Pension Cut

Governor Jerry Brown proposed to increase the current sales tax and tax higher to the high income earner. He also suggests to increase the retired age to 67. If it is approved, the federal government could save a substantial amount for welfare and generate a larger tax revenue. Jerry stated that people have to accept the pension cut since we are undergoing a financial downturn. I think the reduction of the welfare would lead a larger income inequality even though the rich person would be taxed greater. As we are in a economic downturn, the employment environment is not able to increase the income mobility through hard work. It is hard for the poor to climb up the economic ladder since the government fail to increase the employment opportunities for them. If government still insist to cut pension, the income inequality would keep rising. If that is the case, in the long term, consumption of household will fall and eventually it will lead a greater amount of decrease in nation output.

source: http://www.latimes.com/news/local/la-me-brown-pensions-20111202,0,5822403.story