Greetings,

Thanks for your interest in my Budget Reduction Plan. And, while I don’t expect Congress to come together at a level to pass this (or anything as bold and deficit-reducing as this) it is important for us to pause as entrepreneurs and consider what is necessary for our country to create a sound financial future.

I encourage you to leave thoughtful comments. Please add to the conversation. It is up to all of us to work together to create an effective set of solutions. My goal in this blog is to discuss central issues and stimulate thought. We must each decide what type of future we want. I hope this blog helps you to consider this question more deeply.

My brand is “Conscious Millionaire”.  It is based on my capitalistic view of life and business. This includes an underlying philosophy of promoting a world in which you, I, and others in society can all win together.  I  call this the “triple win”.

For each person to win, each person in our society must take responsibility for their life and economic well being. Further, the level of their financial success will be the direct result of the thoughts, emotional states, and actions that they “choose” to maintain.

I am using the word “choose” to have a precise meaning. That meaning is that on some level, consciously or unconsciously, (and I promote the conscious path) each person chooses to maintain, and create, the specific thoughts, emotional states, and actions that determine what they produce of economic value. As a result, they choose their economic outcomes.

Now, I realize that many things over which we have no direct control occur in each of our lives each day. However, each of us chooses how we respond to these and what we do – through our thoughts/beliefs, emotional states, and actions/strategies – to move through and overcome negative experiences. Furthermore, it is our responsibility to choose our desired destiny and then think, emote, and act our way to arrive there.

Now, the economic debate we are having and the lack of resolution which is occurring is the result of a clash between two fundamentally different economic views of the world, in general, and the future of the United States, in particular. At the heart of this debate is whether the future of the United States will be capitalistic or socialistic.

The actual popular vote in the recent presidential election was statistically a virtual even match. The fact our country is essentially evenly divided, with very strong voices and bitter acrimony between people who believe in the two possible economic futures for our country – capitalism and socialism – is why we are having such a difficult time agreeing on anything that has economic ramifications, from the debt ceiling increase in 2011 to the current “cliff” deal.

In a brief format, I am going to define some terms that relate to how the two major political parties currently view our desired economic future, clearly tell you which I prefer and why, then offer my Budget Reduction Plan as one option of how to resolve this matter in the near future.

The debate over whether we will have a capitalistic or socialistic future will rage on for years. And, my goal is covering this in my blog is to inform my readers on what they need to know in order to make financial, business, and wealth decisions.

Now, while there is much division, as responsible citizens, we must come together in order to create a workable solution to our rapidly increasing budget crisis. If we don’t, then the economic future of our country is in jeopardy.

Upfront I want you to know that the plan I am proposing goes against my natural views in terms of taxes in that I generally oppose any increase in taxes; however, if we want to avoid a “Greek Styled” future, one that WILL occur within five to ten years if we fail to take the necessary actions NOW, then each of us will be called to compromise and give in order to create a better future for all of us to enjoy.

I will restate this in succinct terms:  either we make large changes NOW (and, yes, some of them would be painful) or within five to ten years we will be in a similar economic condition as Greece is today (and this will be much MORE painful!)

 

We can keep our heads in the sand and kick the can down the road – one final time – or we can deal with reality now.  However, I think we are all called to a higher responsibility – to ourselves, to one another, and to the future of our country.

We must move beyond the current divide and childish behavior that both major political parties, including the President and many Senators and Representatives are exhibiting in Washington, and develop a plan that requires often unpleasant decisions and actions on everyone’s part.

As a way to begin a conversation, I am going to provide some terms and their definitions. Understanding these terms and how they apply to the two major political parties will help you understand the great divide – one that is only growing deeper – we have in our country today.

I’ve included “economic poverty” and “economic wealth” in these terms because how one sees these goes to the heart of the discussion. The definitions I provide on these are consistent with the Conscious Millionaire view, a view that is founded from experience – my experience in first going from poverty to wealth and now by helping others rapidly move forward on their chosen wealth path.

In short, they are based on what I have found actually works to help people move out of their current economic condition, whatever that is, and into a wealthier economic condition.

CAPITALISM: rewarding those who take economic risks and provide products and services that have economic value to others.

CONSCIOUS MILLIONAIRE CAPITALISM: rewarding those who take economic risks and through honest means and a heart-felt desire to help others and thereby provide products and services that have both intrinsic (actual) and economic value to others.

SOCIALISM: an economic philosophy that supports all citizens enjoying a consistent narrow range of economic well being and benefits; therefore those who achieve economic success greater than the average person should have significant portions of their wealth taken from them (taxed) and redistributed to those who are less economically successful so as to maintain a society in which all people have a narrow range of economic well being.

