Every campaign season brings promises of change. What are the chances, in an election cycle more based on these promises than any in recent memory, that the next President will actually change anything? I speak to well-informed friends and they harp on the nuances of the Parties’ positions. The news media frets over the absence of specifics. It is ludicrous to think that the details matter in the slightest.
Decisions in this country are made by hundreds of egotistical and self-centered men and women trying to keep their well-paying jobs in Washington. The president is of course but one of them. We have layers upon layers of laws and regulations on our books. Both candidates have pledged to take some form of sharp object to these programs and the bloated budget that they create and get them under control.
Who do they think they’re fooling?
These are the pet projects of their constituents, donors and of the other hundreds of legislators, judges, regulators and lobbyists that make the real decisions in this country.
We will have an African American president or a female Vice President after having African American and female Secretaries of State, Congressmen, Senators, Supreme Court Justices and business people all through our country. Will either president declare victory over prejudice and ceremoniously slice all race and sex-related laws from the books? We would save tens of millions at least. No Way!
Everyone receives Social Security; even those with millions. Will either president come out and make a change to a means-tested payment of this benefit? We would save tens of millions. Do not hold your breath.
Does anyone really think that either president will eliminate earmarks? Two to three percent of a several hundred billion dollar budget is a lot of money. Not gonna happen!
These are the laws and regulations we all know about. The laws of the US are contained in hundreds of volumes. Regulations cover just about everything that exists in our economy and cost taxpayers and businesses billions. Is there any chance that we will make any real dent in these laws and programs? Special interest groups have paid entrenched Congresspeople great sums to get their beneficial laws enacted and they will not go quietly. We could not even get a critically important emergency bail-out package through Congress without the addition of billions in wasteful special-interest add-ons.
It is probably time for a complete do-over. Pass a first law eliminating all other laws. Then start over from scratch. Good luck with that. Good luck making any real change to the laws of this country. Washington is set in its ways. No one man is going to change that. God knows many have tried. But go ahead and vote for the candidate of Change, which is both and every candidate in history. I am sure it will work this time.
So much gets lost in the sound bites and finger-pointing of presidential campaigns that it’s sometimes tough to know what the respective candidates really believe–or seem to believe–on various issues. This morning’s Columbus Dispatch has an excellent and readable overview of the McCain and Obama tax proposals. You can find it here.
The last few paragraphs especially interested me:
William A. Raabe, a tax professor at Ohio State University’s Fisher College of Business, argued that the candidates aren’t really talking about something that could have the largest effect on average workers: Social Security and Medicare.
Realistically addressing the long-term solvency problems of both entitlement programs could mean an increase in taxes or reduction in benefits, Raabe said. He also argued that the Wal-Mart worker is more likely to be affected by state and local taxes than changes in federal policy.
Serious questions also remain about how much discretionary spending will be available for either McCain or Obama to pursue his agenda, with the financial markets in turmoil and the government’s $700 billion Wall Street bailout to be enacted.
There also are broader philosophical questions raised by tax policy and the issue of what is fair, depending on which class benefits and your point of view.
Under McCain’s plan, is it fair to have the wealthiest enjoy such a large share of the tax cuts in dollars, while lower-income groups struggle with rising prices?
Under Obama’s plan, is it fair for the rich to pay a higher percentage than anyone else? And is it right that such a relatively small slice of Americans shoulders so much tax burden, with many people paying little for services?
September 28th, 2008 By JAZZ SHAW, Assistant Editor
When it comes to matters of fiscal conservatism, it often becomes a lonely business to stand on the beach by yourself, shouting at the ocean with these foul tasting, sandy pebbles in your mouth. Readers have made their preferences clear when it comes to matters of economic prudence. “Nay nay!” you say. “We’ll have none of your Bob Barr and his crazy ideas about cutting spending across the board. We’ll stick with the way we’ve been doing things for years, thank you very much.” I’m feeling slightly less isolated this morning after reading the Washington Post’s editorial, The Long-Term Cost.
