Friday, December 16, 2005

The New America Foundation again

As I noted in an earlier post, the New America Foundation recently issued an interesting tax reform plan, a but bolder and more novel than what the Tax Reform Panel was able to do, although flawed by the peculiar administrative idea of subjecting taxpayers both to an income tax and to a progressive consumption tax. Having everyone file two returns instead of just one is not an idea I would expect to go anywhere. But still, the NAF is trying a bit harder than most other groups in Washington these days.

Now the NAF has issued a "Nonpartisan Social Security Reform Plan," devised by Maya Maguineas of the NAF plus economists Jeffrey Liebman and Andrew Samwick. Although some in the liberal blogosphere have been experiencing heart palpitations because both Liebman and Samwick have worked with conservative eminence grise Martin Feldstein, in fact Liebman is on the Democratic side of the aisle and worked for the Clinton Administration, while Samwick lines up on the Republican side (albeit with principle, not hackery) and worked for the current Bush Administration.

The NAF plan tries to balance left and right policy preferences by providing a mix of benefit cuts, revenue increases, and mandatory individual accounts that are funded half through new taxes and half through diversion of a slice (1.5%) of the existing Social Security payroll tax. King Solomon and slicing the baby in half, you see. But in fact this is the sort of plan that deserves attention, and the most serious one out there, so far as I am aware, other than the Peter Diamond-Peter Orszag plan that tries to be similarly balanced but leaves out the accounts and presumably has no prospects for acceptance on the right.

Liberal bloggers have been attacking the plan, however, because it has the accounts with a bit of a Social Security payroll tax diversion to help fund them. So to some of them it might as well be the Bush plan all over again.

It's funny how arbitrary details can affect people's perception of things. The NAF plan replaces two-thirds of the diverted payroll tax revenue through a progressive increase to the payroll tax (raising the ceiling on the tax, not the rate). So, if they changed the sequence of the cash flows, they could almost fully fund the accounts through the new taxes. This would probably cause the plan to be perceived differently, even though in substance it would be exactly the same.

Samwick has sounded a bit touchy, perhaps understandably so (none of us likes to be trashed) in discussing the plan in his own blog. Among other things, he says that the mandatory accounts with a bit of payroll tax diversion are indispensable to get conservative support for the plan, including his. But alas, getting rid of them may be indispensable to liberal support for the plan, and no plan has a chance politically without both liberal and conservative support. (When I speak of a plan having a chance, I mean several years down the road - obvously nothing is possible now.)

It's a shame that the symbolism of individual accounts and payroll tax diversion matters more than the substance of Social Security reform, to many on both the left and the right. In fact, whether or not there are individual accounts is really more of a fiscal language or descriptive detail than one with important economic substance. More on that at some future time.

17 comments:

  1. Anonymous11:40 AM

    For what it's worth, the NAF plan is much better balanced between tax increases/benefit cuts than Diamond-Orszag. NAF is roughly half tax increases (when the mandatory account contribs are included) and half benefit reductions, which is as good a definition of the political center as any. Diamond-Orszag gets the great majority of its improvements in solvency from tax increases (about 85%, based on the SSA analysis of the plan). That may be a bigger reason D-O isn't very viable politically.

    ReplyDelete
  2. Anonymous10:52 PM

    Live Your Life With A Little Daily Motivation.. Do we seek online education Daily,weekly or yearly. I have been interested in working and online education for years now. I am driven to success by the master teachers from the past. I really enjoy people like Wayne Dyer, Greg Vanden Berge and Tony Robbins. Im writing to this blog for selfish reasons, I want to see everyone live the life of their dreams. I am Living my life to the fullest and it is due to a book writen by Greg Vanden Berge . Master Goal Achiever and Author of Start Living Your Dreams Today.. A Great Book from the masters.. I hope you enjoy the book as much as I did..

    ReplyDelete
  3. Anonymous9:24 PM

    I am here because of search results for blogs with a related topic to mine.
    Please,accept my congratulations for your excellent work!
    I have a bad credit bankruptcy personal loan site.
    Come and check it out if you get time :-)
    Best regards!

    ReplyDelete
  4. Anonymous1:59 AM

    A fantastic blog yours. Keep it up.
    If you have a moment, please visit my bad credit home loans online site.
    I send you warm regards and wish you continued success.

    ReplyDelete
  5. Anonymous1:35 AM

    I am here because of search results for blogs with a related topic to mine.
    Please,accept my congratulations for your excellent work!
    I have a bad credit home equity loan site.
    Come and check it out if you get time :-)
    Best regards!

    ReplyDelete
  6. Anonymous9:14 PM

    Hey, you have a great blog here! I'm definitely going to bookmark you!
    I have a bad credit income low mortgage site.
    Come and check it out if you get time :-)
    Greetings.

    ReplyDelete
  7. Anonymous9:14 PM

    Hey, you have a great blog here! I'm definitely going to bookmark you!
    I have a bad credit income low mortgage site.
    Come and check it out if you get time :-)
    Greetings.

    ReplyDelete
  8. Anonymous11:26 PM

    Hi Fellow! I was just searching blogs,and I found yours! I like it!
    If you have a moment, please visit my bad credit loan personal us site.
    Good luck!

