February 25, 2004, So Much for the Third Rail of American Politics
Adding a cherry on top to the Bush Administration's long term fiscal policy, Federal Reserve Chairman Alan Greenspan testified before Congress advising that the national legislature must take decisive action to reduce the deficit which did not include tax increases but did include reducing future social security benefits.
AARP won't be too upset, of course, because Greenspan promised that the current group of people receiving benefits (who by and large paid a far lower percentage of their income in payroll tax than current workers) shouldn't be effected, whereas people nearing retirement, or a fair to middling bit away (such as your 41 year old talking dog) are, well, fucked.
You see, the most logical revenue raiser to improve the solvency of social security, i.e., eliminating the upper income cap of around $85,000 at which point most social security tax disappears, is absolutely unthinkable, yet it is absolutely painless (except politically). The tax now is REGRESSIVE-- and often results in minimum wage dishwashers paying a higher percentage of their income in taxes than well-paid chefs. We should change that egregious result... No, no, no. Can't do that. Not raising taxes is sacrosanct-- damn everything else. If tax revenues from current tax levels are unable to support government programs, then the answer is simple: cut those programs.
Perhaps the President will come back tomorrow with some more nice raw meat for his base, say, restoration of Jim Crow laws, or pointing out that John Kerry's father is ethnically Jewish, to divert attention from this possibly troubling bit of economic news (i.e. thanks to his discretionary Iraq adventure, future social security benefits will be reduced-- and yes, the link IS as simple as that).
Just a quick example of what an awful candidate John Kerry is, and why the voters who decided based on I don't know what that he is "electable" have failed to consider, is not merely his failure to seize on this (and he will fail to seize on it), but his response to his voting record on defense matters (i.e. a series of "no" votes on over a dozen weapons systems). The CORRECT response is simple and devastating: "The Cold War has been over for over a decade. YOU JUST SHOW ME ONE OF THOSE WEAPONS SYSTEMS THAT COULD HAVE STOPPED THE EVENTS OF SEPTEMBER 11TH-- JUST ONE-- YOU SHOW ME!!!" And this issue would never, EVER, be raised again. Instead, Kerry turns to "I fought in Vietnam! How dare you question my patriotism!" As I said: crappy candidate. Democrats, this is the election of a generation-- and we all fucked up, trying to guess what OTHER people want in their President, instead of what WE want and know to be right.
I don't know why my man Edwards is not seizing on some of Bush's criticisms of Kerry, notably the whining and waffling-- and seizing it for his advantage. He ain't acting like no big-time trial lawyer I'VE ever seen... Maybe it DID come down to Howard Dean-- and Dick Gephardt WILL roast in hell for accusing Dr. Dean of being a baby-killer and all the other nice things he said about him (such as Dean's pointing out that social security benefits might have to be reduced, which, thanks to Gephardt's helping to kill off the one candidate WHO COULD HAVE CRUSHED BUSH, will now become a self-fulfilling prophesy).
In short, Zero is fiddling while Home burns... and he STILL might win in November. Excuse me, while I puke my guts out...
Comments
TD, I'm in basically the same boat as you are (mid-30s) and would be screwed by Greenspan's proposal. But no more so than doing nothing, in which case the tax burden on you and me will skyrocket over the next couple of decades. What I liked about Greenspan's raising of the issue is that hopefully it will focus attention on the problem. Reasonable minds can disagree about the fix -- perhaps we should raise the retirement age, perhaps we should raise the cap on payroll tax, perhaps we should raise the rate of the tax.
But right now, both fricking parties are sticking their heads in the sand (or perhaps more graphically, up their anatomy) and not addressing the problem. It'll be painful to do now, but the pain only gets geometrically worse from hereon out.
Posted by Tung Yin at February 25, 2004 04:32 PM
TD, I'm in basically the same boat as you are (mid-30s) and would be screwed by Greenspan's proposal. But no more so than doing nothing, in which case the tax burden on you and me will skyrocket over the next couple of decades. What I liked about Greenspan's raising of the issue is that hopefully it will focus attention on the problem. Reasonable minds can disagree about the fix -- perhaps we should raise the retirement age, perhaps we should raise the cap on payroll tax, perhaps we should raise the rate of the tax.
But right now, both fricking parties are sticking their heads in the sand (or perhaps more graphically, up their anatomy) and not addressing the problem. It'll be painful to do now, but the pain only gets geometrically worse from hereon out.
Posted by Tung Yin at February 25, 2004 04:32 PM
TD,
Raising the ceiling will certainly bring in more money now.....and greatly increase the liabilities that come due when those folks retire. Taxing the hell outta Bill Gates may seem fine, but he'll then be eligible for a 6 figure social security check each month.
