The SanityPrompt

This blog represents some small and occasional efforts to add a note of sanity to discussions of politics and policy. This blog best viewed with Internet Explorer @ 1024x768

Monday, February 28, 2005

Where Do We Go From Here? Part IIa

One of the sources of the Democratic Party’ troubles, I have long maintained, is an inability to choose between saying what its members believe or saying what its members believe people want to hear. And Democrats are justified in believing that the country is quite evenly divided between the two major parties. Recent articles about No Child Left Behind have noted that the National Conference of State Legislators, a membership organization of state legislators from all 50 states has a membership of 3657 Republicans and 3656 Democrats. If that’s not suggestive of an even division within the country I don’t know what is. Oh yeah, how about Gore losing Florida and the Presidency by literally a handful of votes?

In a two-part essay that begins today, I will argue Democrats have to let go of the belief that they are just inches away from winning nationally. Democrats won’t ever win, and more importantly, begin to realize progressive change, until they dare to stand up and say things that are unpopular or that are seen as out of touch -- the things they truly believe.

My problem with this Democratic conundrum is that the political landscape is really not as evenly divided as it appears. Republicans control all three branches of government, most of the state houses and governor-ships. But more importantly, they control the national agenda and the national subtext or narrative.

This last part is crucial, for the national subtext determines how something like a policy proposal will be portrayed in the press, how it will be cast, and how it is likely to be received. Time Magazine used to cast this as the conventional wisdom. But it is more than this and certainly more than the taken for granted notions of the Beltway elites. Not for nothing did Clinton famously proclaim in one of his state of the Union messages -- "the era of big government is over." The national subtext represents how the majority of people are inclined to view political messages, to decide among policy options, and to interpret cause and effect in the policy landscape.

Elections are determined by recent events but national subtexts are shaped by significant historical developments and the way that society digests them. My theory is that society’s work like amateur social scientists. When presented with a consequential set of historical developments, they search the landscape for plausible hypotheses. One job of political parties is to present these hypotheses in a clear and compelling enough way that society will consider them as explanations for the developments witnessed. Once in place, a subtext provides for a sustained period the compelling narrative by which most people understand events around them and make political decisions. Just as financiers speak of secular shifts in stock markets, I think of shifts among subtexts as secular shifts in political markets.

I can think of several moments in American History when these national subtexts have emerged to transform the tenor of the political landscape. Around the time of the Great Depression the nation turned away from the dominant economic conservatism of the time and embraced the Democratic liberalism of FDR. The narrative people told themselves in the wake of this disaster and FDR’s strong leadership was that unchecked market forces were unreliable and dangerous and needed to be controlled and regulated by the national government and by comprehensive social policies. This subtext stayed in place by and large and was even magnified up until the late 1970s when ‘stagflation’ emerged.

What had occurred was that the Great Depression and Roosevelt’s subsequent intervention gave people a plausible story by which they could understand historical cause and effect. This framework provided a way not simply to understand the past, but to make judgements about appropriate behavior and decision-making in the present. Even though this period was interrupted by two Republican presidents, I would maintain that Nixon’s Presidency was in fact one of our more liberal presidencies for it saw a significant expansion of the welfare state and of the national bureaucracy. Recall, that aside from Goldwater’s candidacy in 1964, the standard bearers for the Republican Party at this time were Eisenhower, Rockefeller, Ford, & Nixon.

Reagan’s Presidency marked the replacement of this national subtext by a competing vision that conservative Republicans had been pushing since the mid-60s. Reagan came to office at the height of America’s post-oil boycott malaise, promising to cure the nation’s ills with an agenda of tax cuts and economic growth. The economy’s recovery during this time cemented in people’s mind that tax cuts would lead to economic growth and that large government would lead to economic stagnation. Never mind that scholars have serious questions whether Roosevelt’s policies in the 1930s did anything to end the Depression. Or that Paul Volcker’s policies at the Fed probably did more to encourage economic growth and end the stagflation of the early 1980s than Reagan’s tax cuts and subsequent deficits. The national narrative doesn’t necessarily attend to truth or accuracy. It attends to the simplest plausible story presented. Today, tax cuts are off the table. Big government is bad. Government spending is bad. Markets are flawless and good. These shibboleths lie beneath the surface in the media dialogue or what I call the Washington ethosphere but they are common and deeply held. They are implicit in the political dialogue throughout the 50 states.

