The Public Policy/Demagoguing the Deficit

O'Lessker, Karl

from Canada ruffling the waters, but only barely. Picture Mr. Perfect running on the grass, scooping up leaves and tossing them into the air. Picture him sliding down a gleaming steel slide while...

...But there is variance among the programs: Social Security and Medicare more than doubled, from $199 billion to $400 billion, while the cost of other programs (e.g., Aid to Families with Dependent Children, for example) has barely kept up with inflation...
...As we argued, I looked about the room...
...They like a quiet life...
...Instead, it will be used, as it is today, to pay the government's other bills, leaving the taxpayers and retirees of the future not one penny better off...
...During FY 1991 alone the Social Security trust fund took in $53.7 billion more in taxes and interest than it paid out in benefits...
...most don't, but when has that ever mattered to government...
...The other way is to raise the Social Security payroll tax...
...it didn't become a regular feature of our legislative branch until shortly after the Civil War, when Congress created Appropriations Committees as a bulwark against fiscal profligacy...
...Congress is in no mood to cut spending on popular domestic programs...
...But how can either justify saying she is "the winner" over Thomas...
...A few tables away was Tony Curtis...
...It's not just good...
...Cutting benefits by only a couple of billion dollars a year will add up to massive savings...
...She hugged me and told me I was a star...
...Every poll taken over the last two decades has shown overwhelming public support for the major elements of the welfare state...
...It is true that the cost of entitlements has grown over the last decade, from $357 billion in FY 1982 (the first Reagan budget) to $687 billion in FY 1992—an increase of 192 percent during a period when the Consumer Price Index rose 48 percent...
...he writes opinions...
...And the total amount of Social Security tax collections skyrocketed, from $605 million to $279 billion, over forty-eight times greater than the increase in the CPI...
...There are mailmen, policemen, firemen, lawyers, doctors, Social Security workers, wives who don't work, even a few retired people...
...Besides, Social Security and other entitlements incontestably enjoy the support of the American people...
...Wednesday Dinner at Spago for my pal Sid's birthday...
...Her lead: "Anita F. Hill was the loser in her battle with Clarence Thomas a year ago...
...The writer also found Hill's impact in the record number of sexual harassment charges filed this year with the Equal Employment Opportunity Commission...
...Thus, as the Washington Times opined, "One and only one party to this controversy has continued to press its case [in public] this past year, and that is Miss Hill...
...Frightened faces...
...One way to ensure that they do is to cut benefits for those already on the rolls...
...S. News & World Report had similar numbers showing a "dramatic shift in public sentiment"), they were worthless...
...Similarly, the maximum payroll tax on employee and employer combined went from $60 a year to $5,980—more than ten times the CPI...
...Behind me sat Swifty Lazar...
...Witch Doctor by Terry Eastland 56 The American Spectator December 1992...
...Karl O'Lessker is professor of public and environmental affairs at Indiana University and a senior editor of The American Spectator...
...The same poll a year ago showed Thomas believed by 47 percent, Hill by 24...
...I don't want to ever die...
...S o, if the very regressive Social Security payroll tax has risen even higher than the benefits it is intended to finance, what justification can there be for cutting those benefits...
...The fair conclusion is the narrow one of her catalytic, post-confirmation effects...
...Now, I have no doubt that Hill was a "catalyst" of liberal candidacies and also sexual harassment filings...
...They looked happy, even giddy...
...Not one kind face, I thought...
...And what they are getting is being financed by today's workers, who may not receive an equivalent level of benefits when they retire...
...And there is not as much room for cutting as some might think, particularly if one looks at the Social Security "replacement rate"—the proportion of a retired worker's pre-retirement income provided by his pension...
...Abramson, the thrust of whose stillin-the-works book on the Hill-Thomas business was apparent, explained that Hill became "a catalyst for candidacies by Terry Eastland is resident fellow at the Ethics and Public Policy Center and the author of Energy in the Executive: The Case for the Strong Presidency (The Free Press...
...The program has expanded, of course, but the benefits have not become more generous...
...They don't expect to be rich...
...I was very happy to see him...
...While indicating how much higher benefits have to be if they are to meet the standards of "adequacy" established by Social Security's founders, the numbers suggest a benefit structure almost precisely in line with the 1939 goals...
...As for the Journal/NBC poll and others like it (U...
...They just want to live sensibly and pass whatever they know on to their kids...
...So the responsible subcommittees and committees face tough decisions: On what basis can they keep SSI fully funded but cut AFDC, or vice versa...
...Most Ameri-cans would assume—considering the benefit hikes of the 1960s and the across-the-board 20 percent increase of 1972—that the current replacement rate is well above what thefounders envisioned in the late 1930s...
...Some are government income transfers out of general revenues, e.g., farm subsidies and welfare...
...women" (meaning Democratic women) who stood good chances of winning...
...But it is not very helpful to tar all entitlements with the same brush: taking the ax to so vast and inchoate a set of programs as "entitlements" makes no more sense than any other exercise in guilt by association...
