Bell Curve The Law Talking Guy Raised by Republicans U.S. West
Well, he's kind of had it in for me ever since I accidentally ran over his dog. Actually, replace "accidentally" with "repeatedly," and replace "dog" with "son."

Wednesday, February 16, 2011

The 2012 Budget and Presidential Leadership

President Obama's proposed 2012 budget doesn't bother me as a budget document. It is not a proposal to solve all our growing fiscal crisis, however. It is just a proposed operating budget. The GOP is hammering Obama for lack of leadership. To some extent they have a point. What the Republicans wanted was for the President to propose the unpopular cuts. He didn't; he proposed the easier ones. That was smart. It is a good idea to force the GOP to stop taking potshots from the sidelines as they have done for two years and instead take some responsibility for governing. Want a balanced budget without raising taxes? Make a proposal. Let the country see just how much it will cost them to keep the Bush tax cuts for the super rich. Otherwise, let's talk turkey about how we reduce deficits during a recession without screwing everyone. Republicans need to be forced to admit that they can't solve the problems we face without serious cuts to very popular programs or some tax increases on the wealthiest among us. Until they do, and as long as they insist on claiming that the problem is Obama being a spendthrift, then there is no reason for the President to save their bacon. He needs a partner in Congress. If not, we can wait. I suspect we will have to wait.

On the other hand, I DID want to see the President take a stab at the entitlement issue. I do not mean I want him to adopt the idiotic proposals of his blue-ribbon commission. Those proposals are basically cuts. Good riddance. No. I wanted him to be 100% crystal clear that we are not going to cut or reduce social security, and that we will solve this entitlement problem through other budget spending cuts or raising the social security tax cap. That is leadership on the issue.

He does need to lay down the law on this issue and a few others, not just say "everything's on the table in private back-room negotiations." That's not transparency for you. So yes, President Obama, take the lead. Oppose "entitlement reform" where it means just screwing the taxpayers out of their old-age security. Instead remind the American people that Social Security and Medicare must be paid for, and that means we may need to restore some of the tax rates of the 1990s (the prosperous 1990s) on the wealthiest.


Raised By Republicans said...

I think that the President is not really in a good institutional position to make detailed proposals. Any proposals he makes - especially to a Congress largely controlled by those hostile to him personally and to his ideas and constituents - will be shredded before it comes close to becoming law and he attaches any political capital to those proposals it will look like a major defeat.

But I agree with LTG that Obama could have been more clear about what he would veto. I think he could have been open about a veto to further reductions in Medicare benefits or further tax cuts for example.

I also agree it was smart of Obama not to do the GOPs heavy lifting on balancing the budget without tax cuts. Like LTG says, Obama is forcing the GOP to come clean about the opportunity costs of the Bush tax cuts for the wealth. That's classic Obama. Without actually committing himself to anything he's boxed the Republicans into a corner. He's done the same thing in foreign policy arenas with good effect (think Iran, Venuzuela etc).

I also agree with LTG that returning to the tax rages of the 1990s would be a very very good way to solve our current accounts problem. And we know it would not ruin the economy because the economy was better then with higher tax rates than it is now with lower ones. At the very least this shows us that economic performance is not solely dependent on tax rates (which is the implicit argument of the monotonous proposals from the GOP).

While I think that Social Security is a separate issue from the budget (because it's funded through a separate revenue stream), I disagree with LTG that doing things like raising the retirement age by a couple of years in stages over a decade or so constitutes "screwing taxpayers out of their old age security." I don't think doing much more than a minor adjustment to the retirement age is necessary. I'm not one of these people who think Social Security is doomed. We just need to figure how to get through a temporary problem caused by an excessive number of Baby Boomers who had kids late and lived longer than we expected people to live in the 1930s. But lets also be honest about how Social Security is a separate problem from the budget. SS comes from different revenues. Obama's spokespeople have been fairly clear about THAT on the morning talk show circuit.

The Law Talking Guy said...

Two things. First, I wish Obama were cleaer that Social Security is not "broken" and does not need to be "fixed." It's predicted to be sound for the next 20 years and will only require additional funding for the relatively short period when the baby boom crests. At that time, we can either devote some of the general fund revenue to it or raise the cap on taxable income (currently only the first $106,800 of income is taxed for social security). Indeed, the best proposal would be to keep the SS tax rate at the lower 4.2% rate (lowered temporarily from 6.2% for 2011 only) but raise the taxable-income-cap much higher. I wish Obama were clearer about this.

I disagree with RBR that raising the retirement age is no big deal. It leads to unemployment by keeping older (and more expensive) employees in the workforce longer, blocking not only new hires but promotions. It only "works" to lower SS costs because of actuarial tables - because, on average, it means two years less of payments that a retiree would otherwise be entitled to. To add insult to injury, the employee is also has to pay additional social security taxes for the additional two years.

We shouldn't be trying to squeeze more life out of the American worker. We should be squeezing more money from thsoe who have benefitted unfairly from the Bush tax cuts. Did you know that ExxonMobil is paying zero in income taxes this year although it is the most profitable corporation on earth?

Raised By Republicans said...

I agree that the Bush tax cuts should be first stop on our road to fiscal responsibility. I also agree that it's absurd that Exxon (and other corporations) easily escape from corporate taxes despite huge profits (and yet still seem to enjoy complaining about being over taxed and over regulated).

But I think it is pointless to obstinately cling to a particular retirement age which was selected nearly 100 years ago. When social security was set up (in 1935), the life expectancy in the United States was around 60. It's now at about 78. Why should we declare that 66 is a just age at which to retire and 67 is not? If telling people today (who expect to live 30 years longer than people when the law was written) that they will not get full benefits for a year longer than their grandparents saves us a big headache 20 or 30 years from now, then I'm all for it.

The Law Talking Guy said...

I suppose we don't know how much it will save to change the retirement age. And it's something we could trade if need be. But it's already slipping under the 1983 law. Anyone born after 1960 can't retire until 67 already. The 65 age is only fully in place for those born before 1937. Even someone born in 1940 has to wait till 65 and 6 months. So how much longer odes it have to get?

Raised By Republicans said...

That's sort of how I see it, LTG. This is our ace bargaining card. We can trade a year extension on the retirement age for tax increases or something else - but it should be traded for something big and valuable.

USWest said...

How about we stop using social security funds to pay for wars and other thing the general fund can't afford? They raid social security all the time.Remember Al Gore's Lock Box?

I would not object to some means testing of social security.

We do not have a mandatory retirement age in this country. But I can tell that after a certain age,people just get tired and performance suffers. My significant other at 58 tells me all the time that he is beyond caring about work most of the time and that it is discipline that makes him care what little he does. He's in a high stress job at the top working 12 hours days- no OT and tethered to a Blackberry. His boss is pushing 70 and his hanging on is doing more harm to us than good as an organization. I think we should talk less about retirement age and more about offering older workers part time deals, or encouraging them to stay on at reduced salaries, to mentor young workers, etc. Why be so absolutist?

Raised By Republicans said...

My dad did phased retirement and that was certainly the way to go for him.