Issue 18
March 10, 2019
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The Quintessential Centrist’s core mission involves offering readers an elevated discourse that blends news, careful analysis and viewpoints from the left, right, and center of the political continuum. There is a sizable contingent of centrist-Americans who are interested in compromise, open to reasonable ideas, and whose main objective is facilitating legislation that will benefit the country, bridging ideological differences and helping to unite our bitterly divided nation.

This week TQC presents six centrist ideas, that if implemented prudently and responsibly, have the potential to improve America by making our nation safer and more equitable for the majority of its citizens. These represent topics that The Quintessential Centrist intends to continue researching.

At TQC, we believe in a progressive tax code. People who earn more should pay more. However, a progressive tax code must be applied with levelheadedness and proportionality. We agree with the position taken by many on the right side of the aisle who argue against excessively high marginal tax rates. A disproportionate number of people who would bear the burden of all in marginal tax rates over 50% and / or be subjected to “wealth taxes” proposed by politicians on the left, are responsible for creating a disproportionate number of jobs in America. We must be careful not to impose a marginal tax so burdensome that it takes away job creators' economic incentive to offer employment opportunities for working Americans. That is suboptimal for all Americans. It is important to keep in mind: most higher earning salarymen and women in the United States already do pay significantly more taxes, as they should.

We align ourselves with many on the left side of the aisle who argue that although marginal tax rates are higher on the wealthy, it is unjust that certain rich individuals can use the tax code to their advantage and lower their tax rate to a level lower than what working class Americans pay, in some cases to 0%. Hedge Fund managers, Family Office principles and Private Equity partners are typically wealthy individuals. By utilizing “carried interest,” they can reinvest profits back into their respective entities vs. paying ordinary income tax on short-term capital gains. Real estate investors often use 1031 exchanges to roll proceeds from property sales into new physical assets thereby shielding their gains from income tax. At TQC, we do not begrudge those individuals for utilizing the existing tax code to lower their tax bill; any rational person would do so. That said, “carried interest,” 1031 exchanges and other unquestionably regressive loopholes in the tax code should be closed. Without debate, these loopholes disproportionality help wealthier Americans. Very few middle-class and working poor Americans benefit from these carve outs. We believe that is unfair to all Americans.

We support the introduction of term limits for members of the U.S. Congress & U.S Senators. Politics is the second oldest profession in the world. Unfortunately, it shares many properties with the oldest profession in the world. Too many politicians on both sides of the aisle allocate too much of their human capital selling themselves rather than performing the tasks and achieving the results they were elected to do. Instead, they often draft and vote for legislation that serves little purpose but to afford themselves a higher probability of getting re-elected while selling out the majority of the people they were voted into office to represent. Of course, there are exceptions to this generalization. Certain Democratic and Republican lawmakers do put the American public before themselves; sadly, they are in the minority. Term limits are a simple, sensible idea that will better align politicians' intentions with the will of the people who voted them into office.

Entitlements must be reformed and the retirement age must rise. Compared to some of the other issues we’ve opined on in the past and the research we are currently engaging in for future articles, this is relatively straightforward. What’s difficult is the political will to implement it. Lawmakers can serve for as long as they are elected. Hence, once they giveth, they are extremely reticent to taketh away. If politicians continue to promise a party without detailing how they will pay to deliver the party favors, there will not be anything left for the younger generation of Americans to be entitled to. At TQC, we support moving the retirement age up to 70 for everybody under 45 years old except in select industries where the job is so physically demanding that it is not realistic or safe to wait until 70. Social Security was simply not designed to support an increasing number of Americans who’s projected lifespans have risen from ~60 in the mid 1930’s when many of the current entitlement programs (including social security) were ushered in via Franklin Roosevelt’s “New Deal,” ~70 in the mid 1960’s to ~80 now. People are living longer; hence, it is reasonable to ask them to work and continue to pay into the system for longer before retiring and drawing on Social Security. This is a common-sense, centrist approach to help replenish the system without cutting current benefits to older Americans and assuring that benefits can be paid to the people currently paying into Social Security.

One of the reasons most politicians on both sides of the aisle refuse to seriously tackle this important issue is because even though they intellectually understand that Social Security and other benefits are limited resources, they know it’s political suicide to vote to rationalize them. Despite celebrities, athletes and fashion icons that appeal to younger Americans encouraging millennials and Gen Z’ers to vote, empirical evidence clearly shows that older people vote more often than younger people do. This dovetails into our position arguing for term limits. If politicians on both sides of the aisle knew they could not stay in office in perpetuity, they would be much more inclined to vote for legislation that would help the country stay fiscally solvent, even if it meant them potentially being voted out of office.

