June 27th, 2026 - Wrapping up an Amazing Quarter

Steve and Adam Van Wie kick off a lively Saturday financial hour by recapping a rough week for mega-cap tech stocks, contrasting it with surprising strength in small caps, household balance sheets, and the broader job market. They pivot into policy, dissecting a new federal housing bill, corporate ownership of single-family homes, and the political theatrics around interest rates and inflation. Wrapping up, they tackle thorny Social Security fixes—from lifting the payroll tax cap to letting young workers opt out—while weaving in sharp asides on taxes, AI’s limits at Ford, and America’s global image during the World Cup.

Transcript

Steven Van Wie 0:00

It's Saturday morning. It's 10 o'clock. This is the Van Wie Financial Hour. I'm Steve Van Wie. And we're supposed to have another one here. I'm not here.

Adam Van Wie 0:13

I'm here.

Steven Van Wie 0:14

Oh, there he is. All right.

Adam Van Wie 0:16

I am here and I am Adam Van Wie.

Steven Van Wie 0:19

Adam is still away, but joins us today. As I said last week through telepathy, meaning actually telephone. But, um, he'll be back soon. And, um, Joey took the kids and went down for a little couple-day fun and games in, in the southern part of Florida. So lots of people picking up some good times during this very appropriate season to do so. Good. Up here we have yet another in a long series of beautiful Saturday mornings, and we're raring to go. So, got lots to do today, lots to talk about as usual, but I want to— a couple of personal things. Um, today is the last day of my 24th year doing radio. The first day, 24 years ago, was on June 28th, which is tomorrow. And some big things are happening on June 28th this year. For one of them, Mel Brooks turns 100 tomorrow. And from what I can tell in the media, he's doing just fine. Thank you. And that's pretty special. If you grew up like we did, laughing at him, you can appreciate the fact that he's still around and still yucking it up. But there's another one too, a really big one. Elon Musk also has a birthday tomorrow. He will be 55.

Steven Van Wie 1:52

And then as an afterthought, there's me. I will turn 76 tomorrow. So a lot of things going on. Not that we do a lot of celebrating, but I have enjoyed sharing my birthday with Mel and Elon, brothers of the cloth. So something to admire in both of them. Anyway, I digress, as I so often do. I want to welcome everybody back. Regulars, we keep saying it, you keep listening, we'll keep talking, and we mean it. And if you're new to the show, try to stick around and you'll learn something if you can make the whole hour, I'm sure. And if you held over from Angela Walker, You heard that this station is going to be live next Saturday morning, which is the 4th of July. Angela will be here in person. I will be here in person. Not sure about anybody else, really. I will know one of these days, but it doesn't matter. I told Roger, who will be— he's a producer and he will be here live also. I told him I hate used radio, things you've heard before. So what? And I'm not that nuts about canned radio. And I will pretty much promise you, if you want to hear some live radio next week, I would stick to WBOB because you're much more likely to hear it here than anywhere else. All right. So I put the plug in for the station and the people. Now it's time to move along. I'm taking up some valuable time. It was not a week in the market that maybe. Adam just texted in and he said he can barely hear me. Can Roger— can you make it louder to him? Yep. All right, I'll yell. No, I won't. Um, he— Adam will be in with us next week. He, he just verified that, so we'll be back to normal pretty much, and hopefully having a good time. And I'd like to have better news to report. I do know one thing before we get into the market wrap, that I checked all the services before I left the house this morning, and we will have jobs reports coming out next Saturday. I always like that because it's recent news and it really leads into things that are being experienced in the market and in the economy. And they've been pretty darn good lately. The tracking indices are pretty good. So it looks like June is another solid month for job creation, and that will hopefully help everything. All right. It was kind of a ho-hum to actually poor, depending on which market you're looking at, a week in the market because of, you know, sometimes all news is bad news and sometimes it's actually bad news. It's bad news. And when you're trying to keep the strait open and they're shooting at people, The market doesn't like that. And I'm going to let Adam go through it all and tell you all what happened.

