Mallory Factor wants to join in the chorus of Pelosi critiques. After all, Nancy Pelosi has been Speaker for how many years and there has been so little progress? Did I say years – try hours and PAYGO is back over the objections of those spend and borrow Republicans. But Mr. Factor is worried about the imminent threat that some projections of Social Security reserves might turn negative in two or three generations. Heavens – what do we tell the children?
But here is the entirety of Mr. Factor’s attack on Speaker Pelosi:
The Democrats long ago staked out an uncompromising position on Social Security that took the president’s call for private accounts off the table. That leaves only two options: increase taxes or cut benefits – or, more likely, both.
But let’s suppose we Democrats did not take privatization off the table. There would still be only two options for reducing some expected future shortfall as privatization does not create one penny of wealth. Of course, the free lunch crowd over at the National Review never bothered to take Finance 101 so they won’t get the basics.
But then Mr. Mallory also turned into a liberal Keynesian further down in his ill informed rant:
increasing the payroll tax by only 1.89 percent would reduce potential employment by 277,000 jobs per year, on average, over the next ten years. Raising the payroll tax would harm lower-income earners the most. Many Americans already pay more in payroll taxes than in federal taxes.
Long-term fiscal responsibility does not reduce long-term growth even if the Laugher Curve nitwits at the National Review keep saying it does. But I too am concerned that public policy under the Bush Administration is trying to shift taxation away from general income taxation and towards employment taxes. So if Mr. Mallory is in favor of raising the income tax rate for the well to do to avoid increasing payroll taxes, we welcome him to the Democratic Party! Now go invite Speaker Pelosi to lunch and work out a bipartisan compromise.
Update: Someone needs to help Lawrence Kudlow understand our Constitution:
Yesterday’s package of new rules to govern the lower chamber erases the three-fifths majority that was required to raise taxes under the old Republican House rules. The new rules allow tax hikes through a simple majority vote. This is a bad sign. I wonder if today’s stock market decline isn’t picking up this high tax threat.
OK Larry, let’s walk you over the process very slowly. Let’s suppose Charles Rangel pushes through a tax increase in the Ways and Means Committee. And let’s suppose the House passes the legislation. It’s not enacted unless the Senate also passes it. And of course, President Bush could veto it. I guess Larry is afraid Bush wants to sign a tax increase.
Update II: Thanks to the AB reader for pointing us to IPI Policy Bytes as both George Pieler and Tom Giovanetti claim PAYGO will reduce long-term growth. It is truly amazing how certain rightwingers think reducing national savings promotes long-term growth.
Update III: When Mr. Factor said the Center for Data Analysis, he was referring to the Heritage Foundation and this paper:
Weaken the U.S. economy by reducing the number of job opportunities and personal sav¬ings. By fiscal year (FY) 2015, the number of job opportunities lost would exceed 965,000, and personal savings (adjusted for inflation) would decline by more than $55 billion
First of all, 965 thousand over ten years is nowhere close to 227 thousand per year. Secondly, this is the calculation of the authors using what seems to be some Keynesian model. I’m sorry – but an abuse of a Keynesian model by a group of Heritage hacks is rather pathetic. But then Mr. Factor multiplies their bogus claim by a factor of three? This is rather low even for the pages of the National Review.