaching what could be called full employment in Chile. That’s very different from a country like Spain, with a socialist government for the last 12 years, that has an unemployment rate of 24 percent and a youth unemployment rate of 40 percent.
Chile’s private pension system has been the main factor in increasing the savings rate... 26 % of GNP, compared to about 15% in Latin America. consider privatizing Social Security, you must look at assets as well as liabilities. I am sure that the U.S. government has gigantic assets. Are they more or less than the liabilities of the Social Security system? I don’t know, but the Cato project on privatizing Social Security will study that. In Chile we calculated the real balance sheet and, knowing there were enough assets, financed the transition without raising tax rates, generating inflation, or pressuring interest rates upward. In the last several years we have had a fiscal surplus of 1 to 2 percent of GNP. The main goal and consequence of the pension reform is to improve the lot of workers during their old age. As I will explain, the reform has a lot of side effects: savings, growth, capital markets. But we should never forget that the reform was enacted to assure workers decent pensions so that they can enjoy their old age in tranquility. That goal has been met already. After 14 years and because of compound interest, the system is paying old-age pensions that are 40 to 50 percent higher than those paid under the old system. (In the case of disability and survivor pensions, another privatized insurance, pensions are 70 to 100 percent higher than under the old system.) We are extremely happy. But there have been other enormous effects. A second—and, to me, extremely important—one is that the new system reduces what can be called the payroll tax on labor. The social security
Chile’s private pension system has been the main factor in increasing the savings rate to the level of an Asian tiger. Our rate is 26 percent of GNP, compared to about 15 percent in Latin America. The Asian tigers are at 30 percent. The dramatic increase in the savings rate is the main reason that Chile is not suffering from the so-called tequila effect that plagues Mexico. We do not depend on short-run capital flows because we have an enormous pool of internal savings to finance our investment strategies. Chile will grow by about 6 percent of GNP this year, the year of the “tequila effect.” The stock exchange has gone down by only 1 or 2 percent and will be higher at the end of the year. Chile has been isolated from short-run capital movement because its development is basically rooted in a high savings rate. Pension reform has contributed strongly to an increase in the rate of economic growth. Before the 1970s Chile had a real growth rate of 3.5 percent. For the last 10 years we have been growing at the rate of 7 percent, double our historic rate. That is the most powerful means of eliminating poverty because growth increases employment and wages. Several experts have attributed the doubling of the growth rate to the private pension system. Finally, the private pension system has had a very important political and cultural consequence. Ninety percent of Chile’s workers chose to move into the new system. They moved faster than
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Germans going from East to West after the fall of the Berlin Wall. Those workers freely decided to abandon the state system, even though some of the trade-union leaders and the old political class advised against it. But workers are able to make wise decisions on matters close to their lives, such as pensions, education, and health. That’s why I believe so much in their freedom to choose. Every Chilean worker knows that he is the owner of an individual pension account. We have calculated that the typical Chilean worker’s main asset is not his small house or his used car but the capital in his pension account. The Chilean worker is an owner, a capitalist. There is no more powerful way to stabilize a free-market economy and to get the support of the workers than to link them directly to the benefits of the market economy. When Chile grows at 7 percent or when the stock market doubles—as it has done in the last three years—Chilean workers benefit directly, not only through higher wages, not only through more employment, but through additional capital in their individual pension accounts.
P
rivate pensions are undoubtedly creating cultural change. When workers feel that they own a fraction of a country, not through the party bosses, not through a politburo (like the Russians thought), but through ownership of part of the financial assets of the country, they are much more attached to the free market, a free society, and democracy. By taking politicians out of the social security business we have done them a great favor because they can now focus on what they should do: stop crime, run a good justice system, manage foreign affairs—the real duties of a government. By removing the government from social security, we have accomplished the biggest privatization in Chilean history—someone even called it, paraphrasing Saddam Hussein, the mother of all privatizations, because it has allowed us to go on to privatize the energy and telecommunications companies. That has been our experience. Of course, there have been some mistakes. There are some things that should be improved. There is no perfect reform. With time and experience, I know I would do some things differently. But on the whole, I can tell you that it has been a success beyond all our dreams.GSOURCE: CATO.ORG
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ECONOMIC SNAPSHOTS: PUBLIC DEBT In this section we will be bringing you some illustrations of the condition of our Nation. This month we point the spotlight on our Nation’s out of control debt.
US: Crushing Burden of Debt Debt held by public as a share of economy
100%
WWII CURRENT PATH
1940
1950
1960
1970
1980
1990
2000
2010
2020
SOURCE: OMB/CBO
Europe: Trouble Ahead
Government debt as a share of economy (2011)
152% 114%
120% 100%
91%
100% 64%
SPAIN
SOURCE: IMF
PORTUGAL IRELAND
ITALY
GREECE
UNITED STATES
NEWS & OPINION | ELECTION 2012
What’s Really in the Ryan Budget The Ryan budget has generated considerable controversy in Washington... it’s an appropriate time to analyze the plan and consider what it would mean for America.
By Daniel J. Mitchell
Thanks to several years of fiscal restraint during the 1990s, the burden of federal spending dropped to 18.2% of gross domestic product by the time Bill Clinton left office. The federal budget today consumes more than 24% of economic output, a one-third increase since 2001 in the share of the U.S. economy allocated by politics rather than market forces. That makes the Republican House budget, which would reverse this trend, extremely important for the economic health of the country. Both political parties deserve blame for the spending spree that’s put America in a fiscal ditch. President George W. Bush was a big spender and President Obama has compounded the damage with his stimulus spending and other programs. But the era of bipartisan big government may have come to an end. Largely thanks to Rep.