Adam Van Wie 5:00

Yeah, it was, it was not a great week, but it really was kind of isolated mostly to mega-cap tech stocks.

Adam Van Wie 5:10

And the, the Nasdaq fell 4.6%. That brought its total loss for June to 6.2%.

Adam Van Wie 5:18

The S&P, it's been a little bit better, although not good. It lost 2% this week and is down 3% in June. However, it's still been a great quarter to be invested in both, with the Nasdaq up over 17% and the S&P up over 12%. The Dow kind of bucked the recent trend, gaining 0.6% this week and 1.7% this month. Despite those gains, it is actually up the least this quarter, gaining 11.9%. To me, this just shows signs of sector rotation rather than a market pullback. There's evidence of this outside the major indexes, too. The Russell 2000 small-cap index was up 1.4% this week, and the S&P Equal Weight Index was up 0.55% this week. So it wasn't all bad news. Just those headline— those two headline numbers were bad, but overall could have been a lot worse.

Steven Van Wie 6:12

Yeah, Adam, the Russell 2000 index closed at an all-time record.

Adam Van Wie 6:17

Yeah, it did. And so that is— that is very encouraging to me. Because the Nasdaq had really been way overbought and extended. And so to see some profit taking there is not surprising, but it's what the people do with the money once they, once they take it out of there. And it looks like they're buying other things. That's an encouraging sign. Yeah.

Steven Van Wie 6:40

There's also money flooding into equities overall in the economy. The cash flow into equities is astounding. It— I'm surprised the market isn't a little bit stronger based on that alone.

Adam Van Wie 6:54

So sometimes you can't really get a full picture just by looking at a cap-weighted index, because especially when the Mag 7 are doing poorly, which they are, it's going to make everything look bad, kind of disguising some good things that are hiding under the surface. And that's what's happening right now.

Steven Van Wie 7:12

So true.

Adam Van Wie 7:12

Even with all of that and the recent volatility, the S&P is sitting just 3% below its all-time highs and right at its 50-day moving average. The cumulative advance decline line also made a new high on Friday, signaling that the— that really signals that the mega-cap stocks are what is weighting down the index. And more stocks are actually doing well than the index would suggest. More than 60% of S&P 500 stocks are trading above their 50-day moving averages right now as well. So there is good news under the surface.

Adam Van Wie 7:47

One area of the economy that remains strong is employment, at least from a data perspective. The 4-week moving average of new jobs created put out by ADP continues to show over 100,000 jobs created per month. And that's pretty strong and it's been that way for quite some time. The initial jobless claims are at historically low levels and they're at the same levels we've seen since COVID ended. And it's just It's kind of eye-opening how low the initial claims have been. Even the tech sector, which has seen an uptick in layoffs recently, is creating enough new jobs to outpace those that are being laid off. So while we're seeing layoffs, we're also seeing a lot of hires.

Steven Van Wie 8:30

And what do you think going forward? Good week this week or next week?

Adam Van Wie 8:35

I mean, I don't know. Next week, 50/50 to me.

Steven Van Wie 8:40

July is historically the best summer month, and we'll, we'll see if that's going to hold up. And it won't get started, of course, really until the next week. I will take a quick break and be right back. Don't go anywhere. This is the Van Wie Financial— Welcome back to the Van Wie Financial Hour. Easy for me to say. I'm Steve Van Wie.

Adam Van Wie 8:59

And I'm Adam Van Wie.

Steven Van Wie 9:00

And I remind everybody, the lines are open. 904-222-8255. And if you want to pick up the phone and perhaps answer this trivia question, feel free to do so. These are brought to you as usual by Paul Lloyd of First Coast Alarm. Call Paul at 904-636-7888. Let's talk about taxes now that the filing season is pretty much wrapped up, except for those of us who do extensions. And the numbers are coming in. From the IRS. What percentage of tax filers received a tax cut in this year's bill because of OBBBA? What percentage? It's between 1 and 100, obviously. So that's all the hints you get. All right, Adam said he has a bit more to talk about on the market wrap, so let's just get right into it.

