Position Paper: Economic and Moral Conservative with a Social Conscience

BY: Rev. Capt. Daniel W. Merrick, Ph.D.; M.E.; B.S.P.; B.B.M.

USAR, ARMORED CAVALRY, Retired, Disabled American Veteran.

Brief Background:

Dr. Merrick holds a bachelors degree in Psychology and Bible Missions, a Masters in Vocational Education, and a Ph.D. in Biblical Linguistics and Iconology. He is the third in his family line to mustang in the armed forces by going from enlisted to officer. Captain Merrick is an author of the book ‘Instructions To Money: From Welfare To Millionaire’ published by Outskirts Press of Parker Colorado and is presently writing his next book entitled ‘Breakfast With The President’ a political commentary by American Patriots. Dr. Capt. Merrick served in the Army in the Ordnance and Armored Cavalry branches before he was disabled in 1992. Capt. Dan is also a radio show host and the President of RDJ Catalog, Inc. He also serves as pastor for his local congregation. For more on Rev. Dr. Capt. Merrick see his web site: www.InstructionsToMoney.net

My Position: Communism and Socialism are not the solution.

After having served on the Iron Curtain and seeing the attack of Code Pink first hand on the streets of Washington DC, I am even more convinced that the liberal left holds suicide politics. If their ends were in fact reached, we would surrender our constitutional rights, including their right of free speech, and be lead by an Islamic dictator. No doubt such a dire fall would result in the execution of any loud political dissident such as the members of Code Pink. History has shown that the provocateurs of leftist revolution are the first victims of its success.

To me the climate of protest today is reminiscent of the Vietnam era when young people with weak minds, easily persuaded into cultish dogma of leftist radicals, join the screaming crowds of a small minority in attempts to dissuade the populous from defending constitutional values that made this nation great.

I am familiar with this mind set having had my exposure in college to the deceptions of taking an American History class, then discovering that the professor was an espoused communist who proceeded to teach a communist leftist radical view of American History, far from the course syllabus description.

The Republican view is very similar to the old conservative Democratic view of our republic. That we have constitutional values that make a basic tenant to our form of government. The rights of the people are best protected by those who understand the difference between selfless sacrifice rather than a socialized view that freedom means anarchy. In the modern left radical view held by highjack of the Democratic Party in America, society has full relaxation of laws with the loosest interpretation of moral imperatives. In this ideal society of the new communists, our children have sex with everybody freely, use drugs, have socialized forms of government owed national resources, and are antagonistic to order and authority.

Yet the old argument of the means justifying the ends comes into play in the eventuality of this panacea society.

As it was with the fall of the Soviet empire the eventual end of the liberal agenda is corruption. Bureaucrats are forced in the shared poverty of this machine to take bribes to afford basic services and preferential treatment. Soon the motivation of the masses is depressed into inferior production of goods and the seduction of antidepressants where self propagating social workers foster the continued redistribution of wealth to the nonproductive. The eventual ends are a dictatorship forced by the nature of the effects of society to rule with an iron hand to meet requirements of the expanding society. The fascists under control in these examples viewed in today’s world prove the suppression of the free expression of views and the press.

Thus we have entered the quandary of self-destructive nature of American Media. Romancing singing of ‘The Way We Were’ like it was some grand design of the Camelot of the Kennedy administration for us to surrender to the Vietcong in 1963 and adopt the failures of investing in poverty like burning money and expecting the ashes to turn to gold. You would think there was no Cuban missile crisis and that Castro didn’t kill thousands of dissidents to hear Bill Moyer tell the affectionate tale on PBS and NPR. So the labor unions extort payola and dissolve the nation’s corporations which are in fact the best and fairest form of sharing wealth ever created on earth. Owning shares of private profit institutions is the only proven alternative to nationalization programs that have failed throughout history.

Everyone can state the problem Ad Nauseam but few offer solutions. The left can not continue to tax resources beyond the point of creating productive influence as during the administration of President Carter. Republicans must allow compassion to administer their ability to compromise for allowances for some social programs while allowing controls in spending for national defense. At risk of creating another disagreement, I offer my solution to end the economic argument and social security crisis at hand.

PROBLEM: Social Security Will Fail due to politician’s inability to act and as a result of their raiding the fund for debt.

My Solution:

To privatize social and government services in all forms to a REESA (Retirement Emergency Education Savings Account). Take the social security system and social services system out of the government’s hands. They have already proven their untrustworthiness in handling the trust fund account by transferring SSA funds to the general budget and creating deficits.