...But, most assuredly, none of the money saved now by cutting benefits or raising taxes will go to meet those liabilities...
...And any permanent cut in benefits, of course, would adversely affect today's younger workers when they retire...
...I hope no one imagines these decisions would be based on careful policy analyses...
...Whatever criticisms may be leveled against the system, aggravating the deficit problem isn't one of them...
...My long-time best friend from youth, Barry Walker, sat next to me for hours...
...Its most ardent defenders—the senior-citizen lobbies—point to a surplus of income over outlays...
...A remarkable turnaround," Abramson called it...
...But Social Security pays for itself and ought to be left alone until changes are designed specifically to meet the financing requirements of the next fifty years...
...They're both political suicide: as long as surpluses mount, there's no chance that Congress will do either...
...Moynihan's greatest concern is the regressivity of the Social Security financing mechanism—the flat-rate payroll tax, which takes more from American wage earners than does the income tax...
...He reads and thinks about cases...
...Human resources, income security, veterans, agriculture, and housing programs accounted for outlays of $289.5 billion in FY 1991-46 percent of entitlement spending and 108 percent of that year's deficit...
...Crazy faces...
...These people are also worried about the way the schools are going, the way crime is going, the sad fact that the safe life we had in 1962 is only a memory that their kids will not know—unless maybe they move to Idaho...
...Not if one confronts one of the complications of a modified "pay-as-you-go" System, which Social Security has been since the 1977 and 1983 amendments that rescued the trust fund from insolvency...
...I'm not, but I watched her dance for a long time...
...Disability, though riddled with problems, took in $2.3 billion more than it spent last year, and will continue to do so for several more years...
...And just as appropriations can be raised or lowered, underlying authorizations for "automatic" entitlement spending can be changed...
...This makes sense to me...
...Demagoguing the Deficit by Karl O'Lessker 54 The American Spectator December 1992 In the all-important case of Social Security, probably not...
...Not one contented face...
...Conservatives who call for a reduction in benefits must offer a more compelling rationale than lumping Social Security in with all other entitlements, or labeling it "welfare," for it's important to distinguish between types of entitlements...
...Can't some of this extra cash be used to pay the deficit down...
...It isn't...
...One justification rests on "fairness": current retirees get much more out of the system than they put in...
...They look happy...
...Social Security's critics argue that future benefits for retirees will already be far lower than they should be in proportion to the amount of "contributions" exacted through the payroll tax...
...A Northwestern University survey conducted in the late 1980s found support levels for maintaining or increasing expenditures for all social programs, ranging between 97.5 percent for Medicare to 75.6 percent for the least popular, food stamps...
...Let me explain: Clarence Thomas has been a Justice since last October...
...On the contrary, an influential minority of members, led by Senator Moynihan, has been pressing for Social Security tax cuts, and the longer the economy remains sluggish, the more likely that such a cut will be enacted...
...To bolster her conclusion she reported some "news"—the results of a Wall Street Journal/NBC poll of registered voters showing that 44 percent now believe Hill told the truth, while only 34 percent sided with Thomas...
...The current railing against entitlements and "out-of-control" budgets is badly misplaced...
...Social Security is by far the most important of these programs, and current projections made by the Social Security Administration (SSA) predict a $1-trillion surplus by the end of the century, which will peak at $5.5 trillion in 2025...
...The FY 1991 deficit would have been almost 20 percent higher without the Social Security payroll tax...
...I begin with Jill Abramson's front-page piece in the October 5 Wall Street Journal...
...If Congress should ever decide that we are spending too much money on, say, price supports, it could change the authorizations that produce that spending almost as easily as it could cut appropriations for, say, NASA...
...As Robert J. Myers, the longtime chief actuary of the SSA, demonstrates in Social Security (1985), average replacement rates are almost exactly the same as those set in the 1939 amendments: 41 percent today versus 40 percent in 1939 for a single worker, 62 percent today versus 60 percent for a married couple...
...I got into a righteous fight with a woman at our table over abortion...
...Our peculiarly American separation of authorizing and appropriating was not laid down by the Founders...
...But income tax collections grew slightly more, and average monthly benefits stayed within about 2 percent of per capita disposable income...
...The remaining entitlement programs—Medicare, Disability, and Social Security, collectively known as OASDHI—make up half of all entitlements and pay their own way through dedicated payroll taxes...
...Changing from entitlement funding to annual appropriation will not lead to lower spending for any program that enjoys broad political support...
...It is nevertheless true, as Senator Moynihan has argued, that using any part of the proceeds from the Social Security tax to pay government's current bills amounts to requiring lower income workers to pay more than their fair share...
...Maybe crushes are the only things that last...