Adam Van Wie 9:58

Yeah, I want to talk a little bit about household balance sheets and how strong they have been recently. The amount of debt per household compared to income, or, or basically the ability to service the debt that is held, is historically low despite house prices being very high and interest rates going up. Additionally, households are accumulating more assets than they have historically. Real estate assets are more than 70% equity, which is about the lowest since 1950. Even the bottom 50% of households in terms of net worth now own hundreds of billions in equities, something that has never happened in the history of investing. So there's a lot of strength in the consumer, the household, the job market.

Adam Van Wie 10:45

It isn't always reflected in the news or in the consumer confidence arena, but if you just look at the numbers, you would kind of say, "Oh, maybe things are pretty okay." Another thing that I was looking at is that we often look at gas prices, interest rates, and the strength of the dollar to determine what might happen next in the stock market. All of these can have outsized effects on consumer pocketbooks, so they are important indicators. Recently, oil prices have plummeted from well over $100 to about $70. The 10-year yield has dropped from about 4.6% to about 4.3%, and the dollar remains elevated, but it dropped this week, and it could be looking at a reversal of its recent trend. One other good sign is that CNN's Fear and Greed indicator is sitting at extreme fear as June comes to an end. There is still plenty of bearishness out there despite the recent market performance and the SpaceX IPO. And I know that sounds like a bad thing, but if you listen to this show enough, you know that when the retail investors get skittish, the market tends to go the other way. So something to keep an eye on. One area of concern in the economy though is delinquencies on almost all types of debts are rising. The bulk of the increases come in student loans, which have recently begun requiring payments again. Over 10% of student loan balances are now delinquent, and over 9 million out of 43 million borrowers are in default. That— is a lot of people not paying their debts.

Steven Van Wie 12:22

That's not a good sign.

Adam Van Wie 12:25

No.

Steven Van Wie 12:27

Well, there's obviously more to be done economically, but the gloom and doom that you hear in the press, it's just not really coming to light. And part of it is sort of illustrated this week And I assume everybody's like I am, been having a really good time watching the people from around the world coming here for the World Cup games and discovering that the way they are being, the way America is being portrayed to them at home is not really anything but detached from reality.

Adam Van Wie 13:10

What a shock.

Steven Van Wie 13:11

Yeah. Isn't it though? Things are actually fun here. You can go places, you can do things. A lot of people are saying things are so inexpensive. And my personal favorite was the guy that said, you go to one store and you can buy milk and cereal and a BB gun.

Steven Van Wie 13:35

Is this a great country or what?

Adam Van Wie 13:37

I mean, What else could you need? Really? Really?

Steven Van Wie 13:41

But there, the foreigners seem to be particularly infatuated by brisket and related barbecue things in several places.

Adam Van Wie 13:51

So, and don't forget about the ranch dressing.

Steven Van Wie 13:53

And if you're going to take it, remember TSA says if you're going to take a big one home with you, do it in your checked baggage. This is not going to let you on board with it. I think out of everything, That has been kind of the funniest thing of all. We sort of take it for granted and they don't.

Adam Van Wie 14:03

Yeah.

Adam Van Wie 14:14

So no, the brisket is not surprising because that, that's not something that's done everywhere.

Steven Van Wie 14:19

Yeah. Chicken wings and brisket on and on that they're having so much fun. But mostly what I see is people talking about how friendly Americans are, which I knew and you knew, but they didn't know because that's not what they get told when they go home. I find it very odd, very disheartening in some respects.

Adam Van Wie 14:42

I historically, I think that Americans have had this, uh, at least Europeans have had this opinion of Americans that they're loud, obnoxious, overweight. They don't like, uh, they don't assimilate very well to other cultures and I have to say, having traveled to Europe, some of that is true. There are those Americans— you can always pick and choose. There are also Europeans like that, but yeah, um, but they've gotten that reputation. And then recently, because of politics, I think it's just gone even crazier, the reputation that we have abroad. And it's really nice to see that people are coming here and discovering that it's not anything like what they assumed it would be like.

