Let Them Eat Cake
The Usual Suspects are lining up to push the third plank of the Bush Social Security propaganda. On one hand, the Usual Suspects tell us that the Pozen plan only slows the rate of growth of benefits. On the other hand, only the wealthy will sacrifice so the poor can have more. So when
Paul Krugman points out that no one gets more benefits and the middle class suffers the largest cuts in terms of percentage of retirement wealth, Al “not Glenn” Hubbard tells those making around $40,000 a year know that they are affluent and can afford these benefit cuts (and continuing to pay the 12.4% payroll contribution).
These defenses of the Pozen plan strike me as the modern day equivalent of the remarks attributed to Marie Antoinette – “if the people have no bread, then let them eat cake.” This weekend, the New York Times provided us what Kevin Drum calls the The Bobbsey Twins. David Brooks writes:
By embracing the progressive indexing of Social Security benefits, the president has asked us to make a shared sacrifice for the common good. He’s asking middle- and upper-class folks to accept benefit cuts so there will be money for the people who are really facing poverty. He has asked us to redistribute money down the income scale. Why should programs for children and families be strangled so Donald Trump can get bigger benefit checks?
Having told us that privatization guarantees high stock market returns, which was plank #1 for the propaganda, John Tierney dusts off plank #2, which is the system goes broke around 2017. The political risk that Tierney talks about comes down to whether the GOP will make permanent its various tax cuts on capital income – including the reduction in the top tiers of the income tax, dividend and other capital income tax reductions, and the elimination of the estate tax.
Tierney’s most recent op-ed, however, exposes this progressivity argument for what it is. Brooks et al. want to argue there is a shared sacrifice. I’m not sure whether Mr. Trump even has employment income but certainly his capital income is many multiples of $90,000 a year. So even including deferred taxes, individuals such as Mr. Trump will likely get a significant overall tax break paid for by middle class workers – either in the form of future new taxes or continuing to contribute 12.4% of the wages to a Social Security system that will pay out less.
Brooks et al. also want to argue that Bush is being principled and brave. Yet, Bush-Cheney ’04 denied that they were planning to cut benefits during the President campaign – and when presented with the facts, Andrew Card tried to disown the Pozen plan. The cynicism, dishonesty, and hypocrisy of these Bush minions aside, the middle class likely knows that Bush’s Social Security proposals are part of a massive shift of the tax burden onto them. Now if these minions wish to say working class Americans are affluent enough to make sacrifices so Donald Trump can keep his tax cuts, maybe we Democrats should highlight their own words.
Update: Paul Krugman was on the story before I was – again.
Update II: How dare I leave Donald Luskin off my list? He is rather desperate to accuse Krugman of a lie:
Krugman flat-out lied when he wrote that “benefits for the poor would be maintained, not increased” in the president’s proposal. It’s true that under progressive indexing benefits for the lowest-wage earners would stay the same as under current law … Krugman also lied when he portrayed progressive indexing as “a plan to slash middle-class benefits.” It’s not a plan to “slash” benefits at all, or even reduce them. Under progressive indexing, everyone’s Social Security benefits will be greater than they are today, by the rate of inflation or more. What progressive indexing does is slow the runaway growth in benefits
Yes, there is a lot more to Luskin’s latest rant – but he has failed to rebut anything Krugman wrote – although he does display his own stupidity and/or mendacity as usual.