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Wednesday, May 04, 2005

Social Security Reform

I think that Matty Yglesias is 90 % right here

I particularly like "Next best, raise the FICA cap so that it covers 90 percent of payroll and change the indexing formula to ensure that it covers 90 percent of payroll forever" except for two things. First why only 90 % of payroll ? Why not 100% ? Second why is this his third choice after doing nothing and hitting the State governments (again) by making their employees bear part of the SSA legacy debt ?

I think that Yglesias makes a very threadbare argument which makes no sense at all

So on Social Security: What is to be done? Ideally, nothing. The notion that we need to achieve perpetual solvency in 2005 for a program that's in balance into the 2040s seems to be based on a version of the old adage that "a stitch in time saves nine." And so it does. But you don't open up your closet and start stitching up your least threadbare sweater. The future is uncertain. We can't know right now if this Social Security deficit will even exist, much less how big it will be. The first thing to do is to work on the on-budget portion of the federal government, primarily through tax increases

It seems that Yglesias supports tax icnreases so long as the new revenues are not put in the social security trust fund. To me this makes no sense at all. The trust fund provides a positive (tiny) amount of protection from idiot boondogles. It is true that it is not enough to protect Americans retirement income from the Bush administration, but, really, isn't that asking a lot. This is the bunch which claims the right to lock up anyone they want forever so long as the President chooses to call him an enemy combatant. You can't expect some office in West Virginia to stop Bush when the Constitution can't even slow him down.

But I'll grant for the sake of argument that the trust fund is a fraud and thus that social security taxes are just taxes. That would still mean that an increase in social security taxes is just as good as an increase in income tax. There is nothing that says FICA has to be regressive. The fact that it is currently regressive makes it easier to raise social security taxes for rich people, since starting from roughly zero there is no way to go but up. I think that liberals oppose the idea of prefunding social security, because it has been a scam in the past. I think that FICA is so aweful now that it should be reformed. Saving social security is a useful argument for FICA reform.

Most of all remember, the Democrats are in opposition. They don't have to get to yes. If the Democrats propose an excellent and popular policy which is anathema to Republicans, they win even though it won't be enacted. I think that policy is elimination of the FICA ceiling.

On the no strategy strategy he refers to his host Joshua Marshall who argues that Democrats are like drunks and they have stop trying to be clever cold turkey. Remember that guy who megawhupped the Democrat candidate twice who said "honesty is the best policy" (didn't think you would. his name was William McKinley).

This means that making policy based on polls is a bad idea. However, sometimes occasionally, by coincidence I guess, the majority is right. Right now the majority of Americans want to raise the FICA ceiling and change nothing else about Social Security. I am puzzled and delighted to find that I agree with most of my fellow citizens. I am even more puzzled and not at all pleased to disagree even 10% with Matthew Yglesias and company.

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