    ReplyDelete
  9. Anonymous10:45 AM

    Hi Fellow! I was just searching blogs,and I found yours! I like it!
    If you have a moment, please visit my bad credit mortgage company xxasdf site.
    Good luck!

    ReplyDelete
  10. Anonymous10:45 AM

    Hi Fellow! I was just searching blogs,and I found yours! I like it!
    If you have a moment, please visit my bad credit mortgage company xxasdf site.
    Good luck!

    ReplyDelete
  11. Anonymous6:44 AM

    Bloggers

    Looking for ram contracting of central florida at http://doityourselfpro.com/. Well I recomend This Site.

    ReplyDelete
  12. Anonymous6:01 PM

    REMODELING

    remodel loans Tips for building or remodeling your dream home.

    ReplyDelete
  13. Anonymous11:28 AM

    Saw your blog about direct loan - as it is along the same lines I thought I would share this link with you. We were paying far too much for family things like clothes for us and the kids, games consoles inc the new Wii and soon to be PS3, car insurance/home insurance/pet insurance, broadband, mobile phones, landline calls, home and garden items, camping equipment and utilities/loans etc - you name it, we were spending too much on it.

    Then a friend of mine recommended a site called www.bargainplace.co.uk. We were able to get cheaper electricity, gas, mobile phone, broadband and loan deals at bargainplace. Thanks to my friend (and the site) I am saving something like £100 a month and can afford an extra holiday abroard each year. Booked of course on www.bargainplace.co.uk. Thanks bargainplace ;-) !!

    ReplyDelete
  14. Anonymous12:03 PM

    Really great blog I've bookmarked it - now some really important bits of financial advice - as it is along the same lines I thought I would share this info with you.

    We were paying far too much for items like kids clothes, games consoles, car insurance/home insurance/pet insurance, broadband, mobile phones and utilities/loans, lowe s home improvement etc. Then a friend of mine recommended a site called www.bargainplace.co.uk. We were able to get cheaper electricity, gas, mobile phone, broadband and loan deals at bargainplace. Thanks to my friend (and the site) I am saving something like £100 a month and can afford an extra holiday a year. Booked of course on www.bargainplace.co.uk. Thanks bargainplace ;-) !!

    PS - I set up a website a couple of months ago and until recently I was getting no traffic at all. Then, I signed up to Linkreferral.com. Not only did I start getting visitors by the truck load, I also joined Affiliatewindow and am now making lots of money by partnering with companies like Argos, Next, John Lewis, Pixmania, Marks and Spencer, LX Direct, Littlewoods, Vodafone, phones4u, phones2u, Sky, NTL, Virgin Media, Talktalk, Woolworths, Empire Direct, ebay plus online gambling sites - you can make pot loads of cash.

    Linkreferral.com is absolutelely free and has really helped my business take off.

    PLUS!! there are opportunities to make money from Linkreferral as well - sign up for free and check out the website and email received for details

    Follow these free tips and you won't go far wrong - that brand new BMW or Mercedes might just be around the corner!!

    ReplyDelete
  15. Anonymous9:13 AM

    .
    .
    .
    .
    .
    .
    Good blog - very interesting!! I liked it so much I'm going to share this hush hush advice with you. Ever wondered how your neighbours are driving around in their brand new BMW or Mercedes cars - with their kids dressed in all the latest named gear and foreign holidays aplenty?? Well they discovered the secret to the extra online income.

    If you are looking for a free tool to attract loads of free links to your blog or website then congratulations I've got the solution for you - and it is FREE!!

    My website specialises in autism and animal and to drive traffic to my website I was searching around the internet for absolutely ages looking for SEO tools and ffa submission sites to fire my site up the Google search engine - unfortunately these doing work and in fact had the opposite affect plunging my site down the rankings like it had a heavy weight attached!!, then I signed up for this free superb traffic generating tool - I now have loads of hits to my websites/blogs and my site is shooting back up the Google rankings quicker than ever before.

    Consequently this saw my affiliate commissions shoot through the roof - meaning lots of extra money coming in for my family - I bought my first Mercedes car on the proceeds of my online campaign.
    Sign up now - it's free.
    . Sorry if this information is of no use to you but seeing as you have the anonymous feature enabled I thought I should share this free bit of essential promotional advice with you and would hope you would do the same for me and others who want to boost their online internet income.

    I hope the tool will serve you equally as well as it has me - it's free!!

    Best of luck, cheers for now, dave.
    .
    .
    .
    .
    .
    .

    ReplyDelete
  16. Anonymous9:17 AM

    Hi my friends! I'm writing to you because I just came across a business that I think has great potential. It lets you save money on almost everything. Make money from almost everything, Including home loans- plus... help lower your taxes--best of all--it requires absolutely no investment. I thought you might be interested and like to check it out...

    Here I have a business businesses site/blog. It successfully covers business businesses related stuff and almost everything else!

    Come and check it out if you get time, Scott.

    ReplyDelete
  17. Anonymous7:17 PM

    In debt? consumer credit site offers help for bill consolidation loan and other consumer debt.

    ReplyDelete