Wrap Up on “Tax Cuts, Feh”

Well, that was fun. It’s always interesting when one strikes a nerve on both sides of the online political debate. Through the comments thread and other sites, some ideas and concepts have come up which I’d like to spend a second addressing here on the surface level, so here we go:

* Glenn Reynolds points to bloggers who note that the spin off the “$44 trillion deficit” in most media seems to imply that it’s Dubya himself who is going to be responsible for creating it, when in fact the largest segment of the estimated deficit comes from a different source entirely (namely Medicare/Social Security) and not from Bush’s cuts and spending package. One of the bloggers Glenn links to suggests that the Financial Times story that started the uproar gets it wrong from the beginning, although this fellow’s selective use of ellipses (the same scourge that so recently inflamed the blogoverse against Maureen Dowd), conveniently excises out the section right up top that notes specifically that much of the debt comes from “healthcare and retirement costs.” So at the very least the FT’s spin is not egregiously out there. The CNN story to which this guy points to also notes the source of most of the estimate deficit fairly high up in the article. The guy seems mostly worked up about headlines, but I’ve always found the complaint about overly simplified headlines a little silly, because headlines are meant to be simplified and draw you in to read the rest of the story.

Be that as it may, I wouldn’t blame Bush for portions for debt he’s not responsible for (there were a lot of problems before came around). My main thrust was that I don’t see how the tax cuts we’re getting right now make things any better now or down the road; these cuts won’t be the primary deficit source down the line, but they won’t help. And given the slant of the cuts toward the wealthier segments of the population, I don’t see how it well serves the immediate economic purpose of stimulating the economy today.

* A lot of folks in my comments board, as it happens, did note that Social Security/Medicare was the primary component of the estimated deficit, and suggested (since many of the folks who chose to comment funneled in from conservative-leaning sites) that the time has come to dump these commie wealth-distribution programs. I happen to agree with this position, although not for ideological reasons. I’m not particularly worried about the flaming pink socialist aspects of these programs, but I would note that the reason these programs have become onerous because they’re no longer reflecting the reality in which they were created. To focus on Social Security, in the 1930s, to put it simply, people died earlier; there were fewer people receiving benefits and a larger number of workers supporting those that did.

Although it’s interesting to note that the primary data point you’d think would be relevant here — life expectancy — isn’t really. In 1930, US life expectancy for men was 58, and for women it was 62. However, those numbers factor in the relatively higher rate of infant mortality back then, so for the purposes of complaining about Social Security, they’re not particularly reliable. The statistics that are more relevant are the percentage of people who live to the retirement age of (used to be) 65, which is significantly higher now than it was in the early days of Social Security (in 1940, only 53% of men and 60% of women lived to 65; in 1990 it was 72% and 83% respectively), and the length of time people who reach 65 live past that age. Interestingly, that time has not increased as much as you might think — in 1940 it was 12.7 years for men and 14.7 years for women, and in 1990 it was 15.3 and 19.6 years respectively. But it’s still longer. (I’m getting these stats here.)

The point remains that overall, more people are surviving to receive Social Security, and living longer once they’re on it — and demographically, the pool of workers supporting them is shrinking in terms of the ratio of workers to retirees. We should either radically change the time and manner in which people receive Social Security benefits, or change the way in which works, from a system where people support others to a system where they largely support themselves (i.e. taking the social security tax and investing it for that one person), or, alternately, where they support a smaller pool of people demographically relevant to them — say, everyone born 1969 has their social security taxes go into a pool to support that age group when it retires.

The drawback to all of this is that some group has to be willing to take the hit for the generations older than they while this sort of massive switchover goes on, and I don’t know who is ready to do it. I’d nominate my generation, since none of us expect to receive Social Security anyway, but inasmuch as I’m already suggesting we don’t need any more tax cuts, I’m already marked for death by conservative people my age. I don’t want to give them an excuse for a full-blown jihad.

Of course, the logical conservative position is that the government shouldn’t be forcing people to save for/support retirement at all; that people should be doing it on their own. I think it’s sweet conservatives believe people do what’s in their best long-term self-interest all the time, in every case. Alas, I don’t feel the same level of cheerful optimism.

Medicare is another whole ball of wax, which I won’t drone on about here and now, but I’m also willing to go with the position it’s deeply broken and needs to be radically fixed.