Paul Ryan and the fiscal blueprint he prepared as chairman of the House Budget Committee earlier this year, the GOP has begun climbing back on the wagon of fiscal sobriety and has shown at least some willingness to restrain the growth of government. Policy makers should focus on reducing the burden of government spending as a share of GDP—leaving more resources in the private economy. The Ryan budget has generated considerable controversy in Washington, and it will become even more of an issue now that Mr. Ryan is Mitt Romney’s running mate. So it’s an appropriate time to analyze the plan and consider what it would mean for America. The most important headline about the Ryan budget is that it limits the growth rate of federal spending, with outlays increasing by an average of 3.1% annually over the next 10 years. If spend-
GENERATIONAMERICA.ORG
ing is left on autopilot, by contrast, it would grow by 4.3% (or nearly 39% faster). If President Obama is re-elected, the burden of spending presumably will climb more rapidly. This comes as a surprise to many people since the press is filled with stories about the Ryan budget imposing trillions of dollars of “savage” and “draconian” spending cuts. All of these stories, however, are based on Washington’s misleading budget process that automatically assumes an ever-expanding government. The 4.3% “base line” increase is the benchmark for measuring “cuts”— even though spending is rising rather than falling, and it’s only the rate of spending growth that is being slowed. Even limiting spending so it grows by 3.1% per year, as Mr. Ryan proposes, quickly leads to less red ink. This is because federal tax revenues are projected by the House Budget Committee to increase 6.6% annually over the next 10 years if the House budget is approved (and this assumes the Bush tax cuts are made permanent). Since revenues would climb more than twice as fast as spending, the deficit would drop to about 1% of gross domestic product by the end of the 10-year budget window. To balance the budget within 10 years would require that outlays grow by about 2% each year. Spending in the Ryan budget means the federal
To balance the budget within 10 years would require that outlays grow by about 2% each year. budget reaches balance in 2040. There are many who would prefer that the deficit come down more quickly, but from a jobs and growth perspective, it isn’t the deficit that matters. Rather, what matters for prosperity and living standards is the degree to which labor and capital are used productively. This is why policy makers should focus on reducing the burden of government spending as a share of GDP—leaving more resources in the private economy. The simple way of making this happen is to follow what I’ve been calling the golden rule of good see ‘RYAN BUDGET’ PG 18
15
Defining Ryan By Michael D. Tanner
With more than a third of American voters telling pollsters that they don’t yet know enough about Republican vice-presidential candidate Paul Ryan to have an opinion of him, the race to define the Republican congressman is fully joined.
D
emocrats clearly want to paint Ryan as an unbending ideologue who refuses to compromise and is unwilling to work with his opponents. Already Obama campaign adviser David Axelrod has taken to calling Ryan a “right-wing ideologue” and “quite extreme.” President Obama himself refers to Ryan as “the ideological leader of Republicans in Congress.” It’s impossible to deny that there has been an ideological component to Ryan’s career in Washington. He has been an articulate spokesman for the idea of smaller, less costly government, and he is perhaps Congress’s best-known advocate of entitlement reform. There is no doubt that in his heart he prefers markets to government control. But any effort to paint him as an inflexible ideologue runs up against his demonstrable tendency toward pragmatism. Throughout his time in Washington, Ryan has been the classic “half a loaf” type of conservative. Time and again, he has shown that he is willing to compromise and take far less than he had originally sought, as long as he is moving incrementally in the direction he wants to go. You won’t find Ryan on the short end of any 434-to-1 votes.
T
ake, for example, the infamous “Ryan budget.” Yes, it cuts spending and reforms Medicare—though not Social Security— but it was far from the most fiscally conservative budget offered by Republicans this year. Just compare Ryan’s budget with the one proposed by Senator Rand Paul (R., Ky). Ryan’s budget takes 30 years to reach balance. Paul’s would have balanced the budget in five years. Ryan would cut government spending by $4.1 trillion over ten years. Paul would have cut spending an additional $4 trillion over that period. Ryan’s budget didn’t touch Social Security. Paul’s would have raised Social Security’s retirement age and means-tested the program. Now, that is a fiscally conservative budget. In fact, Senators Jim DeMint (R., S.C.) and Pat Toomey (R., Pa.) also offered budget proposals that cut spending more than Ryan’s budget did. Ryan was willing to push the envelope on spending cuts, but only as far as he could while still getting
NEWS & OPINION | POLITICS
the votes of moderate as well as conservative Republicans. Yes, his budget is conservative, but it is hardly radical.
A
ccording to the National Journal, Ryan works with Democrats about as often as any Republican does. Most famously, he collaborated with liberal senator Ron Wyden (D., Ore.) to develop the latest iteration of his Medicare reform plan. In fact, the evolution of Ryan’s Medicare plan shows both the promise and the perils of his pragmatism. Ryan’s first Medicare reform plan was fairly accurately described as a voucher program: Seniors would each receive a support payment roughly based on the current per-capita amount of Medicare spending. Wealthy seniors would receive somewhat less, poor and sicker seniors somewhat more. The Ryan-Wyden plan, on the other hand, abandons the voucher concept in favor of a pure premium-support model.
Ryan was willing to push the envelope on spending cuts, but only as far as he could while still getting the votes of moderate as well as conservative Republicans. Yes, his budget is conservative, but it is hardly radical. Ryan also gradually agreed to loosen his proposal’s cap on overall Medicare spending. In his original plan, Medicare spending would not be allowed to grow any faster than the overall economy. In Ryan-Wyden, the cap is GDP growth plus a full percentage point. At the same time,
the burden for exceeding growth caps has shifted from seniors themselves, who would have been required to pay more out of pocket under the original Roadmap for America’s Future, to providers, who will have their reimbursements reduced under Ryan-Wyden. The budget passed by the House this year was in some ways closer to Ryan’s original Medicare proposal than to the Ryan-Wyden plan. But Ryan has clearly shown that he is willing to water down his ideas if doing so garners Democratic support. The downside of Ryan’s pragmatism is that each change has weakened his proposal. His original proposal would have reduced Medicare spending by far more than Ryan-Wyden. Given that even the most optimistic scenarios show Medicare running $38 trillion in the red, Ryan’s retreat is not a step in the right direction. Still, it might have been justified if Ryan’s willingness to compromise had attracted substantial Democratic support. But, in the end, it was the Democrats who refused to budge. Senator Wyden was the only Democrat to join with Ryan, and even he later backed away from his support under pressure from his caucus. Ryan’s pragmatic streak has also led him to cast many votes that seem to contradict his reputation as a budget hawk. Ryan would no doubt say that he won important concessions in exchange for those votes—for instance, getting health savings accounts included in the Medicare prescriptiondrug bill—or that the alternatives were worse. But any way you look at it, those votes hardly make Ryan an inflexible budget cutter. All of this means that Ryan is not really the government-slashing savior envisioned by some conservatives. It also means that he is not the ideological hard-liner portrayed by some liberals. He is, in fact, likely to disappoint his conservative backers on occasion. But he may also be able to work across party lines to really change the disastrous course we are now on.G Michael Tanner is a senior fellow at the Cato Institute and author of Bad Medicine: A Guide to the Real Costs and Consequences of the New Health Care Law. SOURCE: cato.org. This article appeared on National Review (Online) on August 22, 2012.