According to Student Loan Hero, in 2018, 69% of college students took out student loans to pay for their education. On average, students graduate with $29,800 in student loan debt. There is ~1.56 trillion dollars of outstanding student loan debt. To better frame this, outstanding credit card debt totals ~$1billion dollars. Bear in mind there are more credit card holders than student loan borrowers. In fact, the only tranche of consumer debt that is higher than student loans is mortgage debt. And unlike student loan debt which is rising, mortgage debt (and credit card debt) levels are flat to slowly declining. What's more, because of the Bankruptcy Abuse Prevention and Consumer Protection Act passed in 2005, student loan debt is almost impossible to get discharged, even in personal bankruptcy. This is a slow-moving crisis that in unsustainable.

Since 1998: "The average tuition and fees at private National Universities have jumped 168 percent. Out-of-state tuition and fees at public National Universities have risen 200 percent. In-state tuition and fees at public National Universities have grown the most, increasing 243 percent."

Given the prohibitive cost of financing a college education, institutions are beginning to offer alternative financing mechanisms that do not leave students mired in debt after graduation. One proposed solution is "income sharing agreements", with Purdue University among the most notable schools to offer it. The concept is simple: rather than receiving fixed tuition payments, the school fronts the tuition money and is entitled to a percentage of the student’s future income. The immediate benefits for the student are clear, they include: lower barriers to entry for college, the opportunity to earn a college degree without crippling debt, and a greater probability that their college prepares them for a successful career; however, like most arrangements, the devil is in the details. What percent of future income does the student forego? For how long? Does the student wind up paying a "premium" over what it cost them in tuition plus interest payments on the student loan?

For the Universities, their budgets would shift from a fixed, guaranteed revenue stream (tuition) to a variable, deferred, and non-guaranteed revenue stream. This could put existing operating budgets in jeopardy and force major changes to stalwarts of the higher education model, such as tenured professorship.

Immigration will be an increasingly important driver in facilitating that our demographics remain conducive to economic vibrancy. At TQC, we are strong proponents of legal immigration. This nation was founded on immigration and inter-state mobility of human capital. Furthermore, the fertility rate in the United States is now < what it needs to be to keep our population stable (2.1 babies per woman) and ensure we have enough young, working citizens to support a larger number of retirees. We agree with conservatives and most moderates who believe that people who enter the United States illegally should not be rewarded. We agree with the majority of liberals and some moderates who argue that at a minimum we must carve out an exception for Dreamers who are law abiding, tax-paying citizens. They were brought here as children and had no choice in the matter. We find ourselves aligned with many on the right who argue that awarding citizenship to anybody born here encourages tourist visa babies and chain migration, and is outdated in world of relatively cheap travel and mobility of people. Sensible reform is long overdue and desperately needed.

We agree with many on the left who make the compelling argument that people have the right to claim political asylum. If a family is willing to walk ~3,000 miles from Honduras, Nicaragua, and Guatemala - nations plagued with gang violence, kidnappings, rampant corruption and general lawlessness - we must ask ourselves, things have to be pretty oppressive if people would rather risk being robbed, raped, killed or having their children snatched from their arms to get away from their reality and the chance to claim political asylum in the United States. However, some of these migrants were exploited and led to believe they could make safe passage to the US and be awarded at the border. Furthermore, fleeing drug cartels, corrupt governments, violence and poverty are not typically grounds for being granted political asylum. And we agree with many right of center that argue we cannot simply open our borders and allow undocumented migrants to flow in unchecked or we risk creating a never ending cascade of people trying to enter our country; many with dubious asylum claims. It’s an extremely sensitive balancing act that requires polices with reasonable checks and balances with the safety of migrants, immigration officers and American citizens in mind. This is much easier said than done, as we are in the process of learning from our research.

We welcome our new readers and encourage them to have a gander at our December 16th issue on gun control.

The Quintessential Centrist believes that U.S. citizens should maintain the right to purchase and utilize firearms. The right to bear arms is a fundamental right protected by the 2nd Amendment to the U.S. Constitution. However, when James Madison penned the 2nd Amendment, machine guns, military grade assault rifles & bump stocks – which effectively turn semi-automatic weapons into automatic weapons - did not exist. Hence, we must apply common sense and rationality when applying text written in 1791 to the present.

Thanks to you, our mission is gaining traction. TQC is a budding platform and so we would like to extend a thank you to our early core of readers. Ultimately, it is your thoughts, ideas and suggestions that will enable us to reach our goals. We welcome and value our reader’s ideas and suggestions. Please drop us a line with any questions, comments, explanations or declarations on the topics above or about any subject you deem worthy of further investigation.

We look forward to hearing from you. Thanks for being part of The Quintessential Centrist.