Social Security: Will Bush cave?
Rossputin blog
In Economics & Tax Policy
There are rumors swirling that President Bush is willing to talk about ways to "fix" Social Security with "no preconditions".
I am truly frightened (as much as one can be about an economic policy) that Bush will prove to those few remaining blind GOP loyalists that he is no conservative. I hope I am wrong to be afraid.
Bush went longer than any President in history before vetoing a bill, and then finally found his veto pen to veto stem cell research. He could have vetoed McCain-Feingold which he said he knew was unconstitutional. He could have vetoed any of the many insane spending bills which have saddled current and future taxpayers with massive debt. And he could have vetoed the Medicare prescription drug benefit, which makes all the other spending look like small potatoes. But no, since Bush is a big-government religious radical, he did none of those things.
Those on the left believe that anyone who is for low taxes is a conservative and that anyone who is a religious Christian is conservative. And in a way they are right, but with two very different meanings of the word conservative.
The former use defines (these days, as the proper word is "liberal", as it was used generations ago) a person who believes in limited government and liberty. The latter defines a person who is rigid in his or her views, against change, and (these days) interested in using government to achieve what they can't through moral suasion, much as the left likes to do with their pet projects.
The public confuses the word conservative in that it lumps both these groups together. I am in the former group of conservatives and Bush is in the latter. In other words, if you are using the word "conservative" as it relates to a vision of the proper role of government, Bush is not one.
This brings us back to Social Security. One of the few things Bush has gotten right was his early focus on Social Security reform based on personal accounts, possibly including means-testing or indexing, and, read his father's lips, no new taxes.
Now we hear rumors (such as in this Wall Street Journal editorial) that Bush may be willing to consider tax increases in the form of raising the cap on the income on which FICA is paid, currently $90,000 a year. And he may do this while simultaneously giving up personal accounts, possibly in the interest of being able to say he did something about Social Security's problems.
There are many great reasons that this strategy would be a disaster for Social Security and for the country. Some of the financial details can be found in this research article by Heritage:
Raising the Social Security Payroll Tax Cap Does Not Fix Social Security
But beyond the fact that raising the payroll cap would only delay, not fix, Social Security's problems, there are other truly huge flaws in this idea.
One of the biggest is the disaster this will mean to small businesses and self-employed workers, who are the true economic engine of this country. If the cap is raised, these people are likely to be looking at marginal tax rates of over 50%. It will be throwing huge buckets of sand into the gears of that economic engine.
Another of the huge flaws is that it gets away from personal accounts. I believe the country has been swayed by the AARP's and the Democrats' and the unions' propaganda on this issue; people do not understand how devastating Social Security is to the country and particularly to lower income workers who are forced to save into a program which does not actually save the money, which provides a far worse return than even a CD at a bank, which is not able to be passed down to one's children, and which enables the government to partially mask their profligate spending.
[I have written at length about "Why Liberals (and Democrats) should support Social Security reform." You can read the blog posting HERE, or get the PDF version of the article. (Left-click to read, right-click to save.)]
Make no mistake, the Democrats and unions are desperate to prevent personal accounts for two main reasons: First, they keep power by funneling as much taxpayer money as possible through government and then claiming to be the providers of free goodies. If money were to stay in the private sector rather than go through their greedy fingers, they lose control of the ability to buy people's votes with their own money. And second, a person who has any investment portfolio, even if as small as a few hundred or few thousand dollars in a savings account, suddenly cares about good government. If bad government policy destroys the value of their investment, either through taxation, regulation, inflation, or currency devaluation, those voters get mad. Since the Democrats tend to do all those things (particularly the first two), it is in their interest to keep as many voters as possible from having any noticeable stake in any particular policy choice.
If Bush goes along with these thieves by either agreeing to raise the payroll tax cap or abandoning the idea of personal accounts within a reform package, he will not only have sealed his fate in my view as the worst President of my lifetime (with the possible exception of Jimmy Carter who at least had the virtue of not claiming to be a conservative), but he will have done massive damage to the economic future of our country. |
