Thursday, December 15, 2011

The there that isn't

There simply is nothing to discuss or even listen to from the "field" of Republican presidential candidates. I actually watched most of the last debate and couldn't find anything substantive. The whole was based on how much each candidate didn't like Obama and thought his policies were failures. Not one scintilla of defense for any pro or anti positions was given. No one explained why the "personal mandate", for example, was bad -- they just competed with each other in their distaste for it. They couldn't explain why this policy came out of Republican/conservative think tanks and had been supported by Republicans for decades ("Individual mandate is individual responsibility"). Or why Nixon's healthcare plan was to the left of Obama's. Or why the "public option", so popular in public opinion polls here and successful in practice most everywhere else, is not under discussion anywhere in the ranks of our reps.

Of course, none of the candidates explained how they would eliminate the vastly unpopular denial of coverage for "previous conditions" that the insurance industry has saddled us with, and which Obama's healthcare plan would get rid of. Would they allow people to opt out of healthcare premiums until they were sick? Or, would they simply let those without healthcare die (as many in the audience at an early debate seemed to favor)?

Mitt Romney, who as governor of Massachusetts supported and signed the bill which is the model for Obama's healthcare bill, said that, basically, he did so because "what's good for Massachusetts is not necessarily good for the country." No one knows what he means by this except as a way of making excuses to the Tea Screamers and other yahoos who don't like the plan. Thus, there was no debate on the issue, just on whether Romney hated the plan at least as much as his rivals say they do.

None of the candidates or the simpering incompetent moderators seemed to understand that the temporary lowering of the FICA tax does not necessarily imperil Social Security -- since when do Republicans care about saving Social Security as we know it? -- because the change specifically says that the lost revenue would be made up from general funds. Do facts have any meaning in this circus? One can make the argument -- and I have a great deal of sympathy for it -- that lowering the FICA tax temporarily will make it impossible ever to raise it back again, making Social Security dependent on general funds from the federal budget. The could allow a breach in the wall of the whole SS structure which, in future years as the hump of "boomers" pass through the system, would require more and more general revenue funds. A far better plan -- and one I've always supported -- is to raise the cap on income subject to FICA. This would enable the wealthy to shoulder their fair tax burden, perhaps lower the rate for everyone (especially when the boomers die off) and would ensure the solvency of the SS system indefinitely.

In any case, the world of true debate about real ideas is not the cloud-cuckoo-land of the Republican "debates". The latter is all about $10,000 bets, conspicuous religiosity, and who has hewn most faithfully to unexamined conservative mythology. It seems to me that grownups should be allowed equal time to reply -- especially those from the fact and reality-based community.

5 comments:

  1. What "wall" are you referring to regarding the structure of Social Security?

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  2. I meant the the separation of Social Security from general revenues due to the separate nature of the FICA "tax". Each generation contributes to the funding of the retirement of the generation preceding: we each help our parents retire, and expect that our children will do the same for us. This kind of cross-generational cooperation is one of the finest achievements of our democracy; it has worked successfully for generations now, with only an occasional tweak necessitated by the changing birthrates and the increasing inequality in wealth not reflected in the tax rates -- especially FICA. (FICA is pretty much regressive -- hitting lower income people harder -- which fact has become more significant with the cut-off of FICA at about $100,000.)

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  3. There is no separation between the FICA tax and general revenues. When current inflows exceed outflows to retiree benefits, rather than setting that money aside, the Treasury spends it on roads, bridges, schools, defense, healthcare, etc. So when it comes time for my retirement, the government will need to either raise taxes, issue bonds, cut my benefits, or do something else in order to finance payments that I am due. There's no "lockbox" nor are there any real assets in the Trust fund - just IOU's from the Treasury. Rather than have my retirement be dependent upon the government's ability to tax and borrow in the future, I'd rather have the money be put into a private account that actually belongs to me, rather than it being subject to the whims of Congress.

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  4. Alas, this is true. In principle, though, FICA taxes pay for SS, and government borrowing is just that (or so it seems), with repayment "guaranteed" by the U.S. government. This guarantee is (what is left of) the "wall" I referred to. It isn't as if SS were part of the general funds, contingent on successive Congresses resolutions and funding.

    Lots of us are uneasy about the Feds borrowing money from SS to fund all sorts of things. I agree with Anonymous on this. However, I'd rather see SS make money on the interest from government bonds (such as it is these days!) than have someone play games with individual investment accounts such as is always being proposed by Republicans.

    The stock market giveth and the stock market taketh away. I have lots of friends who lost a lot of their retirement money in fairly conservative IRAs during the last (2008) bust. I'm sure they were glad to have the security of their SS accounts. If the U.S. government can't pay back its debts, we are, of course, all in big trouble.

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  5. I don't see the "security" in my SS account when the future payouts are at the whims of Congress. And in order to pay my benefits, there is the need to either borrow money (which could seriously impact the value of the dollar and/or the level of interest rates) or raise my taxes. The government can always "pay back its debts" by printing money, but running up a huge bar tab now and saying "I'll pay for it later" creates a huge hangover. The bonds (and the interest) that the SS Trust fund "owns" is just funny money. They aren't real Treasuries that they could give to you or I today and we could go sell in the open market. And rather than just turn on the printing presses, they will likely tell us that our benefits have to be reduced to a much lower level than what we had planned for and we have to work longer. It's a huge mess. Anyone in their right mind would prefer that 4-6% of their paycheck to be deposited into a private savings account where you at least own it outright. If you want to keep it invested in CD's or bonds rather than stocks, go for it. At least you know it's yours when you get to retirement.

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