We currently remain in the grip of what I call the Reagan subtext. It gives Republicans the ability to control the national agenda, to put Democrats on the defensive, and to present a coherent story of their vision and leadership. Democrats, as we note, struggle to present a coherent story and credible set of policy alternatives that make sense. Republican candidates start out with an advantage because the subtext supports and validates their vision. But the time and opportunity to create a Democratic subtext is now at hand.

Sunday, February 27, 2005

No Special Treatment

Well, Talon News Service has shut down amid heavy criticism. There goes another endangered breed of conservative journalist, hounded by the liberal media. The White House continues to maintain that they offered no special treatement to Talon's White House reporter, a gay part-time male gigolo who has starred in gay porn production and who used a fake name on his press credentials. I am sure that lots of people who work in the White House and go through its minimally guarded doors use fake names and engage in criminal conduct all the time. No worries there. Either the White House has serious security problems or someone is not being completely straightforward. Pop quiz - which do you think it is?

Saturday, February 26, 2005

They Ought to Be Ashamed

That is if they had a capacity for shame.

I am an American. I am proud of my country and proud of what it means to be an American. Proud of the principles my country stands for and of its continuing capacity to improve on the promise of this nation, to improve on the noble vision of a free people who govern themselves while enshrining the rights of minorities and individuals from the tyranny of the majority.

But they made me ashamed when they announced that they could declare anyone, American or not, an enemy combatant and imprison them indefinitely without recourse to a lawyer. They made me ashamed when they put Colin Powell before the UN to trumpet the evidence for war, showing all the support for their claims that Saddam had a large program of weapons of mass destruction that posed an imminent threat to the US -- only to conclude a few years later that there was no program and no imminent threat. Just a capacity to pose an imminent threat at some future point in time. They made me ashamed when the stories of mistreatment from Abu Ghraib and Guantanimo Bay emerged. Ashamed when the official Justice Department memos emerged, penned by our own Attorney General today, justifying such actions as torture. I am embarrassed at their re-election. Embarrassed at their cavalier attitude towards the truth, towards the opinion of the rest of the world, towards their obligation to provide some reasonable justification for initiating hostilities with another country. Embarrassed at the profligacy of policies that grant huge tax breaks to the wealthy while running up billions of dollars in debt that our children will have to repay.

But never have I felt so ashamed of my country as this. Bob Herbert in yesterday’s New York Times discusses the story of Maher Arar. He was traveling back to Canada from Tunisia when he was plucked off a plane at JFK while in transfer within the US. He was imprisoned with no charges and then shipped to Jordan and then Syria. While there he was thrown into a rat infested cell no larger than a ‘grave’ where he was tortured and beaten repeatedly until the Syrians concluded he had no ties to Al Qaeda. The US government still maintains he is a dangerous threat to the United States, although the original charges arose from a tip of the Canadian Mounted Police that turned out to be entirely erroneous. As a Canadian official is quoted as saying -- "accidents will happen." This US policy, called ‘extraordinary rendition," should give anyone who is an American pause, anyone who argues that our country is so great because we stand for freedom and protection of the rights of the individual. The reason we have rights, freedom and rules to protect individuals is not so we can feel good about ourselves or so that we can trumpet how free we are. They stand to protect each of us from excessive government power that can be used capriciously and erroneously. It’s bad enough that the Government never felt it necessary to make clear what crimes Mr. Arar was charged with. That they intentionally sent him to a country that sanctions torture in order to find out what he might know violates everything this country is supposed to stand for.

Arar has filed suit against the US for his treatment. Our government’s response? "…None of Mr. Arar's claims can even be adjudicated because they "would involve the revelation of state secrets.""

