Bush, Obama, Ryan, and the truth about social security

There is a newsbrief in my local newspaper, one of many trite bits from the snorefest called the Republican National Convention, that Jeb Bush said President Obama should stop blaming his brother for the country’s economic woes.

All other things being equal, Jeb Bush is correct that a real leader accepts responsibility for his own policies. President Obama has cheerfully taken responsibility for his own policies – but rightly declines to take responsibility for the lingering results of President Bush’s time in office.

George W. Bush inherited from President Clinton an unprecedented federal budget surplus, and a debt of $5 trillion. He ran unprecedented budget deficits every year of his two terms, and bequeathed to President Obama a debt over $10 trillion.

George W. Bush doubled the national debt during a time of prosperity and growth, when McDonald’s was advertising “Help Wanted” and paying more than the legal minimum to get anyone to work behind the counter.

He bequeathed to President Obama a nation with its economy in freefall, looking at a very real possibility of Great Depression 2.0, with up to thirty percent unemployment.

Accordingly, it is a real accomplishment that President Obama held the unemployment rate under 9 percent, adding to the debt during a recession only about as much as Bush added to the debt during a period of prosperity.

Jeb Bush may be correct that his brother is a man of integrity, courage, and honor, at least personally. But George W. Bush did a great deal of damage to this country as President of the United States, an office for which he had no significant qualifications.

Now, to be fair, I’ll admit that President Obama’s campaign has something in common with Paul Ryan’s: they are both speaking in vague slogans, failing to be clear, precise and specific with the American people about the real state of the social security trust fund.

Paul Ryan’s social security plan is a solution in search of a problem. The REAL problem is simple to fix – although President Obama would have to admit some errors by Democrats to be direct and forthright about it. The social security trust fund is adequate for many decades to come. Social security can balance with very modest tweaking in tax rates, retirement ages, and benefits.

It is true, we can’t retire earlier, live longer, pay in less, and keep the same benefits for 20-30 years. Currently, I can draw twice the social security benefits if I work until I’m 70 as I will if I retire at 62. Rightly so.

The REAL problem is this: First, the anticipated surplus was invested in T-bills, obviously the safest investment available. But that made the trust fund part of the national debt. In 1968, congress and LBJ changed the bookkeeping, so that the revenue, surplus, and obligations became part of the federal budgets. That may have looked sensible at the time, but it meant taking advantage of the surplus now, when the obligation was much further down the road. The trust fund was no longer a segregated fund that, as President Roosevelt said, the politicians couldn’t touch, because it was self-funded. The politicians had found a way to touch it.

President Clinton understood that budget surpluses, which he generated near the end of his second term, needed to be used to pay down the national debt, particularly to fund the obligations to the social security trust fund. George W. Bush, acting like a kid in a candy store, said “Let’s give the surplus back to the people” as if the people were not $5 trillion in debt. By the time he left office, it was $10 trillion. The social security trust fund was a significant part of that debt. The rest came from the National Bank of China.

Funding social security isn’t difficult. The federal treasury simply has to repay the borrowed money as it is needed. This is not a government subsidy, it is repaying money which the government borrowed, for a time, because it was not yet needed to pay out social security benefits. The FICA taxes to cover this obligation have already been collected, and continue to be collected.

The problem, from a Republican viewpoint, is that paying the government’s lawful debts requires tax revenues, and their mantra is “tax cuts uber alles.” The government doesn’t have any other source of revenue. Its not a business. It doesn’t sell goods for a profit.

The Paul Ryan solution is to assume that government CANNOT repay the borrowed money to the trust fund, therefore, those who rely on social security, now or for their future retirement, will have to take a Greek-style haircut, because God forbid we roll back the Bush tax cuts on millionaires. Better the United States government default on its most important obligation to the American people.

Ryan and his allies deceitfully imply that meeting the obligations of social security would require massive subsidy from taxpayers in order to pay benefits. Not so. It would require repaying a loan, that the Republican leadership would prefer to default on.

President Obama’s campaign is pouring millions of dollars into fluffy TV spots that accuse Ryan and the Republicans (accurately) of trying to do away with social security and Medicare, leaving seniors in dire poverty. What President Obama’s campaign seems to be afraid of is telling the truth, the whole truth, and nothing but the truth, to the American people.

President Obama ought to over-ride the public relations gurus (as he has done before in some of his finest moments), and lay all the facts on the table. That wouldn’t make Jeb Bush’s brother look any better, but it would make President Obama look a lot better than he does right now.