GENERATIONAMERICA.ORG
17
Like Steve Jobs, Ben Bernanke Should Think Long-Term
by William Poole
Fed Chairman Ben Bernanke recently
As I reflect on these issues, I keep coming back to the marvelous biography of Steve Jobs by Walter
kicked off the annual Economic
Isaacson. Are there lessons in his life as an
Symposium of the Federal Reserve
entrepreneur and head of Apple Computer—now
Bank of Kansas City, which draws
just Apple—for public policy today?
central bankers, academics, market participants
Apple made huge investments in developing the
and policymakers from around the world. I have
Macintosh computer and subsequent i-this and
taken the liberty of drafting his ideal speech:
i-that. The vision was remarkable and the length
Again this year, as for the past three years, we
of time to develop new products not trivial.
seek to understand the prospects for the U.S.
Apple’s Macintosh computer project began in
and world economies following the most severe
1979 and continued through turbulent years in
recession since the Great Depression.
the early 1980s of very high interest rates
We thought that by now economic growth would
followed by deep recession; the machine did not
be picking up, but the expected sustained
come to market until early 1984.
recovery has not occurred. In the U.S., employ-
Later products also took years to develop. Even
ment is growing but far too slowly.
the Apple store took almost two years from Jobs’
Why?
conception to opening.
Bottom line: The absence of a long-run fiscal
Business investment is especially vulnerable to
plan is weighing heavily on planning by the
uncertainties about the future because the lead
business sector.
times are often long. Projects expected to come
I’ll focus this morning on the role of nonresiden-
to market in three to five years are much more
tial fixed investment and the effects of fiscal
dependent on the long-term environment than
policy on this important component of GDP. In
on the immediate business situation.
the second quarter of 2012, real business fixed
Washington’s Fiscal Paralysis
investment was still 6% below its level at the
Lagging business fixed investment cannot be
business cycle peak in the fourth quarter of 2007.
attributed to monetary policy. Interest rates are see ‘LONG TERM’ PG 19
Interest rates are at historic lows and have been for some time. Banks are flush with funds, as are large corporations. Monetary conditions are not restraining economic growth. We need to look elsewhere for the source of the problem.
NEWS & OPINION
RYAN BUDGET CONTINUED FROM PG 15 fiscal policy: The private sector should grow faster than the government. This is what happens with the Ryan budget. The Congressional Budget Office expects nominal economic output (before inflation) to grow about 5% each year over the next decade. So if federal spending grows 3.1% annually, the burden of federal spending slowly shrinks as a share of GDP. According to the House Budget Committee, the federal budget would consume slightly less than 20% of economic output if the Ryan budget remained in place for 10 years. This would be remarkable progress considering that the federal government is now consuming 24% of GDP vs. Mr. Clinton’s 18.2% in 2001. If Paul Ryan’s policies are social Darwinism, as Mr. Obama and his allies allege, one can only speculate where Bill Clinton ranks in their estimation. Spending restraint also creates more leeway for good tax policy. Regardless of what you think about deficits, the political reality is that it is difficult to lower tax rates if government borrowing remains at high or rising levels. If deficit spending continues at current levels, then higher tax rates are almost sure to follow. And higher tax rates can’t create an environment conducive to more investment and jobs. The Ryan budget avoids this unpleasant outcome by addressing the problem of excessive government spending. This makes it possible to extend the 2001 and 2003 tax-rate reductions. It also clears the way for other pro-growth reforms, such as Gov. Romney’s proposed across-the-board 20% income tax cut, a more competitive 25% corporate tax rate, and less doubletaxation of dividends and capital gains. One of the best features of the Ryan budget is that he reforms the two big health entitlements instead of simply trying to save money. Medicaid gets block-granted to the states, building on the success of welfare reform in the 1990s. And
Medicare is modernized by creating a premium-support option for people retiring in 2022 and beyond. This is much better than the traditional Beltway approach of trying to save money with price controls on health-care providers and means testing on health-care consumers. Price controls are notoriously ineffective—because health-care providers adapt by ordering more tests and procedures—and politically unsustainable due to lobbying pressure. Means testing imposes an indirect penalty on people who save and invest during their working years. That should be a nonstarter for a political party that seeks to encourage productive behavior and discourage dependency.