Thursday, February 24, 2005

The Best Strategy Posting I Have Seen In a Long While

Check out Dan Carol's latest ideas about rebuilding the labor movement. What a concept -- giving back as marketing. I think this is really profound stuff.

" to reach "non-traditional" audiences and start a conversation about career, or college, or child care, let alone the need for workers to organize?

I'm talking about a Purple Bank to match Wells Fargo.

I'm talking about the appeal of Apple's iPod stores.

I'm talking about creating places for mixing together – and mixing music. A new union hall that combines child care and after school programs and job training site and urban theater district – all in one.

I'm thinking about a reverse AARP model – where instead of reaching out to 50-year-olds with Modern Maturity magazine and health insurance pitches on their birthday, we offer a hand out to new parents, from L.A. to Louisiana, with support services. And then grow a trusted relationship with thankful parents from there."

Read the rest here.

How to Speak Democratese: Pt II

OK, so we've covered some things Democrats should stop saying. Here are some things they should be saying more often.

What to say

Tax Deferments: Let’s stop talking about George Bush’s tax cuts. Whatever we have to say about them, whether they were good or bad, whether we can afford them or not, the fact is that they were not tax cuts. A tax cut implies an overall reduction in your tax liability. But Bush’s tax cuts have resulted in an explosion in the budget deficit and an expansion in our national debt that will require future tax increases to pay down. Unless George Bush’s restructuring of the economy repeals the laws that have governed our national economy for the last 100 years, we will not grow ourselves out of this problem. {Oh I forgot, he hasn’t even come close to re-structuring the economy.} Economic growth has almost no chance of reducing the size of the debt or the deficits. In fact, obligations are growing much faster than the economy. When Bush took office, tax receipts were 21% of GDP and outlays were 18.5% of GDP. Today, outlays are 19.9% of GDP while receipts are 17% of GDP. Spending has gone up and tax revenues have gone down. Sooner or later, they are going to have to come into balance and when they do you can bet that taxes will go up. So Bush’s policies don’t represent a cut in taxes, they represent a deferral in the taxes that Americans will eventually have to pay.

We don’t have a Social Security crisis, we have a general funds crisis: OK, I acknowledge that is unlikely to connect with voters. But maybe on this one we need to connect with the punditocracy. They keep saying Democrats have to have a plan. That they can’t just sit around and pretend there isn’t a problem. They can’t just criticize. Oh yes we can. Especially if your diagnosis, prognosis, and treatment are all wrong. The problem that faces this country is that we don’t have the general fund revenues to meet our obligations to repay Social Security the money we are borrowing today. The real problem is that unless we get control of the deficit today, it will explode when it comes time to add the revenue deficits of Social Security. We should be accumulating a surplus today. We should be on track to have a surplus in 2018 so we can meet our obligations to retirees out of that money. This will require courage and hard choices and sound economic thinking. Things the Bush administration has failed to demonstrate since day 1. But we shouldn’t fall for the trap that there is a tremendous looming crisis in social security when the real crisis is that we can pay our bills today. If George Bush were serious about protecting the long-term future of this country for our children, he would sit down and agree to tackle this problem.

George Bush’s plan to privatize the Social Security system won’t solve the funding imbalances and will increase our budget problems by billions. If he really cared about our children and their future he wouldn’t be recklessly increasing the national debt year after year. His plan would further increase the budget deficit, costing $2 trillion dollars in the first ten years along. His proposal is a solution to a problem that doesn’t exist that threatens to worsen the most serious domestic problem we currently face -- the imbalances in our national accounts (a combination of government debt and household debt). Until we increase national savings (which the Bush plan ironically won’t do) the dollar will continue to weaken, Americans will continue to watch their international standard of living decline, and the probability of wholesale collapse in the dollar and world economy will continue to increase. If you don’t believe me see Brad DeLong and Nouriel Roubini on this topic.

