2006 December 24 Sunday
Bush Supports Social Security Tax Increase

George W. Bush, the man who brought us a war that is now going to cost $170 billion in this fiscal year and who also signed into law a huge expansion of Medicare with a drug benefit, has backed away from his pledge to oppose all Social Security payroll tax increases.

"So far, no one in the administration has simply stood up and said, 'We will not raise payroll taxes in any way, shape or form,' " said Pete Sepp, a vice president for the National Taxpayers Union, which led a coalition of several dozen groups to write a letter asking for such an assurance.

Meanwhile, the House's top Republican on tax cuts, outgoing Ways and Means Committee Chairman Bill Thomas, warned last week that the White House has hinted that it will accept a tax increase on higher-income families in order to win accommodations from Democrats.

Upper class people helped get Bush elected in the first place. They got a lot of tax cuts from him in his first year in office and have done well as a result. Can't say I feel a lot of sympathy for them at this point. But I fear that the term "upper class", when used in the context of tax increases, extends all the way down to my level of income.

Bush wants to make a deal with the Democrat-controlled Congress on how to once again "save" Social Security.

Social Security could be the first test. Since November, Mr. Bush has said everything should be on the table in the effort to fix the program's finances -- a statement in sharp contrast to his declaration after the 2004 elections that "We will not raise payroll taxes to solve this problem."

I oppose this sort of thing because I want a financial crisis in old age retirement programs to force a big rise in the eligibility date to begin collecting. In a nutshell, since people are living longer they should work longer. We can not afford to have so many people not working, especially since medical costs per retired person are rising so rapidly (as are all medical costs).

Bush's attempt to create private Social Security accounts was a foolish and deceptive proposal that would have made the problem worse, not better. Though his now dead Social Security privatization proposal is small potatoes in the folly leagues as compared to his immigration amnesty and guest worker program proposals. If we to continue to take in any immigrants at all we need to demand that all immigrants are revenue positive, meaning they will pay more in taxes than they receive in benefits. Otherwise they just make an already huge problem even worse.

I also think that attempts to fix the underfunding of Social Security amounts to political grandstanding because Medicare is the far larger problem and Bush has made the Medicare problem worse, not better. Medicare is projected to consume 24% of all federal income taxes by 2019 and 51% by 2042.

Even the debt and deficit numbers you read about understate the size of the current US federal deficit. The audited financials of the US government show a deficit more than twice the officially reported one. Similarly, the cost of the Iraq war is far greater than the amount appropriated for it each year while the war is fought. Joseph Stiglitz estimates the total cost of the Iraq war might be as high as $2 trillion. Among the costs we will pay for in the future: long term care of the maimed soldiers who survive; interest on the debt incurred to fight the war; opportunity cost of pulling people out of the private sector to go fight in the war; and interest on the debt accumulated to pay for the war.

All these hundreds of billions and trillions of costs and unfunded liabilities add up. The United States has peaked as a world power. For demographic reasons (aging population and declining average IQs - and more here) and other reasons we are going to decline as a world power.

Share |      By Randall Parker at 2006 December 24 01:55 PM  Economics Government Costs


Comments
birch barlow said at December 25, 2006 7:34 AM:

"But I fear that the term "upper class", when used in the context of tax increases, extends all the way down to my level of income."

Yup, typical left-wing bait-and-switch bullsh**. Leftists like to start talking about the multimillionaire white male record exec who wants $24.99 for the CD with someone's favorite song, some guy like Potter from "It's a Wonderful Life," when in reality the leftists want to tax professionals like scientists, doctors, and engineers of all races and both sexes. But what can you expect? The way leftist (and religious fundamentalists on the other side, and ideologues in general) believe their own do-gooder lies, is it any surprise that they lie to everyone else too?

birch barlow said at December 25, 2006 7:59 AM:

This is getting slightly off-topic here, but I should also add that respect for authority is way overrated. Between the cop handing out the ticket for driving 72 in a 65 zone, the parking enforcement guy handing out $60 parking tickets to people who parked illegally because all the legal spots were blocked by construction (probably intentionally to raise revenue), tobacco company execs who raise their right hands and say "nicotine is not addictive," civic leaders in the midwest who say the earth was created in October 4004 BC, the political class passing bullcrap like "race does not exist," "gender is a social construct," and all the crazy s*** that the Bush Administration and both parties in Congress are doing with the borders and the budget...authority sucks. Power corrupts even good people, and bad people seem to be attracted to power. If the American middle class, and professionals in particular don't wake up, the 21st century is going to be damn ugly.

D Flinchum said at December 26, 2006 5:11 AM:

"In a nutshell, since people are living longer they should work longer. We can not afford to have so many people not working, especially since medical costs per retired person are rising so rapidly (as are all medical costs)."

I tend to agree with you; however, age discrimination often pushes people in their 50's and 60's into retirement. Just another little way that the business interests get subsidized by the rest of us.

Ned said at December 26, 2006 5:53 AM:

Kotlikoff and Burns have written a compelling book about this problem - "The Coming Generational Storm." They describe in detail the looming financial train wreck that the US is headed for. As the Baby Boomers begin to retire and become net consumers of government programs rather than taxpayers, there will simply not be enough money to support all the entitlements. The politicians are not as stupid as they seem - they are aware of all this but they never talk about it. They know they will not be in office (or maybe even alive) when the crash comes. Let the next generation of congress critters deal with it. Just a few weeks ago, Congress gave in to the intense pressure brought by two of the most powerful lobbies, the AMA/AHA/medical trust plus the AARP, and blocked a 5% cut in Medicare reimbursement. Just pass the problem on to later generations and don't worry about it for another year rather than fix the dysfunctional Medicare program - what, me worry? It should be no consolation that the other highly developed coutries (Western Europe plus Japan) are facing even worse problems. The whole mess has the potential to cause another worldwide Great Depression.


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