But good entitlement policy also is a godsend for taxpayers, particularly in the long run. Without reform, the burden of federal spending will jump to 35% of GDP by 2040, compared to 18.75% of output under the Ryan budget. Assuming the GOP ticket prevails in November, Mitt Romney will make the big decisions on fiscal policy. But there is no escaping the fiscal math. If Mr. Romney intends to keep his no-tax-hike promise, he has to restrain the growth of spending. This doesn’t mean he has to go with every detail of the Ryan budget—but it’s certainly a good place to start.G Daniel J. Mitchell is a senior fellow at the Cato Institute. SOURCE: CATO.ORG
everything old is new again CHICAGO TRIBUNE 1934
GENERATIONAMERICA.ORG
LONG TERM CONTINUED FROM PG 17 at historic lows and have been for some time. Banks are flush with funds, as are large corporations. Monetary conditions are not restraining economic growth. We need to look elsewhere for the source of the problem. Everyone is well aware of the standoff— indeed, paralysis—in Washington over fiscal policy. Monetary policy cannot fix or even offset the damage being done by fiscal inaction. In round numbers, to stabilize its finances the federal government needs to cut its annual deficit by $500 billion, or about 3% of GDP. Doing so will require cuts in outlays, revenue increases, or some combination of the two. Doing more would be wise, but 3% of GDP is the minimum. The problem for the economy is this: No one knows where the spending cuts or revenue increases will fall. Consider expenditure cuts first, because their impact is easy to explain. In nominal dollars, in 2011 total government consumption expenditures and gross investment—“government purchases” for short—was 20% of GDP. This figure includes both federal and state and local purchases, which are partly financed by the federal government. Obviously, a resolution of the budget issue will not eliminate the entire 20%.
current fiscal policy is stimulative, because of the deficit, in fact policy is very restrictive.
have to make a commitment of several years to see the Mac and, later, various i-products come to market.
The same argument applies to revenue increases, whether by increases in tax rates or by reduction of tax preferences.
In no case was the outcome clear at the outset.
Until disputes about corporate taxation are resolved, corporations are left wondering what the effects will be on their particular businesses from some combination of tax rate and tax preference changes. Tax Uncertainty What about the individual income tax? Reducing certain tax preferences will affect the businesses of those benefiting from those preferences. For example, scaling back the deductibility of home mortgage interest—a proposal discussed by many—leaves prospective homeowners and homebuilders in doubt. Similarly, increasing upper income tax rates, which may or may not occur, will affect the return to entrepreneurial activity. Steve Jobs was not himself much motivated by money, but his investors and employees were. The possibility of a tax
19
Every serious observer agrees that there is a pressing need for tax reform, and that the shape of reform is to lower rates and broaden the tax base. It may or may not be desirable to raise more tax revenue in the process of reforming the system. That is a political judgment properly left to elected officials. My counsel, however, is to get on with it. In the late 1990s, Steve Jobs launched the “Think Different” ad campaign. For the federal government, the mantra needs to be “Think Long-Term.” We are fortunate that the U.S. economy is terribly resilient. Current fiscal uncertainties have depressed growth but seem unlikely to cause a recession in the near-term. Vigorous growth is in our future once people understand what government spending is going to be cut and what taxes are going to be increased to control the deficit.
The possibility of a tax increase and uncertainty over its size weighs negatively on today’s entrepreneurs. increase and uncertainty over its size weighs negatively on today’s entrepreneurs.
If you were a government contractor, however, from a defense supplier to a road-paving company, absent a budget deal, you couldn’t know what your share of the cutbacks would be. Even if ultimately government purchases are reduced by 3% of GDP, 20% of the economy is negatively affected today because no one knows who will fall in the 3% group.
They gave up secure jobs to join a young firm with a charismatic leader and the promise of great riches if the company were successful.
Thus, although on crude Keynesian terms
They knew, however, that they would
The Apple story makes clear the importance of accumulation of human capital. Steve Jobs attracted skilled and experienced software engineers and managers from other companies.
I emphasize again that monetary policy cannot fix the fiscal problem. If the Fed finds something more that might be done through monetary policy, we will do it. But I must be clear: Monetary policy has gone about as far as it can in offsetting the negative effects of current fiscal policy paralysis.G William Poole is a senior fellow at the Cato Institute and Distinguished Scholar in Residence at the University of Delaware. He retired as president and CEO of the Federal Reserve Bank of St. Louis in March 2008. SOURCE: CATO.ORG
YOUR FINANCES
When the Stock Market Defies Logic, Think Long-Term By Terry Savage
What do you do when the financial markets are upside down? What’s the strategy when bad news seems to be good news, and vice versa? It’s a question stock market investors must be asking these days, when economic growth is stalling, fiscal policy is undecided, Europe is talking and not acting, and even the Fed can’t seem to find a policy to help. Yet the Dow Jones industrial average closed out last week at 13,096—within 8
doubled from that closing low point! If you were dumping stocks along with the crowd in early 2009, you may feel humiliated—and far less wealthy. If you were buying stocks that week, you can brag to your friends and neighbors. If you were paralyzed with fear and did nothing, you can now breathe a sigh of relief. If you were this columnist, you can point back to a column you wrote on that day
Y
ment into your 40l(k) or IRA. You have no guarantees that the market will be higher when you are withdrawing during your retirement years. But historic odds say you’ll do better investing regularly in a diversified portfolio of stocks than leaving your money in the bank. Following that discipline is easier when you have some money safely set aside in a money fund to “hedge” your bets.
ou have no guarantees that the market will be higher when you are withdrawing during your
retirement years. But historic odds say you’ll do better
percent of its all-time high of 14,164.53 set
investing regularly in a diversified portfolio of stocks
on Oct. 9, 2007. That was before the
than leaving your money in the bank.
world generally recognized the global financial crisis that has engulfed us in waves over the past five years. The subsequent financial fear pushed the Dow nearly straight downward for the next 18 months, to a closing low of 6,547.05 on March 9, 2009, as investors dumped stocks in a classic selling panic. At current levels, the DJIA has now
urging people to stay positive and continue investing and believing in the future of America. But what no one can do is take credit for consistently calling the turns in the market over these past five years. That’s just something to think about as you keep making that monthly invest-
That’s why you don’t put all your eggs in any one basket. And why you step back, gain perspective, then make a plan—and stick to it. Long-term thinking is what generates prosperity over the long run. A golden opportunity? So if you buy into the idea that trading see ‘STOCK MARKET’ PG 22
GENERATIONAMERICA.ORG
Ready to Retire: What Should You Do With Your 401(k)?