Steven Van Wie 15:25

Yeah, I remember when we all went to your wedding in the Caribbean, and we spent a lot of time walking around the hotel grounds and all, and we noticed one thing above all else. The loud, obnoxious, unruly people didn't speak English. They were all from somewhere else. The Americans were fine, absolutely fine. And I just kind of logged that. What was that, 20 years ago now?

Adam Van Wie 15:58

This is— well, in December it will be.

Steven Van Wie 16:00

Yeah. And I've carried that around with me ever since that, you know, it's not really us that I worry so much about. As you said, certainly it's true. And that's why there was a book written called The Ugly American and all that. But we get a bad rap. Except for lately. And lately, these people are all going to go back to where they're from and they're going to tell stories. And those people hopefully will then decide, well, they're going to take a vacation over here, too. And maybe we can get a little ripple moving throughout the world where we restore in the eyes of the public what we all know to be true. This is a great place.

Adam Van Wie 16:40

Yeah. Yeah, definitely. I think, I think this World Cup has surprised a lot of people how well it's been run, how organized it's been. Um, I went to a game in Miami, and outside of a little bit of like confusion about how to get to the parking spots, it was extremely well organized. There was no real lines for anything. Um, it was very secure. We had to go through like 4 checkpoints to even get in. And, um, I, I was very impressed with how, how well it went off. And getting out of there wasn't even that bad. And we're talking about traffic in Miami. Um, so yeah, I think it's overwhelmingly positive reviews from the World Cup so far.

Steven Van Wie 17:20

Yeah, the talking heads that we all know who are so willing to express opinions that they hold were dead wrong. Absolutely dead wrong. I haven't heard of any problems and you just confirmed it in a place where if you're going to have some problems, that might be one of them because traffic down there is so dismal anyway. Yeah, just don't go there. It's not a place I look forward to frequenting, but as long as they had it managed, that's wonderful. All right, I guess we should move on. We've been talking about all kinds of good things about America. How about a really dumb one to kick it off here? A court in Massachusetts struck down a tax cut ballot measure. They said it couldn't go to the people. It was a proposal to slash income taxes to 4% from 5%, and they said the language is misleading. Well, I don't know how you can mislead somebody on a tax cut, and they didn't actually explain that, but they said It would have shrunk tax bills for state residents at all income levels while costing the state more than $5 billion a year. There's the rub. What does it cost the state? A poll in May found that 62% of respondents support the tax cut, 19% opposed, and 20% were, were, um, unsure. Now, what is wrong with this picture, people? You got a, an extremely popular proposal, the people love it, and it goes to court to stop it from being voted on. It's just mind-boggling to me. that's why I would never live in Massachusetts or anywhere near it. That's just me. All right, how about a more interesting story, this time out of Michigan? I don't know if you all heard, but Ford just won Best in Show for quality in their recent output. And the quality had been slipping, but they won anyway. And I'll tell you why. Because they had been implementing AI through a lot of their processes and that AI was giving them answers that in reality didn't turn out to be such a good idea. So they started looking at the problems and they found that a lot of it had nothing to do with people engineering. It was on AI. And they went out and they rehired 350 experienced engineers who took a look at what AI was doing fixed it, improved everything so much that they won a quality award. How's that, AI? Take it. All right, we got to take a quick break. We'll be right back. Don't go anywhere. This is the Van Wie Financial Hour. Welcome back to the Van Wie Financial Hour. I'm Steve Van Wie.

Adam Van Wie 20:35

And I'm Adam Van Wie.

