An Idea for Libertarian-ish Social Security Reform
How about this? The government says to current workers, “OK, we will pay you the present discounted value of what we owe you actuarially for Social Security at the current benefit scale, but we will throw on a 50% penalty. Do you want to take the deal?”
Presumably millions would.
Then the government says, “OK, instead of us now sending you a check–which of course would be paid for simply by raising the deficit–you can claim this as a tax credit. If the amount we owe is more than your current tax liability, you just roll it forward until we work off our debt to you.”
The above scheme doesn’t completely abolish Social Security, and it is vulnerable to the politicians just jacking up tax rates to compensate, but I like it because:
(1) It involves no new rights violations. What the government does is reduce the amount it plans on taking from future taxpayers (to pay current workers’ Social Security benefits down the road when they retire), and the way it finances it is to reduce taxes on current workers. Yes, there are still remaining rights violations after the above is implemented, but (if I’m thinking through it properly) the above represents an unambiguous reduction.
(2) The 50% (or whatever it is) penalty rate lets the politicians clean up the government’s liabilities very cheaply.
(3) The people opting in obviously benefit.
I am trying to think of a way to work in Laffer Curve effects, so that rather than give people a tax credit of a certain dollar amount, instead the government reduces their marginal tax rates. The problem with this approach is that you don’t know how much income someone would have generated in the absence of the policy change. But it would probably be even better if, instead of doing the tax credit, instead the government took your average AGI from the past 3 (or whatever) years, and then figured out how much it would reduce your marginal tax rates by. So if you had an average year, it works out to the same reduction in tax liability. But if you bust your butt because of the tax holiday, you end up “saving” more than what the government computed that it owed you in exchange for renouncing your future Social Security benefits.
By the way, it’s late and I just wanted to fire this off. I am not sure how to handle a worker who still has years of working ahead of him. I actually wasn’t thinking with the above, “And now this guy would be totally out of the system,” because then you have to deal with his stream of future Social Security contributions. I guess you keep those fixed, and then still ask the guy upfront, “Do you want a lump sum [after the penalty] to renounce your claim on future benefits, even though you still have to contribute?”
Ben Stein Wants Props for Being More Socialist Than Obama
I truncated the post title a little bit for brevity, and a lot to be provocative, but you tell me if I’ve mischaracterized Ben Stein’s thoughts on passage of the health insurance legislation (HT2 DRH):
[W]ith some justification, most of the media rejoiced that national health care had arrived for people with low incomes, with pre-existing conditions, without jobs, with impoverished employers.
To call Barack Obama’s response to the passage…of this bill “triumphalist” is like calling Mount Everest “tall”.
But among the glorying, there was little or no mention of my former boss, Richard M. Nixon, and this was a monstrous wrong, one of an innumerable number of wrongs directed at Mr. Nixon. The flat truth is that in February of 1974…with large Democrat majorities in both houses of Congress, Republican Richard M. Nixon submitted to Congress a national health care bill in many ways more comprehensive than what Mr. Obama achieved.
Mr. Nixon’s health care plan…would have covered all employed persons by giving combined state and federal subsidies to employers. It would have covered the poor and the unemployed by much larger subsidies. It would have encouraged health maintenance organizations. It would have banned exclusions for pre-existing conditions and not allowed limits on spending for each insured. I know a bit about this because I, your humble servant, as a 29 year old speech writer, wrote the message to congress sending up the bill.
In many ways, the bill was far more ‘socialist’ than what Mr. Obama has proposed. It certainly involved a far larger swath of state and federal government power over health care…
My point is not whether or not Mr Nixon’s plan was better than Mr Obama’s. In fact, they have many points in common. My only point is that if you want to call someone a visionary, if you want to call someone compassionate, if you want to note that someone was a foe of inequality and a friend to mercy, think of Richard Nixon…
Murphy Collaborates With the Russians
This is obviously old, since healthcare “reform” is not yet a done deal in our discussion. But I think the interview is still instructive, if only for those of you who may one day find yourself talking to news anchors while sitting on a kneeling chair. Remember kids, always assume the camera is still on you, even if you’re not talking…
Robert Wenzel Receives Death Threats Over Health Reform
With him shooting his mouth off so much, it was only a matter of time. In an open letter to Louise Slaughter (my congresswoman when I was growing up), Wenzel relays his terrifying tale.
