The problem is that McCain panders to ignorance and embraces it. Many don't understand how Soc Sec or the Budget works and why the current surplus can't be used to fix future Soc Sec structural deficits. There is no account to stuff. McCain's plans are pure boob bait and the Dems will wind up spending the surplus if he succeeds.
This is reality:
January 21, 2000
Dumb Idea
You know Congress is hard up for excuses not to return the surpluses to taxpayers when Republicans start talking about paying down the debt as some kind of a national emergency.
But let us be fair: Presidential contender John McCain and Republican House Speaker Dennis Hastert are reacting to graphs showing a pulse spike when focus groups are told the idea of retiring the debt "for our children." Maybe politicians get those reactions because they insist on treating voters as if they are children--too unsophisticated to understand why the national debt is not the equivalent of a family overrunning the limits on its credit card.
Then again, we might be guilty of excessive charity. Mr. McCain gives every evidence of being a man who thinks he looked out his Senate window and saw the Social Security Trust Fund stroll by. Most kids these days, at least the ones skipping college to start Internet companies, understand that paying back debt is only one of the things you can do with revenue, and not necessarily the one with the best return.
Herewith some facts to consider in light of the proposals for a panic spending program to reduce the debt:
The debt is already shrinking in absolute terms as the Treasury pays off maturing bonds; and shrinking even faster according to the ratio that really matters, percentage of national income. At 50% of GDP, we're in healthy shape by developed-country standards. Speeding up the repayment of the debt would merely shift the spending in time. The overall burden would not be reduced to any significant degree (though refinancing some of the debt at today's lower interest rates might be sensible).
The goal of policy should always be maximizing economic growth. The remarkable prosperity of the past two decades has lifted the boat of nearly every American and, incidentally, reversed the trend in the national debt. The best move now is to begin cutting taxes from their current wartime levels. The Cold War is over; the emergency spending levels that accompanied it go on and on.
Voters respond to the notion of being "debt free" because they analogize it to their own situation, where it frees up resources they can spend on other things of value. Republicans owe it to them to explain how the federal fisc really works.
We assume it must have been a pollster who scripted Mr. Hastert's claim yesterday that his plan would leave the government debt-free by 2015. Voters who believe this will be overlooking (as they're meant to) Social Security, Medicare, and the pension and health rights of federal employees and military veterans.
These obligations of the federal government are every bit as real, and, unlike the nominal federal debt, they continue to grow faster than GDP. Nor is it possible to get a firm fix on them, thanks to Congress's willingness to entertain phony estimates while tweaking entitlements in the direction of greater spending. As for "protecting" the Social Security trust fund, there is no such thing: The government merely writes an IOU to itself. You can become a billionaire by writing yourself a check for a billion dollars. Like Social Security, you'll still have to find real money somewhere when you want to spend it.
The nominal debt at least has a virtue; it's a visible reminder to voters of the need for vigilance against Washington's spending urges. We wouldn't be running surpluses today except that the visible debt kept the pressure on politicians to limit themselves to routine leaps and bounds.
There are only two things Washington can do with the surplus--spend it or give it back to taxpayers. At least the Democrats are honest: Bill Clinton applauded himself this week for offering the biggest new entitlement "since Medicare in 1965." Bill Bradley has similar plans for trapping the surplus in Washington and spending it.
The vision-challenged Republicans of Congress have the same idea, just different in the details. They have a spending plan called paying down the visible debt, which, once accomplished, would only aid future administrations and Congresses in increasing the invisible debt through the creation of new entitlement programs. Indeed, the only reason to pay the debt down now is because Congress can't gin up spending programs fast enough to accommodate the funds coming in this year and next.
You know that story about the youngster who discovers money on a bus and knocks himself out to return it to the rightful owner? The same instinctive decency ought to apply to Washington. Today's gusher exists mainly because the "irresponsible" Reagan tax cuts redressed the disincentive effects of the old tax structure. We have surpluses because Americans are harder-working and more productive, not because the politicians have become more frugal. Washington's periodic attempts to jack up the wage tax have been a particular disgrace.
With the world at peace, the economy humming and the debt already on a path to extinction, Republicans shouldn't be conspiring with Democrats to keep the surpluses in Washington. If that's the plan, why don't they just call themselves Democrats?
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