James Tobin on the Current Fiscal Fiasco

Mark Thoma reaches back 22 years and finds some wisdom from the late James Tobin that should be remembered today:

Congress should not touch Old Age and Survivors Insurance (O.A.S.I.), ”Social Security” in common parlance, this year. Leaving it alone is not just interest-group politics. It is good public policy. The Greenspan-O’Neill-Reagan compromise of 1983, bipartisan statesmanship at its best, adjusted both benefits and taxes, and assured the solvency of the O.A.S.I. trust fund well into the next century. According to official median projections, surpluses of O.A.S.I. tax receipts over benefits will be helping to balance the unified budget until 2020 … Now the Administration and the Senate want to make further permanent cuts in real benefits by tampering with the COLA again. Would they dare to propose the same cuts in dollars? Even if inflation were zero? … Proposed cuts in O.A.S.I. are neither necessary nor sufficient to improve the Federal fiscal outlook. General tax increases are the answer, as any arithmetician outside the White House knows. Tom Wicker (”A Deliberate Deficit,” column, July 19) has discovered what was perfectly clear in 1981, that the Reagan strategy was to create deficits in order to bludgeon Congress into axing Federal social spending, including ”entitlements.” And now perhaps you will urge Congress to face squarely the true fiscal problem.

While this op-ed was published on July 20, 1985 – it still rings true today. Remember this the next time a GOP leader promises to pay for their tax “cuts” with “entitlement reform”.