That is, unless you want to rewrite social security altogether & remove the calculations that are based on income.
The ethnic stuff was over the line, btw. You didn't have Republican candidates blaming their losses on the J-E-W-S. Neither party is anti-semetic....let's be fair.
Posted by Ricky at February 25, 2004 10:23 PM
Yes, Ricky:
Social security can be re-written in the same way it was created: by a simple act of Congress. The President controls both Houses-- if he wants to do it, its a no-brainer. No one will stop him, and frankly, the Dems trying to fillibuster it would only bite them in the ass (and I don't think they'd have 41 votes on it anyway).
You are correct that there is an urban myth that social security is some kind of "pensions system". We all know, of course, that social security is actually a T - A - X. Its about time we stopped the bullshit, and STOPPED means testing what goes IN (which, when you think about it, is unbelievable) and START means testing what comes OUT (this, at least, I understand-- to keep the program politically viable). Yes, I know that these moves will hurt POLITICALLY-- but God damn it, it will render the system solvent ACTUARIALLY. Bill Gates, when he turns 65 or whatever the age is by then, shouldn't be eligible for a monthly government check, PERIOD. He doesn't need it. And because he WILL get it, people who DO NEED IT don't get it, or get less than they would if this program were administered fairly. Yes, I know this is crazy talk-- but the system as it now stands is an actuarial time bomb, and Ricky, you're only a coupla years younger than me (IIRC).
As to my anti-semitic comments, this is a blog Ricky: hyperbole is our stock and trade. Do I think that come the general election there will be quiet push polls in certain states reminding voters that Senator Kerry's father was a J - E - W? Yes. I'm certain that's going to happen, unless (1) Kerry somehow blows the nomination or (2) Karl Rove's heart suddenly ceases beating between now and Election Day. Karl can't help himself. Its just who he is. (BTW, Kerry employed his own push polls against Dean in early states; people should go to jail for it IMHO, but its become a common campaign tactic.)
Does that make Bush (or the Republican Party) "anti-semitic"? No. I don't accuse them of that. I'll go further: I don't think Bush has an anti-semitic bone in his body.
I DO accuse the Bush-Cheney-Rove team of being dirty, underhanded motherfuckers (although, as Seinfeld would say: not that there's anything wrong with that.)
Posted by the talking dog at February 25, 2004 10:45 PM
Regarding Kerry's defense votes, Slate has rebutted very well.
As to the ethnic stuff, I'm in agreement with the TD; Rove and his crowd will use whatever they think works for specific markets. They take their cue from Lee Atwater and the Willie Horton ads, and from Jesse Helms and his ads against whoever (was that Harvey Gant? Seems right).
Posted by Linkmeister at February 26, 2004 01:26 PM
"Democrats, this is the election of a generation-- and we all fucked up, trying to guess what OTHER people want in their President, instead of what WE want and know to be right."
Come on, TD, this is very patronizing. We can disagree on Kerry, you don't have to think he's a decent candidate, but spare me the "we all REALLY know that Dean (or whomever else) was the one true Dem candidate, and we don't REALLY like Kerry, but other people will like him more so let's vote for him."
Posted by Haggai at February 26, 2004 06:26 PM
Haggai--
That's not "patronizing"-- that's how its polling. People are telling pollsters that they are voting for Kerry because they think EXACTLY THAT: we don't really like him (if we have even thought about that question at all)-- but we "THINK HE CAN BEAT BUSH".
Its not really well-enumerated in polling WHY this is, but people think it, and it becomes a self-fulfilling prophesy after a while. The "guessing what other people think" is, of course, subjective on my part(and actually applies to a tiny number of Iowa voters-- since Iowa, people just jumped on a bandwagon).
Edwards is doing far better among the "we care about the issues" voters. Its just that the "we want to beat Bush" voters now radically outnumber the "issues" voters, so Kerry, in turn, is clobbering Edwards.
Again: this could work out. Kerry could still (and by God, SHOULD) be elected our next President. But he's a jerk, and not a very good candidate-- IMHO, the worst of the group of four "electable" candidates-- and God damn it, I'll keep saying so. That said, he BETTER beat Bush.
Anyway, Mr. Greenspan has just thrown fresh meat at core DEMOCRATIC constituencies: if the good senator knows how to play with it, maybe we'll be getting somewhere. Meanwhile, in a coupla hours in LA, we'll get to hear what he has to say on this and other things.