Steven Van Wie 20:36

And I remind everyone again that lines are open,

Steven Van Wie 20:42

904-222-8255. And you can do that to either talk about something else or like to try to answer the trivia question. It's a pretty easy one today. What percentage of tax filers this year got a tax cut largely based on OBBBA? Between 1 and 100. We have no bracketry yet. All right, back to the Ford thing for a minute. A couple of stories. Back in 1979 or '80, I remember, because if you think back, this is the, like, the end of the Jimmy Carter era. The economy was pretty much tanking and nothing was going real well. And I remember one day hearing a story that Chrysler had made some cost-cutting maneuvers, and they did it by laying off their entire engineering department. Now, I got thinking about that because I was involved at that time in manufacturing, metal stamping, and we did work for some of the automotive companies. And I thought, you know, that sounds like the wrong reaction to me. I would think if you've been having quality problems especially, that you might want to think of some other things you could cut, but not the engineering. And they subsequently suffered for quite a long time with some of the worst quality ratings ever.. And I know a lot of people who still resent that time period so much that they wouldn't buy a Chrysler. Well, it isn't the same company anymore, especially in certain part of it, as Adam can tell you. He drives a magnificent truck that they made. But it was just something back then that I've— you just walk away, shake your head, say, is anybody really this dumb? But let's crank that up to a little bit more. First off, let me give you a little more background here. The problem with Ford, they determined that the quality had become— the quality control approach had been fragmented across the organization. Departments operated in isolation, and they were operating on what they call a reactive find-and-fix philosophy. That was identifying defects as they appear. Well, if you've ever been involved in manufacturing in the last 20 or 30 years, you know that the idea, the quality improvement idea, was not to find and fix problems. It was to prevent problems. That's the whole— Adam knows more about this than almost anybody. And part of that was because AI was doing things, especially in the software, and it got worked into the system without being thoroughly tested. And I got thinking about Adam's tenure at Home Depot many, many years ago. And if Adam, you were telling me a little bit about that, how Home Depot had all these businesses that they didn't really know. People didn't know. People in Business A didn't know that there was Business C and all that. And I remember you telling those stories. It kind of reminded me of it. Is that on the right track?

Adam Van Wie 24:00

Yeah, well, it was worse than that. Um, Store A in like Marietta didn't have the same processes as Store B in South Atlanta. It was just the Wild West. You could do whatever you wanted as long as it made money, essentially.

Steven Van Wie 24:16

Hmm. That's sad. A bit of a communication problem.

Adam Van Wie 24:22

Yeah. And, uh, when I was there, they were trying to centralize all of the processes, um, from from HR to accounting to store inventory. And it was just a complete nightmare. Great company, but wow, did they have a lot of work to do.

Steven Van Wie 24:41

Yeah, I remember. And then when they brought in their first non-family CEO, Bob Nardelli, full disclosure, we've all known him for decades. When they brought him in, everybody hated him. And I can understand it. He isn't a warm, fuzzy family guy, necessarily. But he inherited a big old mess of confusion. And by the time he got out of there, I gather it was a lot better because the company did very well during that time. Tripled sales and tripled profits and that sort of thing. But they still hated him. Too bad, right?

Adam Van Wie 25:22

In fairness, they would have hated anyone who had that role.

Steven Van Wie 25:25

My point exactly. Yep. Yeah, it was, it was a learning experience for Home Depot. And look what they've done since. My gosh. I remember when I first got into this business 24, 25 years ago, you could buy Home Depot stock for $14 to $17. And I don't know how many times, if at all, it has split since then, but Lately it hangs more in the, what, $400 range. Not a bad investment long term. So just a little, a little remembrance of some things that should be lessons to learn. All right. The Senate passed a housing bill. There's some politics going on up in D.C. now that everybody probably knows about where Everybody agrees we need to pass a housing bill, but Trump says we got to have the Save America Act too. So he's linking them together. And we've got some stubborn people up there who, who will tell you that they believe that voting rights are important and that you ought to have to prove it, but they won't put it in writing. I do not understand those people at all, but Trump's trying to force his hand on it. But let's look at this housing bill. There's some things in here. It's called, first off, the 21st Century Road to Housing Act. And it increases, supposedly cuts red tape, increases housing supply, expands loans to build, and it curbs Wall Street's ownership of single-family homes. Adam and Joey and I have talked about this on air, and there's a lot of mixed emotions around the federal control of how many single-family homes a corporation can own. Got an opinion on that, Adam?

