A time for stubbornness

What’s the Democratic position on wrecking Social Security? We’re against it.

Paul Krugman’s column on the phony Social Security crisis, in addition to its economic analysis, illustrates an important political point, one worth remembering today.

Twenty years ago, under Ronald Reagan, the Democrats in Congress decided to listen to Alan Greenspan and act responsibly, in a bipartisan fashion, to put Social Security on a sound footing. They got screwed.

We already knew that the result was devastating in electoral terms, as younger workers who ought to have been Democrats were made to bear the brunt of the cost for the Democrats’ favorite program. Some of the “Reagan Democrats” were peeled away from the New Deal/Great Society coalition by cultural issues, but many of them revolted at the size of the bite OASDI took out of their meager paychecks.

But at least Tip O’Neill and his colleagues saved the program, right? Wrong, it turns out. The Reagan-Greenspan “reform” was based on accumulating surpluses in the Social Security Trust Fund while the boomers were still working, so as to be able to pay out their Social Security checks when they retired without raising taxes.

Even at the time, it looked to some of us like a game of Three-Card Monte. Put aside the accounting conventions and the lockboxes, and what the “reform” amounted to was financing a big cut in progressive income taxes at the top with a big boost in regressive Social Security taxes for the workers. (Social Security tax excludes capital income of all kinds, and it’s capped, so that the percentage of the paycheck taken out actually falls as income rises.)

Now, as Krugman points out, we’re being told that the Trust Fund doesn’t exist, and that there’s no way to pay out the promised sums. Why not? Because, with Bush pushing and Greenspan cheerleading, we just cut the top tax rates again. So in return for paying more than their share for these twenty years, low- and moderate-wage workers will … get to pay more than their share for the next twenty, and then never collect the benefits they were promised. Perfect, no?

And the moral of the story is: Grover Norquist is (on this point only) right: what’s called “biparisanship” is mostly date rape. If GWB wants to screw the lower two-thirds of the income distribution once again, he’s probably got the votes to do it. But every single one of those votes should be Republican.

This has the makings of a perfect partisan issue for the Democrats. All they need is to hold together and not compromise.

It’s not often that good policy is such good politics, but this is virtually a pure case. Democratic financial-services firms will want to compromise, so they get a say in how the bonanza that will come in fees on those private accounts will be doled out. But we shouldn’t listen to them. If the Democrats use this issue the way they should, it will raise more money in small contibutions than we could possibly get from our share of Wall Street’s largesse.

There’s a time for political nimbleness, and a time for dogged persistence. This is time for persistence. If the Democrats stay united enough for long enough, the press will eventually have to start explaining why.

So stubbornness is the key. Stubbornness, that is, and remembering that There is no Social Security crisis; there’s only a General Fund crisis created by Republican tax cuts for the half-a-million-dollar-a-year crowd.

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: Markarkleiman-at-gmail.com

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