Friday, November 19, 2004

The state of the play

According to the Wall Street Journal, no tax reform from the Administration until 2006. That puts it just in time for the run-up to the midterm elections, always a good time for farsighted statesmanship.
Meanwhile, in Social Security, "advisers say Bush won't spell out how to cover transition costs for new private accounts." Meaning, I presume, that just as with Medicare prescription drugs the pitch will be new benefits for free.
A fine point here: while shifting payroll taxes to private accounts would make the short-term deficit look worse, it actually wouldn't increase the long-term fiscal gap if benefits from the traditional system were cut sufficiently to match the payroll tax shift in present value terms. But the notion that the Administration would be forthright enough to pay for the shift through genuine long-term traditional benefit cuts, thus inviting political attack from the Democrats, requires attributing it with a degree of honesty and responsibility that goes completely against its track record.

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