My Plan:

Create a REESA for each individual in private banking or brokerage companies backed by US Treasury and other AAA rated bond ladders as self liquidating loans. Each account will be earmarked at the value of one million dollars and the principal will not be able to be withdrawn. The bonds would mature in 25 to 30 years allowing the repayment of interest and principal of the loan. The interest earned at a rate of not less than 5% per annum, or $50,000 per year would be accumulated into a resource fund for use to buy medical insurance from private sources, for use in educational expense, for down payment on a home, and for use in retirement. The existing Social Security Tax would remain in place for two generations then the program would be ended and replaced by the REESA program. All social service needs would be eliminated in governmental systems and the resulting private growth and tax savings would create expansion in the private sector. Each and every federal and state program could be funded by the same method allowing for the ending of political and social arguments which all boil down to the cost of services. This would also solve immigration issues in that incoming immigrants can establish a REESA so as to not become a burden on the tax base. taxation could then be used to pay off the national debt and restore solvency to the fiscal heath of the nation. At the end of ones life, the REESA account would then be used to repay costs of the original expense by the government and the balance would be passed on to establish accounts for the heirs of the decedent. Project REESA accounts can also be formed to facilitate public works projects that will eliminate the need for large budgets for future administrations.

Example:

US Treasury bond – Zero Coupons matures in 25 to 30 years at 2 million dollars costs $518,000.00 the loan is given with the bonds as security to a bank or financial institution for 50% of the face value of 1 million dollars. The million is place in a REESA principal account and tied to a REESA benefits account which will be the interest on the savings account from the bank with a minimum of 5% per annum. The unused portion of the benefits account would also accumulate compound interest. In a forty year life of the accounts the bank would earn 2 million for the 1 million dollar loan. The Benefits account would have with interest compounded a total of approximately $5,000,000.00 dollars in the account. The US government could then at retirement tax the account 2 million dollars to pay back the cost of the account and the remaining $3,000,000.00 could continue to earn interest and pay a retirement allowance of no more than $50,000.00 per year in benefits. If this person who would start there account at age 25 in this example lived to age 90, they would have spent $3,000,000.00 in benefits over 25 years while the account balance would earn $150,000.00 a year in interest. For this example lets say they had large medical costs of 1 million. So the balance would be with interest will over 2 million in the benefits account at the end of their life, plus the principal account for a total of $6,757,315.59. That money would then transfer to the heirs of the estate in equal parts to create a natural adjustment for the cost of living variance in future generations REESA. So the government would only have to establish new REESA’s and the tax costs overall would be nothing. (Based on compound interest on account from age 25 to 65 @ 5% at the monthly rate of $4167.00 per month. Interest rates can be variable to allow for market trends. Adjustments can be made to account for individual cases in event of disability). Below is a conservative example of this type of account and how it can be implemented in later age cases.

Economic Controls:

REESA recapture provisions can be established in the bill to provide for limits to keep inflation under control. Second generations REESA accounts could be limited to 1 million dollars and the balance could be recaptured by the state and federal governments to prevent economic acceleration of economies of scale. In the above example the 13 million REESA account holder with two children and 4 grandchildren would then be assessed an inheritance allowance per child and grandchild of 1 million each. The balance would be recaptured by the federal and state government to depress the inflation of the dollar and reduce taxes. In the example above, if the distributions are even the state and federal government would each get approximately 3 million dollars in recapture provisions. Original bond costs can be taxed at the point of retirement also to allow for reducing national debt. This control should be administered to keep control on inflation in line with annual GDP to keep excessive spending from causing inflation. The principal of the account may never be withdrawn, only transferred to future generations to offset any disability, educational costs, and retirement needs. Using interest only payments keeps inflationary controls in place and can be adjusted to allow for COLA rates.

Chart of Compound Interest on simple Social Security replacement account

Bonds cost $518,000.00 and interest charges of $319,120.00 leaving $410,400.00 added from the bank monthly in 360 installments of $1,140.00. The cost of the bonds and taxes deducted would yield a 2 million dollar loan the following at today’s best interest rates. Monthly deposit of $1,140.00 for 30 years with an interest rate of 5.65% compounded monthly with an initial starting balance of $ 752,480.00 (1 million less bond & costs):

Yearly Balance Starting at age 25

1 810153.42

2 871171.11

3 935727.00

4 1004026.24

5 1076285.90

6 1152735.64

7 1233618.41

8 1319191.28

9 1409726.21

10 1505510.92

11 1606849.84

12 1714065.02

13 1827497.22

14 1947506.94

15 2074475.58

16 2208806.66

17 2350927.11

18 2501288.61

19 2660369.01

20 2828673.90

21 3006738.17

22 3195127.73

23 3394441.31

24 3605312.36

25 3828411.03

26 4064446.38

27 4314168.56

28 4578371.20

29 4857893.98

30 5153625.27 Final Savings Balance:$ 5,153,625.27 Ending at age 55

This same plan can be implemented for persons from age 37 under present SSA requirements for retirement at age 67. Short fall plans for 10 years and 20 years can be implemented and still offer 1.5 to 2.8 million in returns on investment. The present Social Security program can be reduced for all persons 50 and over who are all ready on social security and special accounts can be established with full recapture by the federal government to replace the shortfalls of the present failed system. Other alternatives could be to allow a transfer to a 75 year old benefit program to pass on to the heirs REESA accounts.