The piece begins with some sensible warnings regarding the upcoming bailout agreement and how it may, in fact, make things worse in the short term. There is, however, a potential (if unlikely) bright side.
Paid for with borrowed money, today’s rescue plan will actually make matters worse in the short term. But it will be money well spent if we use the time it buys to put America’s financial house in order.
Count me among those who are skeptical, to put it charitably, about our government’s ability to read the writing on the wall and begin the hard work of reducing the federal debt. Far more likely is the scenario where the bailout will temporarily push the “crisis” further down the road and we, as a nation, will go back to simply refusing to think about an unpleasant reality. If we aren’t threatened with barbarians at the gate tomorrow, we shall happily go about the business of running up bills, gutting our credit worthiness, and leaving the bills for “somebody else” to worry about down the road. That date with unfortunate destiny may be quite a bit sooner than you think, however. As usual, the major culprits are our social entitlement programs, Social Security, Medicare and Medicaid.
According to the GAO, existing law requires the government to spend $41 trillion more on these entitlements over the next 75 years than it can expect to receive in payroll taxes and premiums. Of this, $34 trillion is related to health-care programs.
Does 75 years seem remote? Well, the crunch actually begins much sooner than that — in 2011, when Social Security’s cash flow turns negative, because of the first wave of baby-boom retirements. No longer will the rest of government be able to live off the surplus in Social Security’s trust fund. According to the GAO, the federal budget deficit — projected at more than 3 percent of GDP next year — is on a path to exceed 20 percent of GDP by 2050, unless we enact substantial reforms to our tax structure and entitlement programs.
With the passage of this bailout plan, we’re going to have a federal debt in excess of $11 trillion next year. The government claims that the GDP will still be higher than that, but as the Wall Street Journal recently pointed out, those numbers need to be critically examined and adjusted for reality. It’s very much akin to asking a used-car salesman to quote the total value of all the vehicles on his lot, then writing down the number he gives you and wandering away to report it without question.
We can either correct this situation intentionally, which will be painful, or we can let it crash on its own later, which will be disastrous. Neither John McCain nor Barack Obama are seriously talking about any sort of national policy which will result in a lower federal debt over the next four years. Our friends on the Left need to realize that this is no time to look at strapping the federal government with additional entitlement programs, and the ones we have now will require serious adjustments. Similarly, our colleagues on the Right are going to have to face the fact that “one more tax cut” isn’t going to solve anything and $10B per month in military adventurism is already adding up to real money that we simply don’t have. We are in hock to the Chinese for half a trillion dollars, and they’re beginning to balk at the idea of fronting us further. But we continue to insist on electing leaders who promise us more of the same. We will eventually reach a point where this fiscal house of cards collapses entirely under its own weight, and that truly will be the end of the nation as we know it.
Now that the Bush Administration - regarded by many as the most right-wing, free-market, deregulation-oriented administration in living memory has opted for the largest tax-payer bailout of private business in world history - it’s a question of renewed relevance.
“Modern capitalist states are all welfare states. Enormous bureaucracies have been created to tax the rich, regulate business, provide subsidies and special schemes to the needy, thwart environmental harm and health hazards, and so on. The list is long and keeps growing.”
“Between 1970 and 2006, the number of pages in the U.S. Federal Register (which lists all regulations) shot up from 20,036 to 78,000. The number of regulators in the service of the federal government rose from 90,000 to 241,000. In the first six years of the George W Bush era (2000-2006), the number of pages of regulations increased by over 10,000, and regulators by over 65,000.”
“Two of the nationalized corporations, Fannie Mae and Freddie Mac, are by far the largest mortgage lenders in the world, with $5 trillion of mortgages and loans on their books. To put that in perspective, that’s five times the size of India’s GDP. … No nationalization in countries that profess to be socialist have ever been so large. … So much for the myth that the United States is a heartless capitalist ogre. In fact, it combines capitalism with welfarism and often tilts toward the latter when the two conflict.”