21
percent withholding; your money continues to grow tax-deferred; and you maintain the option of rolling it over, should you ever decide to go back to work. The main potential drawback is that your investment choices are limited to
By Carrie Schwab-Pomerantz
what’s available in the plan. If you have 15
Dear Carrie: I’m 64 and about to retire. I’m starting to get my finances organized, and I’m wondering, should I leave my money in my 401(k) or transfer it to a different account? —A Reader
or so funds to choose from, that could be
Dear Reader: Retirement planning can sometimes seem like a lot of work, but the more you get organized now, the more you can relax later on. You’re wise to be looking at your choices ahead of time because when it comes to what to do with a 401(k) after retirement, there are some pros and cons to consider. And what you choose will have an impact not only on the potential continued growth of your retirement savings but also on your income taxes. Review your basic choices Generally, there are four things you can do with a 401(k) when you leave your job. One in particular—rolling over to a new employer—doesn’t really apply to your situation, but the other three merit consideration. Basically, when you retire you can:
n Take the cash: At your age, there’s no penalty, but there are tax consequences. Withdrawals from a 401(k) are taxed as ordinary income, so this could be a big initial hit. The Internal Revenue Service withholds 20 percent right off the top (this is mandatory) and any remaining taxes will be factored in when you prepare your return for the year in which you take the distribution. On the plus side, you’ll have immediate access to your money. On the minus side, your savings will no longer grow tax-deferred. There is a 60-day window in which you can still choose to move your money into a tax-deferred IRA, but after that time, your only choice is to put it in a taxable account.
just fine. But if you’re limited to three or four investment selections, you might be better off moving your money elsewhere. There also may be limitations on withdrawals and when and how you invest. Make sure you get the details.
n Roll it over to an IRA: Like a 401(k), an IRA keeps your money growing tax-deferred. It also gives you the flexibility to choose the types of investments that you deem best. Plus, you can invest and access your money whenever you want, without going through a plan provider. Those are significant advantages. One possible drawback is that a 401(k) may have more legal protection from creditors than an IRA.
n Decide what to do with company stock: If you have appreciated company
stock in your 401(k), there’s another
n Keep your 401(k) with your former
course of action that could save money
employer: This is probably the easiest
on taxes. No matter what you do with
and does have some benefits. You avoid income taxes and the mandatory 20
the rest of your 401(k) assets, you can transfer your company stock to a taxable
4 BASIC CHOICES
FOR ROLLING OVER YOUR 401K
1. Take the cash 2. Keep your 401(k) with your former employer 3. Roll it over to an IRA 4. Decide what to do with company stock
YOUR FINANCES
account and take advantage of what’s called net unrealized appreciation. With this strategy, when the shares are transferred, you pay ordinary income taxes only on the cost basis of the stock (the average cost at the time you received it from your employer), which could be significantly lower than the current value. If you sell immediately, you pay taxes on the appreciation beyond the cost basis at the long-term capital gains rate. If you decide not to sell immediately, you will pay taxes on any additional appreciation at either the long- or short-term capital gains rate, depending on your holding period. If you were to simply roll this stock over into an IRA, you’d end up paying ordinary income taxes on the current value when you withdraw it, which could be much higher than long-term capital gains taxes. Factor in social security Whether you take your entire 401(k) in cash at once or withdraw from it over time, the distributions will be added to your ordinary income. This, in turn, can impact how your Social Security benefits are taxed. Currently, single filers could pay income taxes on up to 85 percent of benefits if their modified adjusted gross income (MAGI) is over $34,000. For married couples filing jointly, the MAGI threshold is $44,000. As you can see, there’s a lot to consider. You’ll also want to look at your 401(k) in conjunction with your other sources of retirement income. This might be a good time to sit down with your tax or financial advisor to review your entire financial picture. All the best for a long and rewarding retirement.G Carrie Schwab-Pomerantz, Certified Financial Planner™, is president of Charles Schwab Foundation and author of “It Pays to Talk.” You can e-mail Carrie at askcarrie@schwab.com. This column is no substitute for an individualized recommendation, tax, legal or personalized investment advice. © 2012 CHARLES SCHWAB & CO., INC. MEMBER SIPC. DISTRIBUTED BY CREATORS.com
STOCK MARKET CONTINUED FROM PG 20 short-term market moves is better left to people who find roller coasters thrilling, then you might start looking around for additional historic long-term trends on which to base your investing philosophy. I’m talking about the kinds of very long-term cycles that are hidden in the shorter (one- and two-year) immediacy of the financial markets. So what do we know about what historically happens to paper currencies? Very simply, we know that when an empire or a country runs up debt, the rulers eventually resort to “printing” more currency to pay down that debt—as opposed to trying to balance their budgets through policies that will generate economic growth. Rulers won’t cut spending and raise taxes if they are trying to “buy” support or compliance from the populace. Once debt gets out of hand, they will “print.” The problem in Europe now is that the individual countries cannot “create” the Euro currency. They are all bound to its standards. Only Germany has enough power to acquiesce in “printing” to rescue the banking system. And Germans have horrific memories of the currency printing spree in the late 1920s, which helped bring Hitler to power. While the United States remembers the Great Depression, Germany remembers the Great Inflation—and stands resolutely against a European bailout. America, on the other hand, has a generational insecurity about recessions and depressions. We’ve seen what can happen when the government demands austerity as a solution to debt problems. And we’re hoping to avoid that at all costs. Eventually, that cost may be inflation—money printing—especially if our government cannot organize around
policies that promote economic growth. Remember, these are not short-term political issues but longer-term economic trends that will defy politicians of both parties. And if you step back and take the larger perspective, you’ll want some protection against that possibility. Historically, that protection has been gold—currently trading around $1600 an ounce. The idea of buying gold now may seem as outrageous as buying stocks in
V
ery simply, we know that when
