I.O.U.S.A - Addison Wiggin [128]
Q: How big a mess are we facing with the major entitlement programs — Social Security and Medicaid?
Steve Forbes: Well, the problem with entitlements is that someday you have to pay for them. And if you haven ’ t built the assets to pay for them, then you ’ ve got a big problem. I think that ’ s why it is important to establish Social Security reform that doesn ’ t appear to take something away from grandma, while actually helping younger people with their own personal retirement accounts. You change the entitlement to something where people feel they ’ ve earned it. Part of the problem with Social Security is people who are on it felt, “ Well, we put money in the system, but the politicians mishandled it. ” These people feel cheated and deceived. Now we ’ re fi nally going to tell the truth to younger people. “ The money that you put in is actually yours. It ’ s not been stolen by politicians. ” The truth is the only way you fi ght these things.
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Q: In looking at history, truth is perhaps the rarest commodity on the American political scene. Does it take a crisis before American people will actually be ready for the truth and ready to act on the truth?
Steve Forbes: With human nature being the way that it is, people do not like to do unpleasant things unless they have to. Kids don ’ t like to clean their rooms unless their parents say, “ You ’ ve got to do it or you ’ re not going to get something. ” That ’ s human nature.
But I think people now know that something is not right with the system. And if we get the leadership, and the people themselves say, “ Here ’ s the proper way to do it, ” we can deal with it. In terms of health care, people know the system seems to have higher and higher costs. Yes, we ’ ve got great new stuff coming, but it seems to get more and more expensive. Why does health care get more expensive whereas in everything else in life — the amount we spend on basic food goes down so we get more, fancier food; we have lower prices for computing power. Why can ’ t we get some of these kind of productivity gains in health care? You ask that question and then it quickly comes back: It ’ s because people don ’ t control the resources. Our resources are taken from us and then we ’ re told we ’ re getting something back for free. It ’ s a great gain. Take a dollar, give you back 50 cents, and you ’ re supposed to be grateful.
Q: The idea of a fl at tax that you ’ re talking about, is that something that would help us pay off this $ 9 trillion that ’ s sitting there so that we wouldn ’ t be spending all that money on debt service and we could actually rebuild the infrastructure? Is the fl at tax a good tool toward that?
Steve Forbes: The fl at tax wins on all fronts. It ’ s a great blow against political corruption and a great blow against the current system of a tax code that brings out the worst in people who are always thinking, “ Do I get a deduction here, do I get a deduction there? ” Instead, the fl at tax enables us to do things for the right reasons instead of the wrong reasons. And fi nally, and very importantly, it means more economic growth. It means higher asset values. Ask yourself, why did housing prices go up starting in 1998? It ’ s because there was a change in the tax code that, in c18.indd 256
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effect, removed the capital gains tax on your primary residence if you sold it. Suddenly you did not have a capital gains tax. When you remove a tax on something, the value of it goes up; very, very basic. So by lowering tax rates, by making it simple so that people can actually understand what ’ s happening to them, we have a better civil life, we have a better political life. We also have a stronger economy, higher assets, more businesses, and better jobs being created.
Q: If we talk about the United States not as an ambitious empire looking to conquer territories — in the most positive