ECONOMIC WEALTH: the direct result of thoughts/beliefs, emotional states, and actions that produce results which have strong economic benefit to others – and therefore, they will pay for them.

ECONOMIC POVERTY: with the exception of mentally, emotionally, or physically disabled who lack the intrinsic ability to provide for themselves, economic poverty is the direct result of thoughts, emotional states, and actions that produce products and services (including those of low paid workers) that have little or no value to others and therefore they will not pay much for them. While many of these thoughts/emotions/actions may be the result of having grown up and remaining in economically impoverished environments, they are learned – and that they can be unlearned and replaced with economically productive thoughts/emotions/actions.

Think about this. I grew up in a family that constantly had financial problems. Yet at the age of five I decided to become a millionaire when I grew up and attained this goal in twenties, then went on to make millions of dollars. HOW? By changing my thinking, emotional state, and actions.

I believe in wealth producing activities – not poverty producing activities. Poverty can be eliminated but not by entitlement programs that, even if well meaning, usually only “enable” poverty producing ways of life. Poverty can only be eliminated by requiring people to change the way they think, feel, and act so they produce more economically productive results!

The real tragedy is that ONLY 2% of the Americans have figured out how to produce $200,000 or more of economic value annually. We should focus our resources as a nation on teaching people how to produce wealth so that 20%, not 2%, of Americans rise to this $200,000 plus economic level! We should celebrate success and hold it up as an example of what is possible.

The division we are now fighting over what the “American Dream” means – capitalism or socialism.

In simple terms, this is the core issue.

Having laid this out, my Deficit Reduction Plan is a straightforward three step plan that results from choosing to look at reality for what is truly occurring: we are failing economically and our future as an economic leader, entrepreneurial country, and land of economic opportunity – is at stake.

Therefore what we need at this time is a SIMPLE YET BOLD APPROACH. An approach that looks reality squarely in the eyes and does the right thing.

Now, before I provide my plan, I want to be 100% clear as to where I stand and therefore the compromises I would, myself, be making in suggesting this plan. I am trained as a tax attorney and consistently oppose higher taxation. My observation is that, in general, it is not the answer to better government decisions or results. In fact, providing smaller revenues forces the government to achieve results while using less capital, that is, more efficiently.

I consistently favor smaller government. I prefer both a private sector approach to answering most problems combined with my taking personal responsibility for my results. I have no interest in being dependent upon a government, or for that matter, anyone, for my results and well being. And, as my brand makes clear, I’m certainly not a socialist but neither am I a pure capitalist – I am a Conscious Millionaire Capitalist.

Now that I’ve presented my views, please take a moment to consider where you stand  on the capitalist-socialist continuum. And even if you never consciously thought through this, you do have a stand. What is it and why do you believe in it?

Please use this blog as a catalyst to help you define both the present and the future in which you want to live, and therefore your own chosen position as being a capitalist, socialist, or some combination of the two. And, if you primarily identify as a capitalist, also consider whether you are a “Pure Capitalist – any means that creates economic wealth is good” or a “Conscious Millionaire Capitalist – only means that are honest and when entrepreneurial, produce true intrinsic value to the buyer are how you desire to create economic wealth.)

BUDGET REDUCTION PLAN

Because we are currently 16 Trillion in debt and are increasing this more than 1 Trillion a year, we must act to both reduce our deficit and stop the over spending that is now occurring. Our economy is being held up by a flood of liquidity (printing of money that is used to make purchases in the open market by the Federal Reserve), we must take action NOW or face a Greek like future within five to ten years.

Here are my 3 steps. They will require everyone to make concessions and will inflict pain on most members of society. These could produce another recession. However, even though these steps would cause pain now, they will help assure that we avoid a much deeper pain over the next five to ten years.

If we do not take significant bold action now, I believe that economic collapse of 2008-2009 will have been a dress rehearsal of what is to come. While the next collapse, like all major downturns, would likely take a different form, the results would be similar – only worse.

STEP ONE – PERSONAL AND CORPORATE TAXES

While I personally oppose increases in taxes and their usually related big government spending programs, IF there is agreement to decrease both current and future spending so that the tax increases are actually used to retire the debt, then I support the following:

Because many people pay no taxes on their income yet still receive the same benefits from the Federal Government as those who do, I propose the following:

1. All taxable income (page one of 1040) “Adjusted Gross Income” be taxed at a 10% rate prior to allowing other deductions, on the first $25,000 of income so that most working / business owner Americans with at least $25,000 or real income would pay taxes. This would mean most people are contributing to the annual government revenues. This 10%, up to $2,500, would be credited to (deducted from) any additional taxes owed on page two of the 1040. Everyone receives benefits from the Federal Government therefore everyone should help pay for them.

