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Paying the Price of Poor Planning:

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Message Mike Folkerth

Good Morning Middle America, your “after the 4th” King of Simple News is on the air.

 

I have often spoken about the “social safety net” that we have in America. I have also remarked that the only difference between us and those in 3rd world countries is that we have a job and for those who don’t, there is social safety net.

 

The question then becomes, “How many people need to be unemployed before the safety net collapses?” After all, it’s the taxes of the working that support the benefits of the unemployed.

 

I heard that. Someone said, “Nooooo it’s not. I paid into my unemployment insurance and so did my employer.” This is true, but we don’t pay enough to provide for 100% of our benefits. The program is set up in such a manner that it will only support a small percentage of those paying in, should they become unemployed. Like any insurance, should the group all make claims on the same day, there goes the neighborhood.

 

To punctuate what I’m saying, thirty three states currently have unemployment funds below recommended levels. When they run out, they will have to borrow the money. Where do you suppose that money will come from? Higher taxes and higher premiums for those who remain employed is the obvious answer.

 

This is the same mathematical phenomenon that has caused Medicare to go into the red this year of 2008. It will be this same mathematical truth that will cause Social Security to go broke a little further down the road. And, it’s the same math that has caused fuel to reach the $4.00 mark.

 

How the heck did we ever get in this mess? Well, we spent countless years, days and hours, planning for it. At least we sent the brightest and the best to Washington to do that planning for us. Uh-oh. So there’s the cause; we sent others to do our planning and they planned for themselves, not us. Well who’d ah’ thunk it?

 

But we were so busy enjoying the temporary trappings of the all of this flawed planning, that it was just as easy to ignore the consequences of a plan that would surely become someone else’s problem after we were dead. But if you’re reading this, you lived too long, because we have arrived at the end of the temporary era. Well, darn the luck anyway.

 

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Mike Folkerth is the author of "The Biggest Lie Ever Believed" and is not your run-of-the-mill author of finance and economics. The former real estate broker, developer, private real estate fund manager, auctioneer, Alaskan bush pilot, (more...)
 
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