...Now he's a lawyer in Palm Beach...
...An important question is not whether these programs are good or bad, but rather whether any federal expenditures (other than interest on the debt) ought to be funded outside normal appropriations...
...Reducing cost-of-living adjustments (COLAs) could save up to $90 billion annually by the year 2000, according to On Borrowed Time (1988) by Peter Peterson and Neil Howe...
...0 f these, Medicare outlays will exceed income in calendar year 1997—but for now Medicare runs a surplus, and helps balance the budget...
...A few entitlement programs pay their own way...
...The world's other democracies authorize and appropriate in a single legislative step, so the fact that we do so for an ever-larger share of our total national spending doesn't necessarily portend a descent into tyranny...
...For yet another thing, a lot of these people are sensible...
...For another thing, they're amazingly friendly...
...They ask about my work, about Hollywood, about Trixie...
...10 At the second presidential debate on October 15, George Bush got flustered with a question on the budget and used the occasion to lash out at the way entitlements are budgeted: "I believe we need to control the growth of mandatory spending .. . that's the main growing thing in this budget...
...Her husband, a policeman and also a Blair grad, is a great dancer, too...
...A few tables away also sat a table of pornography folks, including Al Goldstein...
...There is no balm in Gilead for our budgetary woes...
...It's another little bit of paradise...
...There are other ways of looking at the evidence: From 1940 to 1991, while the CPI rose 953 percent, Social Security benefits rose 2,785 percent—three times as much as the CPI...
...The authors admit that COLA cuts are regressive, and concede that "a permanent switch to a `CPI-2' COLA would cut real benefit levels by 18 percent after ten years of retirement, and by 33 percent after twenty years of retirement—a penalty that would hit the 'old elderly' hardest...
...Of course, journalism did not forget, and its Hill-Thomas retrospectives and pieces on Hill's various commemorative activities showed it shamefully on her side...
...For one thing, everyone here looks normal...
...Barry was the first real friend I had after grade school...
...They note that entitlements now account for half the total federal budget, up from one-tenth thirty years ago...
...Get me out of here...
...Most members will make their budget decisions on the basis of factors such as interest group pressure or a desire to accommodate the leadership or other colleagues...
...The reason it does not change them is that those programs have strong political backing...
...Cutting benefits to reduce the deficit would only compound that inequity...
...This is exactly what was done by the Omnibus Budget Reconciliation Act of 1981, one of The American Spectator December 1992 55 President Reagan's most spectacular legislative victories...
...I still feel the embers of the crush I had on her thirty years ago...
...All told, OASDHI trust funds in 1991 collected $377.6 billion in taxes and interest and paid out $344.4 billion in benefits and expenses, thus decreasing the deficit by $33.2 billion, or 12.4 percent...
...As Robert Ball, the longest-serving Social Security commissioner, has written, "It is just not true...
...That depends more on presidential leadership and congressional ideology...
...I'm not saying that everything in our domestic-spending scheme of things is perfect...
...Should future retirees be required to accept a still lower standard of living in order to alleviate the deficit...
...Bush struck a chord, for if there is one article of faith that unites budget analysts it is that "entitlements"—authorized by prior mandate and not subject to the normal appropriations process—are the largest single cause of our deficit woes...
...They love their kids...
...Granted, the steep rise in the taxable wage base—now $55,500, up from $29,700 in FY 1982—reduces the degree of regressivity...
...He doesn't give speeches or interviews about his work, much less his confirmation, and it would be unseemly if he did...
...Saturday 1 'm in Bethesda, Maryland, at the Holiday Inn on Wisconsin Avenue, for the thirtieth reunion of my Montgomery Blair High School class...
...Gay Patlen was there, still blond and beautiful, and still the best dancer in the class...
...171/ n case you've forgotten, it was a year ago last October that Anita Hill formally accused Clarence Thomas of sexual harassment...
...Those who would use Social Security's excess billions to reduce the deficit argue that the surplus doesn't justify the present level of benefits—today's retirees are getting far more out of the system than they put into it...
...Two-thirds of the budget, I as President never get to took at, never get to touch...
...that the benefits have been greatly liberalized and that the program has departed from the modest goals of the system's founders...
...Subjecting such programs as food stamps or Supplementary Security Income (SSI) or farm price supports to the appropriations process offers no guarantee that they'll become less costly...
...But as time passes, she is looking more and more like the winner...
...Picture him sliding down a gleaming steel slide while Amber stands guard...
...Smirking faces...
...The other rests on pragmatism: that's where the money is...
...Unfunded liabilities in the trillions loom for the middle of the next century...
...President Bush and other leading Republicans were situated to defend Thomas and praise his addition to the Court, but, as Abramson quoted me saying, "The GOP, wrongly, has been unwilling to acknowledge the significant plus" of his appointment...
...None of this is meant to suggest that Social Security is just fine as it is...

Vol. 25 • December 1992 • No. 12


 
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