The View From 1776
Saturday, August 23, 2008
Should we ignore the unfunded liabilities of Social Security and MediCare and let future generations worry about the problem?
The Democrat/Socialist Party wants you to believe that the already huge, unfunded entitlements under Social Security and MediCare are nothing we need worry about.
Washington Post columnist Ruth Marcus wrote (Krugman vs. Krugman, November 21, 2007):
In liberal Democratic circles, the debate over Social Security has taken a dangerous “don’t worry, be happy” turn.
The argument has two equally dishonest components. The first is to deny that Social Security faces a daunting financing problem—one that will be much easier to fix (and less onerous for the low-income retirees that the head-in-the-sanders purport to care about) sooner rather than later. The second is to mischaracterize the arguments of those who advocate responsible action, accusing them of hyping the system’s woes.
Senator Obama proposes to raise taxes to deal with Social Security, the smaller problem, but he doesn’t really know whether his proposed tax hikes will do the job.
Donald L. Luskin wrote (Obama’s Social Security Fine Print):
Mr. Obama angered liberals last year when he admitted that there was a “Social Security crisis.” But at least Mr. Obama’s base should be appeased now that his solution to the “crisis” is to soak the rich. One liberal columnist actually noted with glee the fact that this would take us back to top tax rates not seen since the 1970s.
According to the nonpartisan Tax Policy Center, Mr. Obama’s new tax would siphon off 0.4% of gross domestic product annually. Combined with Mr. Obama’s other tax-hike initiatives, “the total tax on labor would be close to 60 percent. In high-tax states like California and New York, the top rate would be even higher.”
Would it help Social Security’s financing problems? Mr. Obama has no idea. One of his senior economic advisers admitted to me that no one on the campaign has run any detailed models or performed any rigorous analysis. When one proposes an enormous tax increase, shouldn’t there at least be a spreadsheet somewhere?
A Wall Street Journal op-ed article notes that Obama’s Tax Plan Is Really a Welfare Plan that adds to the deficit.
Should we be worried? Richard Fisher, president of the Dallas Federal Reserve Bank, has no doubt. The problem of unfunded liabilities for Social Security and Medicare is gigantic, any way you measure it. Read Storms on the Horizon, his speech to San Francisco’s Commonwealth Club of California on May 28, 2008.
The amount of money the Social Security system would need today to cover all unfunded liabilities from now on