Adam Van Wie 27:26

Yeah. I mean, honestly, I know it's a big, like, populist issue and the media eats it up. And I honestly, I don't think it's nearly as big of a deal as what people say. The reason I say that is not that it isn't happening. It definitely is. But the fact is, when corporations buy homes and lease them to people, it does not take away from the housing supply. It actually contributes to the rental supply, which is an important piece because not everyone can afford to or wants to buy a home. A lot of people want to lease. And that's If you leave that up to the private market, it, it, I don't think that there's a huge discrepancy in rental prices between corporate ownership and private market ownership because they don't set the prices. The market sets the prices. So to me, it's, this is just a non-issue that's become a political hot button. Yeah.

Steven Van Wie 28:26

The anti-corporation people are all over it.

Adam Van Wie 28:30

Yes, exactly.

Steven Van Wie 28:32

All right, then here's another one that I know you have an opinion on. It has been widely reported lately that the average age of a first-time homebuyer is now 40. And I know you've taken exception to that when I've talked about it.

Adam Van Wie 28:49

There is a 0% chance that that statistic is correct. It was, it was like 30-something for like years and years and years. And then all of a sudden it jumped up to 40. It's an outlier for one. It doesn't make any sense. And I just, I don't buy it. I need to see 5 years of data going forward that shows me that it's still 50. And I want reliable data on top of that. But it just, I think that this number is just wrong. I can't wait to see what happens going forward because I just don't think that it jumped 9 years higher in a year. I just don't buy it.

Steven Van Wie 29:33

It does seem a little dramatic, I guess. Well, we do know one thing. The affordability thing is a big issue right now.

Adam Van Wie 29:37

Yeah.

Adam Van Wie 29:43

It is. That is true.

Steven Van Wie 29:45

And if we can get the price of gasoline down, that would impact the entire inflation market. The Fed would probably be more accommodative. I also don't think

Steven Van Wie 29:55

I think there's a very good chance that the Fed is going to raise rates this year. And you feel free to disagree with that one also if you'd like to.

Adam Van Wie 30:04

I don't think that raising rates right now is really a good move. Like, I don't understand why they're even talking about it with most of the recent inflation being caused by the price of oil, which is now reversing itself. What is the justification for raising rates? Today?

Steven Van Wie 30:23

In my book, it's to make stories in the media only. In fact, I read one this morning. You're going to love this, that some people are factoring in 4 hikes this year.

Adam Van Wie 30:39

And I saw something similar that to me seems manufactured and a bit insane.

Steven Van Wie 30:45

Yeah, a little bit of both. You know, 24/7, 365, these people have to say things and write things. I— to me, there's no chance. And quite frankly, I am very comfortable with the interest rates as they are. And if you look at the housing stock, of course, mortgages are the thing everybody's most concerned about. Half of mortgages are at or above 6%, and things seem to be going along pretty well to me anyway. I don't see why we have to get them down to 3% again. Now, if they do, you should of course go get one, but I don't see the need for all this. All right, let's see. We've already kiboshed one, the institutional ownership, and now they're supposedly streamlining environmental reviews, modernizing zoning, and reducing regulatory barriers to accelerate construction. Um, they might have a problem here in that most of those zoning things and, and the environmental stuff are state or local level rules. I do not see how a federal bill is going to make a lick of difference in this sort of thing. I could be wrong, but I don't see it. You're going to tell Los Angeles that they got to lighten up on their rebuilding things? No, they'll nod and go away. And that's about it, in my opinion. I will be back in a moment after we pay our last bills and we'll be right back at it. Don't go anywhere. This is the Van Wie Financial Hour. Welcome back to the Van Wie Financial Hour. I'm Steve Van Wie.

Adam Van Wie 32:28

I'm Adam Van Wie.

Steven Van Wie 32:30

Hmm. And there was a beep. I want to remind everybody again, lines are open.

Steven Van Wie 32:38

904-222-8255.

Steven Van Wie 32:41

What is that? There's something on the phone, apparently.

Adam Van Wie 32:42

Oh, okay.