September 18th, 2008 By SHAUN MULLEN, TMV Columnist
Weekly Dow Jones Industrial Average, 2002-2008
When viewed from perspective of an economy on the verge of a nervous breakdown and the battering that venerable Wall Street institutions and the Dow Jones Industrial Average have taken, President Bush’s plan to privatize Social Security would have wreaked extraordinary havoc had it seen the light of day. And if John McCain were to get his way, that may yet happen.
In fact, McCain wants to radically transform Social Security and employer-provided health care, two of the precious few safety nets left for middle-class Americans, by setting up so-called private savings accounts for each, in essence letting the market — the very folks who have royally screwed up the economy with a big assist from McCain and his Washington helpmates, to decide what’s best for we mere mortals.
It is hard to say which is more troubling.
Not only would SS savings accounts be tied to the health of the economy, as opposed to being a safe harbor in any economic storm when it comes time for Americans to retire, McCain also wants to reduce benefits. And provide a windfall of hundreds of billions of dollars in fees to the financial industry.
Health-care savings accounts would be similarly vulnerable, and worse yet would remove an employer’s incentive to provide a health-care plan for his employees, leaving them more exposed to the same profit-hungry ethos that already runs roughshod in the health-care system. According to one study, up to 20 million Americans would lose coverage under the McCain plan, joining the 45 million who already are uninsured.
Of the many issues which raged in the national debate during the 2004 election cycle but have since fallen down the memory hole, Social Security is surely one of the most curious among the missing. I have never counted myself among the masses crying out that the Social Security system is “hopelessly broken” or needs to be scrapped entirely. However the inversion from an era when a large number of workers were supporting a proportionally smaller number of retirees to the emerging period where a smaller proportional workforce will be supporting the baby boomers has created a bit of a pig in a python. The math indicates that - at a minimum - some adjustments will be required to maintain the current system in a sustainable fashion. How do our candidates stack up on this issue?
Let’s start with John McCain. I agree, at least in part, with the assessment of Peter Wallsten at the LA Times who describes McCain’s position as “somewhat fuzzy.” In 2005 Senator McCain was hitting the trail hard with President Bush, pushing for privatization of the system, but seems to have since modified his policy. From the McCain website, we find that the candidate now:
…supports supplementing the current Social Security system with personal accounts – but not as a substitute for addressing benefit promises that cannot be kept.
I have no problem with offering more options to workers if they wish to beef up their retirement portfolio in this fashion, providing it doesn’t erode the support base for the system. How will he pay for the continued health of the system? That part is a bit less clear. He insists on keeping to the party line that he will not tolerate any increase in taxes in any form, but seems to provide no specifics on how he plans to pay for it. This, it seems, is no accident.
McCain and his aides say the lack of specificity is intentional – the result of lessons from 2005, when Bush tried to sell a skeptical public on private accounts.
“There’s a really careful recognition of the history,” said Douglas Holtz-Eakin, McCain’s economic advisor.
“The history on Social Security has been if you put out specific proposals or preconditions, you polarize the debate and the deal doesn’t get done.”
The Obama campaign web site is, to the best of my searching ability, completely silent on the issue of Social Security, but does have this to say on retirement issues in general:
Currently, 75 million working Americans - roughly half the workforce - lack employer-based retirement plans. Even when workers are given the option of joining employer-based plans, many do not take up the option because it requires considerable work to research plans and investment portfolios, and enroll in the plan. Barack Obama’s retirement security plan will automatically enroll workers in a workplace pension plan. Under his plan, employers who do not currently offer a retirement plan, will be required to enroll their employees in a direct-deposit IRA account that is compatible to existing direct-deposit payroll systems.