an empire or a country runs up debt, the rulers eventually resort to “printing” more currency to pay down that debt... March 2009 at Dow 6547. But stocks doubled from that point, when no one was looking and few were buying. If our country doesn’t get its financial act together, you could see a similar percentage move in gold—the historic “hedge” against inflation. Let me make my point clear. Gold could double from the current $1,600 an ounce if Congress doesn’t get its act together. I have no time frame on that possibility, no deadline—and despite taking my own advice, I devoutly hope it won’t happen. Soaring gold prices would mean that something important has broken down in the American political and financial system, and that our paper currency—the U.S. dollar—would no longer be the safe haven the entire world seeks today. It’s tough to think about but not impossible. And that’s The Savage Truth.G Terry Savage is a registered investment adviser and is on the board of the Chicago Mercantile Exchange. She appears weekly on WMAQ-Channel 5’s 4:30 p.m. newscast, and can be reached at terrysavage.com. © 2012 TERRY SAVAGE PRODUCTIONS. DISTRIBUTED BY CREATORS.com
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HEALTH
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WELLNESS
Maintain Your Health: Reduce Your Risk of Falling By Dr. David Lipschitz
A
fter age 65, about 30 percent of people fall at least once annually. If a hip fracture occurs, 25 percent will die in a year and 50 percent will become dependent— frequently requiring nursing-home care. Fortunately, much can be done to reduce the risk of a fall, the need for lengthy hospital stays or the loss of independence. The risk of falling frequently is due to declines in balance, mobility and gait, as well as a high risk of fainting caused by a blood pressure drop when attempting to stand up. Visual difficulties, dizziness, inappropriate shoe choices and drug side effects often contribute to falls. Tripping due to environmental hazards in the home or elsewhere remains the major cause of falls at any age. For a person at risk of falling, an evaluation by a physician is essential. Medical conditions that contribute to falls must be identified and treated, and problems with gait and balance should be evaluated. Medications that increase the risk of falling should be avoided. Wherever possible, keep medications to a minimum and avoid sleeping pills, tranquilizers and alcohol. Patients must be made aware that medications to treat hypertension can lead to dangerous drops in blood pressure, with changes in posture. Never stand up suddenly and always have something to hold on to.
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HEALTH & WELLNESS
No matter your health, aging is associated with a relentless loss of muscle mass, an increased proportion of weight as fat, and progressive weakness that slows gait speed, affects balance and increases the risk of falls. It follows that the more we do to maintain strength the better. Physical therapy can help reduce falls. Treatment includes balance exercises and working with weights that build muscle, bones and most importantly, strength. The older the patient, the longer the time taken to see tangible improve-
...walk as much as possible. The more time spent being immobile or sitting in a wheelchair, the greater the loss of muscle and the increased chance of a fall. ments, but they will occur and in the long term, the results are well worth the effort. When physical therapy ends, keep moving and consider joining a health club to maintain and improve strength and balance. If needed, do not be embarrassed to use a cane, walker or wheelchair. But walk as much as possible. The more time spent being immobile or sitting in a wheelchair, the greater the loss of muscle and the increased chance of a fall.
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ost serious falls occur in the bathroom. Carefully review the bathroom and make sure slippery surfaces can be avoided, that water does not leak from the shower or tub, and if possible, install handrails from the bed all the way into the bathroom. Often a raised toilet seat with armrests can prove helpful. A sturdy plastic seat should be placed in the tub or shower and use a hand-held shower to bathe. If a wheelchair is needed or gait and balance is significantly impaired, a uniquely designed bathtub or shower may be necessary. Fall-proof the home by clearing walking areas of boxes and electrical and phone cords. Remove low coffee tables and move magazine and plant stands out of the way. Loose rugs should be removed or taped to the floor; uneven wooden floorboards or carpeting must be repaired; and skidproof materials should be used for cleaning.
Many falls are caused by standing on a chair or attempting to remove something from an out-of-reach cupboard. For this reason, clothing, cleaning materials, dishes, utensils and food must be accessible and stored within easy reach. Adequate lighting decreases the risk of a fall. Assure that each room has ambient light from outside during the day, is well lighted at night and use nightlights liberally. Always switch on a light before climbing the stairs and install glow-in-thedark or illuminating light switches. If the risk of a fall is too great, consider whether living alone in a large house with stairs is appropriate. It may be time to move to a one-level home or assisted-living facility, where help is available and people surround you. And as you grow older, no matter your health, live as close as possible to immediate family. Accidents due to falls are a major cause of physical disability, the need for nursing-home care and poor quality of life. The earlier precautions are taken to reduce the risk of a fall, the better.G Dr. David Lipschitz is the author of the book Breaking the Rules of Aging; more information is available at: drdavidhealth.com. To find out more about Dr. David Lipschitz and read features by other Creators Syndicate writers, visit creators.com. Š 2012 CREATORS.COM
GENERATIONAMERICA.ORG
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Jennifer Nelson, M.S., R.D. and Katherine Zeratsky, R.D., FOR THE MAYO CLINIC
WARM WEATHER FOOD SAFETY TIPS
As the temperature rises so does our excitement over picnics and grilling. Unfortunately, the number of foodborne illnesses rise too. Most people know to keep potato salad cold. But beyond that, are you thinking about food safety? Consider the following food for thought as you plan your summer outings. Check the forecast. You know to refrigerate
food back in the cooler.
Use a thermometer. Don’t rely on the color of meat to judge when it’s cooked enough. Use a food thermometer to check the temperature. Safe minimum temperatures are:
Come clean. If your picnic spot doesn’t have
165°F (74°C) for any type of poultry
clean running water, bring some with you. Bring
160°F (71°C) for ground meat other than poultry
wipes or sanitizing gel for surfaces and hands.
145°F (63°C) for solid cuts, such as steaks, of meat or fish
perishable food within two hours. But did you know that drops to one hour when the temperature is above 90 F (32 C)? Serve, eat and get
Wash hands before food prep and after handling raw meats. Keep your cool. Use an insulated cooler with ice, ice packs or partially frozen items to keep food at 40 F (4 C) or cooler. Pack smart. Keep separate coolers for food and
Sugar is sugar— Don’t be fooled
beverages. Chances are people will be in and out of the beverage cooler, which lets cold air escape. To keep food as cold as possible, keep that cooler closed until you’re ready to cook. Pack meat in plastic and put it on the bottom of the cooler to prevent it from leaking on other foods. Pack two platters—one for raw meat and one for cooked meat.