Steven Van Wie 32:46

Anyway, the trivia question still out there. How many tax filers this year actually got a tax cut? And it was all largely based on the OBBBA provisions,

Steven Van Wie 32:59

somewhere between 1 and 100%. All right, just wrapping up this housing bill thing. Adam, do you see anything that could possibly go wrong if the Department of Housing and Urban Development Authority got the ability to make zoning lessons at the local— or regulations at the zoning level

Steven Van Wie 33:25

by city?

Adam Van Wie 33:27

I, I don't like that at all. I think that's a local issue and it should— they should have no authority over that.

Steven Van Wie 33:33

Yeah, talk about big government interference. I, I see nothing in this bill that I like at all. It, it just doesn't speak to me as logical solutions to the affordability problem. I think they want to pass it to say that they did something. That's my opinion.

Adam Van Wie 33:56

That's entirely possible.

Steven Van Wie 33:58

We addressed the affordability. We passed the biggest housing act in 50 years. Yeah, what'd it do? Well, didn't really do anything, but we passed it. Sure, real nice. Hmm, still getting these beeps like we're being recorded or something. You suppose they're watching us? They heard me talking about them.

Steven Van Wie 34:23

Are you not hearing that, Roger? I am. Adam is on his cell phone and someone is trying to call him. That's his call. Wait, okay.

Adam Van Wie 34:31

No, that is not happening. So I don't know what's going on.

Steven Van Wie 34:36

Hmm. I don't either. Well, we'll plow through it. Uh, let's see. Yeah, that's Trump wants to get the The Save America Act. I got that one already. And let's see, here's one for you, a little discussion.

Steven Van Wie 34:55

How about a new bill that would phase out the Social Security payroll tax cap? Where do you stand on that one?

Adam Van Wie 35:05

I, um, I think it's inevitable. I don't love it because it's not the way the system was designed. Um, it's supposed to be You get back what you pay in, but the way that it's been so horribly mismanaged and on, especially on the investment side, it's probably inevitable.

Steven Van Wie 35:24

Well, I agree. The question to me is how quickly will that happen? I have no doubt that it will have to happen. I can't think, you know, I, when I complain about something, especially over a long period of time, and I've been complaining about Social Security since I can remember, because everything they try to do supposedly to fix it just makes it worse because it's always increasing benefits or adding people to it or something like that. This has got to change, in my opinion. And also, there is a secondary proposal out there right now. This one says, let's let young people out of the Social Security system from the beginning. Now, what would the major problem be on that? I think it's a great idea. And remember, all the George Bush pretty much got laughed out of Washington, D.C. when he tried to do it. But think how wealthy everybody would be if we had done that back when we were young. But there's kind of a problem in my book, and that is this: if you

Steven Van Wie 36:43

either just let them opt out, or if you take them out and say, we're not gonna do this anymore, we're gonna do something more like a Trump account system where everybody has one that's invested in the market for 30, 40 years and all that, either way, who's gonna pay my monthlies when people are not contributing anymore. That seems to me to be something of a problem because that's how it works. And I don't— I can't think of a method or technique, a formula that would allow this to work, even though it'd be the best idea since sliced bread. Got an opinion?

Adam Van Wie 37:24

Yeah, I mean, that could work because Look, we're going to end up funding some of Social Security out of general revenue anyways. This at least would cut the problem down to a— the— you could, you could cut it off at a certain point. I mean, if you, if you switch over to the new system, you still have that gap in there where you've got to fund it for a while. So, but under the current system, we have that gap that you're gonna have to fund basically forever. This at least would, would cut that shorter. So I actually kind of like that idea.

Steven Van Wie 37:56

Well, in theory, it's a fantastic idea. It would solve the problem. And if you want to see how it would work, just look up the Canadian system, which is just loaded with money. No problem at all.

