[star]The American Mind[star]

May 25, 2005

A Tax Increase is Unacceptable

Judging from Oliver Willis' and Kos' reaction to this BusinessWeek story on what Social Security legislation might pass both right- and left-wing activists will be ticked.

Any compromise would fall far short of Bush's goal of fundamentally overhauling Social Security. It would make big changes to the program yet retain a basic government-provided benefit for all Americans. It would secure the system's financial solvency for many years by cutting promised benefits and raising payroll taxes on high-income workers. But it would not ensure permanent financial stability, as the President has demanded. An agreement would also include some form of personal accounts, just not the White House version. And new savings incentives -- sometimes called add-on accounts -- would be created outside the current Social Security system. "I can see an agreement along those lines," says Heritage Foundation research fellow David C. John, "assuming both sides come off their absolute positions."

Bush's private accounts fall by the wayside. They have lost any traction they might have had after his re-election. Either the President did a lousy job selling them, or a cynical public is too afraid of having more responsiblity over their own retirement. The best idea in decades to free Americans from Big Government is dying. With the death of private accounts you defintely won't see any politician call for allowing people to opt-out of S.S. so they can fund their retirement on their own. A dirty little secret about S.S. is no one can leave because retirees get their money out of the pockets of current workers. The way the system is structured old people need to pay for them (and I never ever get a "thank you").

What is absolute for this conservative is there can be to tax increases. The problems with government isn't that they don't have enough money. Government takes more money out of our pockets than at anytime in American history. And when they get their (our) money all they do is ask for more.

Benefit cuts I could stomach. Increasing the retirement age is also acceptable but doesn't go far enough. It should be pushed to 70. People are living longer, therefore they can work longer. Making cost-of-living adjustments that would slow the increase in S.S. benefits is also acceptable. These changes would better illustrate the fact that S.S. is a welfare state redistribution program cloaked in social insurance garb.

I can't believe President Bush would sign a tax increase after seeing close up what it cost his father. I also can't believe the same man who fought so hard for his tax cuts would make a 180 turn. That would be like him telling war critics they were right about Afghanistan and Iraq and order an immediate pull out.

But if Bush should sign a tax increase that would only delay Social Security's insolvency then he would cause a tremendous tumble in Republican support. Tax hawks and other economic conservatives would throw up their hands and withhold support. They'd say, "What's the point of electing Republicans if they end up raising taxes?" Raising S.S. taxes would surely usher in a Democratic President because the GOP base would be so discouraged.

"What A Social Security Deal Could Look Like"

Posted by Sean Hackbarth in Economics at 07:40 PM | Comments (3) | Trackbacks (0)