May 22, 2009 Enough government for you?

Has the current economic downturn caused you to alter your retirement plans?  More than two thirds of respondents replied in the affirmative. This is consistent with national polls I have read in various trade journals. The decline in stock account, retirement plan and real estate assets has had a materially negative impact on respondent’s view of their current or future retirement.

 

Do you believe that you can pay enough in taxes that the government can provide you with a good life in retirement? Nearly ninety percent of respondents believe they cannot pay enough taxes to have their retirement income provided by the federal government. This is a double sided question in that it rejects taxes and rejects the level of income the government could conceivably provide. The implication is that individuals prefer to be responsible for themselves and their futures rather than running money through Washington, DC for future personal income needs.

 

Do you want to pay higher taxes in exchange for more government services? This was, perhaps, a loaded question in that we did not specify what types of services would be provided. That issue was left to the imagination of the poll participants. Overwhelmingly, ninety four percent rejected either the higher taxes or increased government services. This is overwhelmingly the opposite of General Colin Powell's recent comment stating the average American desires higer taxes and bigger government.

 

Rejecting higher taxes is not a surprise especially when we watched California voters strongly reject every tax increase on this week’s ballot by a two to one margin. The only California referendum to pass was a limitation on legislator’s salaries whenever the budget was not balanced. One could infer that respondents were also rejecting the idea of more government intervention in their lives. More services means more strings attached and less personal freedom.

 

Do you believe that our government can provide services in an efficient manner? Thisquestion was almost a unanimous rejection of the delivery of government services. It is consistent with responses to the prior question on higher taxes and more services. If the general assumption is government inefficiency, then, axiomatically, why would anyone pay more or want more?

 

Have you updated your will in the past two years? From a wealth management perspective it is very good to find that more than three quarters of respondents have up dated their will within the past two years. Estate planning documents need frequent review to verify that beneficiary designations and specified property transfers remain valid. This is especially true with designated transfers of specific assets to named heirs. At the time the wills and other documents were signed, the disposition of assets may have seemed fair. With the recent radical changes in stock and real estate values, fairness may no longer be the case requiring updated documents.

Should a family’s wealth be redistributed to the rest of the country when the parents die? There was no doubt about this. One hundred percent of the respondents rejected wealth redistribution at the estate level.  Presumably we had different respondents than on our March 28th poll where only ninety two percent objected to asset confiscation at death.  In the prior poll there was almost unanimous support for a flat tax which is consistent with these responses.

 

If you had the option to opt-out of Social Security and Medicare taxes in exchange for never receiving any benefit from these programs would you do it? Here is the anomaly in this week’s responses. Slightly less than half of the respondents would opt to take full responsibility for their financial future if they could be certain that the government would stay out of their life. They are willing to fully fund their own retirement and health care coverage without the government providing a safety net. 

 

The prior questions elicited responses that would imply conservative or, at least, libertarian, attitudes toward personal and fiscal responsibility. Yet, nearly fifty three percent are unwilling to cut the apron strings to the federal government’s programs.

 

Government intervention or provision requires the sacrifice of some level of liberty. The implication here is that we may well be further down the road to socialism than many of us want to imagine. Europe is struggling with generations that have become accustomed to government income even with the knowledge that their systems are financially doomed. Doomsday is just not this year so the voters delay the day of accountability to the next generation. Their problem is that they aren’t willing to have enough children to maintain critical mass either in their populations or their fiscal situation.

 

At least, in the United States, we are back on a road to population growth which is essential for a country and economy to survive. We are the only Western culture that can make that claim. Celebrate children and grandchildren. Without them, there will be no way to fix Social Security, much less Medicare.