I too miss the days when companies offered long, fat retirement plans as part of the employee compensation package, but alas… those days are mostly gone. But we are not children. I immediately get that tick in my left eye again when I hear politicians talking about forced programs to determine how we will feather our nests. Obama’s plan allows employees to “opt out” by signing a waiver, so it seems a needless exercise in nannyism.
As to social security itself, the Senator was quoted in another article as planning on changing the base tax structure to fund the program. He woud freeze the Social Security Wage Base thresholds at their current cap of $102,000 per year, while putting in a “donut hole” plan which would add a new SS tax for those earning over $250,000.
I suppose I don’t understand the need for this “donut hole” beyond the blatant politics of not raising taxes on “the middle class.” If you follow the last link, you will see that the wage base threshold has gone up, on average, roughly $3,000 each year since 2000. This is in response to changes in wages and other economic conditions. He does not, however, favor any increase in the current participation rate of roughly six percent each for the employee and the employer for all income up to the wage base cap. (Nor does McCain, obviously.)
There you have it. I find myself highly disappointed in both of the candidates’ positions (or lack thereof) on this issue. I give full credit due to Obama for recognizing that something needs to be done and that it might involve some pain in the pocketbook to address it, but I will have to give a very, very halfhearted tip of my hat to McCain on this one. I would call on Senator McCain to firm up the specifics of his plan, (which may change my final decision) but the nanny state attitude and weak sister political waltzing around the tax issue by Obama scares me away from awarding him the point on this one. If the Social Security threshold or the minimum retirement age must be raised to get the system on solid footing, just have the courage to do it and let us judge your decision.
You will not read a more visceral and affecting account of what the demise of the Big Three means to individuals, families, neighborhoods and regions than this one from Michigan (cross-posted from Michigan Liberal):
Yesterday my family joined the ever-growing group of Michigan families who now face an uncertain economic future due to lay-offs in the auto industry.
My dad’s employer, once part of The Big Three, offered their employees age 50 and over a puny buyout package, with the hopes that 300-400 people take them up on it. Whispers around the office led most to believe that if the buyouts weren’t taken, they’d still most likely be without a job, and the measly benefits. So as of August 1st, my dad will stay in Michigan, unemployed, with a mortgage, bills, and a very uncertain future. His job, like so many others, is heading to Mexico.
The news broke my heart and my spirit, just as it has for thousands others.
Here’s what worries me most - like many other laid off auto workers, my dad’s in his late fifties, with a bad back, arthritis starting to set in, and a minimal college education in auto repair, no thanks to the GI Bill. He can send me email, watch the funny YouTube videos I send him, but that’s about as far as his computer skills go. With a crummy economy, how does my dad compete with all the hungry, tech-savvy college graduates that don’t have families to support?
This is not the American Dream, this is the Auto Industry Nightmare.
Now what? Barack Obama? John McCain? Gov. Granholm? Anybody?
When it comes to matters of fiscal conservatism, it often becomes a lonely business to stand on the beach by yourself, shouting at the ocean with these foul tasting, sandy pebbles in your mouth. Readers have made their preferences clear when it comes to matters of economic prudence. “Nay nay!” you say. “We’ll have none of your Bob Barr and his crazy ideas about cutting spending across the board. We’ll stick with the way we’ve been doing things for years, thank you very much.” I’m feeling slightly less isolated this morning after reading the Washington Post’s editorial, 
Of the many issues which raged in the national debate during the 2004 election cycle but have since fallen down the memory hole, Social Security is surely one of the most curious among the missing. I have never counted myself among the masses crying out that the Social Security system is “hopelessly broken” or needs to be scrapped entirely. However the inversion from an era when a large number of workers were supporting a proportionally smaller number of retirees to the emerging period where a smaller proportional workforce will be supporting the baby boomers has created a bit of a pig in a python. The math indicates that - at a minimum - some adjustments will be required to maintain the current system in a sustainable fashion. How do our candidates stack up on this issue?
