Responses to Comments – Round 3

To Dan: You are correct that it is hard to define the nature of the terrorist “beast.” My book describes this in greater detail, as does the report of SAFE, of which I am a member. One risk of terrorism is that an attack could knock out a vital port or supply depot in the Middle East or elsewhere (for instance, Nigeria), as you mention. Another is that it could do so in the U.S. (e.g., Long Beach, through which a great deal of West Coast oil passes). And as you suggest, terrorists could come from Al Qaeda, or some splinter group, or from cells in the U.S. But there are a lot of groups that would like to pull off a big attack in the U.S. or our allies. Some of this requires a strong military, such as protection of facilities in the Persian Gulf. But it also involves good intelligence and cooperation with friends and allies. In response to your question, the threat is difficult to quantify, but all intelligence sources — U.S., European, Arab, Israeli — recognize that it is there and growing. I think you will find a lot more of your questions answered in my book.

To Cursed: Thank you!!!

To Lysistrada: You make a good point. Many of these non-essentials, primarily pork-barrel programs, should be cut in any case. And a lot of the money could be put to better use in the U.S. I was also trying to argue that even though this war is relatively easy to pay for, while our troops and their families are sacrificing, it is equitable and moral for all of us to make at least a minor sacrifice, and that adding pork-barrel programs to the budget is hardly sacrifice. Indeed, it gives certain privileged constituencies added government subsidies when our troops lack body armor and proper veteran’s care.

I hope you enjoy the book. I would very much enjoy hearing your thoughts once you have read it. Many thanks.

To Bruce Webb: Great point. You are right about these projections. The problem, however, is not so much when the Trust Fund is depleted, but when the System goes into deficit, which is much earlier. At that time, the government has to come up with the funds to make up the difference between inflows and outflows. It can borrow the money, raise taxes to obtain the money or cut other programs to free up funds to pay beneficiaries. I agree that addressing the Medicare issue is a bigger challenge, but the conventional wisdom is to do Social Security first. I would gladly support doing Medicare first, but there is little hope of doing that and at least a modicum of hope in improving Social Security.

To Dmarek: I acknowledge that you can’t balance the system on the funding from the “rich,” but the payroll tax is very regressive and there are ways of making it more progressive so the inflows into the system in the next decade are more in line with the projected outflows. What is the Constitutional issue you are referring to?

To Coberly: If you check the report of the Trustees of the Social Security system you will find that many people get more than they pay in. The concept of the system was Social SECURITY. It was to ensure people that need the support in their old age receive it. I recommend that you take a look at the 1935 Act. It was never meant as an investment fund. It was meant to ensure that they have enough to support them in their old age. It does have a lot to do with the inflow of funds into the system. If those fall below benefit payments, the government has to get the money to pay beneficiaries from somewhere. That means taxes or borrowing or cuts in other programs. The Trust Fund is just IOUs to the Social Security system from the Treasury, and the Treasury has to come up with the funds from somewhere. And my goal is not to “steal” the money from the Social Security system. If it were sustainable for the next 40 years, I would not touch it at all, but it most likely is not. And if it is not, it will suck funds from other programs. That is what I want to avoid.

To Lysistrada: No argument here. I think there are strong arguments for universal health insurance. And you are correct that Social Security is a contract between the American people and the government; but to honor that contract over time it needs to be put on a sustainable basis in which inflows more closely match benefit payments over coming decades. If I were convinced that would be the case, I would not even raise the subject, but most experts do not think so — and believe that payments will balloon in a couple of decades while inflows of funds will not keep up. If you have evidence to the contrary I will gladly drop the subject as an issue — but the hard facts I have seen convince me that is not the case.

To Coberly (again): I only said the tax is regressive, which it is. Not that the system is regressive — which, as you point out, it is not. And don’t kid yourself about what happens to the money; it is lent to the Treasury and is spent to pay for other government programs. The Social Security system had a stack of IOUs from the Treasury, which it is obliged to make good on when the Social Security needs them to pay beneficiaries. The guarantee comes from the credibility that the Treasury will pay its obligations to the system. But as you say, many people get out more than they pay in. How long do you think that can last without a lot more borrowing to make up the difference of a tax increase to increase the inflow of funds from the system? The money has to come from somewhere. Your posting of 1:06 has it exactly right.

I never used the word “bankruptcy.” But if inflows exceed benefit payments, the money does not come from other payers into the system. It has to come from somewhere else.

Do you consider a plan to ensure that Social Security is put on a sustainable basis is an attack on entitlements? Your idea of a gradual and modest increase in the FICA tax is one way of doing that. Your interpretation that I am saying take the money from people putting it into the system and paying for the military is inaccurate. Where did I say that? To have an honest debate, it is important to at least be accurate — and not attribute things to people that they did not say. I want to be sure that it is sustainable so inflows and outflows are in balance. I don’t want to take a cent from the money paid in for anything. It should all go to beneficiaries. Where did you come up with this odd interpretation?

To Ilsm: I agree that matching funding needs with solutions in the military is sensible. You are in good company. In my book, I describe how Eisenhower expressed exactly the same view in the 1950s. And you are right that OASDI and Medicare should be separate. I unfortunately had to put them together for reasons of brevity, but you are correct. They are different.

To Dan: Yes, the two mesh very well. The last chapter of my book features a discussion of “Energy Patriotism,” which argues strongly that reducing dependence on imported oil reduces U.S. vulnerability, reduces the outflow of funds, and reduces the amount of money earned by some countries hostile to U.S. interests. It would have been great if the President had called for a bold initiative to reduce oil dependence for national security reasons after 9/11. I bet he would have gotten a fairly robust bill.

To Bruce Webb: I am sure the reports you cite are far from perfect and there are a lot of long-term projections that may or may not be entirely accurate. I am curious as to which “party line” I am toeing. These reports are from experts who are put in these positions because of their expertise. They are not partisan. If you have more accurate projections, I would be happy to see them.

To Coberly (again): I never said that entitlements are the cause of current budget difficulties — but most experts believe that they will be. Surely you don’t believe in buying insurance when your house is already on fire. You claim to know a lot about Social Security. I am sure you do, but do you really know more than the people who run the system from day to day? The ones who do suggest that there are large imbalances down the road and at that time, the money will have to be found from taxes, borrowing or elsewhere in the budget.

To Moses: Thanks again. I appreciate your thoughtful approach. You have really captured what I am trying to say: that we need a thoughtful, long-term plan to meet our national security and Social Security needs as well as other priorities.

I agree that we should not touch the system at all unless it becomes so unsustainable that it drains funds from other programs. As long as inflows are likely to be relatively in line with benefit payments, I would not touch it. In any case, I would never suggest that money paid into the system be used for purposes other than to benefit recipients, i.e., not for any other programs.

To Coberly (again): Ahh, we finally agree on something. I think that allowing the top marginal tax rate to revert to the level of the late 1990s would be a good idea to pay for national security. But dividing people into “good guys” and “bad guys” is a little bit simplistic — isn’t it? The last thing I want to do is to kill the program. In my book, I describe it as the most important piece of social legislation in the 20th Century, and certainly the proudest accomplishment of the New Deal. I want it to be around for the next hundred years and have our children and grandchildren benefit from it. They key is to ensure that it is in reasonable balance so the money is there to meet the needs of the future. Ignoring projections of large imbalances is hardly the way to deal with the problem. If you have numbers that are different from those of the Social Security Trustees, and can give me confidence that the system will be in balance for the next several decades, I would love to see them.