Focus on real crisis: Tax
cuts, not Social Security, are the culprit
A Register-Guard
A Register-Guard Editorial
December 18, 2004
Even if President Bush could snap his fingers and magically
"fix" Social Security tomorrow morning, the nation would still be
facing a fiscal crisis.
Social Security "reform" is really an ideological issue
dressed in financial clothing. That's why President Bush is
adamant that widely accepted common-sense strategies such as
raising the income cap on Social Security taxes are out of the
question. He has no intention of pursuing any course that would
leave the existing Social Security system fundamentally
unchanged.
Because it's really an ideological issue, supporters of Bush's
Social Security privatization plan are as impervious to factual
critique as were supporters of his Iraq invasion. Bush backers
believe that he is right about the need to radically transform
government entitlement programs.
OK. Let's not argue about Social Security here. The biggest
contribution a quick fix for Social Security could make to the
nation's long-term financial health would be to force the Bush
administration to stop using it as a diversion to avoid the real
problems: a disastrous budget deficit, devastating future
increases in the cost of Medicare and Medicaid and the draconian
cuts to domestic spending that will be required if Bush's 2001
and 2003 tax cuts are made permanent.
Speaking of the deficit, none other than President Bush got
right to the heart of the matter when he said at his economic
summit last week: "We have a problem. Are we willing to confront
the problem now, or are we going to pass it on to future
Congresses and future generations?"
Never mind that he was really referring to Social Security.
His comments apply perfectly to the federal deficit, which he had
a large hand in creating.
Recognizing the negative effect the ugly deficit numbers could
have on his re-election campaign, Bush announced a goal last
February of reducing the federal budget deficit to 1.6 percent of
the gross domestic product in five years, by fiscal year 2009.
That would involve cutting 2004's $413 billion deficit, which
equals 3.6 percent of GDP, by more than half.
But the president's actions fail to back up his words. A
conservative analysis of Bush's current fiscal policies by the
Brookings Institution indicates that the deficit will remain at
about 3.5 percent of GDP every year for the next decade.
That's the good news. The bad news is that as the health and
retirement costs of the baby boomers begin to mount, the deficits
will balloon steadily, reaching 7 percent of GDP over the next 75
years.
Remember, this is the deficit - the amount expenses exceed
revenues. As a percentage of GDP, the costs of providing Social
Security to retirees and health care to Medicare and Medicaid
recipients is projected to rise from 8 percent in 2004 to 23
percent by 2075.
Bush's frontal assault on Social Security also pushes debate
about making his tax cuts permanent into the background.
Realistically, his re-election and Republican victories in
Congress appear to guarantee that this gargantuan redistribution
of wealth to the wealthy is a done deal.
What does that mean? The Brookings report says that paying for
the full tax cuts in 2014 would require an 11 percent reduction
in all government spending (other than interest payments).
Specifically, that translates into a 45 percent cut in Social
Security benefits; complete elimination of the federal part of
Medicaid; or a 75 percent cut in all domestic discretionary
spending (such as for environmental protection, education and
health research).
The Brookings analysis doesn't mince words: "These figures
suggest that the tax cuts are simply not affordable and therefore
should be substantially scaled back or repealed altogether."
The American people are being misled by the Bush
administration. There is most certainly a real fiscal crisis on
the horizon, but it has almost nothing to do with Social
Security.
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