What are you packing in your picnic cooler? What are you grilling? And how are you doing it safely? To your health, Katherine G
The Food and Drug Administration recently denied a petition by the Corn Refiners Association to rename high fructose corn syrup “corn sugar.” Soon after that, the mayor of New York City proposed prohibiting the sale of large sodas and other sugary drinks (“large” defined as more than 16 fluid ounces). These two events could be viewed as big government regulating what should be personal choice. However, to me, they demonstrate our conflicted feelings about the sweet stuff. Whether sweetness is in the form of table sugar (sucrose) or high fructose corn syrup (HFCS),
Soft drink makers are even switching from HFCS back to sugar. After all, sugar seems more natural and even healthier—right? Nope. Sugar-containing drinks, such as fruit drinks, sodas, energy drinks, sports drinks and sweetened bottled waters, are the major source of added sugar in the American diet. About half of the U.S. population— adults and children 2 years old and over—have
both contain fairly equal amounts of fructose.
sugary drinks on any given day.
As a sweetener, HFCS has been controversial.
This habitual sipping of sugary drinks has been
Food scientists are exploring how the body
linked to poor diet, weight gain, obesity and type
handles it and if there are differences from table
2 diabetes.
sugar. It’s great that we can distinguish HFCS
So don’t be fooled. The recent decision to not
from sugar on food labels. Especially because
allow HFCS to be called sugar is fine by me. But
there are people with fructose intolerance who
the trend away from HFCS to sugar in soft drinks
absolutely must avoid HCFS.
is no improvement.G
TRAVEL
Fredricksburg Texas Home to German Heritage, Pacific War Museum By Kathryn Lemmon
Just before setting out for Fredericksburg, Texas, I happened to see a news item on the Texas tradition of taking photos of youngsters among bluebonnets. When I arrived, I got my first glimpse of these beautiful blue flowers. What a lucky connection—and what a great start to my visit. Fredericksburg is a manageable city with a thriving main street in an area known as Texas Hill Country. Regardless of its size, however, it packs in a number of diverse attractions. From German and World War II history to wine, fine art and presidents, it’s all here. The region was first settled by Germans, and it proudly retains the heritage. A popular landmark in town is the Vereins Kirche (Society’s Church) Museum. Regional names such as New Braunfels and Luckenbach, made famous by the Waylon Jennings and Willie Nelson song, also indicate the German connection. In those early days residents obtained land both outside of town and a small
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WHEN YOU GO: When it’s time for a break, replenish at: Fredericksburg Brewing Co. yourbrewery.com Farm Haus Bistro fredericksburgherbfarm.com Der Lindenbaum Authentic German cuisine derlindenbaum.com Fredericksburg is a 75-minute drive from the San Antonio airport. For more information, visitvisitfredericksburgtx.com
Above: Quaint Main Street in Fredricksburg Far left: Blue Bonnet is the Texas state flower and is a popular subject of photos. Left: The Texas White House, Lyndon B. Johnson National Historical Park
plot in town. An interesting holdover from that time period are homes known as Sunday Houses. Whether for church, shopping or trading, the Sunday House provided practical shelter for a short stay. Before making the time-consuming wagon journey back to the farm, this gave the rural folks a place to rest. Today visitors can still see a well-preserved Sunday House at the Pioneer Museum Complex. This complex is a collection of authentic structures preserved from the 19th century that includes the Weber Sunday House. The Weber family had a seven-mile trek to town, no small distance with a horse-drawn wagon and children in tow. The Sunday House typically had just one room with a lean-to kitchen downstairs plus a half-story above, usually only reachable by an outside stairway. The children most often were assigned to the upper portion.
lesser-known areas such as Leyte and Peleliu. The museum follows a timeline of the events leading up to, during and after the war in the Pacific. One of the displays is a two-man Japanese submarine that was one of only five similar vessels that took part in the Pearl Harbor attack. Special lighting and sound techniques provide a dramatic exhibit. The unusual location—a long haul from the ocean—for a comprehensive museum about the war in the Pacific is due to Adm. Chester Nimitz, who spent the first six years of his life in a hotel operated by his grandfather on Main Street. Eventually he left Texas for the U.S. Naval Academy. Later he became the commander-inchief of the Pacific during World War II. The restored Nimitz Hotel today houses the Admiral Nimitz Museum, showcasing the life and career of Nimitz as well as early life in Fredericksburg.
Sunday Houses aren’t the only structures special to “Fred.” Tank Houses are another type that still stands from times past, National Museum of and local residents are the Pacific War naturally protective of them. Prior to the time of public utilities, homeowners had to supply and store their own water. Generally the tanks were made up of two sections, the lower support portion and the upper tank portion. Today the remaining tanks have been creatively converted into garden sheds or offices, and one is large enough to act as a bedroom at a bed-andbreakfast inn.
Based on the population of the town, Fred has a surprisingly large number of art galleries. The InSight Gallery features fine art with a Western focus in a beautifully restored downtown building that dates from 1907. The Artisans at Rocky Hill Gallery was easily my favorite. The gallery displays the works of specialized artisans who work their magic in reclaimed metals, fabric, ceramics, copper and carved wood, to name just a few. One of them has created a one-of-a-kind horse sculpture from metal gun parts.
The National Museum of the Pacific War is also located in Fredericksburg. Like so many aspects of Texas, it is larger than life. It’s so extensive that tickets are issued for 48 hours to allow time to cover the entire place. The spread of buildings and exhibits covers six acres and has more than 50,000 square feet of indoor space.