George Bush is lazy. He is too lazy to read a newspaper. He is too lazy to learn about major policy challenges and defers to his cronies. He is too lazy to care about the importance of our image in the world. When the 9/11 terrorists were plotting to destroy the Twin Towers, he was in Texas relaxing and chopping wood. He is lazy with the truth. He is too lazy to put forth a concrete plan on Social Security reform. He is too lazy to provide solutions to our health care crisis. He is too lazy to go to a soldier’s funeral. He is too lazy to be President in a time of such challenge that faces this country. He was a lazy student, a lazy businessman, and he is a lazy president. Speaking in terms of laziness gets one off the hook from having to call Bush a liar or stupid. There is no American virtue in laziness. And it forms the kind of coherent message that ties a bunch of arguments together in the same way that the charges that Kerry flip-flopped too much worked.

George Bush is recklessly stubborn. I talked about this in an earlier post during the campaign. One product of Bush’s intellectual laziness is a predilection for choosing on the basis of faith. A little faith every now is a good thing, as long as it stays within the boundaries of set by religion -- supporting a belief when there is insufficient evidence. But Bush confuses faith with certainty and the results are often disastrous. However you feel about the war in Iraq, it is hard to quibble with the facts that we went in with an insufficient amount of personnel to secure the country and the peace and a naïve belief that we would be welcomed as liberators. The Bush Medicare plan had no sources of financing and despite early projections of a $400 billion cost, are now likely to cost $720 billion (and no Robert Samuelson, this is not merely a shift in the time frame). The tax cuts were reckless. His treatment of our allies was wild. His indifference to our perception in the world is reckless because it ignores the strength our foreign policy actions derive from having a base of legitimacy in world eyes.

Wednesday, February 23, 2005

How to Speak Democratese: Pt I

Democrats appear to have a great deal of difficulty connecting with the public. Republicans spend a great deal of time and money conducting focus groups and market testing phrases to find the best way to connect with voters. Now I haven't done any of that, but it does seem that Democrats could use some instruction on how to connect better with voters. If you don't believe that, just look at the latest national poll which asks people which party they trust to handle a major national issue. So let's review what Democrats should and should not say.

What not to say

The Bush Social Security plan is a gamble: Harry Reid used this line. It’s cute since he is from Nevada but it’s wrong. A gamble implies that there is some probability of winning, of success. But the Bush plan isn’t a plan to fix the long term funding imbalances in Social Security. It is a plan to convert what has been the most successful government program into a private program run through Wall Street that will remove the most vital safety net that exists for our seniors. White House memos have and more frank commentators on the Right have made this plain. They see this as an opportunity to dismantle what they see as the central pillar of the ‘welfare state.’ They have always opposed Social Security on principle. They just haven’t had the courage to state their principles out loud. The Bush plan won’t solve the problem will increase the deficit, and will destroy Social Security and it’s protections.

We need an exit strategy in Iraq: No we don’t. We need a strategy for success. We need to win. Whatever you think about the rightness of our being there, Colin Powell’s aphorism still stands. You break it you own it. There is little doubt that the Bushies inflated the case for war by being nebulous about the connection between Saddam and 9/11, by appearing overly certain about the presence of weapons of mass destruction and by inflating the imminence of the threat. There is no doubt that they have seriously undermined our international standing and influence. They have diverted precious defense resources and attention away from more serious potential flash-points such as Iran and North Korea. And they have initiated a war whose destructiveness and impact on civilians and American soldiers has been profound and of dubious moral legitimacy. But we are there and we cannot cut and run, we cannot allow the appearance that the insurgents have driven us from Iraq. The most significant foreign policy failings of the government in the last 25 years have been our retreat from Lebanon after the Beirut bombings and the withdrawal from Somalia after the Mogadishu incident. If you commit forces to an area you commit yourself to the likelihood of losing lives and you don’t do it unless you intend to take those costs and win. We have been far too easy about committing forces in the past and this has created the impression which Bin Laden and Zarqawi love to proclaim, that Americans will flee at the first sign of blood. An exit strategy implies a retreat. What we need is a plan to successfully conclude our intervention in Iraq.

