Marginal Utility

by Tom Bozzo

Hullaballoo's dday recommends an L.A. Times article by Ricardo Alonso-Zaldivar, "Presidential hopefuls are mum on Medicare and Social Security woes," as a "dumb article" And indeed it is.

As dday notes, Social Security is not a particularly urgent problem (though more on that in a moment), and there might just be a problem or two or three that's more urgent than the need to come up with money to plug a gap between payroll taxes and Social Security benefits in the 2040s. On Medicare, the Democratic candidates would deal with the issue in large part through more comprehensive health care reforms. So they are not so much mum.

In fact, one of the first (if passing) waves of Obama disillusionment resulted from his talking about Social Security using what might be viewed as be Republican frames. Moreover, while Alonso-Zaldivar remarks that

The two programs on which millions of elderly Americans depend are apparently just too hot to handle -- especially since any realistic solution is likely to involve a politically unpalatable mix of higher taxes and lower benefits.

this esoteric Intertubal resource called BarackObama.com contains a Web page containing the following words, quoted verbatim:

Obama believes that the first place to look for ways to strengthen Social Security is the payroll tax system. Currently, the Social Security payroll tax applies to only the first $97,500 a worker makes. Obama supports increasing the maximum amount of earnings covered by Social Security and he will work with Congress and the American people to choose a payroll tax reform package that will keep Social Security solvent for at least the next half century.

So, exactly contrary to the article, Social Security is not too hot for Obama to propose a "realistic solution." By the way, this solution is what put me back on the bandwagon, as the very smart Robert Waldmann reminded me some time back that raising taxes on the well-to-do isn't exactly the Republican way of dealing with this sort of thing. (The real Social Security funding issue is that the Bush tax cuts took the money that would repay the bonds held in the Lockbox and gave it to upper-income taxpayers via the tax "cuts." While in a world of magic ponies, I'd prefer to address the issue through the income tax system rather than the payroll tax system — since it's through the latter that IMHO needless tax preferences for capital income can be ended — the bottom line is that money is fungible and removing the cap on the Social Security tax is a big step to extracting the needed funds from the right people.)

And where would we be without the obligatory fluffing of Saint John McCain for a seemingly sensible position he doesn't actually hold? Writes Alonso-Zalvidar:

Of the three candidates, McCain is running as the most fiscally conservative. He criticized the Medicare prescription benefit when it was created in 2003, saying that Congress and President Bush failed to provide for the long-term cost.

Now, what does Candidate McCain say? Again, turning to the Internets:

Lower Medicare Premiums: Seniors face a growing threat from higher Medicare premiums that tax away their Social Security and retirement savings. [emphasis in original]

This is styled as a "retirement tax cut." By taking money out of the system, McCain would make the funding problem worse in exactly the sort of pander that Alonso-Zalvidar is supposed to be criticizing. Moreover, what about the rest of the "fiscally conservative" McCain platform? We have promises to:

• eliminate the AMT
• make permanent the Bush tax cuts (which he was against before he was for them, natch)
• cut corporate tax rates and change the tax treatment of equipment depreciation
  
• not impose a slew of other taxes

which he would offset by

• eliminat[ing] earmarks, wasteful subsidies, and pork-barrel spending
• eliminat[ing] earmarks, wasteful subsidies, and pork-barrel spending (Really, it says that twice! Yet even Gail Collins knows this isn't a major component of federal spending)
  
• reforming military procurement practices (fine, but hardly an offset to an indefinite commitment to the Gulf War II)
• partially privatizing Social Security (which also costs A Lot).

In short, the "fiscal conservative" McCain would reduce federal government revenues by trillions of dollars over the infinite horizon, spend trillions more on the war and Social Security bamboozlement, and save a few billion here and there via the trivial Waste, Fraud and Abuse play. Evidently, fiscal conservatism doesn't mean what it used to. (Over at Media Matters, they were thinking much the same thing.)

Labels: Journamalism, social security