Thursday, June 30, 2005

Terror in the White House

What's a terrorist? Not just somebody who throws a bomb. The object of terrorism is to create a climate of fear that will divert people from their ordinary day to day occupations.

So it was that when a small private plane (according to this morning's New York Times) ventured into restricted air space over the nation's capital, President Bush was whisked away to a "safer place."

No longer do we assume that an aircraft overhead is an ordinary, daily occurrence. Now every plane that passes near the Capitol or the White House is a threat to be fled.

The terrorists have succeeded in establishing terror.

Monday, June 27, 2005

Social Security Reform

Long time no post.... I don't ordinarily like to get political here, but this was just too much: an ad by the Cato Institute headlined "The real issues of Social Security reform" listing them as "Ownership ... Inheritability ... Choice."

That's a diversion. The real real issues for Social Security reform are simply that it remain social and secure.

Ownership, inheritability and choice are all appeals to separate the individual from society. Social Security is social because it works by all of us chipping in together. It remains secure because we pool our resources, manage them as a group, and don't let individual choices jeopardize security or let personal concerns like ownership and inheritability divert resources from its primary goal of providing a safety net for the aged and disabled.

You want to know how I would reform Social Security?

Look at some of the historical facts. The Social Security tax rate was increased in 1983, during the Reagan administration, partly because the Social Security trust fund was nearly depleted, and partly to provide for future benefit payments to the large numbers of retirees expected in the post-WWII baby boom generation. From then on, Social Security revenues have greatly exceeded expenditures, and the surplus has gone into the trust fund.

Now look to the future. The baby boom generation will start to retire in the next few years, and by the time the Social Security trust fund is predicted to run out, (currently predicted to be 2041), most of them will have passed on. At that point, we may have to raise the Social Security tax as the program returns to a pay-as-you-go basis.

Why do I say we "may" have to raise the tax? Because the current shortfall is due in great measure not to any inadequacy of the tax rate but to inadequacy of the tax base. Because income inequality is increasing along with total income, most (if not all) of the income growth is going to people who earn more than the cap for Social Security taxes (currently $90,000). Lower-income workers are not getting much income increase because they're underemployed, and they're underemployed because of competition from lower-wage workers either in, or from, other countries.

That suggests that all we have to do is ramp up the US economy so we use our own workers, young and old, for all they're worth. Get more work from them, pay them more, collect more Social Security tax from them, and the system will stay solvent. But it would also help to get rid of the cap on the taxable income.

Obviously ownership, inheritability, and choice have nothing to do with either the problem or the solution.

P.S. I hesitated to give the link for the Cato Institute's lies about Social Security, but here it is, along with a link to the facts from the Social Security Administration to set things straight.