George Bush is stupid: OK people, one more time. George Bush is not stupid. He is inarticulate. He is crass. He is ambitious to the point that he will compromise any personal integrity whatsoever. He is lazy (see next coming post). But he is not stupid. You don’t win two races for Governor in Texas and two races for President by being stupid. You don’t go to Harvard Business School (even if Daddy got you in) if you are stupid. Stop ‘misunder-estimating’ him. Democrats made the same mistake with Reagan. Want to know why he was called the Teflon president? Because no one believed ideas came from him. He was the source of backbone, simplicity and decisiveness. The same goes for George Bush. Calling him stupid gives him cover. It excuses his failures. It allows him to make others the fall guy. It allows him to pretend he is a simple man which is perceived as virtuous.

Tomorrow I will post some suggestion about what Democrats should say.

Tuesday, February 22, 2005

George Bush as Chicken Little

To hear George Bush tell it, in 2018 the Social Security system is headed for catastrophe because the revenues it takes in will be exceeded by the money it pays out in benefits. Not only is this completely disingenuous, it's not even the first time in history that this will have happened. In fact, this has happened 11 times previously. When it happened, the Social Security Administration (SSA) paid the extra benefits out of the Turst Fund that had accumulated by cashing in the special bonds that the SSA holds -- assets which currently amount to over $1 trillion (see Brad DeLong for more on this & Matthew Yglesias).

Bush's emerging proposal is structured on the assumption that Social Security is and always has been a defined contribution plan. In fact, it never was and never was intended to be. Let's face it, Social Security is a welfare program designed to look like an insurance plan, a social insurance plan. Quoting from the SSA's own website:

"Ida May Fuller worked for three years under the Social Security program. The accumulated taxes on her salary during those three years was a total of $24.75. Her initial monthly check was $22.54. During her lifetime she collected a total of $22,888.92 in Social Security benefits."

Sure people pay into the program based on a set proportion of their income, and benefits are calculated on the basis of what a person paid in. But the set COLAs in Social Security and the way the pay outs are calculated mean that most people of low income do quite nicely from the current arrangements. You can go to the SSA website and try these set of calculations for yourself. But a 55 yr old person who has always earned above the income limit for Social Security (the amount of money subject to SS or FICA tax) can expect a monthly benefit payment of $1,911.00 which is about 22% of that person's wage this year. Another 55 year old who has always earned income at around the poverty level but has always worked can expect a monthly payment of $570.00. You can see that the high earner makes more. But the high earner gets a payment of only 22% of the 2005 salary while the low earner gets a monthly payment that is 65% of the 2005 salary. That's a pretty progressive retirement program and certainly nothing like what would happen if the program were a defined contribution plan and each person paid in the same fraction of income and earned the same financial return on investment. In fact, if each worker died today and had a surviving spouse and dependent children, the wealthy person's payout would be 42% of the the 2005 income while the poor person's family would get a payout that was 103% of the 2005 salary. His family would be better off killing him and drawing down the Social Security benefits. But under the Bush plan, this generous program would be thrown out.

Bush's plan, according to reports in the Washington Post and discussed on Brad DeLong's website, would allow individuals to hold back their contributions into the Fund and invest those on their own. However, when they retired, they would owe the Trust Fund an amount equal to what they would have paid in over their working lives assuming that it was deposited in a bank and earned 3% interest per year. Now most people have been able to beat this rate of return because of the stock market's performance over the last 20 years. But if the concept of regression to the mean teaches us anything, we should probably expect that the rate of return is likely to be lower than this rate of the last 20 years, and in fact, there is no reason that it couldn't be, in fact, very low. If people can't earn 3%, or like the workers at Enron, they lose everything because they make a poor set of bets, they will owe a tidy amount of money, just when they come upon a phase in their lives when they are unlikely to have much earning potential left, leaving the taxpayers with the bill and the likely probablity that we will have to support these individuals anyway.

One thing that is interesting to note is that even the administration's own experts admit that the plan is unlikely to solve the dilemma of the Trust Fund running out of money and having to borrow against future payments from the US government -- in effect, SSA will be selling bonds to the US Treasury, the reverse of what is happening today. With a prospective shortfall of 3.5 trillion over 75 years, Bush's plan would require 2 trillion extra in funding the first ten years and another couple trillion for the decade after that.

