Congressmen Pence on Taxes and Social Security
Congressman Mike Pence opposes tax increases but thinks privatization is what the American people really want:
The administration hasn’t learned from last year. Despite electoral defeats, it is still advancing Social Security reform as an argument over solvency. The centerpiece of George Bush’s plan was to have been personal retirement accounts for workers who wanted to establish their own nest egg – a much better deal for them and a down payment on the huge liabilities owed by the entire system. Unfortunately, his plan faltered. The American people did not reject Social Security reform or personal retirement accounts. They rejected the entire debate and how it unfolded. They rejected the notion that the predominant goal was to make the numbers add up or, in the language of the wonks and actuaries, to make it “solvent.” Such a yardstick expresses no opinion on how to fix an increasingly bankrupt program, and as a result, blesses both benefit cuts and tax increases alike … Social Security reform must be properly understood. It is not about achieving solvency; it is about improving the system so that it offers a better deal for younger Americans through personal savings accounts. Focusing on solvency will lead inevitably to tax increases and benefit cuts.
I have two problems with this. First, the public does want a defined benefits program. Secondly, privatization does not create some magical free lunch. But let me move to where the Congressman and I agree:
the administration should submit a budget that fully protects the Social Security surplus from being used to subsidize government largesse, which Patrick Moynihan once described as “embezzlement.” Voters have repeatedly said loudly and clearly that they object to raiding the Social Security surplus.
It seems Carrie Lukas does not:
Social Security faces a $3.8 trillion cash deficit over the next 30 years. From the point of view of an accountant – or the policymaker eager to duck the issue – Social Security won’t be in financial crisis during those years because it can redeem the bonds in its much-ballyhooed “trust fund” to make up the deficit. Yet that’s no help to working Americans since Social Security’s assets are really just taxpayer liabilities.
Yes, the National Review is in favor of embezzling those payroll contributions we have made over the past 20 plus years to bail out the fiscal irresponsibility of Republican Administrations. Go figure! But let’s return to where the Congressman goes supply-side on us:
Raising payroll taxes would prove devastating to working Americans, small business and the economy as a whole. Worse, it would only serve as a short-term band-aid to Social Security’s financial woes … Overall, the entire economy would slow by 2% to 3%, threatening the standard of living and economic opportunities of every American … We have been down this road before. In 1990, I was a young candidate for Congress when the last Bush administration sided with a Democrat majority in Congress to pass the largest tax increase in history, all in the name of bipartisanship and compromise. This compromise ushered in economic recession and a two-term Democratic administration in the White House. We cannot walk down the 1990 road to “compromise” again.
We did have a recession in 1990 as the Federal Reserve failed to pursue significantly expansionary monetary policy as President George H. W. Bush pursued baby steps towards fiscal responsibility. What the Congressman omits is that the 1993 tax increase was followed by an extended period of strong economics growth. As the Congressman suggests that spending cuts might solve the general fund mess, Ms. Lukas actually gets one right:
It’s theoretically possible that Congress will at long last eliminate unnecessary agencies and programs, thereby freeing up resources to pay Social Security debts — just don’t count on it. No one who’s ever seen Congress in action believes this will happen, particularly when you consider the magnitude of cuts (entire Departments and programs) that would be necessary to meet Social Security’s obligations.
Alas, she immediately returns to the garbage that the Social Security program is running massive deficits:
And even if the dream of massive spending restraint were realized, surely conservatives like Pence would still disdain a ballooning public pension system that devours more and more of the federal budget and more and more taxpayer resources. In reality, of course, Congress won’t reduce spending and taxes will rise.
Translation – since rightwingers like Ms. Lucas don’t want income taxes raised to pay for the massive amount of defense spending necessitated by our neocon leaders, we have to raid the Social Security Trust Fund. I realize that the exchange between a Republican Congressman and a rightwing hack has not moved forward this debate at all. But when has an episode of When Rightwingers Fight ever advanced any policy discussion?