A Texas-style welcome awaits at the Lyndon B. Johnson National Historical Park east of Fredericksburg. This park has two distinct visitor areas separated by 14 miles and split between Johnson City and the LBJ Ranch. At the Johnson City Visitors Center, park rangers can help plan a visit.
Since both my father-in-law and my father spent time in the Pacific during the war, I was especially eager to explore the exhibits. Individual sections cover the well-known areas of activity, such as Pearl Harbor and the Coral Sea, along with
It is possible to tour the Texas White House where the 36th president conducted much of his business. The house was first opened for tours in 2008, and additional rooms were opened in 2011. Lady Bird’s necklaces still hang on the bathroom wall, and her clothing is still in the closet. G© 2012 CREATORS.COM.
GENERATIONAMERICA.ORG
DOOR COUNTY W I S CO N S I N oaaaaaaaaaaaaap
G Pleasantly All-American g
Surprisingly Varied
By Steve Bergsman
M
y visit began with a nature hike at Whitefish Dunes State Park on a cool spring day in bright sun and with few
other visitors. I was in Door County, Wis., a forested peninsula that separates Lake Michigan from Green Bay. Similar to the way the eastern tip of Massachusetts geologically breaks away from the mainland to form a haphazard and extended peninsula called Cape Cod, near to the footballcrazed city of Green Bay, Wisconsin’s Lake Michigan coastline uncharacteristically and haphazardly breaks its solid shores with a long jut of land, forming a less-heralded but equally beautiful vacation land. In fact, Door County is often called Wisconsin’s Cape Cod. If the dramatic shoreline, beaches and traditional New England locale attract summer vacationers and weekend travelers to Cape Cod from the East
Coast, Door County does the same for Midwesterners. The difference is that Door County’s isolation on the Great Lakes makes it virtually unknown outside of the Midwest. Once you drive past Sturgeon Bay and head north on the peninsula there are no chain restaurants or hotels. It’s like the America of the late 1800s and early 1900s. You’ll pass small harbor towns of interesting names—Egg Harbor, Fish Creek, Ephraim, Baileys Harbor and Whitefish Bay—all stranded in an architectural time warp of a more innocent era. Inns, lodges and bed-and-breakfasts proliferate, each one fantastically idiosyncratic. The restaurants and eateries are family-owned and finely tuned to the local ambience. Take for example Wilson’s Restaurant and Ice Cream Parlor, which has the familiar 1950s look new restaurants often try to re-create. The difference is that Wilson’s has been around since 1906, so the 1950s ambience is a real part of its history.
You’ll pass small harbor towns of interesting names— Egg Harbor, Fish Creek, Ephraim, Baileys Harbor and Whitefish Bay—all stranded in an architectural time warp of a more innocent era.
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TRAVEL
There are no Starbucks shops in northern Door County, so one morning I traveled to Door Country Coffee and Tea, where I had heard I could get a baked-egg breakfast and taste the some of the best coffee in the state. This place commercially brews its own brand onsite besides making a host of flavored coffees. While I’m not usually a fan of flavored coffee, the cookie-dough- and pumpkin-flavored coffees were definitely worth trying.
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hat also makes Door County the epitome of All-Americanism is its focus on cherries. As with Washington, D.C., in the spring, many Midwesterners come here just for the cherry blossoms. At one time Door County was the largest cherry producer in the country, with about 95 percent of the market. Alas, today it only produces about 5 percent as other states, such as neighboring Michigan, have begun to dominate. Still, in the spring everything comes up cherries in Door County. First of all, you couldn’t call yourself a restaurant here if you didn’t offer cherry pie for dessert. At breakfast, my hotel offered cherries and yogurt or for dessert a cherry petite. My first stop when I arrived was Country Ovens, which produces Cherry DeLite products and offers the
Midwesterners come here just for the cherry blossoms. At one time Door County was the largest cherry producer in the country, with about 95 percent of the market. dried cherries and bottled cherry juice that I picked up for a snack. I also had a cherry ice cream sundae, cherry wine and at a place called Julie’s Park Cafe, ribs cooked in cherry barbecue sauce. Door County also produces apples, grapes and other fruit, and now there is a growing wine business. That being the case, the area offers a number of places to do wine tastings. One of the more interesting is the Orchard Country Winery and Market, which was built on the acreage of an old family farm where the huge original barn still dominates the landscape. The cherry orchard is accessible, and visitors can try their hand—or their
GETTING THERE: The Appleton and Green Bay airports are close to Door County and serviced by several of the major carriers. I flew from Phoenix, through Minneapolis and on to Green Bay.
puckered lips—in the cherry-pit-spitting competition area. Door County counts 298 miles of shoreline. At its widest point, the land mass stretches about 11 miles. It’s not mountainous, but the land is ruggedly uneven, with rises and bluffs, beaches and coves, farmland and village. Before traveling about, I would strongly suggest taking the Door County Trolley tour, which lasts about an hour and half and provides an overview and a history of the area. The landscape is heavily wooded now, but between the 1850s and 1890s, the peninsula was laid bare of vegetation, with almost every tree cut for the lumber market and shipped to the fast-growing cities of Chicago and Milwaukee. But when I took my 2.8-mile Red Trail hike around Whitefish Dunes State Park I was able to experience a thick forest of white pine, white cedar, sugar maple and hemlock while strolling past the dune thistle and rare flowers like the dwarf lake iris. The naturalist leading my walk listed porcupine, red fox, deer, coyote, otter and the occasional bear as wildlife she sees in the park.
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and dunes aren’t common in Wisconsin, and those in the park are some of the highest in state. The Red Trail hike includes a walk up Old Baldy, the tallest dune in the park at 93 feet. Indeed, surrounded by forest, I thought I was walking through hill country, but no, everything beneath my feet was sand. Afterward, I was telling a Wisconsin down-stater that I was from Arizona, where the hard sand desert land can’t support tall vegetation such as trees and what a nice surprise my hike had been. “Door County is like Sedona, Ariz.,” he told me. “There’s something in the atmosphere that makes you feel better.”
G© 2012 CREATORS.COM.
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