Why I will vote to re-elect President Obama

It is difficult to work up any enthusiasm for the Democratic Party. Leadership nationally and in most states (notably Wisconsin) has shown itself to be a pack of spineless cowards, afraid of its own shadow, chronically unwilling to try anything new, or offer any substantive program, lest the radio talk show boogeymen might have something nasty to say about it. Fundraising boils down to “Citizens United is coming, Citizens United is coming, send us more money more money more money now now now now now.” Don’t forget that figment of Democratic paranoia, the “vast right-wing conspiracy.”

A five year old could identify easily that voters are looking for fresh new faces, bold new ideas, something different from the same old same old, maybe, just maybe, something that might make life better. But, Democratic perceived wisdom is to keep running dinosaurs for the sake of “name recognition.” There is not much different between the reasons Marco Rubio won an upset victory in Florida in 2010 and the reasons Russ Feingold won an upset victory in Wisconsin in 1992. Republicans often miss this lesson, but Democrats never learn. Victories have to be forced on an unwilling party.

Scott Walker didn’t tell Wisconsin voters in 2010 what he meant to do 2011 if he was elected governor, but he did offer himself in a vague, noncommittal sort of way as a fresh, relatively youngish face, a man who took his lunch to work in a brown paper bag, a man concerned about job creation (without offering any details about how to create jobs). The Democratic candidate, a decently competent mayor and former congressman named Tom Barrett, is the main reason Walker won the election. As politicians go, Barrett was about as stale as they come.

When offered a rare second chance to turn Walker out, Democratic Party machinery reverted to form, reducing a popular insurgency at the polls into a re-run of a losing election. Duh-uh, with the choice of Walker v. Barrett voters affirmed that they had already passed on that choice. Barrett, once again, was found wanting. Democrats have a knack for snatching defeat from the jaws of victory.

Obama offered “Hope” and “Change,” in 2008, and despite Sarah Palin’s pathetic carping, he won handily. That was four years ago. He can’t exactly run as the candidate of “change” now. He IS the incumbent. Fortunately, neither can Mitt Romney, a tired politician and soiled millionaire whose platform boils down to “I really admire the thought of ME being president. What do I have to say to win your vote?” Running on his record, he is one of the early architects of health care reform and the individual mandate!

Barack Obama was elected to take the Democratic Party by the scruff of the neck, give it a good shake, and make the party over into something creative, productive, appealing. Instead, once he had the nomination, he sank gratefully into the party as it was, like a gigantic pillow, and went to sleep. Turning to Summers and Geithner for financial advice, he single-handedly allowed Tea Party 2.0 (don’t use my money to bail out the banks) to gather steam. That energy was duly captured by the professional Republican consultants, who redirected the flow into Tea Party 3.0 (everyone hates Obama) and 4.0 (the usual crowd who believe Herbert Hoover had it right all along).

But let’s stop that line of thought for a moment. One of America’s great national past-times is trashing our president. It doesn’t matter who the president is, what their program, what their party, we draw and read cartoons lampooning everything they do, laugh at them on late night talk shows, carp about how they are doing whatever they are doing, and speculate on how their every word and action will cement or alienate the support of bald left-handed Mexican Jewish homosexual women of Chinese descent who are concerned about saving the whales, particularly those who are or are not born-again Christians, Muslim, or Hispanic.

Like most Americans, I have a laundry list of things I would have done differently if I were in President Obama’s shoes. But I’m not. I have the luxury of sitting in my own little room imagining that I have power to do things the way I think they should be done – a power the president, frankly, doesn’t have, and shouldn’t have. We have a government of limited powers, and that means the president can’t fix everything by decree, even if his decrees would always get it just right.

As presidents go, Barack Hussein Obama has done a magnificent job. He steered us away from the cliff of Great Depression 2.0, for which he gets little thanks, because we never felt the pain he saved us from. Franklin Roosevelt had the advantage that our grandparents stewed in Depression with 30 percent unemployment for three years under Hoover before Roosevelt came in. Anything Roosevelt did was bound to be a little better, and he was bound to get credit for easing pain we had felt all to sharply.

We are pretty much out of Iraq, and while George W. Bush signed the treaty that committed us to pulling out (because the elected government of Iraq turned down a longer American involvement), President Obama has stuck to his commitment that we need to be as careful getting out as we were careless going in. Nobody could get a good result out of the quagmire in Afghanistan – the only right way to have done it was to go in for six months, kick some Taliban and al Qaeda butt, then get out, and let our gallant allies of the Northern Alliance sort things out in their country. That’s water under the bridge. Obama is, step by painful step, pulling us away from our massive over-commitment, while trying not to throw away what the troops we did sent managed to accomplish at some considerable cost.