Public Works and Social Services Funding:

Each project can be evaluated and funded in the world economic market with similar accounts. Developing nations can be funded as well as domestic projects. Investment backed regulations should be maintained to insure that the economic stability of market trends within business stocks and valuation to hedge against inflation. Interest returns on REESA accounts can be adjusted to accommodate international stock markets and national economic stability.

An example of a program may be to improve housing in inner city areas to bring them up to code for electrical breaker box systems to help prevent fire risks from old outdated wiring. Lets say that will cost about $3,200.00 per home to convert older inner city homes built in the 1940’s or older. A $10,000.00 bond funded program will cost about $2,800.00 for 25 year bonds with a $4,000.00 balance after costs. Compound interest would yield $13,825.16 plus $10,000.00 from the bonds in 25 years. The total interest cost on the loan of $10,000.00 fro 25 years is $17,261.02 at 10% interest rate. At the end of this loan a total of $23,825.16 is reduced by the costs of $17,261.02 and the proceeds of $6,564.14 is retained by the municipal government who instituted the program. By using corporate triple A rated bonds the city can turn this program into a money making program rather than a taxation creating burden on society.

Requirements for REESA

First generation REESA accounts should be limited to a person age 25 and employed for at least 6 months prior to establishing a REESA. Variations in provisions for the disabled can be made by piggy backing REESA accounts on family members that are working or have an income. Waivers can be made for transfers of SSD and SSI accounts to minimum provisions in funding to replace existing income and provide for cost of living increases. For example a man who worked for 20 years and was disabled could have paid into Social Security as much as 50 or 60 thousand dollars and be earning a subsistence in social security of $1,000 a month. His REESA needs might be less and easily adjusted for in an expected cost of living allowance with a 200 thousand dollar REESA. Conversions of these accounts can be optional and graduated to shift social security burdens from the taxation system to make allowances until those on social security no longer require the funds. Everyone 25 and younger on the date of the bills adoption would then be taxed the normal 14% rate for a REESA account fee and the funds used to pay the balance of existing social security requirements in funding. As the older generations on the old system died and reduced the costs the tax could be phased out to allow for REESA recapture provisions to prevail. Recapture provision could be reduced in future generations allowing for a minimal death tax instead.

If this program was properly administered then personal income taxes could be illuminated and replaced by a one time tax. Corporate taxation could also be reduced in exchange for job creation and a flat federal sales tax could be instituted. The overall effect would be growth and job creation and the savings in tax forms alone would increase actual government revenue. Small business REESA accounts can also be established for small business owners and new businesses providing funds to start ups and sole proprietorships. The SBA can be funded through recapture provisions or a 1 time tax.

Asset Stability:

Banks can be limited in the amount of REESA funds for use in non-asset backed loans. In other words, the laws provisions can limit the amount of risk allowed with the funds by banks. Banks may use the funds for a real estate loans or business project only if the collateral is of sufficient value to prevent loss to the stability of the REESA funds. Over a period of time restrictions of accounts can be lifted in part to allow for economic growth and expansion. The Secretary of the Treasury should have authority to regulate factors to maintain defense against inflation and uncontrolled cost of living.

Revised Taxation:

Corporate tax base can be set to an economic scale as in the present system based on earnings. Personal taxation can be converted into a flat rate for everyone over a certain income level. The shift should take a period to adjust to insure observation of economic conditions and to allow the Secretary of the Treasury to take action where needed. Expanded profit margins in the private sector can be controlled through interest rates, tax on REESA interest, and limitations on REESA fund allowances.

REESA Penalties:

The cost of account establishment can be born by the individual and their local banking or brokerage institution in the amount of a fee for cards, dispersing funds in emergency, and routing taxes to state and federal government. As part of the paper work reduction act, dispensing funds can be through a debit card program with the originating institution. Penalties for premature use of funds can be imposed to prevent access to funds for non-allowable purposes. Banks or brokerages may also be assessed a penalty for not complying with federal guidelines. Locks can be imposed to prevent withdrawal of principal from REESA accounts.

Conclusion: “Never underestimate the power of compound interest”: John Davison Rockefeller. Shifting programs out of the governments control into the private sector, where laws and regulations can not be voted out of existence, will provide for a vibrant stimulation to the private banking and financial service business industry. Limits on the allowable use of returns with generational provisions of theses types of programs, will prevent inflation from getting out of control and insure that a growth oriented economy is established for generations to come. REESA is the only solution that will solve the present crisis in the failed policies of both sides of the isle in allowing trust funds from social security to be raided to pay debts that politicians voted into budgets of the past. Businesses can revolutionize funding requirements for growth and expansion through these methods and governments can illuminate or reduce taxation shifting focus on legislations for future advances in science, medicine, education, space migration, and international diplomacy.

For information on these ideas and other perspectives on how to reform government contact:

Daniel W. Merrick, Ph.D.

858 Rt. 446

Smethport, PA 16749

HOME 814.887.5895 OFFICE 814.887.5081 CELL 814.598.1447 FAX 814.887.5224

Email: Daniel@RDJCatalog.Com Alt Email: Faith@Penn.Com