* Some people in the comment thread have assumed I’m against deficits at any time for any reason, which is reasonable since I went on and on about the evil of passing debt to the next generation. But to be clear, I don’t think a little debt is a bad thing. I think a lot of debt, and systematic debt that doesn’t go away, is very bad. Deficit spending to my mind is like a jolt of caffeine — it wakes you up, gets you focused and gets you going. But as anyone who has too many Cokes or cups of coffee knows, too much caffeine makes you nervous. Likewise tax cuts; I’m not opposed to tax cuts as a general class of thing; I’m just opposed to the idea that they’re the correct political solution to everything, all the time.

To go towards the issue of tax cuts and deficits regarding Bush and his tenure in the White House, I don’t imagine that I would have been opposed, early on, to what I considered to be intelligent, useful tax cuts whose result would have been manageable, short term deficits. But I consider the Bush tax cuts, in the past as well as the current crop, as ill-advised and unfair and designed to create deficits not as short-term stimulus but as a means of long-term control of the country’s financial and political agenda. They’re crap, basically, and part of the Bush administration’s distressing tendency to do what it wants and lie, deceive and misdirect to get it. And I pretty much believe the Bush people are sending a larger return to me at this point as hush money — i.e., take this cash and don’t bitch while we rework the system to our benefit.

* A number of people have suggested that I’m entirely free to send the US government more money if I voluntarily choose to do so, so just write a check and shut the hell up. Well, folks, I’m just one guy. You need to chip in, too. My first point is that the average Americans’ tax burden at this time is not so onerous that the ratio of taxation to overall government benefit is wildly out of whack. My second point, for those who need it spelled out directly, is that inasmuch as I am pretty well off and yet find my level of taxation not intolerable, I think that you probably don’t need a tax cut either, since you (aggregate) are usually paying less than me. Yes, yes, I’m a socialist, I know, and that’s hardly better than beating kittens with ball peen hammers.

As to the answer to the question of who am I to redistribute your money to people you don’t even know, well, like anyone else, I’m just a guy with an opinion, and the opinion is that each of us has to kick in for a tolerable society. I don’t mind kicking in my share, but I think if your basic position is that you don’t need to kick in at all even though you’re clearly capable of doing so, there’s something wrong with you. We can debate about what the right level is, and whether what we kick in is being used well and with a minimum of waste.

Heck, I’d be more than happy to have additional tax cuts if we can have them, have a solid level of government service and not pass on the cost of said service to the kids. We’re just not doing that now.

11 thoughts on “Wrap Up on “Tax Cuts, Feh”

  1. Some Things Just Aren’t Simple or Easy

    And that’s what scares me about the responses you received. Yes, some of the people were willing to imagine there could be a $44 trillion deficit due to Social Security and Medicare. But what was the proposed solution? Why, just discontinue these expensive welfare programs, of course.

    The American people are wealthier and better educated today. Yet we have no tolerance for things that can’t be solved quickly, that aren’t black and white.

    God help us, our individual ability to concentrate on the public issues of the day is decreasing. And yet when our political leaders, scientific experts, etc., etc., study long-term problems and propose realistic solutions, we usually reject what they recommend. We turn on anyone who suggests something hard — such as taking our heads out of the sand!

    What will it take to make the American public act like responsible adults again?

    I guess we can’t expect George W. Bush to help us with this one, can we?

  2. There is a minimal level of government service I expect, and it’s much, much lower than what it is now. Therefore I want to see taxes cut down to what it would require to support that minimum level AND I want to see government spending reduced to just that minimum level.

    What is that minimum level? Go read the Constitution. I would like to see all entitlement programs scaled back and eliminated. I would like to see income tax withholding to end. I want to receive all of my money in my paycheck and then calculate my taxes at the end of the year and write Uncle Sam a check. I believe this would help simplify the tax code and reduce the size and scope of that draconian institution known as the IRS.

  3. Of course, the logical conservative position is that the government shouldn’t be forcing people to save for/support retirement at all; that people should be doing it on their own. I think it’s sweet conservatives believe people do what’s in their best long-term self-interest all the time, in every case. Alas, I don’t feel the same level of cheerful optimism.

    Well, yes and no. I agree that government shouldn’t be forcing people to Do The Smart Thing. I just don’t believe that people will do The Smart Thing for themselves all the time either.

    And, you know what? That’s okay. I don’t see why anyone should force them to Do The Smart Thing, if they’re determined to be feckless. I just don’t see The Issue here. Will some people be stupid and not save for retirement and be broke and dependent on charity to survive? Probably. IS that sad? Yeah, I suppose it is. Is The Thing To Do to force them to save (all at the same rate, in the same way, and effectively at gunpoint)? I don’t think so.