The economy is not performing in superlative fashion, but unless we live in a command economy, the president can only shape the broad outlines, and not always those. Europe is going to hell in a handbasket, rising economies all over the world can work employees cheaper than we can, and congress balks at what government does best: upgrading and installing a first-class infrastructure that allows economic innovation to flourish. Bottom line, President Obama stopped the bleeding, and the recovery is taking longer than we would have liked. Given a cooperative congress, what he’d like to do is on the right track. But he should act boldly, confidently, on a mass scale. We need high speed rail across the nation, not a hundred miles here, a hundred miles there.

I’m disappointed the president took a position on gay marriage. Frankly, its none of the business of the President of the United States. He should have had the political courage to say that, and then drop the subject. Our culture has come to expect the presidency to function as a bully pulpit, sounding off on every contentious issue of the day. It is a matter for the states, not for the feds. Period. Its not about fairness or equal protection of the laws, its about “Oh, here is an interesting human relationship, shall we take official notice of it and issue a piece of paper from the city hall, or just let people do what they want to do and not bother about it?” But, this entire subject really doesn’t matter a whole lot to me. I’m not going to vote for or against much of anybody because they are for or against gay marriage.

Abortion is also a non-issue for me. Again, it’s a matter for the states, to the extent it is the legitimate business of any level of government. No president has the power to overhaul the legal framework of the past 39 years, nor should any try. Roe v. Wade is the law of the land, well-established, a sound, conservative, jurisdictional decision, resolving who shall decide, The State, or the individual pregnant woman concerned. With that well and truly settled, in the free market place of ideas, we are all free to advocate which choice is the right choice, the best choice, the moral choice, and the constitutionally designated decider (the individual woman) will make the final call. There is nothing about this that has any place in a presidential election.

President Obama doesn’t get any credit for this, but on his watch, the flow of undocumented immigrants across our borders has gone down remarkably. The only real question is how to deal with the people who are already here. The president’s proposed policies are right on target, and this is one of the things George W. Bush got right. Democrats and Republicans have various manipulative reasons no majority has ever gotten a comprehensive reform passed, but as the head of the executive branch, Barack Obama’s enforcement priorities are just about right.

Obama has been reasonably good for the country, in perilous times, and his challenger offers nothing of any substance. Voting to re-elect President Obama is a no-brainer. Now, getting back to all the things I would have done differently if I ran the zoo…

Tax policy should reward merit: raise taxes on money nobody could earn or merit

On April 24, the "liberal" Washington Post published a high profile article by economist Arthur C. Brooks, arguing that "Obama is wrong when he says it's 'fair' to tax the wealthy." Most of the so-called "liberal media" bend over backwards to showcase conservative opinion, and to highlight any political current of hostility to perceived "liberalism." The Post is no exception. Whether this is fairness or political masochism remains open to debate.

Brooks offers an erudite, eloquent, emotionally appealing argument. No doubt he has sincerely convinced himself. The only flaw in his presentation is the facts on the ground that he conveniently omits.

Brooks offers several game-playing experiments - popular in many academic fields that try to understand human behavior. In one, a person is issued $10 - unearned, as Brooks emphasizes. They are asked to make an offer to split the $10 with a second person. If they can't agree, neither gets any money. Generally, the second person will accept an offer for $4, but anything less will be rejected as "unfair."

Then Brooks turns to a survey about buying beer. It seems people tend to tell research assistants they would be willing to pay more money to buy the same beer from a fine hotel than from a run-down grocery store. Seventy-percent of people, say the latest surveys. Then Brooks jumps to his eagerly-anticipated conclusion: "The $10 game involves redistributive fairness; the beach-beer experiment reveals meritocratic fairness."

Meritocratic? There is NO difference in the "merit" of the beer. No research assistant seems to have offered the option of paying more for a luxurious room at a fine hotel, because that is worth it, but paying what the beer is worth when buying beer, rather than paying more because it is sitting on a shelf in a fine hotel.

But that is a better way of talking about fairness in our tax system. Nobody likes paying taxes, but if there are no taxes, there will be no government: no police protection (unless you can afford to hire your own private security), no traffic lights, no street cleaning, no military defense, no coast guard, nobody inspecting our food to make sure it is free of mouse droppings and salmonella...

There is no greater merit in beer bought at a fine hotel. The consumer is not paying more for a better quality product. The vendor is charging the customer more simply because they can. Brooks runs on at some length about whether a secretary who is "quicker, more efficient and more reliable" should be paid more than one who is slower, less efficient, and less reliable. Almost nobody would deny the better secretary better pay.

