One of the problems Clinton the Inevitable is having is some rumbling from her base. This is not surprising, given that Clinton is a hawk, a favorite of Wall Street, an ardent supporter of the surveillance state and an opponent of drug legalization. I suspect, in the end, it won’t matter. The Democrats will vote for Hillary anyway. But to appease them, she’s having to embrace parts of their progressive agenda, including expanding Social Security.
Progressives have a few such priorities in mind. First, they want Clinton to embrace an expansion of Social Security benefits. It’s an idea that seemed unthinkable during the period of fiscal austerity from which Congress has slowly been emerging, but it has gained steam among Democrats in recent months. Championed both by Warren and by the significantly more conservative Senator Joe Manchin of West Virginia, the proposal earned support from all but two Senate Democrats when it came up during last month’s budget vote-a-rama. “She says her focus is on economic security. There’s no question Social Security is a key part of economic security,” said Nancy Altman, co-director of an advocacy group dedicated to boosting the public-pension system. “So it’s hard to understand why she wouldn’t do it.
Their other goal includes eliminating college loans in favor of a free education. Because, apparently, what this country really needs is another multi hundred billion dollar entitlement that will massively hike the cost of college. Oh, and they also want a pony and an action man figure and toy train.
The progressives know these ideas won’t get anywhere with Republicans in control of Congress. But they are tired of the Democrats being “cautious” (i.e, somewhat responsible) and want them to be “bold” (i.e,. stupid).
I can attack any part of this agenda, but let’s take on Social Security expansion, which I’ve addressed before:
Only an idiot would ignore that Social Security is already running a primary deficit and its “solvency” through 2033 comes from a trust fund that consists of nothing but IOU’s. Only an idiot would ignore the problem that massive retirement guarantees have created in Europe — plunging fertility rates, slow growth, waves of early retirement, even less personal savings. And only the heir to the throne of the kingdom of idiots would propose tripling this problem.
Even if you ignore the political aspects, you’re talking about a massive tax hike which the government will, as it has done with Social Security, loan to itself and spend, leaving us in an even worse situation. Instead of having a Social Security Trust fund with $5 trillion fictitious dollars in it, we’ll have one with $10 trillion. I haven’t seen a proposal this stupid since Algore said he would shore up Social Security with the money we were borrowing from it.
The wealthy in this country are already paying an effective tax rate in the high 30’s. As Mcardle points out in a series of rebuttals to progressive talking points, this is a historic high. Contrary to the claim that Reagan and Bush 43 put the rich on easy street, the current tax code is just as onerous as it always was:
In 1986, in the face of a persistent budget deficit of roughly 5 percent of GDP, the Reagan administration undertook a massive tax reform that lowered marginal rates but also got rid of most deductions, which actually ended up raising effective taxes on the highest-income groups; the total average tax rate for the top 1 percent jumped from 24.6 percent in 1986 to 30.3 percent a year later. That’s why you could lower the top marginal rate to 28 percent from 70 percent and only see effective tax rates decline by five percentage points over that period.
But even that didn’t last. The George H.W. Bush administration did a big budget deal that raised taxes. The Bill Clinton administration raised them again, and the effective tax rate for the top 1 percent peaked at 35.3 percent in 1995, slightly higher than it had been at the previous peak in 1979. Even after the Bush tax cuts, the effective tax rates of this top group ran somewhere slightly north of 30 percent, or about where they’d been in 1981, before Reagan’s tax reform took effect. They only dipped back into the 20s under Barack Obama, because of the lasting effects of the recession.
Most of the tax relief of the last thirty years has come in the form of eliminating income taxes on the poor and drastically reducing for the lower middle class.
Progressives cling to the fantasy that we can simply raise taxes on the rich forever. “Hey!” they think, “we’re only taking 35.7% of the rich’s income. We could take another 5-10% easy!” Even assuming it were fair or even possible to take half the income of the “rich”; even assuming this wouldn’t damage the economy, we are already committed to spending that money. We already have trillions of dollars in unfunded liabilities for Medicare, Medicaid, Social Security and Obamacare. We already have hundreds of billions committed to interest on the debt and maintaining Obama’s (and soon Hillary’s) wars. We already have a time bomb of public and private pensions that our government may end up bailing out. You can’t just spend money and hope the tax revenue will materialize. You can’t raise taxes on the rich forever. Eventually, you are going to have to raise taxes on the middle class. And eventually, you are going to run into a fiscal wall.
Now, by contrast, Chris Christie this week laid out his plan for Social Security. It includes tapering benefits to people with incomes over $80,000 and raising the retirement age. In the link, Yglesias makes the reasonable point that this hurts poorer seniors the most, who often retire earlier and don’t live as long as wealthier seniors. That’s true, but we still can’t sustain the current system. Maybe you can step the retirement ages a little differently or up the benefits for the most needy seniors. But at least Christie’s plan acknowledges the fiscal realities of the 21st century. At least it’s not based on the pie-in-the-sky belief that we can just raise taxes on the evil stinking rich and pay for … everything.
Contemplating this issue and the opposing views this afternoon, I became a little more optimistic about the 2016 election. A lot of people see the broad Republican field as a weakness. But, in some ways, it’s a strength. Marco Rubio, Chris Christie, Rand Paul, Ted Cruz … these guys have a very diverse array of views on foreign policy, economics and budget issues. They’re all conservative, in their way. But we’re looking at a real debate about where this country needs to be headed. We’re getting a fairly broad and somewhat sensible palette of ideas from the Republican slate. And that becomes really obvious when you compare it to the toked-up-college-dorm-bull-session ideas emerging from Clinton’s base.
The question, as always, will be: do the American people prefer conservative fact or progressive fantasy? I guess we’ll find out.