January 25, 2005
But All Presidents Spend The Surplus!
The only real objection that has come up against Social Security For Dummies is that I make the point that Bush is spending the Social Security Surplus and considering it an offset to the normal budget deficit. The objection makes the point that all presidents do that, so it's not fair to single out Bush.
However, in the piece, I also explicitly say that spending it is fine if you intend to pay it back. I also say that it is not Bush's intention. That's what sets him apart from the other Presidents.
The payroll tax was designed for social security, not for normal government spending. If the government borrows it, it has to pay it back. If it doesn't pay it back, then it is welching on its debt, or "stealing" in other words.
The remaining counterpoint I've seen to that is that if the government borrows from itself, it isn't a concern because it all just sorta cancels out in the long run. That it's really the people's money, your money and my money. So why make such a big deal out of what is essentially paying myself back?
That point is silly enough that it makes me wonder if the people offering it are just trying to deliberately confuse the issue. I'd prefer to have an honest debate.
The correct response is that you have a progressive tax system borrowing from a regressive tax system. In a progressive tax, the rich people pay a higher percentage of their income to taxes than the poor. In a regressive tax, the poor people pay a higher percentage of their income to taxes than the rich.
So if you have a progressive system borrowing from a regressive system, and not paying it back, then on average, you have the rich stealing from the poor.
Bush's arguments advocate this approach. Clinton's did not. That's the difference.
So, there you have it. Bush as the opposite of Robin Hood.
"The payroll tax was designed for social security, not for normal government spending. If the government borrows it, it has to pay it back."
What exactly is bush not planning on paying back, and in what sense is that different from clinton? Is he planning on defaulting on the trust fund?
Let me put privatization in terms you would like. Bush declares that social security benefits will be the same for everybody at all income levels, regardless of how much they contributed, making them much more progressive. (People who are poor their whole lives get lower social security? How is that fair?!) We eliminate the 90K cap on payroll contributions - also more progressive. We also "means test" benefits - i.e. we deny them to anyone who is guilty of having their own retirement savings from other sources - still more progressive. So poor people still get 100% of the social security benefits they had in the old system, which was a flawless wonder. Social security now has colossal surpluses out to infinity, so we decide to cut payroll taxes by individuals.
A Republican then suggests we expand the 401(k) /IRA program. Americans start (indirectly) putting some of the money they used to pay in social security taxes into private investment accounts.
How is this bad? How is it conceptually different from privatization?
Posted by: Pepik at January 26, 2005 10:36 AM