Tuesday, March 01, 2005

Rethinking the plan

The latest polls show at least a majority of Americans agree that we don't need to privatize Social Security, and Gallup has 75% trust Democrats to fix Social Security, not Republicans. That's some really good news for us. But this piece from Mark Schmit in the Decembrist has me thinking about how do we actually do it. He argues that raising the payroll tax cap is a bad idea, if not just because of the political retribution then because it is bad policy. When Bush put it on the table, I said

Unless this is some Rovian-reverse-psychology thing, he should really learn to not talk. Everytime Bush says something, he either pisses off Democrats or confuses Republicans. Nothing good ever comes from him opening his mouth.
because I thought it probably was some Rovian-type thing to trcik Democrats. Mark writes today
First, this is an obvious political trap. Bush all but gave it away when he said he was open to raising the cap in Portsmouth, NH on February 15: "It's important to keep the options on the table. And it's important for me to say to the members of Congress, if you've got a good idea, bring it forward; there will be no political retribution." That's Lucy talking to Charlie Brown: Don't worry Chuck, I won't pull the football away at the last minute. Go ahead and kick it. Of course there would be retribution. That's exactly how they were hoping to get out of this trap, by turning the tables. The minute a Democrat stepped up to propose raising the payroll tax cap, USA-Next or Club For Growth or some other group that the poor helpless White House cannot possibly control would be on TV in his district with ads denouncing him as a tax raiser, complete with a tearful testimonial from some ordinary looking person, a single parent with three kids who would pay a higher tax. And no one is exempt -- Senator Lieberman, this means you, you never-met-a-tax-you-didn't-raise big government liberal. Unfortunately, the White House didn't send out the memo, because all their allies who were supposed to shoot at this hypothetical Democrat instead panicked and fired at the White House.
Uncanny, isn't it? Mark also points out that while raising the cap would make it more progressive, the payroll tax is still regressive as a whole, so it would just be raising a regressive tax on people who weren't really benefitting from those big Bush tax cuts. I would just point out to him that raising the cap so that it covers 90% of incomes instead of the 85% it does now would be balancing out what was assumed to be the norm when Greenspan did his thing in 1983. They assumed a great many things back then, not all of them correct, and the fact that less money is coming in than was expected is how we got into shortfall territory in the first place. But I'm sympathetic to Mark's cause. Being a progressive, liberal guy, I don't have a problem with a progressive tax on very rich white old men. Perhaps some sort tax on their estates when they die. We could call it the "estate tax" and that money could possibly go to shoring up the Trust Fund and, if there is anything left over since it's only going to affect about 4,500 families, we might even pay down some of our debt. Lots of thing are "on the table" so we'll see how that one goes over before we allow private accounts.

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