PGL at Angry Bear writes:
Angry Bear: [A]s Andrew [Samwick] has explained, policy makers have managed the rest of the Federal government such that the expected value of future income taxes cannot cover [existing] Federal debt [including the Social Security trust fund] plus the present value of expected future Federal spending outside of the Social Security program. This is the fiscal crisis that Ben Bernanke testified to -- as did Alan Greenspan when he was Federal Reserve chairman. So how does President Bush intend to address this general fund fiasco? Certainly not an increase in income taxes. Certainly not a reduction in defense spending. Certainly not a repeal of that expensive prescription drug benefit that he brags about in the same speeches where he brags that his tax cuts have given us our money back.
This kind of pandering and dishonesty is not the fault of Andrew Samwick or Ben Bernanke. And it's this kind of dishonesty that leads me to believe that President Bush is advocating what Brad called the second kind of [Social Security] "reform" [in which the current trust fund balance is forgotten, and future benefits are funded out of future Social Security taxes alone.]
Dean Baker calls this "default" and some uber-technical types object to his term. Fine -- let me call it grand larceny. If implemented, it would be a backdoor employment tax increase. Now if President Bush and his minions want to balance the budget by raising employment taxes, might we simply ask that they be honest about it? But then one could argue my suggestion is silly -- after all, how many thieves call the bank before they come over and clean out the vault?
I am not in favor of complete privatization as workers likely do want some form of defined benefits retirement plan. Mark Thoma has been excellent in discussing this aspect of the debate. Of course, one can reasonably ask whether we need as much longevity insurance as the Social Security program offers. Andrew and I might have a difference of opinion on this issue. But as I read Andrew's many excellent discussions on this, he is not advocating an implicit backdoor employment tax increase and nor am I.
Let's be honest -- President Bush and his minions are pushing for a backdoor employment tax increase...