(BTW, I am not going to bother getting up on a soapbox, but for the record: Making death threats to politicians is not only immoral but dumb. The people in DC are thanking whoever it is they worship that they can play those answering machine messages for the media and garner sympathy. It’s like the rulers of Iran giving high-fives to each other whenever some US official denounces them.)
What Would a Reality-Based Economist Say?
Brad DeLong reproduces the below chart from Mark Thoma:
Neither of them offers commentary, but I’m assuming they would say, “See? We need more stimulus, duh. What more evidence will it take?”
But of course, someone like me would look at that and say, “Suppose we overlaid deficit-spending and growth in the Fed’s balance sheet. What more evidence do you need to see that the feds and Bernanke are making this thing worse? The only time in US history where we had more government ‘help,’ we had a decade-long slump.”
David Frum Learns That Ideas Have Consequences
Via Brad DeLong, it turns out David Frum got a 100% pay cut, presumably in response to his “Waterloo” article. (You should skim it if you want to have your bearings as we hear from countless progressives how “right-wing think tanks brook no dissent from the party line.”)
Please don’t misinterpret this post. I am not saying I think AEI is great. All I am saying is that of course they are going to get rid of Frum after that article. And it’s not like it’s a one-shot aberration. They have probably been getting more and more uncomfortable with his “unorthodoxy” and this was the final straw.
I feel the same about Bruce Bartlett. It’s not like he re-ran a regression, came up with new coefficients, and then tweaked his position on the VAT. No, he all of a sudden starts blowing up standard conservative views and big-gun Republicans. Of course his employer was going to be in a really awkward position.
Last point: I am not saying that Frum and Bartlett shouldn’t be allowed to change their views. All I’m saying is, I don’t want to hear a bunch of whining about censorship. If Frum or Bartlett had written stuff in the beginning, like they were writing by the time they got canned, they never would have been hired. It’s not censorship if the Catholic bishop removes a pastor who decides he wants to get married.*
* David Gordon told me an interesting anecdote about this possibility in Catholic doctrine; perhaps he can share in the comments.
Suggestion Box
We’re tying up some loose ends on the blog revamp. If you notice anything off, or have a suggestion, please say so in the comments, thanks.
Crazy Economists
Sometimes I wonder if I’ve gone into the wrong line of work. Maybe I should’ve stuck to theoretical physics back when I thought Richard Feynman was the coolest guy ever.
Mario Rizzo blogs about not tipping NYC cab drivers. I actually think tipping is a good custom. However, I think we should cut Mario some slack, since he’s talking about NYC cab drivers. (It would be like someone saying he hates dogs, and you say, “But they’re so cute and cuddly-wuddly!” and you find out he was attacked by Cujo.)
Brad DeLong politely objects to Mario, in a manner we’ve come to expect from the man concerned with social decorum.
In the comments to DeLong’s post, somebody links to this Steve Landsburg blog post, “In Praise of Genocide.” Now I know, I know, you’re thinking, “OK, that’s just a provocative title to get page views. Surely Landsburg isn’t going to talk about what the post title sounds like. He must be talking about playing Risk or something with his buddies, and ha ha he is ‘praising genocide’ because he kicked butt.”
I wish it were so. Landsburg is actually talking about genocide. Here’s an excerpt: “And likewise I prefer the mass murderer who wipes out an extended “family” of five million to the one who kills, say, four and a half million at random. Taking the death and destruction as given, sowing less misery earns you a little slack.”
Recent Comments