For Forbes '70, personal financial autonomy is key

Keep taxes simple and let people control their own financial resources, Steve Forbes ’70, editor-in-chief of Forbes magazine, said to a large audience last night in Dodds Auditorium.

Forbes, who founded the magazine Business Today while a student at the University, discussed his opinions on the current economic crisis in the United States and possible solutions for problems involving the tax code, social security, monetary policy and health insurance.

Drawing on his experience as a former Republican presidential primary candidate, Forbes warned that the United States will face a real recession within the next four years if a Democrat were to win the presidential election and raise taxes.

“No one understands the tax code,” he said, adding that he recommends a flat tax rate of 17 percent to boost the economy.

“Take [it], drive a stake through its heart, and start all over,” he said.

Lower taxes would change consumer behavior and actually generate more revenue for the government, he explained, adding that “with a low, simple tax rate, you don’t have to gut social insurance because you’ll have more resources to work with.”

Forbes, whose father’s donation resulted in the naming of Forbes College after his son, also emphasized the importance of maintaining the strength of the dollar.

“If we don’t deal with the dollar, we’re going to have other financial problems,” he explained.

As a result of President Bush’s monetary “wink-and-nod policy,” the American dollar has weakened and inflation has occurred, Forbes explained.

Forbes cautioned against increasing the money supply, explaining that “if [the Federal Reserve Bank prints] too much money, strange things start to happen.”

“With a lot of money out there, lenders want to put it to work, and thus you have the crazy mortgages and loans that shouldn’t have been made,” he said.

As for social security, the real problem with the system is who controls the money, Forbes said, noting that he supports the implementation of personal accounts.

Get the best of the ‘Prince’ delivered straight to your inbox. Subscribe now »

“If the money belongs to you, you will see that it is invested better,” he explained. “You will end up with more benefits than social security even if you don’t put it in the stock market.”

He also advocated a more personal solution to the health care crisis. While other sectors of the economy would thrive under high demand, the health industry generates more problems because of the disconnect between provider and patient, he said.

The consumer, rather than the insurer, should be in charge of the money for health expenditure, he said.

Forbes’ company, Forbes Inc., puts aside $2,500 per employee so each person can decide how to spend the money according to his or her health needs.

Noting that Forbes had previous political aspirations for the presidency in 1996 and 2000, an audience member asked Forbes if he had considered proposing himself to Sen. John McCain (R-Ariz.) as a vice-presidential candidate.

“The answer is no because I think he wants to win the election,” Forbes said.

Forbes did, however, predict that McCain will think “outside the box” in choosing his running mate to appeal to independents and reassure doubtful voters.

Sen. Barack Obama (D-Ill.) will choose a very experienced running mate, while Sen. Hillary Clinton (D-N.Y.) will pick a moderate to help widen her appeal, Forbes said.