Monday, February 21, 2005

Goodbye Hunter S. Thompson

Hard as it is to believeYahoo!reports that 'Gonzo' Godfather Hunter S. Thompson killed himself.: Or maybe it's not so hard to believe. He was 67 and I imagine that such a hard liver (no pun intended) wasn't up for going out gracelessly. Remember - "When the going gets weird, the weird turn pro."

Saturday, February 12, 2005

The States as Laboratories

In today's news from the states, the Va. Senate has dropped its droopy-pants bill. Teenagers everywhere are sighing in relief. The bill would have imposed a $50 fine on anyone whose pants fell below his waist in such a way as to show his underwear. I would have thought approbrium from Joan Rivers and the other fashion police would have been enough on this one.

In other news, an Oklahoma legislator is trying to bring back cockfighting by equiping the chickens with boxing gloves. And to think that in some states, these are only part time jobs for very little pay.

I think this should provide us hope for such initiatives as returning more responsibilities to the states and such projects as term limits.

Wednesday, February 09, 2005

And now, for some really cheerful news!

Nicholas Kristof, writing in today's New York Times opines about the dire situation facing our relations and lack thereof with North Korea.

"North Korea is particularly awkward for Mr. Bush to discuss publicly because, as best we know, it didn't make a single nuclear weapon during Bill Clinton's eight years in office (although it did begin a separate, and secret, track to produce uranium weapons; it hasn't produced any yet but may eventually). In contrast, the administration now acknowledges that North Korea extracted enough plutonium in the last two years for about half a dozen nuclear weapons."

It now seems that Libya's nuclear material came from North Korea (while much technical assistance came from Pakistan). So now we have two concerns to worry about. The threat of a nuclear build-up in North Korea and the threat that the cash-strapped and isolated country will start to sell its wares. There comes a time when you have to realize that running a foreign policy on principle (especially when your lack of principles is quite evident) rather than results is a formula for disaster. Conservatives still proclaim Clinton coddled North Korea and rewarded them for their efforts. Well, Bush hasn't done this, but by doing nothing he has allowed them to create a greater threat to world peace than ever existed under the Democrats.

Oh, and try not to be wowed by the astonishing speed with which China leaps to Bush's assistance and exerts genuine pressure on North Korea.

Sunday, February 06, 2005

Go Pats!

A fabulous cap to a fabulous season, made all the more remarkable by a depleted secondary (down to one experienced, accomplished player) completing the last two quarters against Donavan McNabb and an impressive receiver corps. Several quick observations:

1) Instant replay has led to a serious deterioration in the quality of officiating. I lost track of the number of times this post season when the refs declared a turnover on the field when it was obvious play had stopped and the runner was down. Twice in the Super Bowl. At least once or twice in the AFC Championship game. I am glad for instant replay since it has improved the ultimate accuracy of calls. But whether it is moral hazard or just laziness or the league giving bad guidance, refs seem to allow play to continue long after a player goes down and a ball subsequently pops out.

2) Congratulations to the Browns on hiring Romeo Crennell. It's the Pat's loss and he's already been in Cleveland so he knows what to expect. But one concern for Browns fans has to be that last Eagles touchdown grab by Lewis. The Pats left Lewis, the Eagles' fastest receiver in one on one coverage with a first year reserve safety. From the reactions on the field it was clear Belichick hadn't called for that coverage. The Eagles seemed on the way to a score anyway, but forcing them to use more of the clock and possibly a timeout would have seemed a more expedient move. That's either Crennel' blown call or Eric Magnini (the Pats secondary coach and Crennel's likely successor). Crennell or someone on the defensive staff seemed to really blow the prevent defense at the end of all three playoff games and the Miami game.