Posted by the talking dog at February 26, 2004 06:35 PM
**"I DO accuse the Bush-Cheney-Rove team of being dirty, underhanded motherfuckers (although, as Seinfeld would say: not that there's anything wrong with that.)"**
Well, I won't argue with that. :)
However, any politician running on the notion that someone paying into the social security system *may* in the future have their social contract removed on a whim (what, you think the dollar amounts on what constitutes "they don't need it" would remain the same?) is destined for a Mondalian defeat. Running on tax hikes isn't a recipe for success and telling people that they may not be eligible for social security if the pols say they don't "deserve" it is a no-go for people running for election.
BTW, what would happen if Gates were to retire and lose all his investments (most of his money is in MSFT stock) at age 70 and also be ineligible for social security? (that's an extreme example, I know, but I'm throwing out just one form of argument as to why means testing may sound good but is probably a no-winner for pols.
Lastly, I didn't know you were using hyperbole, TD. My apologies for misreading.
Posted by Ricky at February 26, 2004 07:59 PM
I agree with you, Ricky: the system pretends to be a pension system, even though it pays back wildly disproportionately to what workers put in by overtaxing the later generation of workers (conservative darling Ronald Reagan presided over the most vicious, regressive tax increase in human history, which of course, we have called "saving social security").
But it can't work that way much longer: the ratio of how much we have to tax current workers keeps going up and up and up to sustain a program that isn't means tested, and is disproportionately benefitting affluent people (who tend to be healthier and live longer-- see the vicious ECONOMIC cycle go; btw, people SHOULD live longer-- that's a good thing.).
Cutting off Bill Gates (and btw, means testing would be annual; if Microsoft crapped out and Bill ended up on skid row, his SSI would kick in the following January 1st). Reagan pulled it off in the 80's and is regarded as a superhero. I agree that packaging is important. But right now, we have a President that just wants to spend obliviously, while inventing the most unfair and least stimulative tax cuts (dividends? LARGE estates?) ever conceived of.
We hear all the time "the system will be broke by 2030 (or whenever it is I'M about to retire!); well, at the rate this President is abusing the social security system for general revenue, it will effectively be broke by 2009, if he is reelected.
Greenspan just told us so.
Posted by the talking dog at February 26, 2004 09:57 PM
I can give you the ending of this scenario, btw. I said it on the Pathfinder bulletin boards 5 years ago & have been saying it ever since, and it won't matter who or what party is in power or for how long: Get ready for your payroll tax increase.
Name me one time when the gov't needed money and didn't take it.
Full disclosure: My MIL has worked for the social security department for quite some time.
Posted by Ricky at February 26, 2004 10:20 PM
"People are telling pollsters that they are voting for Kerry because they think EXACTLY THAT: we don't really like him (if we have even thought about that question at all)-- but we "THINK HE CAN BEAT BUSH".
Its not really well-enumerated in polling WHY this is, but people think it, and it becomes a self-fulfilling prophesy after a while."
Show me the polling data, TD. I've heard other people say this without pointing to any evidence, and I'm not the least bit convinced. If they really DIDN'T LIKE Kerry, then why the hell would they be voting for him? Are these the same people who really and truly like Dean, and really think he's the best potential prez out there, but just can't be convinced to vote for him? Is that how this is all working?
Posted by Haggai at February 26, 2004 10:33 PM
Haggai:
You'll doubtless hate me for citing him, but William Saletan has the skivvy here. Its impressive data, actually, and shows that among cross-over independents and Republicans-- people critical to the Democrat winning in November-- Kerry is far weaker than one supposes.
Ricky--
I can't imagine a scenario where your statement is not correct (as to your MIL, well, I once heard it suggested that in-laws should be made outlaws). The joke is that the voters continue to behave like morons and believe in people like Dick Gephardt and Santa Claus, but reality is the choices are, and have always been, raise taxes, cut benefits, or both-- but not neither. On that we agree. I continue to be astounded at the "kick-out"; as to your "Bill Gates" example-- the fact is, there will always be a MAXIMUM benefit-- it is only theoretically related to your contribution; if Gates were to contribute billions to the program, yet his maximum benefit were, say, $1200 a month-- SO WHAT? That's my point-- I see removing that cap, and reinstating inheritance taxes (Hell- INCREASE THEM!) and full, regular income tax treatment of passive income (say, interest and dividends) as the fairest way to go; and I think there would be far less political resistance to this sensible policy once, say, Bush and Cheney are... gone.
Posted by the talking dog at February 26, 2004 11:31 PM
I respect Saletan, but check out Ruy Teixeira's analysis for a rebuttal on those Wisconsin numbers.
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