Unfortunately, among those who wouldn't bother to pay the more skilled and reliable secretary more, are a large proportion of those who do the hiring, firing, and setting pay levels in American businesses, particularly at the corporate level. They are too busy paying themselves huge packages. Then they cry "merit" when the president attempts to at least give the hard-working secretary a tax break.

There are stratospheric compensation packages which have nothing to do with "merit." The difference between an entry-level job paying $20,000 a year and a responsible position paying $60,000 a year may well be demonstrated ability, invaluable experience, and skill. The difference between $100,000 a year and $1,000,000 a year may indeed by the drive, acumen, and long work days over many years that build a successful business from scratch.

But what about the difference between $1,000,000 and $30,000,000 a year? Are there enough hours in the day for a corporate CEO to work thirty times harder than the self-made entrepreneur? One might argue the opposite. On pure merit, it is the woman or man who builds a business from scratch who should be making the bigger money. The corporate CEO is stepping into a business built by others before his father was born.

How much more is a top-earner worth, on merit, than the secretary in the local branch office, the janitor who cleans the building, the window-washer, the local salesman, the newest graphic artists in the advertising department? Thirty times as much? One hundred times as much?

Try this out for "fairness" and "merit." Add to the existing minimum wage laws a provision that the lowest paid employee of any enterprise shall be paid no less than one percent of the total compensation package of the highest paid executive. One percent. A penny for every dollar. Oh dear, $700,000 a year entry-level janitors!

In the long run, perhaps CEO compensation would come down to $7,000,000 a year (what a harsh penalty for being entrepreneurial). That would bring the janitor down to $70,000 a year, which, frankly, a good, hard-working, skilled janitor is worth. We all want our bathrooms clean, but none of us want to clean them ourselves.

The laborer is worthy of his hire. Where would all the revenue go that is no longer funding outsize executive packages? It might go into new investment, which might actually create some of the new jobs corporate executives pretend to create. Or, it might go into lower prices, so the rest of us could manage to live on what we earn.

In the meantime, nobody, in any income bracket, is going to be robbed of the rewards for their labor by paying a few more percentage points on their highest tax bracket. Like all of us, the wealthiest in the land can take the Standard Deducation, tax free. Usually, they file a Schedule A to take much larger deductions. They pay only 10% on the first bracket of taxable income, after all the income that is tax free. By any tax proposal on the table, they get to keep 65 percent of the income in the highest tax bracket.

Frankly, business derives a large part of the benefits of government operations, as much or more so than do those who depend on government programs such as Medicaid for their survival. There is no reason that large business incomes should not bear a higher share of the costs.

Let's try a different analogy. I'm researching a biography. It is not likely to be a best seller - few biographies are. I need to consult at least three archives at universities and historical societies. None of them charge admission.

It is good, and right, that they don't charge admission. It would be an unconscionable infringement on the free market of ideas, on diligent inquiry, to require payment for access to our common history. But, it does take money to run these archives. Someone does the work of sorting, filing, categorizing, typing up finding aids and indexes. Someone unlocks the doors and supervises and pulls the boxes.

On the rare occasions that someone who has used these archives has a best seller, they darn well ought to share a chunk of the revenue with the archives. Yes, the author put a lot of hard work into writing a best seller, and they deserve to profit by it. But, many no less deserving or hard working are not so fortunate. Without the archives, and all the work and costs to sustain them, the best-seller could never have been written.

Why shouldn't those who make a lot of money be the ones expected to give a lot back? Not everything, not even fifty percent, but a substantial sum. Those who didn't make money don't have money to give.

When it comes to taxes, we all get to keep most of what we need for basic survival, ALL of us, even the wealthiest. We pay a bit more on the income over and above our most basic survival needs. And we pay a bigger chunk, but much less than half, of the money that is way beyond what anyone "needs." That is as it should be.

This is going to stifle entrepreneurial initiative? Nonsense. Nobody ever walked away from $1 million, because they would only get to spend $720,000 of it. The highest compensation packages aren't for entrepreneurial intiative anyway. They are paid out by well established corporations to people who simply move money around in well established channels, making darn sure they really ARE "too big too fail" so that when they blow it, taxpayers HAVE to bail them out to avoid a full-blown Depression.

Anyone who is serious about eliminating the deficit, and paying down the national debt, MUST face the fact that tax revenues are what we pay these down with. It is unfortunate that George W. Bush and his minions doubled our national debt during good times, when we should have been saving for a rainy day. But they did, and they did it in our name, after promising that we could have our cake and eat it too. Now it's time to pay for the mistake of believing them.

Let those who make far more than they "need," far more than anyone's "merit" could explain, pay more. It is the least they can do for their country and their generous fellow citizens. Give the real entrepreneurs, and those whose work has real merit, a well-earned and long-overdue break.