3) Everyone who loses to the Pats says "we just made too many mistakes." It's an interesting psychological rationalization and it's true, subtract the turnovers and the Steelers and Eagles probably win. But it allows the other team to think they were the better team. After so many such victories this pattern should be telling. Look at McNabb's numbers - 30/51 for 357 yards and three touchdowns. The Eagles outgained the Pats. But tunrovers and the scoreboard tell the tale of this game and most Pat's wins. By now, all those turnovers should be clearly recognized not as simple human errors by careless players but forced mistakes by a cagey coach and team. It's as if Belichick has found the football equivalent of Ali's rope-a-dope, allowing his team to take the other's punches until an opening arises and then jumping on it to exploit an advantage.

4) Bill Belichick made three of the leagues best quartebacks look less than human this post season.

Thursday, February 03, 2005

Who Stole Our $1.4 Trillion?

I know countless others (Josh Marshall, Brad DeLong, Wash Monthly, TAP, Atrios) will do a far better job refuting the argument put forth by Bush last night on why we need to reform Social Security -- but here goes anyway. I was glad to see that Bush mentioned other ways we can fix some of the potential problems that face Social Security, but he disingenuously continues to focus on private accounts and a problem definition that distracts from the real issue.

Bush argues that we need to do something now because outflows will exceed inflows by 2018. If that’s the case we should all be asking - what the heck is the Social Security Trust Fund surplus for anyway?! Daniel Moynihan, when he was in the Senate (he was actually cited by the President last night but not for this) called for reducing the payroll tax because he could foresee just this event - that the surplus accumulated all these years was really just a Washington fiction. It was designed to fund general activities from regressive payroll taxes that penalize those who earn money from labor over those who get income from capital (and the taxes are capped at an income level well into the middle class to boot).

In 1986 we were told there was a looming Social Security crisis and a bi-partisan commission devised a plan to extend its solvency into the future by raising pay roll taxes to their current level of 15.3% (your employer pays the government a tax equal to 7.65% of your wages and you pay a tax of 7.65% on your wages earned [6.2% goes to SS & 1.45 to Medicare). The idea was to accumulate a surplus by taking in more in revenues than we were paying out so that there would be a cushion when 2018 rolled around and outflows began to exceed inflows. That deficit was then to be made up from draw-downs from this surplus. So where was the money supposed to go? Into the Treasury -- the Social Security Administration (SSA) being instructed to buy US Treasury bonds that could be redeemed when the time came to pay out the money. In this way, the SSA was no different than you or I or the countless foreign governments who are now supporting our government budget deficits by buying up US Treasury bonds. In finance, Treasury bonds, particularly short term bonds, are used as a proxy for the risk free rate of return because the word of the US government that it will actually pay out on its obligations is thought to be so sound. So by the SSA’s accounts, the current surplus totals $1.4 trillion dollars. Which means the government owes those of us who are retired after 2018 a bunch of money. And in the last twenty years those surplus revenues have been used to hide the true size of the budget deficit. And when we finally got our deficits under control, Bush and Greenspan told us that we needed to cut income taxes further to prevent a budget surplus from retiring our total public debt of $5 trillion and leading to the specter of public investment into the economy.

Now comes Bush and others telling us that the money really isn’t there. Bush himself made no mention of this surplus last night, leading people to think that Social Security goes broke in 2018. Others have been bolder. That paragon of upper class virtue, the Concord Coalition, has been a loud voice calling for Social Security reform and they write "The trust funds do not represent a pool of savings that can be drawn down to make benefit payments. They are simply bookkeeping devices and the special issue U.S. Treasury bonds they contain represent nothing more than a promise from one arm of government (Treasury) to pay off IOUs held by another arm of government (Social Security.)"

If all this is true US workers should demand their money back because they have been financing government activities off the backs of their labor for the last twenty years while successive governments have continued to cut income tax rates on the rich and especially taxes on capital gains from investment. What has happened has been a gradual shift of the tax burden from the wealthy onto the backs of the middle class and lower income workers at the same time that the income gap between the have-a-lots and the have-nots has grown. So I guess Moynihan was right, the payroll tax increases really were just a ploy to shift the tax burden. And remember - Greenspan, who called for cuts in income taxes because of a surplus arising from payroll taxes, now is scheduled to come before Congress in March and speak about the urgent need to cut benefits and engage in other tactics that undermine Social Security’s 6 decades of promises to America’s workers. Paul Krugman has written compellingly and repeatedly about this bait and switch by Greenspan.