Steven Van Wie 38:12

I don't— I don't like it. But there is some historical precedence. A lot of people don't know exactly how Social Security is funded. And for the most part, you know how it's funded, because when you get your paycheck, there's a line item for FICA in there. It's funded whenever anybody gets paid around here. But that's not the only way. Over the years in Social Security, there have been additions like the survivors and the disability and so on. And when people are let into new benefits on the fly like that, the government— then the government actuaries say, here's the estimated cost of that. Addition to what we're doing right now, and they fund it through general revenues. It is not at all unusual for that to happen. I don't like it, but if you're going to keep giving away more money, sometimes you have to. And I— it worries me a bit, but I think you're probably right that if they really decide to take action on this and make it work for generations to come, there's going to have to be a big offset from the general revenues. The other thing that funds it is the taxes people pay on their Social Security income, and I believe that's going to have to be addressed also. It would not surprise me that there'll be a single cutoff for annual income to pay taxes, and if you're over that, you pay 100%. I see almost no way to get around that. Agreed?

Adam Van Wie 39:50

Yeah, probably. I mean, we're already at 85. What is it really that big of a difference?

Steven Van Wie 39:56

Well, no, I would argue that it is, but it isn't, so I won't.

Adam Van Wie 40:02

No, it's not. Um, that one will be very unpopular, but that's, uh, I do think that may happen.

Steven Van Wie 40:10

And, you know, your generation is right on the cusp for all these things. And there, there is also something we've talked about that I was just thinking about right now. Your generation is tiny, but the one behind you is huge.

Adam Van Wie 40:26

That's right.

Steven Van Wie 40:28

So as we boomers go away, then that relieves some tension on the system a bit. And when you guys move into the recipient categories, there's going to be less of you there, and by then the next generation is going to be working. It seems to me there might be something of a self-correcting mechanism in this whole thing.

Adam Van Wie 40:52

You know, they take all that into account when they do those studies, so then they're still projecting shortfalls. So I don't think it will self-correct, but it will ease it a bit, uh, just because there is an hourglass, uh, you know, sort of formation with the generations there. Gen X is very small, Boomers huge, Millennials are huge. So, um, so there might be a bit of easing on it, but I think they've already factored that in.

Steven Van Wie 41:19

Well, this, the proposal to, to change to 100% on the, on the income side of it, that would be phased in over about 5 years. And I, I think for a lot of people it would probably be kind of a shock because their taxes are going to go up a long ways. And there will be a lot of very clever people who are out there looking for ways around paying themselves salaries that would require less and less input. It's a problem that, like I say, every time I see anybody try to address it, they make it worse. Real simple.

Adam Van Wie 41:55

All right.

Steven Van Wie 41:56

Now, do you want to be feeling sorry for the birthday boy? And I don't mean me. Elon is no longer a trillionaire.

Adam Van Wie 42:07

Oh man, poor guy.

Steven Van Wie 42:09

Yeah. And there, there is a law being proposed by some of the usual suspects to tax trillionaires. Well, it's not going to generate much revenue, is it?

Adam Van Wie 42:24

Wow. I mean, yeah, let's let's just come up with an arbitrary amount of money and then we'll set that as the most anyone is allowed to have, whether it's actual cash or in corporate stock or anything. That seems like a great plan. And not arbitrary at all.

Steven Van Wie 42:38

Mm-hmm.

Steven Van Wie 42:40

Well, how about if a government's big enough to limit your wealth to a trillion dollars, is it also big enough to change that down the road to half a trillion or a hundred billion? I think or something like that.

Adam Van Wie 42:54

You think? Yeah. And also disincentivizing success is all— has worked out so well across the globe. We should really do more of that.

Steven Van Wie 43:03

I think we really should. See what California's doing with their wealth tax now? They're saying, because Newsom is trying to run for president, he knows how unpopular it would be. So he's saying, and no, I'm against it for California, but I like it in general. But it's got to be done at the federal level. Mhm. The slimeball of the world weighing in on things. All right, IRS reports back that in this filing season, 97% of tax filers have received a tax cut, largely based on the provisions in the OBBA— OBBA. Now I have only one question: why aren't more people who think more like we do, just touting that every day in every way from every media, maybe people get the idea that things are getting better around here. Who knows? More next week when Adam and I will both be here live. I hope everybody has a wonderful Fourth of July and we'll see you all then. Thanks for listening. This is the Banwe Financial Hour. Until next week.