Thursday, March 27, 2008

Defunding Social Security As An Election Strategy

Okay, I understand why Novak is arguing that we should slash FICA taxes and tell younger workers, "In return for your reduced tax burden you will get little to nothing from Social Security when you retire." Demolishing Social Security fits with his world view. But what I can't understand is why he believes McCain should make that part of his platform. I grant that McCain has been promising to cut pretty much every tax under the sun, but even he would probably recognize that "this one is different".

Novak has a hard time keeping his lines straight. First, it's:
Moreover, Republicans talk about offsetting losses in payroll tax revenue by cutting future Social Security benefits, which contains seeds of electoral catastrophe.
This later becomes,
Even Republican advocates of cutting the payroll tax talk about offsetting it with reduced future benefits. That's a bargain young workers would buy in a minute, and current Social Security recipients would be assured that their pensions would not be reduced one penny.
The distinction, apparently, is that you hammer the theme, "Younger workers, you're not going to get Social Security anyway, so let's reduce your taxes and phase it out," reassuring current recipients, "You're still going to get every cent of what was promised to you," and telling everybody else... er, Novak left that part out. Yet that block of "everybody else" is an important group to address, as putting their future benefits at risk "contains seeds of electoral catastrophe".
The perceived need to offset losses in payroll tax revenue stems from a belief that the Social Security trust fund must be replenished. The truth is that there is no such fund, and the heavy payroll tax revenue resulting from the Greenspan Commission's 1983 "reform" not only provides enough money for Social Security but funds other programs, as well.
Wow. So in Novak's mind, Social Security is so "rich" that even if we pretend that the treasury notes comprising its "trust fund" are worthless, it can continue to pay not only for itself but for a host of other programs. And it could thus pay for itself even after a tax cut. What a compelling case for a "reform" that slashes benefits.

McCain says that he doesn't really understand economics. Novak appears to either be in the same club, or to be trying to take advantage of McCain's weaknesses. Either way, taking Novak's advice seems like a surefire way for McCain to blow a hole in his own foot.

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