January 18, 2005

Sawicky v Kling

Here's an interesting debate in WSJOnline between bloggers Arnold Kling and Max Sawicky on SS reform. To my mind, Sawicky isn't very persuasive. Too much: "there isn't really a problem," plus too much: "there are other big problems, so how can you justify tackling this one and not them?" (Hmmm. Where have I heard that line before?) Arnold has a good response:

...OK, Max, let's get back to one of the points in your first post. You wrote that "the right-now budget crisis stems from tax cuts, military spending increases, and unsustainable, double-digit growth in Medicare and Medicaid."

The way I would put it is that politicians have three credit cards -- three ways of buying votes today and paying later. This involves making promises that will have to be redeemed by taxes collected in the future. Those three credit cards are the general budget, Social Security and Medicare.

Changing Social Security from a transfer scheme to one with personal accounts serves to take away the politicians' Social Security Credit Card. They no longer would have the authority to promise benefits out of future Social Security taxes...

Of course you can't solve every problem at once. Duh. But when you have several problems of a similar sort, then solving ONE of them can create the momentum and believability that make solving the others possible later. And it makes sense to pick the one that's the most brittle and hit it first. (Reason#2 on my List of Ten Reasons for Invading Iraq. That's where I've heard that line before. "We can't solve ALL the world's problems!")

To generalize: If a Republican tries to solve a problem, then 1. It's not a problem. 2. It's the wrong problem. 3. Our problems are too overwhelming, we dursn't do anything.

I do NOT, by the way, agree that there is a "right-now budget crisis." The deficit is decreasing right now, beause our economy is growing strongly and tax revenues are going up. All of which has, I suspect, some mysterious karmic connection with them tax cuts Max Sawicky doesn't like.

Also, part of our budget problems come from the need to buy necessities from Congress, which should decrease as the Republican majority grows with each election. The President bought HSA's by agreeing to the Prescription Drug benefit. I think it was a smart trade, an increase in the welfare state that was probably going to happen no matter what, balanced by a plan that will start teaching people a better approach to paying for health care. Our only hope is for people to become wiser--this is a democracy, and people are going to get what they want in the end. Of course the same point goes for SS private accounts. More important than the direct economic effect is that they will teach people to think like investors and owners, instead of like helpless clients of the state.

Posted by John Weidner at January 18, 2005 7:47 PM
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