    People have the fundamental right, as adults, to make stupid decisions that will harm them later in life. Interference in this, while well-meant, is possibly a greater threat to liberty, in the long run, than a host of more obviously “illiberal” policies… that don’t sound so caring.

    (I suspect one reason people make “stupid” saving choices NOW is that they “know” the government will take care of them. Self perpetuating cycle, eh?)

  4. Sigivald writes:

    “And, you know what? That’s okay. I don’t see why anyone should force them to Do The Smart Thing, if they’re determined to be feckless.”

    Ha! I’m tickled by this.

  5. Sigivald said:
    “(I suspect one reason people make “stupid” saving choices NOW is that they “know” the government will take care of them. Self perpetuating cycle, eh?)”

    Speaking for myself, I made “stupid” saving choices because I believed my company when it converted my defined benefit pension to a cash balance one, and then I believed the wall street pundits who said stocks were the best investment option.

    In other words, I was screwed royally by business, and government had NOTHING to do with it.

  6. Tripp, stocks still are one of the best investment options. But Wall Street Pundits are wrong 99.99% of the time. If you want to invest in stocks, do it right and read Investor’s Business Daily.

  7. Bixby,
    Thanks for the tip, but do you really expect me to put my money into a system where the participants lie and the government is loosening up already lax regulations?

    To be fair, some companies are honest, but how can you tell?

    And the government wants my 93 year old grandma to use this for her retirement savings??

  8. Personally (unlike Robert Heinlen), I trust the government a lot more than I’d trust a corporation.

    In theory, the government is transparent. In theory, it’s accountable — to *me*. In theory, it does what I want it to. Sure, in practice it does none of these all that well, but it does them all a lot better than a corporation does. That’s as it should be, really.

    If I pay my taxes in to the government, then receive a pension once I’ve retired/if I get injured on the job/y’know, something like that, I’m still paying for my retirement. To be honest, I’m probably paying a hell of a lot more than I’ll leech when I do retire. So I may be a burden on the system, but that’s not my fault: I’ve done my bit. The system should work better.

    If I pay a corporation (that is, invest), where’s my guarantee I won’t be screwed over?

  9. Mark,
    Your guarantee could come from the government, unless it is in the pocket of business. One of the biggest scams of the 90′s was businesses converting employee’s pensions from ‘defined benefit’ to ‘cash balance’, skimming off billions in the process. They backed off from doing that to the over 40 crowd because of the threat of an age descrimination lawsuit. So what is the Bush administration doing? Passing legislation to make it illegal for employees to sue for age descrimination when their pensions get pilfered.

    I’m sure the legislation will be called something like the ‘Support the Troops and Pension Liberation’ act.

  10. John,

    I am sure you will be surprised to know that I think the govt should force people to save for their retirement, since it is essentially a foregone conclusion that we will be responsible for them if they don’t do it. We would end up taking care of them, as a society.

    That being said, I think the current structure of Social Security is a joke. Forcing everyone to save into that system, which doesn’t save and invest but just pours the money out in a constant funnel to Congress to spend on other things, just encourages them to spend it.

    It is just one giant tax. FIT, FICA, Medicare – they all meld together. Stop differentiating between them. The govt doesn’t. All these deficit worries are just that – worries. When the time comes, they will simply raise taxes to cover the shortfall. All politicians, Rep and Dem alike, have realized that spending money on their constituents is the quickest and surest way to get re-elected. If we leave taxes ‘high’, as you have stated you want (ie – no tax cut), they will simply drive the budget higher and higher and higher. If we have a tax cut, they will have to spend less. There will still be a spending increase. It all comes down to how much they spend. Anyone who puts any stock at all in a 44.2 trillion dollar shortfall is fooling themselves.

  11. Brad writes:

    “Stop differentiating between them. The govt doesn’t.”

    How about instead of asking us to stop differentiating, tell the govt to start differentiating? The problem doesn’t lie in the government. It is simply made up of people with faults and greediness and ignorance etc. The problem is that on the whole, the people of the United States have dropped their guard and grown complacent and apathetic. The government wouldn’t misspend our money if we didn’t let it. The answer isn’t simply “tax-cuts.” It goes deeper than that. “The price of freedom is eternal vigilence.” Well the American people have really dropped the ball there.

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