The idea of the Purple Plans (a combination of red and blue) represents needed change through productive ideas agreed to by both Republicans and Democrats. While that may seem an impossibility today, the alternative to that kind of change is disaster.
I urge you to take a look at what Professor Larry Kotlikoff has to say about the tax, education, health care and other issues facing the United States. While you may not agree with all his ideas, the facts he presents should open your eyes to the scope of the problems we we face. The information should make you mad as hell at all politicians because their bickering and inaction in favor of party politics is destroying our children’s and grandchildren’s future.
This is no Chicken Little story, the sky really is falling and the fox is outsmarting us once again.
The Purple Plans
Dear Fellow Economists and Concerned Citizens,
As you know, our country is at a critical juncture. Growth has slowed to a crawl. Fourteen million Americans are unemployed, and three million have stopped looking for work. We are saving nothing and investing next to nothing.
Last year’s national saving rate was 0.1 percent, and our net domestic investment rate was 4.4 percent. Saving nothing means we have nothing to invest in our country. Those investing in our country are foreigners, which explains our huge current account deficit. It’s easy to blame foreigners for our problems, but without their investment, our net domestic investment rate would also be 0.1 percent.
Most Americans have experienced no growth in their real take home pay in decades. Those who are doing well are doing better, with income and wealth growing more unequal over time. And our government is broke. Based on the Congressional Budget Office’s latest projections, the fiscal gap separating the present value of projected non-interest spending plus the official debt and the present value of projected taxes totals $211 trillion.
This is the mountain of obligations we ignore while focusing on the $10.3 trillion “molehill” of official debt held by the public. Decades of Enron-style accounting has permitted both parties to keep the vast majority of the government’s debts off the books.
Our fiscal gap is 14 times GDP — a larger ratio than prevails in Greece or, it appears, any other developed country. Eliminating the fiscal gap without structural reform would require either an immediate and permanent 64 percent increase in all federal taxes or a 40 percent cut in all federal non-interest spending. Delaying such adjustments leaves an even bigger bill for our children.
We need fundamental structural reforms of our fiscal and financial institutions to kick start our economy and protect our children from an economic future we would not seek for ourselves. Our tax system is a disgrace. Our Social Security system is an inefficient and inequitable morass of incomprehensible rules. Moreover, Social Security is in worse fiscal shape than in 1983 when the Greenspan Commission “fixed” it. The costs of Medicare and Medicaid continue to explode, and the new Health Exchanges, while promising to do tremendous good for tens of millions of uninsured, could easily face explosive costs.
The 2,300-page Dodd-Frank bill retained our “trust me” banking system. As a consequence, it stands poised to re-detonate, whether triggered again by fraud or by a collapse of U.S. or European government bond markets. Finally, our energy policy continues to endanger our children and our globe and enrich our enemies.
Our future lies in one place and one place only — in the well being of our children. Our sacred duty as adults is to protect their welfare. We have failed in that responsibility. Our politicians, in both parties, care, it seems, much more about the next election than the next generation.
The time has come to support policies, not people. We need solutions that are fair, bold, efficient, transparent, sustainable and generationally equitable. The Purple Plans reflect a non-partisan economist’s solution to our problems. Each plan should appeal to both red Republicans and blue Democrats. Hence, the name “Purple Plans.”
President Kennedy said, “Our problems are man-made, therefore they may be solved by man. No problem of human destiny is beyond human beings.”
Were he with us today, he would not sit silent while Washington continues to do too little too late. I ask you to read the following simple reform plans at the websites listed below, to endorse them if you can, and to spread their addresses far and wide, particularly to the President, members of his administration, and members of Congress, .
Many thanks for considering this appeal.
Sincerely yours,
Laurence J. Kotlikoff
Professor of Economics, Boston Universitywww.thepurpletaxplan.org
www.thepurplehealthplan.org
www.thepurplesocialsecurityplan.org
www.thepurplefinancialplan.org
www.thepurplegenerationalbalanceplan.org
www.thepurpleenergyplan.org
www.thepurpleeducationplan.org
QUINNSCOMMENTARY 
We definitely have a debt problem, but after reading the purple plans I’d say they have a lot more red (as in socialism not republicanism) than purple. The purple tax plan is a rehash of the “FairTax”. When you move from an income based tax system to a consumption based system there will be clear winners and losers. The losers will be anyone who has saved money for future spending but will now have reduced consumption capacity due to the new sales tax. We are also a consumer economy so any decrease in consumption due to higher tax included prices will affect the economy in general.
The problem with our tax code are tax expenditures (the special carve outs and loopholes for this special interest or that). There is nothing in changing tax systems from income based to consumption based that will keep congress from legislating more loopholes and subsidies at the behest of the deepest pocketed lobbyists.
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