2. All other tax rates be increased by 10% for all individual tax payers for a period of ten years. This is similar to allowing all Bush tax decreases, 2003 extended through 2012, to expire for everyone. This spreads the burden of paying down the deficit to everyone. Leave dividend and long term capital gains taxes at 15% for all individuals as this encourages investment and capital formation.

3. To increase economic expansion and to make American companies more competitive on an international field, given that most countries have lower corporate tax rates that in the United States, reduce the corporate tax rate to a maximum 28% and keep this for ten years.

If the above tax changes are made, we can avoid a lengthy debate over changing the tax code and can leave it in place for now.

STEP TWO – RAISE SOCIAL SECURITY AND MEDICARE AGE TO 68

In order to face the reality that people are living substantially longer and will need to work longer, phasing in both social security and Medicare to begin at age 68. Eliminate all cost of living adjustments to social security benefits for the next ten years.

1. Raise the age for qualifying for social security (combine early and later ages into one) to 68 as follows:

Age 55-64, begin at age 62 early / 66 mandatory

Age 50-54, begin at age 63 early / 67 mandatory

Age 45-49, begin at age 64 early / 68 mandatory

Age 40-44, begin at age 65 early / 68 mandatory

Age 35-39, begin at age 66 early / 68 mandatory

Age 34 and below, begin at age 68

2. Raise the age for qualifying for Medicare to age 68.

Age 55-64, begin at age 65

Age 50-54, begin at age 66

Age 45-49, begin at age 67

Age 44 and below, begin at age 68

STEP THREE – ADDITIONAL 5 to 10 TRILLION IN REDUCTIONS

Over the next ten years, 2103-2022, reduce spending by a minimum of five and up to ten trillion on these programs: Medicaid, military base budget (non war time), and other federal programs. Suggesting a minimum of 10% reduction for Medicaid and military for 2013 and holding this budget amount constant, with no adjustments for inflation, for the next ten years. The only exception for temporarily increasing the military budget would be times of a declared war.

Much of the other reductions need to come from the growing laundry list of entitlements. These so called entitlements are wealth transfers made to people who did nothing to earn them – nothing in terms of labor or contributions in order to receive them. While some “social net” in a society has value, ours has grown to the point that it is neither affordable nor does it promote the greater social good for which it was originally intended, that of empowering people to achieve more with their lives, both as individuals and as contributing members of society. These entitlements include: welfare, food stamps, subsidies for producing more children, and unemployment benefits that extend beyond six to twelve months. The bottom line fact is we simply can’t afford to continue providing these at their current levels and so they need to have a 10% or greater cut back.

The Budget Deficit Plan I propose combines higher taxes/revenues with changes in expenses achieved by both increasing the eligibility age for social security and medicare while reducing most current expenses by 10% or more. Because the majority of our problem is on the spending side, the majority of the changes must be changes in expenditures; however, both an increase in revenues and decrease in expenditures are proposed in this plan.

Nothing in this plan eliminates the ability of the Federal Government to respond to natural disasters as there is no provision that the budget must be balanced each year. This would be too constrictive to effectively run the government and respond to unique circumstances.

REALITY

If America were a business, something similar to what I’ve proposed – raise revenues and eliminate expenses we can’t afford – is precisely what would occur. And, if it didn’t, it would become bankrupt. And, if we as a nation to not take the type of bold action of the type I am suggesting, the it is likely what just like a company that acted irresponsibly would go bankrupt, over the next five to ten years we are likely to become like Greece is now – a country that can not pay our bills.

It’s not too late. We could create a plan similar to the one I’ve proposed. If you agree that we must take this path, then contact the President, Senators, and Representatives, tell them you are willing to compromise along the lines outlined above, and ask them to behave like adults – instead of holding small ego positions by making lines in the sand.

It’s time for us to all DEMAND RESPONSIBLE ACTION from our President, Senators, and Representatives.THE TIME FOR BIG, BOLD ACTION IS NOW.

You deserve it. Our country deserves it. And, so do your children.

To YOUR Entrepreneur Success,

.

J V Crum, III, M.B.A., J.D., M.S. Psy

Author, “Conscious Millionaire: The Formula for Creating Wealth.”

Keynote Speaker, Event Presenter, Radio and TV Guest Personality.

Small Business Coaching, Entrepreneurship Training, Leadership Development

Founder/CEO: Conscious Millionaire Institute, LLC / Conscious World Foundation, Inc.

www.ConsciousMillionaire.com

www.ConsciousMillionaire.com/blog

www.ConsciousMillionaire.com/contact

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