Thursday, February 17, 2005
Double or nothing
Bush signaled today that he is willing to consider raising the cap on payroll taxes to help fixed Social Security's long-run funding gap. Well, just barely:
The present arrangment levies no tax on wages above $90,000 per year, so the change would make Social Security more redistributive to boot.
Why would Bush consider such a move? To date, the Bush proposal appears to be designed to slowly siphon off resources from and eligibility for Social Security, until the program, leaving people with a fixed contribution pension for retirement that is their responsibility to manage. In the process, the mild redistribution of Social Security would be largely abandoned, which makes the rich happier, and Wall Street would get a huge commission on managing private accounts, which would make them very happy.
This burn-down-the-New-Deal dream has hit a solid wall of opposition in red and blue America. So Bush can either search for a graceful exit, or he can double his bets.
That is, Bush could propose a reform that creates private accounts and begins the siphoning off process, and simultaneously increases the SS tax base and progressivity. This would set off a slow class war through the coming decades as the rich and upper middle class seek to privatize their contributions to hold on to them, while the lower middle class and poor fight to hold on to their piece of the payroll tax pie and guaranteed benefits, by curtailing privatization. The outcomes could range from a bigger, more progressive SS, to none at all.
So perhaps Bush is a gambling man, willing to risk strengthening the welfare state while trying to poison it. Or perhaps he just wants to lure the Democrats into a policy debate they shouldn't engage.
The article above also includes this gem:
Does anyone really believe that? Surely everyone can think of one person in their lives who would fritter or speculate away any money they got their hands on. It's no coincidence many unscrupulous financial sector firms target suckers---especially elderly pensioners---for foolish investments in gold, currency, land, etc. P.T. Barmun's law of suckers isn't going to be repealed anytime soon.
(Among my nominees for "people who shouldn't be trusted with their own retirement" includes the former chairman of Arbusto himself...)
Of course, Bush is full of it when he suggests he is offering "choice". His advisers know that it would be foolish to do so, and will insist on drastically limiting choice among investment plans, and requiring retirees to purchase annuities with their savings. So this is all, as usual, a cloud of lies...
Asked directly, Bush said he would not bar raising the $90,000 cap, although he does not want to see the payroll tax rate go up.
``The one thing I'm not open-minded about is raising the payroll tax rate. And all the other issues go on the table,'' Bush said in the interview, according to an account in Wednesday's New Haven (Conn.) Register.
White House spokesman Trent Duffy said raising the cap on Social Security taxes is just one option among many being advocated.
``Just because he said it was an option doesn't mean he embraced it,'' Duffy added.
The present arrangment levies no tax on wages above $90,000 per year, so the change would make Social Security more redistributive to boot.
Why would Bush consider such a move? To date, the Bush proposal appears to be designed to slowly siphon off resources from and eligibility for Social Security, until the program, leaving people with a fixed contribution pension for retirement that is their responsibility to manage. In the process, the mild redistribution of Social Security would be largely abandoned, which makes the rich happier, and Wall Street would get a huge commission on managing private accounts, which would make them very happy.
This burn-down-the-New-Deal dream has hit a solid wall of opposition in red and blue America. So Bush can either search for a graceful exit, or he can double his bets.
That is, Bush could propose a reform that creates private accounts and begins the siphoning off process, and simultaneously increases the SS tax base and progressivity. This would set off a slow class war through the coming decades as the rich and upper middle class seek to privatize their contributions to hold on to them, while the lower middle class and poor fight to hold on to their piece of the payroll tax pie and guaranteed benefits, by curtailing privatization. The outcomes could range from a bigger, more progressive SS, to none at all.
So perhaps Bush is a gambling man, willing to risk strengthening the welfare state while trying to poison it. Or perhaps he just wants to lure the Democrats into a policy debate they shouldn't engage.
The article above also includes this gem:
``Investors aren't just Wall Street people, as far as I'm concerned,'' Bush told the crowd invited by the state's all-GOP congressional delegation. ``I think every citizen, every citizen has got the capacity to manage his or her own money.''
Does anyone really believe that? Surely everyone can think of one person in their lives who would fritter or speculate away any money they got their hands on. It's no coincidence many unscrupulous financial sector firms target suckers---especially elderly pensioners---for foolish investments in gold, currency, land, etc. P.T. Barmun's law of suckers isn't going to be repealed anytime soon.
(Among my nominees for "people who shouldn't be trusted with their own retirement" includes the former chairman of Arbusto himself...)
Of course, Bush is full of it when he suggests he is offering "choice". His advisers know that it would be foolish to do so, and will insist on drastically limiting choice among investment plans, and requiring retirees to purchase annuities with their savings. So this is all, as usual, a cloud of lies...
