Tuesday, March 15, 2005

Requiem for Social Security reform??

David Brooks, playing his I'm-thoughtful-and-above-the-fray card rather than his partisan card now that the election season has passed, worries about the apparent failure of President Bush's Social Security plan:
"[I]f Social Security reform fails ... it will be many years before any sort of big entitlement reform will come up again. The parties will keep playing chicken, and we will soon find ourselves catastrophically buried under our own debt."
Brooks is making a prediction, not an immediately verifiable or falsifiable claim about current policy. But I must say I strongly disagree. Actually, what I disagree with is not the somber prediction, which seems all too plausible, but the suggested causation.
Bush has gotten burned, not for trying to tackle the financing gap, which his Administration has for some time admitted is not addressed by substituting private accounts for existing benefits, but for trying to run a unilateral steamroller on a controversial policy change, on the supposed view that this would permit otherwise controversial benefit cuts to be made. Instead, he seems to have made benefit cuts even more of a political hot potato than they would have been standing alone.
There is no lesson whatsoever that the parties cannot, as in 1983, cooperate to make Social Security more sustainable by combining tax-side and benefit-side changes. If anything, what has happened this year reconfirms the lesson of 1983 by showing that alternative political approaches do not work.
Brooks blames the Democrats for playing Yasir Arafat, as he puts it, by turning down compromise offers floated by Republican Senators. At this point I'm not enormously interested in playing the blame game, but it certainly is worth noting that, after the way the Democrats have been rolled and excluded from all Capital Hill action over the last few years, a lot more would have been needed to persuade them that the Republicans meant to do serious bipartisan business and could be trusted at it.
Desperately offering concessions when you're way behind on points, and when you have zero track record of cooperative behavior in the past few years, is not the best way to test bipartisan good faith. So there is no lesson from the Bush follies that responsible bipartisan measures to address the fiscal gap have no chance. The lesson, rather, is that scorched-earth partisanship is a political dead end. Let's hope that the next generation of Republican leaders - since the current generation is lost beyond redemption - is listening.

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The answers to Social Security, economic growth and tax reform is the:

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http://tinyurl.com/5my69

A "New Deal" for a New Generation

1. Revenue neutral Tax reform with the Fair Tax HR 25-(www.fairtax.org) which replaces all personal and business income and payroll taxes including AMT with a national Retail Sales tax. Prices drop 25% before you add in the sales tax, so consumers pay about the same as they do now but with a much larger paycheck going home. "Gives Every American Family a Raise." (http://tinyurl.com/6agz9 ) Economic growth first year of 10.5%

Reform Social Security into 2 systems for a New Generation. New Tier 2 System to be applied to all person born after 1975(30 years old or younger). Call them the Tier 2 Generation who start retiring in 2042.

2. Social Security Saftey Net is Account #1 with the pay out set at a flat saftey net level equal to the poverty line for an individual. Whether you are a maid or a millionaire you both have a saftey net that is equal. 2004 poverty line level is $9310 or $775/m.

3. Social Security Savings & Pension Plan - Account #2; For Tier 2 Generation establish a Thrift Savings Plan/Pension style account with matching funds from Uncle Sam. For every dollar the Tier 2 Generation saves in this account the Federal government will provide a 50% match up to $1,000 per year. Save $2000 in your Pension savings and Social Security matches with a maximum of $1,000.

You get 2 Social Security Accounts for the price of one. Account #1 - True Satandard Saftey net; Account #2 Portable Pension savings plan.

The savings from Account #1 provides resources for Account #2 making the entire system solvent for the Tier 2 Generation who are the children and grandchildren of the Baby Boomers.

Pension Account will allow for an annuity style payout only.
No borrowing from it. This Pension replaces the idea of corporate pensions that the older generations used to enjoy.

The Fair Tax provides the increased take home pay for a family to save for retirement and participate in Account #2 as well as extra take home pay for Health Care, Child Care, College Tuition and other Family needs.

We do not need to raise taxes we need to replace our income tax system to grow the economy and increase revenue. The Fair Tax is estimated to grow the economy over 10% in its first year and give every American Family a Raise.

Read more on the Tier 2 solution at http://tinyurl.com/5my69

Or Visit My Blog Tax Reform "Fair To All" http://fairtaxreform.blogspot.com/

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