What folks like Bush are really saying is that in addition to the huge budget deficit in general revenues that currently exists, in 2018 we will now have a deficit in revenues from payroll taxes and that all of these obligations will have to be paid from current revenues. In essence they are telling us that we have a general funds crisis because our obligations to reimburse Social Security for the money we borrowed and our insatiable general fund spending activity will far outstrip our revenues from general fund sources such as personal income taxes, corporate taxes, gas taxes and other fees and small taxes. This leads to the obvious questions 1) why can’t we get more revenues from general fund sources and 2) why can’t we commit to fixing our problems with our budget deficit? Bush told us last night that we owed it to our children to preserve Social Security. What we really owe to our children is to get our general fund house in order so that we don’t saddle them with onerous levels of taxation to support our profligate spending of the last 5 years and the foreseeable future.

Tuesday, February 01, 2005

Yet Another Reason to Celebrate William Safire's Departure

I was catching up on some newspaper reading this morning and came across a piece about Bush's second inaugural address (lower case intentional) by that now late (and not so great) columnist for the New York Times. In it, he claims that Bush's speech ranks among the 5 best second inaugurals ever. That there have only been 20 modifies this praise somewhat, but it certainly sticks on the way down the craw. I am particularly inspired to respond to this because last night I had occasion to see an episode of American Experience on PBS that focused on Lincoln - the closest thing we have to a civic saint in our culture. Safire admits that Lincoln's own effort is incomparable, but the contrast between the two inaugurals is telling both for the contrast in the humility with which Lincoln expressed himself, and the difference in historical circumstances. Safire's comments betray the myopia of the professinal speechwriter (as well as his political myopia) -- that a speech is to be judged by its words and structure outside of its historical context.

But the difference between a great speech and great speechwriting (usually contracted out these days of course - esp by the verbally challenged Shrub) rests in their historical context. Churchill's speech after Dunkirk is not significant for the parsing of his words or the rhythm of his syllables, but for the dark circumstances of Britain's defeat in France which surrounded the occasion of its delivery. Correspondingly, Lincoln's Second Inaugural (appropriately capitalized) is a relevant point of comparison with Bush's own effort not simply because of the rich language and biblical cadence (nor even its amazing humility), but because it was given at the apex of the brutally destructive Civil War, when bitter feelings were everywhere, where triumphalism was an easy lure, and where the historical significance of the struggle was apparent ( the 13th amendment having just been ratified - and the preservation of the union in response to armed rebellion against democratically-arrived-at-decision imminent).

Lincoln's speech derives its import because of these contrasts -- a bloody war over the freedom of a race, over the preservation of the principles of this country is met not with calls of revenge but for aggrieved northerners, many whom were mourning the loss of sons, brothers, and fathers, to welcome back into the fold of liberty their southern compatriots and to renew the American project together with them.

Bush's call for liberty in comparison is not only cynical and specious (liberty from what and for whom), but pales when thrown in the light of historical context. What great struggle? What great sacrifice? The war remains a war with a shifting purpose whose mission has been redefined into obscurity by all but the most dedicated pundits. It is a limited war. We apply no similar efforts to preserve the liberty of those in Darfur, or Iran, or China. Many of our supposed allies in the larger War on Terror don't even know what liberty means - witness Pakistan & Saudi Arabia. We are spreading freedom like we are rationing it from a jar of dwindling mayonaise, and of course, most oxymoronically, we are spreading freedom at the point of a gun which was fired without proper provocation. The expansion of freedom is a worthy goal and one almost all Americans share. But given the means by which and the situations in which Bush has chosen to demand freedom (as well as its apparently dim prospects both at home and abroad), the rejection of Bush's repeated argument by 54 million Americans is understandable.